8 Record retention

122 IN ECOM 1 submissions were sought as to whether New Zealand should adopt article 10 of the Model Law. Article 10(1) provides that: “Where the law requires that certain documents, records or information be retained that requirement is met by retaining data messages . . .”. Article 10 is facilitative. It does not require records to be kept in electronic form; it allows them to be retained in that form if persons choose to do so. An advantage of enacting an equivalent to article 10 is that it would apply across the board, avoiding the need to amend every piece of legislation pertaining to record keeping. This approach reflects the reality that many businesses and government departments keep records, in electronic form, and that recent legislation allows this to be done.²²⁸

123 Article 8, which deals with “original information”, is also relevant as some statutes require the presentation or production of “originals”, other than for evidential purposes. The Evidence Code will resolve issues involving the admissibility of electronically generated information as evidence in a court proceeding.²²⁹

Requirements for “originals” in New Zealand legislation

124 There are various provisions in legislation which impose requirements for supplying, depositing, and receiving original documents. With the exception of the Insurance Companies’ Deposits Act 1953, the Insolvency Act 1967, the Income Tax Act 1994, the Patents Amendment Act 1992, and the Archives Act 1957, all of these provisions contemplate that the requirements can be fulfilled in respect of copies of the documents, as long as these are properly certified in accordance with the particular statute.

Examples

The Arbitration Act 1996, Schedule 1 article 35(2) provides that the party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy.²³⁰
The Archives Act 1957 section 9 provides that where any public archive or public record is in the possession of any person other than a government office, and the original of that archive or record is not in the possession of any government office, that person shall deposit that archive or record in the National Archives.
Regarding the admissibility of banking records, section 47B of the Evidence Act 1908 provides inter alia that where a record is of information recorded or stored in written form, that the copy has been compared with the original entry or with a copy made in accordance with section 156A (4) of the Reserve Bank of New Zealand Act 1989 and is correct.
Under the Goods and Services Tax Act 1985 section 24(1) a supplier must provide the recipient at his/her request with a tax invoice, and if the supplier claims to have lost the original tax invoice, s/he may provide a copy marked “copy only”. The same applies in section 25(3) in respect of credit notes.
Under the Hire Purchase Act 1971 section 7(1)(d) a copy of the hire purchase agreement marked “Purchaser to keep this copy” shall be given to the purchaser at the same time as the original is given for execution, if the purchaser executes the agreement on a day later than the other party.
Section NF11(6) of the Income Tax Act 1994 provides that anyone who is required to deliver up a certificate of exemption must deliver up all original copies issued to them by the Commissioner.
Section 127(4)(a) of the Insolvency Act 1967 provides a bankrupt is deemed not to have kept a proper record of transactions if s/he has not preserved a record of all goods purchased in the course of business, duly supported by original invoices.
Section 16(7) of the Insurance Companies’ Deposits Act 1953 requires the original of each annual statement to be signed by the auditor and so on.
Sections 58 and 62 of the Partnership Act 1908 provide that in cases of renewal or dissolution of a partnership, a certificate must be signed in a like manner as the original certificate.
The Patents Amendment Act 1992 enacts the Patents Co-operation Treaty, rule 92.4(d) of which provides any national Office or intergovernmental organisation may require the original of any document transmitted by telegraph, teleprinter, facsimile or other like means of communication producing a printed or written document to be furnished within 14 days of the earlier transmission.
Section 152(4) of the Tax Administration Act 1994 provides that where the original of a record is in the custody or control of the record holder, a copy shall be admissible in evidence, provided that proof that it is a correct copy is given by someone who has examined the original record. Section 152(5) provides that where the record holder does not hold the original but only a purported copy, a copy of that copy may be admissible if the purported copy was made in the regular course of business and the copy of that copy is correct (both of which must be proved).

125 In addition many statutes provide that in legal proceedings copies of documents shall be admissible in evidence as of equal validity with an original document. These copies must also be certified in accordance with the requirements for each statute. For example, section 29 of the Charitable Trusts Act 1957 requires copies or extracts to be certified under the hand and seal of the Registrar of Incorporated Societies.²³¹

Statutory requirements for record keeping

126 As noted in ECom 1,²³² statutory requirements for record keeping are numerous. Company and tax legislation generally require records to be retained for at least seven years, and there are penalties for non-compliance.²³³ For example, section 190 of the Companies Act 1993 permits records to be kept in written form or “. . . in a form or in a manner that allows the documents and information that comprise the records to be easily accessible and convertible into written form”. The company must also ensure that adequate measures are in place to prevent records from being falsified and to enable any alteration to be detected.

127 Submissions made to the Law Commission strongly supported the introduction of article 10 or an equivalent. However the New Zealand Law Society entered the following caveat:

it does not necessarily provide adequately for those people or organisations who wish to save electronically the information from other records (in paper or other electronic formats). In that case, while the electronic information may be available it will at best be only a copy of the original record. The individual requirements for retaining records will need to be considered before there can be a move to eliminate the original records and rely entirely on electronic copies.²³⁴

In other words, the concern is that if the law required that an original paper document be retained, it may not be satisfied by the retention of an electronic record.

