By Doug Robertson and Andrew Walker
The rapid spread of Covid-19 and the sudden closure of commercial premises across the UK has prompted a need for clear direction on the use of electronic signatures and the risks and difficulties which can be associated with their use. In addition, there have been reports of solicitors swearing statutory declarations remotely by Skype and this note addresses whether this is safe practice.
Admissibility and Validity of the document
An electronic signature is capable in law of being used to execute a document (including a deed) provided that the person signing the document intends to authenticate the document and also that any formalities relating to execution of that document are satisfied. The primary UK legislation on electronic signatures is the Electronic Communications Act 2000 (ECA 2000) and this gives a very wide definition on what may constitute an electronic signature.
Furthermore, the courts have always taken a permissive stance on the question of whether an electronic signature is admissible as evidence. However, the fact that an electronic signature is likely to be admissible to a court does not inevitably mean that it is valid. Concerns arose following comments in Mercury in 2008 that an electronically signed document may not amount to a ‘discrete physical entity’ or the ‘same physical document’ at the moment of signing. Since then there has been some slightly contradictory guidance from the Law Society and the courts. As such, care should be taken that the document which is being executed by the client or other parties is in its final form.
Documents which need to be in writing
Whilst a simple contract does not necessarily need to be in writing, in English and Welsh law some documents do need to be made ‘in writing’ or ‘signed’ to be valid.
The Law Commission’s conclusion in 2019 was that the primary requirement for a document to be ‘in writing’ was one of visibility. As such, anything that is intended to be and can be read on screen (such as an email) would satisfy this. With regards to a document being ‘signed’ the test is that the mark which appears in a document must have been inserted in order to give, and with the intention of giving, authenticity to it.
An electronic signature ought to satisfy this test.
Practical difficulties with executing deeds electronically
One significant difficulty with executing a deed electronically is that there is often a need for a witness.
Two common examples where a witness is required is when a deed is being executed by a single director of a company or when a deed is being executed by an individual. Moreover, currently there is a clear consensus that physical presence is required in order to validly witness the execution of a deed. This means that witnessing cannot be achieved via video-link or other remote methods. At the moment this gives rise to clear difficulties because the witness would effectively need to be stood behind the person executing the deed and looking at his screen.
Furthermore, Mercury could also be interpreted to effectively require the witness to make their signature on the same version of the document being electronically signed and before it was freshly saved or uploaded. Practically, this looks unrealistic and could also raise questions regarding the deed’s authenticity.
Consequently, in regular circumstances, the electronic execution of deeds is generally not advisable. In the current climate, it may prove necessary to execute deeds electronically depending upon the commercial circumstances. However, great care must still be taken to ensure that all the statutory requirements for execution are still met.
Section 7 of the ECA 2000 provides that, in any legal proceedings, an electronic signature incorporated into a particular electronic communication shall be admissible in evidence in relation to any question as to the authenticity of that communication or as to the integrity of that communication. The present position is that the electronic signature will be considered as prima facie authentic unless evidence is put forward to call this into question. The party claiming that the signature was not authentic would need to prove this on the balance of probabilities.
HM Land Registry
HM Land Registry have issued instructions on the point of electronic signatures in the light of the Coronavirus outbreak. They have advised that they are not relaxing their requirement for wet ink signatures for certain registrations. Consequently, a transfer deed or lease will require a wet ink signature for it to be successfully registered. Similarly, if consents are required to make an application then they will need a wet ink signature to be accepted too.
Further advice on these points can be provided if necessary.
Remote swearing of Statutory Declarations
We have considered two principal issues on this point which are (1) the witnessing of the swearing; and (2) the mechanics and timing of the payment. Whilst there is no clear guidance on this subject from the courts, the Law Society have previously stated that it remains the convention for their to be physical presence rather than virtual.
Witnessing the swear
The thrust of this problem is very similar to the problem of witnessing the execution of a deed. The concern remains that, without a physical presence, it is very difficult (and may be impossible) for the individual witnessing the swear to be certain that it has been carried out correctly. This would potentially undercut the essential purpose behind the making of the statutory declaration. There is also the same danger deriving from Mercury which is that a court deems that the person witnessing the swear has not actually signed the same version of the statutory declaration.
Having considered this problem, a potential solution may be for the statutory declaration to be signed live by video call and then to be immediately sent to the witness for an electronic or wet ink signature. A note stating that the statutory declaration had been sworn remotely could mitigate against the risk of misleading third parties.
Nevertheless, we cannot say for certain that the above will constitute a valid swear and there remains no authority on the subject. Use of the above mitigation strategy still carries the risk that it will not be deemed to be a valid swear and, in any event, swearing remotely would only be done with express supervising partner authorisation.
Payment for the swear
The problem in this respect arises from the legislation which governs the process, namely, section 19 of the Statutory Declarations Act 1835 (“Act”). The Act prescribes that the fee for making the declaration is “due and payable upon making and subscribing such declaration”. Taken at its face value, this makes remote swearing very difficult to achieve because even by use of bank transfer, it would be hard to make the payment concomitant with the making of the declaration.
One potential solution to this problem is for the solicitor to acknowledge to the swearor that they (or the client) are indebted to them for the sum of the fee-thereby creating a consideration upon the making of the swear.
An alternative might be for the fee to be sent to the attesting solicitor and then for the swear to take place as soon as the money arrives. The difficulty in both of these cases is that they may not comply with the literal interpretation for the act. Unfortunately, again, there is no court authority on section 19 of the Act.