Ontario Bill to Amend the Electronic Commerce Act

A private member’s bill, Bill 96, the Electronic Commerce Amendment Act, 2012, was introduced on May 17, 2012, to amend Ontario’s Electronic Commerce Act.

The bill does three things:

i) It repeals the exclusion of land transfers from the E-Commerce Act (paragraph 31(1)(d) of the Act, s. 2 of the Bill).

ii) It requires for a land transfer that is electronically signed, that

in light of all the circumstances, including any relevant agreement, the purpose for which the document is created and the time the electronic signature is made,

(a) the electronic signature is reliable for the purpose of identifying the person; and

(b) the association of the electronic signature with the relevant electronic document is reliable.

It does so by requiring that s. 11(3) of the Electronic Commerce Act (whose text is quoted) applies to these documents. (Bill s. 1)

iii) It removes the exclusion of documents of title from the E-Commerce Act (by s. 2(2) of the Bill).

The Uniform Law Conference last August amended the <Uniform Electronic Commerce Act to remove the exclusion of land transfers. In other words, item (i) above is consistent with the action of the ULCC.

What do you think of the other two provisions?

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Comments

  1. I think provisions made in ecommerce act has been implemented well, there is a definite requirement of transparent medium for land transfers, it has been the current scenario that made this deployment necessary, with above mentioned 3 points you can find the better utilization of the technique that needs proper security in terms of support provided by authorities.

    esign

  2. I am not sure I understand all of the previous comment.

    With respect to signatures, if one imposes a reliability requirement, is there not a risk that some e-signatures will be held invalid for insufficient reliability, even if everyone knows who did them and why? Today in Ontario one does not need a signature on a real estate transfer (Land Registration Reform Act s. 21), so is it necesary to impose an open-ended technology requirement?

    The third point deals with documents of title. Documents of title are not used to convey real estate. Thus that provision will not facilitate electronic land transfers.

    Is it safe to allow the E-Commerce Act to apply to documents of title without any safeguards or barriers to promote security or uniqueness of the document, and to deal with the consequences? (New Brunswick’s Electronic Transactions Act has never excluded them; everyone else’s does SFAIK.)

  3. Summary

    John Gregory kindly told us about the May 17 private bill to amend the Ontario Electronic Commerce Act, 2000 for real estate documents.

    The main change in the bill will be that real estate documents are no longer excluded. This would give effect to a recent recommendation by the Canadian Uniform Law Conference. The change is an important piece of housekeeping and we should make it.

    John questioned we should make some added changes that are in the bill. In my view, it would be a mistake to make these added changes, and we should remove them from the bill. But we do need to study a morass of old and new laws on real estate documents and to reform them.

    Added changes

    Currently, the legal formalities for, say, giving a 5-year lease of a small store are perhaps entirely different from those for, say, giving a 1-year lease of a very large aircraft. We must sign and seal the former, but we can perhaps use our judgment on how we execute the latter.

    John has previously said that the Act was purposely “minimalist” and “technology-neutral,” like the UN model and Acts in other jurisdictions.

    We’ll continue to refine the process for electronic signing, for everything from buying a book over the internet, to securely signing a contract using a service like DocuSign or perhaps Cosign. We’ll continue to use Teranet’s secure process for registering electronic documents. The “minimalist” and “technology-neutral” approach accommodates these refinements.

    The Act now says that, where the law would require an electronic document to be signed, it must have an electronic signature. This is electronic information that a person creates or adopts in order to sign the document and that is in, attached to or associated with the document. We’d probably feel that this was a good test.

    However, the Act may require more for some documents. For these documents, the electronic signature must be more “reliable.” It must be more “reliable” for the purpose of both identifying the signer and associating the electronic signature with the document. Whether the electronic signature is “reliable” depends on “all the circumstances.” These include “any relevant agreement, the purpose for which the document is created and the time the electronic signature is made.” We’d probably wonder what this requires and why it might be needed.

    The documents for which the electronic signature was to be “reliable” in the above ways were to be described by regulation, but there’s no regulation. This confirms that we haven’t yet needed to use the “extra-reliable” test.

    The bill would say that some real estate documents must meet the “extra-reliable” test; a mere regulation won’t do the job.

    The bill would use the words in the old exclusion to describe the real estate documents that must meet the “extra-reliable” test. This is, “Documents, including agreements of purchase and sale, that create or transfer interests in land and require registration to be effective against third parties.”

    Defining a kind of document is bound to cause confusion. The above words are especially confusing.

    For example, any agreements can create an “interest in land,” if a court will order “specific performance” of it. The agreement creates the interest, because equity regards something as done where it ought to have been done. For an agreement of purchase and sale (which the words specifically mention), the courts routinely ordered specific performance, because every piece of land is unique. Lately, the courts have accepted that many properties are so similar that damages are an adequate remedy. It doesn’t seem to be a good reason for deciding whether a document must meet the “extra-reliable” test, that a court will order specific performance of one agreement, but not another.

