revolutionising singapore’s conveyancing process with blockchain · 2019-10-01 · the...
TRANSCRIPT
1
Revolutionising Singapore’s
Conveyancing Process with
Blockchain ________________________________________
Group 1: Bonnita Leman, Dylan Mah Hon Sen, Ng Jun Xuan,
See Too Hui Min, Tan Hui Xin
April 2019
2
Blockchain technology, with its distributed and
tamperproof properties, could be the key to revolutionising
Singapore’s conveyancing system. This paper explains how
we can simplify the fact-finding process using an
informational blockchain, as well as streamline the
conveyancing process via smart contracts. After explaining
the legal challenges that may arise from utilising
blockchain, this paper lays out some legal and technical
solutions. It concludes with an overview of the
implementation process and steps for the future.
We would like to thank Ms Susan Yuen from Moey and Yuen, as well as Mr Wee Wern Chau and
Mr Bryan Chew from the Singapore Land Authority (“SLA”) for kindly providing us with their
valuable insights.
EXECUTIVE SUMMARY
ACKNOWLEDGEMENTS
3
TABLE OF CONTENTS
I. Problem Statement
II. Summary of Research Findings
A. Singapore’s Conveyancing Process
B. Definitions
C. Cross-Jurisdiction Analysis
III. Recommendations
A. REC-I Informational Blockchain
B. SECURE Workflow Blockchain
IV. Legal Challenges & Solutions
A. Contract Law
B. Formalities
C. Liability
D. Data Protection Laws
V. Evaluation
A. Need for Trust
B. Limited to Less Complex Transactions
VI. Implementation
VII. Conclusion
5
5
5
9
10
15
16
19
26
26
29
31
32
37
37
37
38
39
VII.
4
SUMMARY OF
RESEARCH FINDINGS
5
In its bid to become a Smart Nation,1 Singapore has embraced technology’s potential for improving
the lives of citizens. However, the present conveyancing system remains mostly paper-based and
inefficient. Thus, this report seeks to investigate how blockchain technology may be used to improve
the conveyancing process in Singapore, specifically for non-HDB residential property. Our paper
targets the purchase of non-HDB residential property because other transactions attract their own
respective rules and procedures, which are not the "core" of conveyancing.2
A. Singapore’s Conveyancing Process3
(1) Timeline
There are four main phases in Singapore’s conveyancing process:
Figure 1: Four phases in the conveyancing process.
1 More information about Singapore’s Smart Nation initiatives can be found on the Smart Nation website:
<https://www.smartnation.sg/> (accessed 7 April 2019). 2 “Ethnic Integration Policy and SPR Quota”, HDB website (last reviewed 29 December 2017)
<https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/resale/ethnic-integration-policy-and-spr-quota> (accessed
7 April 2019). 3 Some of the information in this section was obtained from Ms Yuen, a conveyancing lawyer. We also referred to
“Background to property purchase”, SLA website (updated 17 May 2018)
<https://www.sla.gov.sg/News/articleid/360/parentId/97/year/2003?category=Press%20Releases> (accessed 7 April
2019); and “Option to Purchase: 6 Things to Know Before Exercising It”, Singapore Legal Advice (18 Jan 2019)
<https://singaporelegaladvice.com/law-articles/option-to-purchase-before-exercising/> (accessed 7 April 2019).
I. PROBLEM STATEMENT
II. SUMMARY OF RESEARCH FINDINGS
Pre-Option Period
Option Period
Pre-Completion Period
Completion
6
During the Pre-Option period, the buyer and
seller will generally negotiate the terms of the
Option to Purchase (“OTP”). Once they have
agreed on the terms, the seller will grant the
buyer an OTP in exchange for an option fee,
which is usually 1% of the purchase price. At
this juncture, the buyer will consider how he
wishes to pay the rest of the purchase price. He
could do so using cash, a bank loan, CPF
money, or proportions of each.
After the buyer has paid the option fee, the
Option Period will begin, during which time
(usually 14 days) the property is “reserved” for
the buyer and the seller is not allowed to sell the
property to others. The buyer can exercise the
option by paying the balance deposit, which is
usually 5-10% of the purchase price. Otherwise,
the OTP will expire, the buyer forfeits the
option fee, and the seller can sell the property to
another buyer.
Upon payment of the balance deposit, the
buyer’s conveyancing lawyer lodges a caveat to
protect the buyer’s interest.4 The lawyer also
4 Land Titles Act (Cap 157, 2004 Rev Ed) s 115(2). See
also: Alrich Development Pte Ltd v Rafiq Jumabhoy
[1993] 1 SLR(R) 598 at [37], and Cathay Theatres Pte
Ltd v LKM Investments Holdings [1998] 1 SLR(R) 234
at [32]. 5 Traditionally, a charge involves a transfer of ownership
from the chargor to the chargee, but a mortgage does not
involve a transfer of ownership from the mortgagor to
the mortgagee (see: “Section 5(A)(2): (2) Differences
between “charge” and “mortgage” no transfer of
ownership in a charge” at
<https://www.singaporelawwatch.sg/About-Singapore-
Law/Commercial-Law/ch-22-banking-and-finance>).
However, in the context of property law, mortgages and
sends out legal requisitions and prepare the
transfer, charge5 and other required documents.
The sale is complete once the seller discharges
his charge. The lawyer then submits the
documents to the SLA so that the SLA can
register the title in the buyer’s name. Finally,
this title will be reflected on the land register and
become indefeasible.
(2) Important Steps
During the Pre-Option and Option Period, the
buyer’s lawyer needs to conduct title searches
on the property. This is to verify that the seller
has good title to the property and that there are
no encumbrances to prevent fraudsters from
attempting a sale when they do not have title to
the property. A title search is done online via the
Integrated Land Information Service (“INLIS”)
portal. It is relatively costly to conduct a title
search.6
The lawyer also needs to conduct bankruptcy
and litigation searches on the seller. If the
seller shows risks of bankruptcy or is involved
in litigation, it is possible that the seller cannot
charges essentially have the same effect. This is because
the Land Titles Act (Cap 157, 2004 Rev Ed) s 68(3)
dilutes the difference between the two, by stating that a
“mortgage shall not operate as a transfer of the land
mortgaged, but shall have effect as a security only”.
Hence, the terms “mortgage” and “charge” will be used
interchangeably in this report. 6 The INLIS website can be accessed here:
<https://www.sla.gov.sg/inlis/#/> (accessed 7 April
2019). According to the website, it costs $16 to do a
search on “Property Title Information”.
