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No settlement yet on e-system

News

Cite as: (2008) 82(7) LIJ, p. 23

The legal profession remains wary of e-conveyancing while insurance issues remain unresolved.

Victoria’s online property settlement scheme is yet to gain the endorsement of the legal profession, despite six months of negotiations over the e-conveyancing model’s legal framework.

LIV CEO Mike Brett Young said until the professional indemnity insurer for the state’s lawyers, the Legal Practitioners’ Liability Committee (LPLC), was happy with the Electronic Conveyancing Victoria (ECV) structure, the LIV would not recommend its use.

“We want to make sure lawyers are adequately covered by insurance if they become involved in the e-conveyancing system,” he said.

E-conveyancing has become a contentious issue with the Victorian system jostling for prime position alongside the National Electronic Conveyancing System (NECS) – which remains under development.

“We really don’t know which is the best system, but what we would like to see is that whichever system is used, it be taken up by all the states. There is an opportunity here for some real harmonisation,” Mr Brett Young said.

On 12 May, ECV completed its first online transaction – a transfer by two Melbourne conveyancing firms, in conjunction with Bendigo and Adelaide Banks – prompting calls from the State Revenue Office for other banks to use ECV.

The Victorian government introduced ECV last November after spending six years and about $40 million developing the online model.

Fees for paper conveyancing transactions were subsequently increased in an attempt to get users to switch to the more efficient electronic system.

Some states have reportedly expressed interest in using Victoria’s system, while other stakeholders say they will not support a collection of state-based systems over NECS.

ECV has been shunned by the major banks, which want a system they can use across all state jurisdictions, and by lawyers, who point to the potential for increased liability.

LPLC claims solicitor Justin Toohey said negotiations with the Department of Sustainability and Environment (DSE) were continuing.

“The legal framework has been through two or three different versions and we have commented on them, and we are waiting for the government to come back with an amended version,” he said.

In a six-page letter in May to Land Victoria executive director and registrar of titles Chris McRae, the LPLC outlined its concerns relating to “significant transfers of risk to the legal profession”.

The letter also stated that a proper compensation framework was essential if consumers were to have confidence in any e-conveyancing system.

“The requirement for a proper compensation system is at the heart of LPLC’s submissions about risk allocation in relation to the ECV project,” the May letter said.

“In one sense, LPLC has been concerned that the rules/requirements have been ‘drafted around’ the committee’s insurance policy, rather than starting from a position of asking what is a fair and reasonable allocation of risk for professional advisers acting as participants in the system to be expected to shoulder, and then drafting accordingly,” the letter said.

Mr Toohey said the LPLC did not want to be drawn into the political and business debate about ECV and NECS and would not be “taking sides” with either.

LIV Property and Environmental Law Section solicitor Karen Cheng said solicitors should liaise with the LPLC to ensure they were fully aware of the liability and insurance issues surrounding e-conveyancing.

She said once an e-conveyancing model was endorsed by the LPLC, the LIV would conduct a series of professional development seminars to make sure lawyers fully understood how it worked.

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