128 This problem highlights the fact that different types of records raise different issues regarding their retention. There are those created and maintained in electronic systems, and those created in paper and converted to electronic form. This distinction was observed in the final report of the Victorian Electronic Records Strategy,²³⁵ in the context of the admissibility of electronic records as evidence. It was also noted in ECom 1,²³⁶ that electronically generated information does not have an “original” in the sense in which that term is generally understood in the law of evidence. If “original” is defined as the medium on which information is fixed for the first time, it would not be possible to speak of “original” data messages, since the addressee of a data message would always receive a copy thereof.²³⁷

129 Article 8 provides that any requirement to present or retain information in its original form is met by retaining a data message provided there is a reliable assurance as to the integrity of the information, and that if the information is required to be presented to a certain person, then it is capable of being displayed to that person. The Guide to Enactment informs us that article 8 is intended to cover documents which must be transmitted in “original” form (for example, weight certificates, inspection reports, insurance certificates) as well as documents of title and negotiable instruments. The Guide observes that the advantage of sending an original paper document is that other parties may be confident that the content has not been altered. So long as the integrity of the data message can be assured from the time it was generated, then the functional equivalent of originality is met by the data message.

130 The Australian Bill implements article 10 in clause 12. Clause 12 specifies that the electronic form of a document must be “readily accessible so as to be useable for subsequent reference”, and must maintain the integrity of the information. “Readily accessible” is intended to mean that the information contained in the electronic communication should be readable and capable of being interpreted. “Useable” is intended to cover use by both humans and machines, and means more than mere receipt of a data message. These terms are more fully explained in the Explanatory Paper issued by the Attorney-General’s Department.²³⁸ Clause 12(1)(a) specifies that the document must satisfy these requirements “at the time of the recording of the information”, which avoids inadvertently requiring a stored communication to be updated so as to be retrievable every time technology changes. The integrity of the information requirement relates to the method of generating a document in electronic form. Relevant matters in determining whether the method is reliable include:

methodical recording of the information;
assurance that the information has been captured without omission; and
protection of the information against alteration.

131 Clause 12 deals with the retention of written communications separately from retention of electronic communications. The requirements in respect of each are the same, except for an additional requirement for electronic communications that information identifying the sender and recipient of the communication and the time when it was sent and received must also be retained.

132 Clause 11 of the Australian Bill is based on article 8 of the Model Law, with some differences. It provides that requirements and permissions to “produce” documents will be met by producing a document in electronic form, subject to conditions regarding accessibility and integrity of the information. The Explanatory Paper considers that the “production” of documents is a more appropriate term than the concept of an original document. Clause 13 provides that exemptions from clauses 11 and 12 may be made by regulation, and that those clauses do not affect the operation of the Commonwealth Evidence Act 1955 or any common law rule of evidence. Both clauses 11 and 12 provide that copyright in a document will not a breached simply because it has been generated in electronic form for the purposes of those clauses.

133 The hallmarks of existing New Zealand legislation which permit manual records to be kept in electronic form are:

the records must be easily accessible;
the records must be easily convertible into written form;
there must be adequate measures in place to prevent records from being falsified and allow alterations to be detected.²³⁹

134 Similar themes are to be found in both articles 8 and 10 of the Model Law. Under article 8 there must be a reliable assurance as to the integrity of information from the time it was first generated in its final form; under article 10 the information must be accessible, usable for subsequent reference and in a format which can be demonstrated to represent accurately the information generated, sent or received.

135 We have considered whether adoption of a provision akin to recent New Zealand legislation (for example section 190 of the Companies Act 1993) within our proposed Electronic Transactions Act would remove barriers to electronic commerce adequately. We consider it preferable to adopt provisions akin to clauses 11 and 12 of the Australian Bill. We have come to this view for the following reasons:

Section 190(1)(b) of the Companies Act 1993 requires information to be “convertible into written form” whereas the Model Law and the Australian Bill concentrate on a requirement of “usable for subsequent reference” which is broader and more enabling in nature.
Section 190(2) of the Companies Act 1993 provides that there must be adequate measures to prevent and detect falsification of records. The threshold is lower than the Model Law and the Australian Bill in their respective requirements to “represent accurately” the information generated, and provision of a reliable means of assuring the maintenance of the “integrity of the information”. The Companies Act provision may not cover an alteration which did not amount to falsification. In comparison, clause 12(3) of the Australian Bill ensures that properly endorsed changes and insignificant changes will not negate “the integrity of the information”.

136 Article 8 of the Model Law and clause 11 of the Australian Bill address requirements to present or retain original information. As noted previously, the Explanatory Paper to the Australian Bill considers that “production” of documents is a more appropriate term.²⁴⁰ Clause 13 of the Australian Bill exempts clauses 11 and 12 from the operation of the (Commonwealth) Evidence Act 1955 or any common law rule of evidence. In our view, an equivalent clause 11 of the Australian Bill is required to cover documents which must or may be produced outside of legal proceedings. Examples of such documents include documents of the type to which we refer in paragraph 129.

137 On the assumption that the Evidence Code is enacted contemporaneously with the proposed Electronic Transactions Act, we recommend that the equivalents of clauses 11 and 12 of the Australian Bill expressly state that they do not affect the operation of the Evidence Code or any common law rule of evidence. Alternatively, this could be stated in a separate provision akin to clause 13 of the Australian Bill.

138 Finally, we refer back to the question of certified copies to which reference was made earlier.²⁴¹ In our view, electronic certification should be possible through the electronic signatures regime we propose.²⁴²

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