7
transfer good title to the buyer. 7 Bankruptcy
searches are conducted online via the
Insolvency & Public Trustee's Office on the
Ministry of Law (“MinLaw”) E-services
portal8. Litigation searches are also conducted
online via the E-litigation portal. 9 As the
searches are expensive, lawyers may turn to
third-party portals such as Questnet 10 and
D&B,11 which are cheaper and more efficient as
they can generate combined searches from one
search.12
Once the buyer has paid the balance deposit, the
lawyer needs to lodge a caveat via the online
Singapore Title Automated Registration System
(“STARS”) eLodgement portal.13
The lawyer also needs to send out legal
requisitions to the various government
agencies. Legal requisitions are applications
made to obtain more information about the
property. For instance, requisitions may be
made to the Public Utilities Board to find out
whether the land is affected by drainage
reserves. This is necessary as OTPs may make
it a condition for legal requisitions to be
satisfactory. Legal requisitions can be sent
online via the InteReq portal.14
Figure 2: InteReq’s illustration of how law firms can use
the portal to send out legal requisitions.15
7 According to the Bankruptcy Act (Cap 20, 2009 Rev
Ed) ss 107 and 111, when a person is declared a
bankrupt, the Official Assignee shall take possession of
his property and has the power to deal with the property.
This affects the seller’s title to the property. 8 The MinLaw portal can be accessed here:
<https://www.mlaw.gov.sg/eservices/io/xhtml/layout/Fra
me.xhtml> (accessed 7 April 2019). 9 The eLitigation portal can be accessed here:
<https://www.elitigation.sg/_layouts/IELS/HomePage/P
ages/Home.aspx> (accessed 7 April 2019). It costs $16
per search per year. 10 The Questnet portal can be accessed here:
<https://www.questnet.sg/> (accessed 7 April 2019). 11 The D&B (Dun & Bradstreet) portal can be accessed
here: <http://www.dnb.com.sg/> (accessed 7 April
2019). 12 Ms Yuen shared with us that many conveyancing
lawyers turn to alternative portals such as Questnet an
D&B, since it is relatively costly to conduct searches on
portals like e-Litigation. This is particularly since these
portals are cheaper and more efficient, as they can
generate combined searches from one search. 13 The STARS eLodgement portal can be accessed here:
<https://www.sla.gov.sg/starsELS/jsp/common/index.jsp
> (accessed 7 April 2019). 14 The InteReq portal can be accessed here:
<https://www.starsinfo.com.sg/lriweb/pfk/PfkMainServl
et?pContents=/lri/WalkinUrl.jsp&pAction=FIRST&pPor
talId=LRI> (accessed 7 April 2019). More information
on InteReq can be found on InteReq’s brochure:
<https://www.crimsonlogic.com/Documents/pdf/resourc
eLibrary/brochures/eGovernmentConsulting/Intereq_Bro
chure.pdf> (accessed 7 April 2019). 15 Taken from InteReq's brochure:
<https://www.crimsonlogic.com/Documents/pdf/resourc
eLibrary/brochures/eGovernmentConsulting/Intereq_Bro
chure.pdf>.
8
Next, the lawyer prepares the transfer and charge documents. A hardcopy “wet” signature is
required from the parties. Upon completion of the sale, the lawyer must submit these documents
online, as well as physically to the SLA’s office16 no later than 1 pm on the next working day after
the online submission.17
(3) Problems
First, efficiency is not maximised. Lawyers rely on multiple online platforms, which often require the
same set of information (e.g. particulars of the buyer, property address, etc). As such, there is
unnecessary repetition in terms of data entry. Furthermore, the process is not fully digital; some
documents have to be submitted physically, and wet signatures are required. This is not only costly
but also time-consuming.
Second, there is still a lack of trust between the parties. With “wet” signatures involved, there is a
risk of forgery. Moreover, lawyers may represent both the buyer and seller at the same time, which
could result in an actual or potential conflict of duties. Parties are wary that the lawyers may not act
entirely in their interest.
16 Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 6 states that “[e]xcept for
instruments described in s 57(3) of the Land Titles Act and rule 15A of the Land Titles Rules … all instruments on
paper form shall be lodged for registration in person … after the same instruments in electronic form has been
electronically lodged” (emphasis added). This means that hardcopy submission is required for these particular
documents. 17 Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 8 states that paper lodgement
shall be submitted no later than 1pm on the next working day after the corresponding electronic lodgement.
9
B. Definitions
(1) What is Blockchain?
Simply put, blockchains are decentralised and
distributed ledgers18 which record changes in data.
Replications of the data store occur in real-time
across a number of systems. Cryptographic
methods are used, including digital signatures to
prove authenticity, as well as hashes for references
that allow for read-write access control. 19 A
blockchain is also tamperproof and has an auditable
trail. In other words, it has mechanisms which make
it difficult to change data records, and easy to detect
when someone is trying to do so.20
(2) What is a Smart Contract?
Despite its name, “smart contracts” are not the legal
contracts which are familiar to lawyers. A “smart contract”
is merely computer code that is executed if – and only if –
pre-specified requirements are met.21 It is akin to a software
vending machine, in which the exchange of an item in return
for payment is automated.
In the context of conveyancing transactions, a smart contract can, for example, be employed to ensure
that the transfer of title from one party only occurs when specified conditions are met. However, these
required conditions are ultimately derived from a pre-existing legal contract.
18 Antony Lewis, “Part 6: Blockchain Technology” in Antony Lewis, The Basics of Bitcoins and Blockchains (Mango
Publishing Group, 2018) 324-351 at 326. 19 Id, at 335. 20 Antony Lewis, “A Gentle Introduction to Blockchain Technology”, Bits on Blocks (9 September 2015)
<https://bitsonblocks.net/2015/09/09/gentle-introduction-blockchain-technology/> (accessed 6 April 2019). 21 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018).
10
C. Cross-Jurisdiction Analysis
The benefits of integrating blockchain into the conveyancing process have been recognised in
numerous countries. The following table illustrates examples of countries that have embarked on such
projects, as well as their respective levels of integration, as observed and categorised by Graglia and
Mellon.
Figure 3: The more advanced the level of integration, the higher the level.22
In following subsections, we take a closer look at how blockchain technology has helped improve
foreign conveyancing systems. The Republic of Georgia (“Georgia”), Sweden, and Dubai have been
chosen for their varying degrees of integration.
22 Michael Graglia, Christopher Mellon, “Blockchain and Property in 2018: At the End of the Beginning”, The MIT
Press Journals (10 July 2018) <https://www.mitpressjournals.org/doi/pdf/10.1162/inov_a_00270> (accessed 7 April
2019).
11
(1) Georgia
In 2016, Bitfury Group developed a pilot project in collaboration with Georgia’s National Agency of
the Public Registry (“NAPR”). These are some notable features:
1. Private, permissioned blockchain with a distributed digital time-stamping service: This
allows NAPR to verify and sign a document containing a citizen's essential particulars and
proof of ownership of property.23 This adds “immutability and allow[s] the owner of the
document to prove that the receipt existed no later than the time of time-stamping, and that it
was authorised by NAPR.”24
2. Verification features: Before a transaction is concluded, the nodes of the blockchain can
verify that the buyer has enough funds and that the seller has ownership of the property.25
3. Land titles are recorded on the blockchain: The entire registry is placed on the blockchain.
Title can registered and searched on the blockchain itself (see Figure 3 above).
(2) Sweden
In 2018, Sweden’s Lantmateriet jointly developed a project with ChromaWay with the following
features:26
1. Private blockchain and smart contract application: The private blockchain is open-source,
checked by Lantmäteriet, and run by other nodes.27 As the transaction progresses, updates are
recorded onto a blockchain.
