On 3 March 2020 the Lord Chancellor, Robert Buckland QC, made a written ministerial statement welcoming the report of the Law Commission on Electronic Execution of Documents (Law Com No 386). That report concludes that there is no need for formal primary legislation to reinforce the legal validity of electronic signatures on documents, and that the existing framework makes clear that businesses and individuals can feel confident in using e-signatures in commercial transactions. This is consistent with guidance given by the Law Society on 21 July 2016 and established practice, and supported by case law.
Automatic signatures
In the recent case of Neocleous v Rees [2019] EWHC 2462 (Ch) the High Court considered whether an automatic signature on an email was sufficient to render a document signed within the meaning of section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (“the 1989 Act”). The 1989 Act provides that a contract for the sale or disposition of an interest in land must be in writing and the documents incorporating the terms must be signed by or on behalf of each party to the contract. The Claimant sought specific performance, contending that a series of emails amounted to contractual terms and that the electronic signature automatically added to the emails complied with the requirements of the 1989 Act. The court agreed. Reference was made to relevant case law in this regard as well as to the Law Commission Consultation Paper which preceded its Report, and which found that the weight of the case law supported the view that an electronic signature satisfied a requirement for a signature where there was evidence of an intention to authenticate the document.
Witnessing of electronic signatures
The ministerial statement went on to reference a more equivocal matter contained in the Law Commission Report, being the question of video witnessing of electronic signatures. The statement went only so far as to ask that the Industry Working Group to be established in accordance with the Report’s recommendations, to consider this question. The issue arises in particular where the relevant signatures are made by execution of a deed, such as, by virtue of section 52 of the Law of Property Act 1925, where a transfer of land takes place. In respect of deeds, section 1(3) of the 1989 Act provides that an instrument is validly executed as a deed if, and only if, it is signed by an individual in the presence of a witness who attests the signature; or at his direction and in his presence and the presence of two witnesses who each attest the signature, and it is delivered as a deed. The particular difficulty is what is meant by “in the presence of a witness”; can this presence be virtual, or must the witness be physically present? If the latter, electronic execution of a deed would require the presence of an attesting witness alongside the electronic signor.
This issue arose in Man Ching Yuen v Landy Chet Kin Wong [2019] UKFTT 2016/1089 (Tribunal Judge Gatty), in which the writer appeared for the Respondent. The matter concerned a residential property which was registered in the sole name of the Respondent by virtue of a Form TR1 dated 30 September 2010. The Applicant, who had previously been registered as a co-owner, lodged a unilateral notice against the title. The Respondent applied to cancel the notice, to which the Applicant objected, leading to the referral of the matter by the Land Registry to the First Tier Tribunal.
There was a significant factual dispute in respect of the Form TR1. It was not in dispute that such a form existed. It purported to be signed by both Applicant and Respondent, and to have been witnessed by a solicitor. However, the Applicant denied that he has signed the document at all, contending that is was a forgery. The Respondent’s case was that the parties had met in her office in Hong Kong, and had both signed the Form TR1. The attesting solicitor had been virtually present via Skype, had witnessed the signatures of both parties, and, when the Form TR1 was later received by her in the post, she added her attesting signature to the document.
The factual dispute was disposed of in favour of the Respondent, primarily on the basis of the evidence of the attesting solicitor. At paragraph 20 of the judgment the Tribunal Judge recorded that she had asked to see proof of identity and was shown a Hong Kong identity card with a photograph on it, but was concerned that this had no expiry date and thus asked to see a bank card, which she was shown, with a matching signature to that placed on the Form TR1. The Tribunal dismissed the prospect of the Respondent having found a look-a-like for the Applicant and forged both an identity card and, in anticipation of the request, a bank card, as this “would have required a level of cunning and criminal organisation that would be beyond most people.”
The resolution of the factual dispute was not, however, the end of the matter, as the Applicant argued that even if (which he denied) it was his signature on the transfer, the Form TR1 was not a valid deed as the attesting solicitor was not present as she was not physically there. Although the Tribunal Judge ultimately determined that he did not need to decide this question, significant analysis of the issue is contained within the judgment, as well as consideration of the findings of the Law Commission Report. As far as is known, this judgment therefore contains the most comprehensive modern analysis of the requirements of section 1(3) of the 1989 Act, viz the requirement of physical presence by the attesting witness.