    Or, for example, the Ontario Land Titles Act either guarantees some registered interests in land or gives priority to some registered interests in land. The Act doesn’t directly deal with whether a document is “effective against third parties,” or treat all documents the same way. For example, a grant of a perpetual right of way needn’t be registered, but a lease for a period yet to run of more than three years must be registered. This doesn’t seem to be a good reason for deciding whether a document must meet the “extra-reliable” test.

    When we discuss the above words, we tend to refer loosely to the documents to which the words might apply. We call them “land transfers” or “documents of title.” This can hide the true effect of describing a document according to whether it creates an interest in land and should be registered.

    Real estate documents raise many formal issues. Some formalities are ancient, like a seal on a deed, or written and signed evidence under the Statute of Frauds. Even the realtors’ standard agreements of purchase and sale purport to be “sealed,” in order to make an offer irrevocable. Section 13 of Land Registration Reform Act does away with a seal on a transfer, charge or discharge. Section 21 does away with writing and signing on an electronic document that creates an interest in land.

    John Gregory’s articles on electronic documents and electronic seals, and the comments on them (including mine), deal with these issues.

    Conclusion

    We need to study the morass of old and new laws on real estate documents and to reform them. The added changes in the bill only touch the surface of this morass. For the time being, we should make the important housekeeping change recommended by the Canadian Uniform Law Conference, by removing the exclusion for some real estate documents. We should defer the added changes in the bill until we can study the issues and deal with them fully.

    This may disappoint people in the real estate industry, but they would be wise to press for a full solution. In the meantime, the above articles may show that our existing laws aren’t as serious an obstacle to electronic transactions as might appear.

  4. I recently added a comment to John Gregory’s article on private members’ Bill 96. This comment corrects the words “documents of title” in my comment.

    The bill would amend the Ontario Electronic Commerce Act, 2000 for real estate documents. I thought that we should make the main change in the bill, so that that real estate documents would no longer be excluded. I thought that we should remove some added changes from the bill. But I thought that we needed to study a morass of old and new laws on real estate documents and to reform them.

    The added changes would require the electronic signature for some real estate documents to be “extra reliable.” Among other things, I felt that the words that would describe these documents were bound to cause confusion.

    In the comment, I said that, when we discussed the above words, we tended to loosely to call the documents “land transfers” or “documents of title.”

    Under the Ontario Electronic Commerce Act, 2000, for the purpose of a contract for the carriage of goods, a document of title is, for example, a warehouse receipt or bill of lading. It represents the goods, and transferring it transfers title to the goods. It may be negotiable.

    A real estate lawyer could use misleadingly the words, “document of title,” in the context of electronic commerce, as if it meant a document of title to real estate.

    In fact, a document of title to real estate has little significance as such. Although possession of title deeds could formerly affect priority, it can rarely do so under land registration. Although delivering title deeds could be an act of part performance that made an agreement to give a mortgage enforceable, it’s rarely used for that purpose now. We shouldn’t need to use the words, “document of title,” for real estate at all. And we definitely shouldn’t do so in the context of electronic commerce.

    As a result, Bill 96′s repeal of the exclusion of ‘documents of title’ from the E-Commerce Act will not facilitate electronic land transfers but may mislead people dealing with traditional documents of title into trying to do electronically what the technology and the law do not currently support

  5. For an example of what can be done already, i.e. without statutory amendment, in several provinces including Ontario by electronic communications, see the Lawyer Done Deal site.

  6. Bill 96 died on prorogation of the Ontario Legislature in October 2012, but the contents now appear in Bill 28, also under the title Electronic Commerce Amendment Act, 2013, introduced on March 6, 2013, by Todd Smith, MPP (PC). The discussion above can be applied to the new bill.

    Does it seem like a good idea to you?

  7. The Ontario government has now introduced amendments to the Electronic Commerce Acd as part of its budget legislation, tabled on May 2, 2013. The amendments (in Schedule 5 of the bill) repeal the exclusion for land transactions, namely paragraph 31(1)(d) of the act.

    The amendments also make it clear that the Act applies to documents, signatures etc whenever they were made. The Act has always been interpreted in that way, but some people were doubtful whether it would apply to land transactions only for documents made after the exclusion was repealed. There seems to be no policy reason why information in electronic form that meets the standards of the Act should not have its benefits.

  8. In his last comment, John Gregory kindly told us that, under the new budget bill, the Electronic Commerce Act, 2000 would allow land transactions to be electronic. The Canadian Uniform Law Conference had rightly recommended this as a housekeeping change.

    Previous bills that would make the change had proposed some added changes. The current bill rightly removes the added changes.

    The added changes would have required land transactions to be “extra reliable.” I had commented that it would have been a mistake to make those added changes. My comment gave reasons for this.

    The danger of an “extra reliable” test may not have passed. The existing section 11(3) of the Act still allows a regulation to impose the test. Perhaps we won’t know what the government will do to electronic land transactions until after the budget bill has become law.

    Section 21 of Land Registration Reform Act does away with writing and signing on an electronic document that creates an interest in land.

    As other Slaw articles and comments show, we do still need to study a morass of old and new laws on real estate documents and to reform them.