2. Lantmateriet’s database: Registration of title takes place on the blockchain. Lantmateriet
then retrieves the updates in ownership from the blockchain and changes its registry
accordingly.28
23 Ian Allison, “Bitfury trumpets blockchain land registry with Republic of Georgia at Harvard and UN,” International
Business Times (9 Nov 2017) <https://www.ibtimes.co.uk/bitfury-trumpets-blockchain-land-registry-republic-georgia-
harvard-un-1646616> (accessed 7 April 2019). 24 Qiuyun Shang, Allison Price, “A Blockchain based Land Titling Project in The Republic of Georgia”, The MIT Press
Journals (28 Dec 2018) <https://www.mitpressjournals.org/doi/pdf/10.1162/inov_a_00276> (accessed 7 April 2019) at
p 76. 25 Id, at p 77. 26 “The Land Registry in the block chain — testbed”, Chromaway (March 2017)
<https://chromaway.com/papers/Blockchain_Landregistry_Report_2017.pdf> (accessed 7 April 2019). 27 Id, at p 59. 28 Ibid.
12
3. File storage: All parties possess digital files representing various documents, such as
agreements of ownership and mortgage deeds.29 This eliminates the need for storage of
physical documents. The original files are kept separately.30
4. No bearer instruments: No bearer instruments are stored on the blockchain for precautionary
reasons. Nevertheless, they could be so in the future, subjected to risks and potential
legislative issues.31
5. ID-solution: Instead of relying on a private key to identify individuals, a customised ID-
solution is used instead. One key benefit is that it is easy to add more levels of security, such
as biometric information , so as to tailor to varying security requirements.32
Figure 4: Illustration of the Swedish blockchain platform application.33
(3) Dubai
Thus far, Dubai’s project is the most advanced case of blockchain integration by a governmental
body. The project has five notable features.
1. Title deeds and smart contracts: The project aims to record all properties, documents and
transactions on a blockchain by 2020.34
29 Id, at p 68. 30 Id, at p 59. 31 Id, at p 68. 32 Ibid. 33 Ibid. 34 Samburaj Das, ”100%: Dubai Will Put Entire Land Registry on a Blockchain” CCN (9 October 2017)
<https://www.ccn.com/100-dubai-put-entire-land-registry-blockchain> (accessed 6 April 2019).
13
2. Integration with other government services: The blockchain portal will be connected to
utilities providers such as electricity, water, and telecommunications systems. It will also be
connected to personal tenant databases, e.g. Emirates Identity Cards and residency visas.35
3. Consolidated online portal: Users will not have to go to different service centres; all
transactions are to be completed using the same portal, including tenancy contract renewals,
utilities payments, and conveyancing.36 Moreover, users can deal in properties online without
visiting a registration office at all.37
4. Listing: Properties for sale will be listed on the blockchain, which allows for “real-time listing
of information, with no duplications or outdated information... [and] once a property is sold it
is automatically delisted.”38
5. Mortgages: Banks can create a node, connect it to the Land Department’s node, and
mortgage/re-mortgage/de-mortgage property.39
Figure 5: Screengrab of the blockchain portal displaying information on a property. The column on the right titled
“Blockchain Activity” shows all the activities related to the property as recorded on the blockchain.40
35 Ibid. 36 Government of Dubai Media Office, ”Dubai Land Department becomes world’s first government entity to conduct all
transactions through Blockchain network” (7 October 2017) <http://mediaoffice.ae/en/media-
center/news/7/10/2017/dubai-land-department.aspx> (accessed 6 April 2019). 37 Lara Abdul Malak, ”Dubai Land Department to Implement Four Blockchain Projects in 2019” UNLOCK (24 May
2018) <https://www.unlock-bc.com/news/2018-05-24/dubai-land-department-to-implement-four-blockchain-projects-
in-2018> (accessed 6 April 2019). 38 Ibid. 39 Ibid. 40 QuantaLoop, ”Blockchain Use Case Study: Dubai Land Registry” <https://quantaloop.io/blockchain-case-study-
dubai-land-registry/> (accessed 7 April 2019).
14
RECOMMENDATIONS
15
While some countries seek to use blockchain’s transparency to solve the problem of corrupt
administrative systems, 41 Singapore’s authorities are renowned for being corruption-free 42 and
already enjoy a high level of trust from its citizens. Hence, our recommendations will focus not only
on removing the need for trust between actors in the conveyancing process, but also on increasing
efficiency. This follows in the footsteps of countries such as the United Kingdom, where blockchain
is envisaged to make transactions almost instantaneous.43 In particular, we aim to reduce transaction
time, eliminate repetition, and remove the need for physical lodgement of documents.
Our recommendations consist of two components working in tandem:
(1) an informational blockchain named “REC-I” (Real Estate Conveyancing Information); and
(2) a smart workflow platform built on smart contracts known as “SECURE” (Singapore
Electronic Conveyancing Unified Real Estate).
41 For example, blockchain was adopted in Honduras to combat land title fraud. Previously, politicians had hacked into
the land registry database and changed the records to reflect that they owned expensive land. With a tamperproof
blockchain solution that all members of the public can monitor in real-time, the government expects to reduce corrupt
behaviour. Gertrude Chavez-Dreyfuss, “Honduras to build land title registry using bitcoin technology” Reuters (16 May
2015) <https://www.reuters.com/article/usa-honduras-technology/honduras-to-build-land-title-registry-using-bitcoin-
technology-idINKBN0O01V720150515?irpc=932> (accessed 6 April 2019). 42 Adrian Lim, “Singapore rises to third place in annual ranking of least corrupt countries” The Straits Times (29 Jan
2019) <https://www.straitstimes.com/politics/singapore-rises-to-third-place-in-annual-ranking-of-least-corrupt-
countries-global-study> (accessed 4 April 2019). 43 Lorna Stark, “Blockchain: Rewriting the Way Government Does Business” KPMG Insights (26 September 2017)
<https://home.kpmg/xx/en/home/insights/2017/09/blockchain-rewriting-the-way-government-does-business.html>
(accessed 6 April 2019)
III. RECOMMENDATIONS
16
A. REC-I Informational Blockchain
One of the pain points of the existing system lies with informational governance.
The data required to complete a sale-and-purchase transaction resides in
multiple different sources. For example, INLIS is used when conducting a title
search, InteReq is used for legal requisitions, and third-party databases such as
Questnet are used when conducting a litigation search. Not only is it troublesome to visit so many
sources, it is also confusing as users need to familiarise themselves with many different interfaces.
Moreover, each source charges a fee per use, increasing the costs borne by lawyers and clients.
Additionally, the information in third-party databases may be outdated, since they retrieve their data
from the official sources only on a periodic (e.g. quarterly) basis. Finally, there is a risk that
information from third-party sources may be erroneous or otherwise unreliable.