Physical presence
The Tribunal Judge began by noting that the Law Commission had expressed a provisional view in its consultation paper that actual physical presence was probably required. However, he accepted the submission made on behalf of the Respondent that the final Report was more equivocal. At paragraph 5.30 of the final Report the conclusion is that “it is not clear that the requirement may be satisfied by remote forms of witnessing”; and that there is a presumption that Parliament intends courts to interpret legislation allowing for changes including technological developments. The judgment goes on to cite paragraph 5.35 of the Report. This provides:
“Some consultees argued that it would be open for a court to decide that remote or virtual witnessing would satisfy the statutory requirements. Although we agree that may be the case, we are not persuaded that parties can be confident that the current law would allow for a witness viewing the signing on a screen or through an electronic signature platform, without being physically present. This conclusion is based on the combination of the restrictive wording of the statutory provisions and the serious policy questions underlying any extension to accommodate technological developments.”
The Tribunal Judge noted that one of the factors relied upon in the Report in favour of the need for physical presence was a requirement for the signature of the witness to be affixed at the same time as execution of the deed. However, he noted that in Wood v Commercial First Business Ltd (In Liquidation) [2019] EWHC 2205 (Ch) the High Court had held that whilst it was a requirement that the person executing the deed sign in the presence of a witness, it is not a requirement for the witness to sign in the presence of the person executing. Having gone on to consider Wright v Wakeford (1812) 4 Taunton 213 and Netglory Pty Ltd v Caratti [2013] WASC 364 (a case in the Supreme Court of Western Australia) the Tribunal Judge held that it is not a requirement of section 1(3) that the witness’ attesting signature must be made on the same occasion as the maker of the deed’s signature, within a reasonable period of time, such as a few days as in the instant case. This undermined one, but only one, of the Law Commission’s justifications in support of physical presence.
The Tribunal Judge did not consider on the question before him that the nineteenth century authorities were of any use as to whether “presence” could include “virtual presence” but rather framed the question as one of policy – a balancing of risk and convenience. As both the Law Commission and the Tribunal Judge recognised, the present law permits of more than one conceivable answer, and, therefore in the context of the application before him, given the uncertain state of the law, the Applicant had a realistic prospect of persuading a court or Tribunal hearing a rectification application that the TR1 was not validly executed as a deed due to the lack of physical presence. However, the Respondent succeeded overall, the Tribunal finding that, were rectification to take place, a constructive trust would arise due to the signature on the TR1, allowing the Respondent to require the re-conveyance of the Property. He therefore dismissed the application and directed that the unilateral notice be cancelled.
Room for argument
There have been a number of erroneous reports suggesting that this case is authority for the proposition that virtual presence is not sufficient for the requirements of section 1(3) of the 1989 Act. That is not the case. It is likewise not the case that the Law Commission Report is supportive of such proposition. Rather, what is clear both from the Report and the decision is that there is scope for argument either way and at present no authoritative determination in the case law. This is perhaps surprising given the growth of electronic signatures and virtual working. It appears conceptually surprising that contemporaneous virtual witnessing by video-link should not be thought to be as secure as the physical presence of a witness, as a matter of policy, given the purpose of a witness is to prevent against fraud, and unsatisfactory that equity may need to intervene in such circumstances where bar actual physicality the formality and policy requirements have been met. Yuen v Wong makes clear that there is room for argument, and that the position is not clear-cut. The finding that an argument that there be physical presence has a realistic prospect of success is a far cry from a determination that this must be the case, and the point remains open to determination. It is hoped that the Industry Working Group takes note of the considerations given by Tribunal Judge Gatty to this difficult area in a case which, though a first instance tribunal decision, deserves much wider recognition.
Chris Bryden is a barrister at 4 Kings Bench Walk, specialising in Chancery, civil and family law. Email cxb@4kbw.co.uk. Twitter @BrydenLaw.
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