Pain Points of Current System Benefits of REC-I
Data stored in multiple systems with varying
user interfaces
Information is consolidated and intuitively
organised
Users pay a fee per use, per search Cheaper/potentially free for users
Third-party databases are updated periodically Always up-to-date
Results displayed by third-party databases may
not be accurate
Data comes directly from official sources
To resolve this, we propose creating a single portal which utilises blockchain technology to record
the information. The blockchain is a permissioned one: only approved parties will be able to upload
information onto the blockchain, while members of the public – such as buyers, sellers, and banks –
can view the data, but cannot modify it. The aforementioned approved parties consist of these
government-affiliated organisations:
(a) SLA INLIS, providing title and encumbrance searches;
(b) SLA MyProperty, providing basic information about the property;
(c) MinLaw's Insolvency & Public Trustee's Office, providing bankruptcy records;
(d) E-litigation, providing litigation records; and
(e) InteReq, providing legal requisitions.
17
The SLA will be the operator of the blockchain, giving them the authority to decide which parties
have the permission to add information onto the blockchain. This allows the SLA to adapt to any
future changes in the database providers (e.g. if a new database provider enters the market) or if an
existing database provider has been compromised.
The platform will be supported by a user-friendly interface, as demonstrated below.
Homepage
CorpPass credentials are
required for log-in. This
promotes interoperability as
many of the existing databases
require CorpPass credentials.
Search Page
The page is optimised for
simplicity. Generally, the
information that users need can
be divided into two categories:
information about (1) the
buyer/seller, and (2) the
property.
Individual Search Results
At the top, the page segregates
information neatly into two tabs.
Under the “Individual” tab,
there is a sidebar that users can
click on to display the desired
information.
18
Property Search Results
The layout for the “Property”
tab is similar to that of the
“Individual” tab.
(1) Limitations
REC-I will require participation from many government
agencies, but data-sharing between agencies continues to
pose administrative difficulties. However, the long-term
benefits outweigh the costs of co-operation between
agencies. Additionally, initiatives such as the Public Sector
(Governance) Bill44 already seek to encourage secure data
flow across agencies.
Further, some information may not be placed on the blockchain. For instance, law
firms conduct know-your-client and anti-money laundering checks before they agree
to work for a client. These require information from non-government institutions
who may not have the capacity to be a node on the REC-I blockchain. Another
example would be requisitions from condominium management committees
(“MCs”). While some MCs use InteReq’s online legal requisition services, many
MCs do not even have an online presence. It would be cost-prohibitive to force all
MCs to join the REC-I blockchain.
44 Public Service Division, Prime Minister’s Office, “Media Factsheet on the Public Sector (Governance) Bill” (8
January 2018)
<http://www.nas.gov.sg/archivesonline/data/pdfdoc/20180108011/Media%20factsheet%20on%20the%20Public%20Se
ctor%20-%20Governance-%20Bill.pdf> (accessed 6 April 2019).
19
B. SECURE Workflow Blockchain
Apart from REC-I, a transaction workflow blockchain, SECURE, is also proposed to enhance the
speed and ease of conveyancing property. By moving the transaction onto the blockchain, costs can
be reduced and risks lowered by eliminating:
(a) the need for repeated title and bankruptcy checks,
(b) the need for manual in-person submission of documents,
(c) the payment of the monies to the various parties, and
(d) the risk of transferring money without title being obtained.
The SECURE platform is powered by semi-private blockchain. Thus, the public will be able to
perform conveyancing transactions on the blockchain. However, only a consortium of trusted parties
will be nodes in the blockchain with permissions to modify the blockchain. These parties will include,
inter alia, the SLA, partner banks, and the judiciary.
(1) Offline OTP
The first step of the conveyancing process starts with the issuance of the OTP. We propose that this
part of the process remains offline, due to the need to involve lawyers when negotiations are likely to
take place regarding the terms of sale, price, and the duration that the OTP is to be valid for.
(2) Creation of Offer on the Blockchain
Once the parties are in broad agreement, the seller will create a digital OTP on SECURE by
entering key details of the transaction (i.e. parties’ names, property information and price).
20
SECURE will then verify that the seller has good title and that there are no other outstanding OTPs
issued for the same property. This prevents the problem of “double spending” in the context of
conveyancing transactions. Furthermore, a digitised copy of the OTP contract will also be hashed and
placed onto the blockchain. This prevents any party from unilaterally modifying the terms of the
contract and reduces the risk of forgery and fraud.
The OTP will be placed on a private segment of the blockchain, ensuring that only the potential buyer
is able to view the OTP. The potential buyer will then be able to accept the OTP by paying the option
fee on SECURE.
(3) SECURE’s Payment System: Escrow Bank Account
All payments on SECURE will be made by way of an escrow bank account that is controlled by a
smart contract. This bank account is likely to be set up by the SLA. However, the funds in the account
can only be accessed and moved by the smart contract.
In the past, conveyancing monies were deposited with lawyers into a client account. However, this
allowed fraudulent lawyers to easily abscond with client monies. Now, modern conveyancing practice
requires lawyers to open specialised conveyancing (“CVY”) accounts for conveyancing monies to be
deposited in, reducing the likelihood of fraud. Nonetheless, these CVY accounts are costly and the
handling of conveyancing monies are governed by detailed rules.45
45 Conveyancing and Law of Property (Conveyancing) Rules 2011 (No. S 391) rule 5(1)(b). See also rule 2, which
equates a “conveyancing account” with a CVY account.
21
On the SECURE platform, only the smart contract has control over the deposits in the bank account.
This significantly reduces the likelihood of fraud and misappropriation. Furthermore, SECURE can
put into place specific requirements that must be fulfilled before funds are disbursed to the seller’s
bank account.
For example, at the stage of the issuance of OTP, once the smart contract receives the option fee from
the buyer, it is able to ensure that the offer for the OTP is still valid and that the seller still has good
title to the property. Once the relevant nodes have verified that these requirements are fulfilled, the
smart contract will disburse the funds to the seller. Updates will then be made to the public REC-I
blockchain, so that “the world” is made aware of the transaction.
Conversely, if the smart contract is unable to verify that the seller still has good title, the buyer's
money will remain in the escrow account. The buyer will then have the option to withdraw his/her
money. Thus, the buyer’s funds are protected at all times.
(4) Obtaining Financing and Execution of OTP
At this stage of the conveyancing transaction, the buyer and seller will negotiate the precise terms of
the sale and purchase of the property. Once the terms of this agreement are finalised, a tamperproof
copy will be placed onto the blockchain.
The buyer will also usually seek financing options (e.g. bank loan, CPF money) to fund the purchase
of the property, rather than pay in cash. Based on practitioners in the field, this phase of the
conveyancing is usually time-consuming. This is because (1) the buyer needs to apply to multiple
banks, using essentially the same information; and (2) upon receiving the application, the various
banks have to perform their own due diligence and research before offering a quote. We believe that
SECURE is able to increase the efficiency in this phase of the transaction.
SECURE may act as a centralised platform for the buyer to request and accept loans quotes from
various banks. The platform itself already has the pertinent information of the buyer and the
property from the OTP, reducing duplicate paperwork.
22
Further necessary information such as the buyer’s credit history, personal information, outstanding
loans and CPF balance can then be obtained by pinging various agencies and placing the information
on a private segment of the blockchain.46 The buyer will then grant access to the information to the
banks he wishes to obtain quotes from.
The various banks with all the necessary information in the blockchain are then able to expediently
calculate the terms of loan that they are willing to offer.
46 Private information is a common feature amongst permissioned blockchains. See “Channels”, Hyperledger Fabric
<https://hyperledger-fabric.readthedocs.io/en/release-1.4/channels.html> (accessed 7 April 2019).
Banks' Offers
The banks' offers will be
collated and presented to
the buyer so that he may
compare the suitability of
the various offers.
23
After the buyer selects a bank and accepts the bank’s terms, the agreement is signed and placed onto
the blockchain, together with information of the charge that the bank is expected to obtain. This
allows for auditing and the automatic creation of the charge once the conveyancing transaction is
completed.
Having obtained financing for the purchase, the buyer may then exercise his/her OTP by paying the
balance deposit through the SECURE escrow system. The smart contract once again verifies that
there have been no changes to the seller’s title. Once verified by the relevant nodes, the exercise
money is disbursed to the seller, together with an automatic caveat lodged on behalf of the buyer over
the property. This simultaneous transfer of funds and lodging of caveat ensures that the buyer’s
money is protected at all times.
The centralisation of financing for the buyer brings about gains in efficiency through the reduction of
duplicate paperwork. Moreover, as the transaction is taking place on the SECURE platform, the banks
are assured that the seller has good title, such that any eventual security interest they have in the
property will also be good.
Furthermore, the digitised and decentralised nature of SECURE allows banks to tap into the
information to continually innovate themselves.47 For example, one can imagine that through the
increased digitisation of relevant information, banks can begin to harness artificial intelligence to
automatically offer quotes to the buyer, reducing turnaround times for buyers to obtain a quote. The
increased ease of obtaining financing quotes from various banks also allows buyers to seek out the
best available terms. This increase in market efficiency may further reduce the cost of obtaining
financing for buyers.
(5) Legal Requisitions and Discharge of Charge
After the execution of the OTP, the parties’ lawyers will then rely on the REC-I platform to perform
the necessary due diligence. The consolidation of information reduces duplicate data entry and costs
associated with obtaining information the seller and buyers.
The discharge of the existing charge over the property will have to be obtained from the seller’s bank.
The seller’s bank can be made privy to the information on the blockchain such that they may verify
47 Mr Wee shared that a decentralised blockchain can allow for quicker innovation by various players in the ecosystem,
and we found his idea of a centralised platform for purchasers to obtain loans highly interesting.
24
the details of the conveyancing transaction. This is relevant for the bank to determine if the sale price
is sufficient to discharge the balance of the loan. The seller’s bank may then sign off on the discharge
of its charge on the property, subject to the repayment of the loan balance. This sign-off is securely
placed on the blockchain for use during the completion process.
At this point, parties are ready to complete the transfer of the property and the payment facility for
completion will be opened.
(6) Completion
Both the buyer and the financing bank will transfer funds into the SECURE escrow account. The
smart contract will then verify that all required steps have been completed (e.g. legal requisitions and
discharge of the existing charge). Most importantly, it will verify again that title still resides with the
seller. Once verified, the smart contract will disburse funds to all the relevant parties such as the
seller’s bank, the Inland Revenue Authority of Singapore (“IRAS”), the SLA and the seller himself.
Simultaneously, the SLA will be notified of the completed conveyancing transaction, leading to the
change of ownership and the creation of a new charge in favour of the buyer’s bank. Similar to earlier
transactions, the simultaneous nature of the transfers ensures that monies are not disbursed without
the buyer obtaining his property. The conveyancing transaction is thus complete, together with an
auditable record of all the steps and documents in the process.
What does SECURE automate/streamline?
Automatic verification of title Smart and secure escrow account
Speedy collation of loan offers Automatic creation of caveats
25
LEGAL CHALLENGES &
SOLUTIONS
26
In the bid to improve Singapore’s conveyancing process, certain legal challenges may arise. This
paper focuses on four key concerns: (1) contract law; (2) statutory formalities; (3) allocation of
liability; and (4) data protection laws.
A. Contract Law
(1) Ambiguity
While the code in a smart contract is necessarily black-and-white,48 contracting parties often desire
“wriggle room” in their contractual terms. They may use inherently ambiguous language (e.g. “bona
fide” or “reasonable”), which cannot be reduced to code.
Figure 6: Example of common terms in a sale-and-purchase agreement which cannot be codified due to the ambiguous
portions highlighted in bold.49
Hence, for the foreseeable future, it is not possible for a smart contract to contain a whole OTP or
sale-and-purchase agreement. Only key and clearly-defined contractual terms will be executed by the
smart contracts.
(2) Conflict between Natural Language Contract and Smart Contract
The smart contracts in SECURE do not replace a natural language contract.50 Instead, they merely
automate certain aspects of the parties’ agreement. As such, any smart contract will need an
underlying natural language contract.
Unfortunately, this creates a risk that the terms of the natural language contract might conflict with
those of the smart contract. For example, parties may state on paper that the option fee is “1% of the
48 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018) at p 24. 49 The example was extracted from the LawOnline Singapore website at <http://lawonline.com.sg/forms/> (accessed 6
April 2019). 50 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018) at p 23.
IV. LEGAL CHALLENGES & SOLUTIONS
“Before delivering vacant possession of the Property to the Purchaser, the Vendor must ensure
that the Property has been completed so as to be fit for occupation and must remove all
surplus material and rubbish from the Property.”
27
purchase price”, but state in the smart contract that the fee is “1% of $2 million”. What happens if
the seller decides to increase the purchase price beyond $2 million? The buyer would probably pay
only $20,000 into the escrow, thereby automatically receiving an option despite the seller’s protests.
Currently, how the courts will deal with such scenarios is uncertain, given
the lack of legal guidance. To eliminate this uncertainty, parties should
utilise a hierarchy of precedence clause. This clause would clarify that the
natural language document should prevail over the smart contract in the
event of any inconsistencies. This is an ideal solution as the effectiveness
of these clauses have been tried-and-tested in local courts.51
Even without a hierarchy clause, a court might find an implied term that the
natural language contract should take precedence. To prove that the term
exists, parties need to show that (1) they did not address their minds to the
lack of a hierarchy of precedence clause; (2) the term is necessary for
business efficacy; and (3) the parties would have responded “Oh, of
course!” if the proposed term had been put to them at time of the contract.52
However, it is uncertain whether the court will imply the term, since the
exercise depends on the facts and the threshold of necessity is high.53
Even if the court does not imply a term, parties could argue that the facts
are analogous to the issue of conflicting documents in an agreement. Two
situations could arise:
(a) If the conflict cannot be reconciled, the court will prefer the more
specific term over a general one; or
(b) If the conflict can be reconciled, the court will try its best to reconcile
the terms.54
In situation (a), the natural language contract would probably prevail as it is more specific than the
smart contract. For the natural language contract, parties have carefully negotiated its terms and added
in details such as ambiguous clauses. In comparison, the smart contract is pre-programmed by
51 See for example: The“Inai Selasih” (ex “Geopotes X”) [2005] 4 SLR(R) 1 at [18]. 52 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 at [101]. 53 Id, at [100]. 54 Sintalow Hardware Pte Ltd v OSK Engineering Pte Ltd [2017] 2 SLR 372 at [53]–[55].
3. Conflicting Documents
1. Hierarchy
of Precedence
2. Implied Terms
28
SECURE and is only concerned with executing a few key provisions. Therefore, it is likely that the
natural language contract will prevail.
In situation (b), parties risk a re-interpretation of their obligations. Using the example of an option
fee expressed as “1% of $2 million” versus “1% of the purchase price”, the court might find that
parties intended for the purchase price to be fixed at $2 million, even though such a constraint is not
expressly stated in the natural language contract.
(3) Voidability
Courts may declare a contract voidable or void ab initio
under certain circumstances. For instance, parties may
have lacked mental capacity at the time of contracting.55
Alternatively, parties may have been under undue
influence. 56 These are vitiating factors that a smart
contract platform can neither detect nor avoid. Upon
declaring a contract void, parties need to be restored to
a position as if the contract had never existed.
Unfortunately, transactions recorded in a blockchain are practically immutable and cannot be
“deleted”.
Although the transaction cannot be deleted, courts can enforce their judgment by adding a block that
essentially nullifies the previous transaction. For example, if a sale-and-purchase agreement is
declared void, the new block would reassign ownership back to the seller.
55 See for example: Woo Swee Har v Yeo Boon Kim [1991] 1 SLR(R) 637, where the transaction was set aside as the
seller had lacked mental capacity. 56 See for example: Che Som bte Yip v Maha Pte Ltd [1989] 2 SLR(R) 60, where a mortgage deed was set aside on the
grounds that the mortgagor had been acting under undue influence.
29
B. Formalities
(1) Recognition of Blockchain Records by the SLA
Presently, several documents only require electronic lodgement, for
instance, documents for the lodgement of caveats.57 However, both
electronic and physical lodgement are required for documents such
as charge documents and documents for the registration of title.
“Wet” signatures are still required on physical documents.
The SECURE platform dispenses with the need for both physical and electronic lodgement. Instead,
the blockchain records form a reliable trail of the entire conveyancing process. Thus, the SLA can
rely on the blockchain records in place of the forms which are presently approved for physical or
electronic lodgement. This would eliminate the energy- and time-consuming process of physical
lodgements, and streamlines the lodgement of all necessary forms with the SLA.
As a result, the Registrar should consider recognising SECURE's blockchain records as an approved
form of an instrument intended to affect registered land, pursuant to s 51(1) of the Land Titles Act.58
Additionally, the requirement for either physical or electronic lodgement of forms can be gradually
phased out as the SECURE platform achieves more widespread use.
(2) Enforceability and Digital Signatures
Section 6(d) of the Civil Law Act requires a conveyancing agreement to be signed and in writing in
order for it to be enforceable.59 The SECURE system utilises digital signatures at each stage to ensure
that only the right parties who are involved at the respective stages can read and write on the platform,
as well as to automate aspects of a conveyancing agreement. Digital signatures are a type of electronic
signature which provides an additional security layer through asymmetric cryptographic systems.60
A question therefore arises: does a digital signature satisfy the requirements under s 6(d)?
57 Land Titles Act (Cap 157, 2004 Rev Ed) s 57(3)(d); Land Titles Rules (G.N. No. S 40/1994, 1999 Rev Ed) rule 15A;
and Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 6. 58 Land Titles Act (Cap 157, 2004 Rev Ed) s 5(1). 59 Civil Law Act (Cap 43) Rev Ed 1999 s 6(d). 60 Electronic Transactions Act (Cap 88, 2011 Rev Ed) s 1(1), Third Schedule.
30
At first glance, it appears as if they are sufficient, since s 8 of the Electronic Transactions Act (“ETA”)
states that electronic signatures can satisfy the legal requirement for documents to be “signed".61
However, conveyancing agreements are excluded from the application of s 8 by operation of the First
Schedule.62 Thus, electronic signatures have yet to be legislatively recognised as sufficient for the
formalities requirements of conveyancing contracts.
Despite this, the High Court in SM Integrated Transware v Schenker Singapore63 has held that
electronic signatures can fulfil the requirements of s 6(d).64 In this vein, since digital signatures are a
type of electronic signature, digital signatures could arguably be recognised for this purpose too.
Nevertheless, to accord greater certainty to the status of digital signatures, they should be given
legislative recognition in the context of the enforceability of conveyancing agreements. We propose
that the First Schedule of the ETA be modified to remove the exclusion of contracts for the sale of
immovable property. Following this, since digital signatures would meet the requirements under s 8,
conveyancing agreements signed digitally on the SECURE platform would be enforceable.
Concerns may arise over (1) the security and (2) the
cautionary effect of an electronic signature. Given the
high value of conveyancing agreements, one might be
wary of replacing “wet” signatures with electronic
signatures. However, such concerns can be alleviated.
First, the SECURE platform can caution users
whenever they are entering into an enforceable
agreement using, for instance, a pop-up notification. Second, digital signatures are likely to be more
secure than "wet" signatures. This is because "wet" signatures are easy to forge, whereas digital
signatures use keys that allow for an individual's identity to be reliably ascertained. Moreover, they
are explicitly recognised as a secure electronic signature under the ETA.65
61 Electronic Transactions Act (Cap 88, 2011 Rev Ed) ss 7 and 8. 62 Electronic Transactions Act (Cap 88, 2011 Rev Ed) First Schedule. 63 SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd [2005] SGHC 58. 64 Id, at [91]. 65 Electronic Transactions Act (Cap 88, 2011 Rev Ed) s 3.
31
C. Liability
In the event of programming errors resulting in any malfunctions of the REC-I and SECURE
platforms, the issue of who should take up liability arises. Ordinarily, affected users would directly
sue the programmers; however, this would hamper the adoption of the platform, as users would balk
at incurring heavy legal fees to obtain compensation for losses caused by someone else.
We propose that the SLA’s Assurance Fund66 can be
tapped into for the purposes of compensation, but the
SLA would retain a contractual right to require
contribution from the software developer up to a limit
of the overall contract price (which may be further
raised or reduced, depending on what the SLA deems
appropriate). Currently, the Assurance Fund is
maintained through a proportion of fees incrementally collected by the Registrar of Titles.67 It is
acknowledged that drawing from the fund to compensate users may severely drain the reserve if there
are losses suffered with respect to high-value properties. However, unless the SLA bears some risk,
it is unlikely that any software development company would agree to create the platforms in the first
place. Allowing the software developer to limit its risk will help the SLA get the projects off the
ground, and reap long-term rewards in the form of enhanced efficiency, security, and innovativeness.
Moreover, post-transition, the platform could ultimately reduce the risk of the Registrar committing
a mistake or misfeasance, since it eliminates the need for physical lodgement of forms. Finally, the
SLA should rigorously test each platforms’ software during the pilot stage.
To put this solution into effect, we recommend that the statutory grounds for claims for compensation
– which currently include the sustaining of loss through the Registrar’s mistake, omission or
misfeasance68 – be legislatively expanded to include programming errors in REC-I and SECURE.
66 Land Titles Act (Cap 157, 2004 Rev Ed) s 151. 67 “Ch. 29 Land Law” Singapore Law Watch (6 July 2018) <https://www.singaporelawwatch.sg/Headlines/ch-29-land-
law> (accessed 8 April 2019) at para 29.7.6. 68 Land Titles Act (Cap 157, 2004 Rev Ed) s 155.
32
D. Data Protection Laws
Singapore’s data protection regime comprises the Personal
Data Protection Act 2012 69 (“PDPA”) and sectorial
regulations.70 The PDPA requires organisations71 to comply
with nine core obligations 72 when they collect, use and
disclosure personal data, unless they are excluded from the
PDPA73 or fall under one of the prescribed exceptions.74
Although sectorial regulations exist, this paper will focus on the PDPA as it sets the baseline standard
for data governance, and SECURE's users will be from different industries and sectors.
(1) Extent of PDPA’s Application
One preliminary point is the extent of the PDPA’s applicability to SECURE. In this regard, we have
to ascertain which kinds of data and which participants are regulated under the PDPA.
First, the PDPA regulates “personal data”. As "personal data" is broadly defined,75 it likely includes
most of the data in the transactions on SECURE will constitute “personal data”. For example, the
parties' names, a residential property address, and bank account details are probably personal data.
69 Personal Data Protection Act 2012 (No. 26 of 2012) (“PDPA”). 70 Examples of sector-specific regulations include the Monetary Authority of Singapore Notice 644 on Technology Risk
Management and the Monetary Authority of Singapore Notice CMG-N02 on Technology Risk Management. Where the
provisions of the PDPA are inconsistent with the sector-specific regulatory instruments, the latter will prevail: Personal
Data Protection Act 2012 (No. 26 of 2012) s 4(6)(b). 71 “Organisation” is defined in PDPA s 2 to include “any individual, company, association or body of persons, corporate
or unincorporated, whether or not: (a) formed or recognised under the law of Singapore; or (b) resident, or having an
office or a place of business, in Singapore”. 72 Parts III to VI of the PDPA address the substantive part of personal data protection (the “Data Protection
Provisions”). The other Parts concern other matters such as the Do Not Call Registry and appeals to court. 73 The Data Protection Provisions do not apply to individuals acting in personal or domestic capacity, employees acting
in the course of employment and public agencies or their agents: PDPA, s 4(1)(a)–(c). 74 Exceptions to the Data Protection Provisions are stipulated in the Second Schedule to the Sixth Schedule of the
PDPA. 75 “Personal data” is defined in PDPA s 2 as “data, whether true or not, about an individual who can be identified: (a)
from that data; or (b) from that data and other information to which the organisation has or is likely to have access”.
By virtue of limb (b), since the participants is likely hold information that would aid in identifying an individual,
transactions will likely involve the collection, use and disclosure of personal data. For example, a postal code
identifying the property of a seller may not constitute personal data per se. However, a participant on the platform
would likely have access to a database which could identify the seller by executing a search with that postal code. See
also Re Credit Counselling Singapore [2017] SGPDPC 18, at [8]–[10], which decided that data such as email addresses
could constitute personal data.
33
Next, the SLA, 76 individuals acting in a personal or domestic capacity, 77 and employees 78 are
excluded from compliance. However, other participants, such as banks and law firms, will have to
comply with the PDPA. These users should consider the following issues when creating their platform
(“the Organisation’s Platform”) to connect to SECURE.
(2) Clarifications and Technical Requirements for Compliance with the PDPA
While the PDPA imposes nine core obligations (subject to exemptions) on organisations, we will
focus on the (1) consent, notification and purpose limitation obligations; (2) correction and retention
limitation obligation; and (3) protection obligation, which are the most likely to pose difficulties.
First, organisations must notify79 the data subject of the purpose80 of their
collection, use and disclosure of his personal data, and obtain his/her
consent. 81 Therefore, the Organisation’s Platform should contain
mechanisms to bring notice of the relevant purposes and obtain consent
from the transacting individuals when collecting their personal data, as
well as before using or disclosing such data to another participant on
SECURE.82 This requirement should not be difficult to fulfil since existing
solutions, such as R3's Corda, have such a feature.83
Second, the correction and retention limitation obligations require organisations to alter or dispose of
personal data in certain situations, which may be an obstacle given blockchain technology’s
tamperproof editable trail.
76 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(c), read with Personal Data Protection (Statutory Bodies)
Notification 2013 para 2. 77 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(a). 78 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(b). 79 Personal Data Protection Act 2012 (No. 26 of 2012) s 20(1)–(2). 80 Id, s 18. 81 Id, ss 13 and 14(1). 82 Personal Data Protection Act 2012 (No. 26 of 2012) s 18 provides that the collection, use and disclosure of personal
data must be pursuant to a purpose notified to the individual and that purpose must be one which a reasonable person
would consider appropriate in the circumstances. Therefore, there would be no need for a mortgagee-bank to disclose
the financial information of a mortgagor-individual to another bank which is not participating in this particular
transaction. 83 Mike Hearn, “Corda: A Distributed Ledger” (29 November 2016) at p 51. Corda is said to be privacy-preserving and
does not broadcast transactions throughout the network but rather, it transmits the relevant data only to participants that
need to acquire such data to carry out their transactions.
1. Consent,
Notification & Purpose Limitation
34
Regarding the correction obligation,84 we propose that instead of deleting an
existing record, one could create a mechanism where the older record is
flagged as invalid and a newer, updated record would be created to take its
place.85
However, complying with the retention limitation obligation86 may be less
straightforward. It has been suggested that compliance with this obligation
can be met by destroying the private keys used for decrypting the personal data
stored on the ledger, as that would amount to removing the means by which the personal data can be
associated with the individual.87 However, it is unclear whether, in practice, there is a unique private
key for every transaction or whether a private key is used for multiple transactions. Where there is a
high volume of transactions, it may not be practicable for an organisation to have a unique private
key for every transaction.
In this case, it is suggested that instead of destroying the private key, the Organisation’s Platform
could be designed as follows: A time limit is set for the transaction to be completed and this limit is
communicated to the data subject during the collection of personal data. When the time limit is
reached, the organisation can no longer access the personal data on the application layer, unless the
data subject consents to an extension of the limit. The personal data may still exist in the foundation
layer. However, the means of associating the personal data with the data subject is removed at the
application layer. A subsequent unauthorised attempt to access the personal data at the foundation
layer would then render the organisation in breach of the retention limitation obligation.
Notwithstanding the above suggestion, it would be desirable for guidelines to be issued by the PDPC
or the SLA to clarify how organisations may comply with the retention limitation obligation.
84 Personal Data Protection Act 2012 (No. 26 of 2012) s 22. Broadly speaking, the correction obligation allows the data
subject to request for his personal data held by the organisation to be corrected. The organisation must correct the
personal data as soon as practicable if it is satisfied that a correction should be made. However, where the organisation
feels that a correction should not be made, it should annotate that a request has been made but no correction was
effected. 85 Yeong Zee Kin, “Blockchain Records Under Singapore Law” Law Gazette (September 2018)
<https://lawgazette.com.sg/feature/blockchain-records-under-singapore-law> (accessed 06 April 2019). 86 Personal Data Protection Act 2012 (No. 26 of 2012) s 25. The retention limitation obligation requires the organisation
to cease retaining documents containing personal data or to remove the means by which personal data can be associated
with the data subject once there is no longer a purpose of retaining the personal data and there is no longer any legal or
business purpose for that retention. 87 Supra n 85.
2. Correction &
Retention Limitation
35
Third, organisations need to protect personal data in their possession with “reasonable security
arrangements”.88 Blockchain technology is often claimed to be more secure
than traditional database technologies.89 However, in the event of a data
breach that results in the unauthorised disclosure of personal data on
the Organisation’s Platform, the question of whether the organisation
has complied with the protection obligation is highly context-specific.
For example, there may be programming vulnerabilities in the
Organisation’s Platform.90 In addition, non-technical weaknesses, such
as the lack of enforcement of security policies or of adherence to reporting
procedures,91 may found a breach of the protection obligation. It is unlikely that the use of blockchain
technology per se will allow organisations to satisfy the protection obligation. Thus, they should be
wary of technical and non-technical weaknesses.
88 Personal Data Protection Act 2012 (No. 26 of 2012) s 24. 89 Nir Kshetri, “Blockchain’s Roles in Strengthening Cybersecurity and Protecting Privacy” Telecommunications Policy
2017; 41: 1027–1038. This paper argues that blockchain technology offers greater security than cloud computing
technology and that blockchain could be a “nightmare for cybercriminals, data manipulators and others who mishandle
personal data”. See also: Dylan Yaga, Peter Mell, Nik Roby & Karen Scarfone, “Blockchain Technology Overview”
National Institute of Standards and Technology Internal Report 8202 (October 2018)
<https://nvlpubs.nist.gov/nistpubs/ir/2018/NIST.IR.8202.pdf> at 37–38 (accessed 06 April 2019), which emphasises
that the enhanced security promised by blockchain technology takes effect only after the transaction is committed to the
ledger. Prior to such confirmation, transactions are vulnerable to network-based attacks, such as denial of service
attacks and zero-day attacks, and programming errors. 90 Numerous reports have revealed the prominence of security concerns in blockchain platforms. See for example: Ana
Alexandre, “Report: Over 40 Bugs in Blockchain and Crypto Platforms Detected Over Past 30 Days” (14 March 2019)
Cointelegraph <https://cointelegraph.com/news/ripple-co-founder-gives-25-million-donation-in-xrp-to-san-francisco-
university> (accessed 06 April 2019). See also: Vincent Chia, Pieter Hartel, Qingze Hum, Sebastian Ma, Georgios
Piliouras, Daniel Reijsbergen, Mark van Staalduinen & Pawel Szalachowski, “Rethinking Blockchain Security: Position
Paper” (12 June 2018) <https://arxiv.org/pdf/1806.04358.pdf> (accessed 06 April 2019), which identifies smart
contracts as the main source of security concerns, beyond cybersecurity incidents arising due to inadequate operations
security measures. 91 See for example: Re Singapore Health Services Pte Ltd and Integrated Health Information Systems Pte Ltd [2019]
SGPDPC 3, where two organisations were found in breach of the protection obligation, notwithstanding the fact that the
data breach in question was caused by a highly skilled and sophisticated perpetrator, due to reasons such as poor staff
awareness of the policies in place and the lack of timely incident reporting.
3. Protection
36
EVALUATION &
IMPLEMENTATION
37
This section makes two main observations on
our proposed solution – namely, that there is a
need for trust, and that the proposed solutions
are limited to less complex transactions.
A. Need for Trust
Despite remarks about the earlier variants of
blockchains being “trustless” (i.e. parties only
need to trust the code and not humans),92 parties
necessarily need to have trust in the
government, programmers, and participants, in
order for our proposed solution to be effective.
Firstly, since the government will provide key
information on REC-I to enable transactions on
SECURE, parties need to trust that the
information provided is accurate.
Secondly, given the high degree of dependence
on code, there is a need to trust that REC-I,
SECURE and the smart contracts created on
them are, to the greatest extent, practicable and
free from programming errors.
Thirdly, there must be trust in the participants
to not collude and act maliciously (e.g. by
intentionally providing false information). In
this regard, blockchain technology does not
guarantee the correctness of the information
input into the platform, but merely ensures the
integrity of that information through an
auditable trail.93
B. Limited to Less Complex
Transactions
Clauses commonly found in complicated
contracts, such as frustration clauses or
ambiguous language, can possibly be coded into
smart contract in the near future. 94 For the
present, our proposed solution will be limited to
less complex transactions, where most parts can
automated by smart contracts.
92 Jean Bacon, Johan David Michels, Christopher
Millard & Jatinder Singh, “Blockchain Demystified: A
Technical and Legal Introduction to Distributed and
Centralised Ledgers” [2018] Richmond Journal of Law
& Technology 1, at para 7. “Trustlessness” is more
commonly used to describe permissionless blockchains,
such as Bitcoin and Ethereum, where parties transact
using pseudonyms and rely primarily on consensus
protocols, rather than trust in an intermediary or a
transacting party, to validate transactions.
93 See generally: Victoria Louise Lemieux, “Trusting
Records: Is Blockchain Technology the Answer?”
Records Management Journal 2016; 26(2): 110–139. 94 See for example: Legalese website,
<https://legalese.com/aboutus.html> (accessed 06 April
2019). Legalese is a legal technology startup which is
attempting a create a domain-specific language for law.
If successful, the language, L4, will be able to capture
legal semantics and logic, allowing legal documents to
be coded in the same manner as it is drafted.
V. EVALUATION
38
We envision the implementation to be carried out in three phases:
In the first phase, pilot testing of REC-I and SECURE should be carried out in a closed
environment among stakeholders, before expanding the programme to a select group of
transactions, such as transactions in a new property launch. Public consultation should
then be carried out to understand the concerns of existing stakeholders when migrating
to the platform. Having gathered the feedback, the public can be educated on the
platform and the underlying technology.
The next phase will involve amending aforementioned legislation to enact
changes with regard to complying with formalities, enforceability of digital
signatures, as well as allocation of liability.
The last phase will see a gradual extension of the platform from
the select group of pilot transactions to all private property
transactions. Subsequently, it can be extended to HDB
property transactions, as well as non-residential property and
transactions involving testamentary instruments.
VI. IMPLEMENTATION
39
In conclusion, the current state of conveyancing in Singapore provides ample room for improvement.
We believe that the blockchain has vast potential to revolutionise conveyancing practice in Singapore
to increase efficiency and security. The REC-I and SECURE platform can reduce the costs, time and
risk of fraud in the conveyancing sector. Nonetheless, such a shift must be supported by changes and
clarifications to the law of contract, property and data protection to create confidence in the new
system. This confidence is further developed through a phase-by-phase implementation of the
platforms to ensure the concerns of all stakeholders within the conveyancing ecosystem are heard and
addressed, before the expansion of the platform.
VII. CONCLUSION
Word Count: 6,944