Land Registration Bill [Lords]

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Mr. Cash: On amendment No. 67, which is analogous, I understand the Government's reasoning for making the system compulsory in relation to a future time when most conveyancers are using it. However, in the early stages they will be pioneers, and they should be able to return to using a paper system if the system does not work as intended or envisaged. What will there be in the way of back-up for times when systems go down, as they frequently do?

Mr. Wills: I shall come to amendment No. 67 in a moment. Of course, it is in everyone's interests that we work together with practitioners to deal with all eventualities. Systems do go down, but as time passes they become increasingly secure and reliable, and we must work with practitioners to ensure that they are robust. Things go wrong in the paper world as well.

I hope that I have done enough to reassure the hon. Gentleman on amendment No. 85 and that he will feel able to withdraw it.

Amendment No. 65 is rather technical. It would deem that an agent authenticating an electronic document under clause 91 is acting under a power of attorney. The purpose of that is not to extend the authority of the agent, but to bring the agent within the scope of section 7 of the Trustee Delegation Act 1999.

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That section was enacted on the recommendation of the Law Commission to bolster the protection given to trust beneficiaries. It is intended to ensure that delegation by trustees to one person will not allow that one person to satisfy the long-standing rules of law that at least two trustees must execute a conveyance and receive the capital proceeds of any sale. The amendment is unnecessary because the Bill does not adversely affect the operation of section 7 of the 1999 Act.

Mr. Cash: Will the Minister raise his voice slightly in case Opposition Members do not hear every word he says?

Mr. Wills: I am sorry, I shall do my best to speak up.

I hope that I have given the hon. Gentleman sufficient reassurance to enable him to withdraw amendment No. 65.

Amendment No. 66 would undo subsection (6) of clause 91. I assume that it is intended to probe the Government's intentions regarding the role of agents in the electronic conveyancing world. Let me say at once that clause 91(6) does not confer authority where none exists. Clause 91 does not create a general presumption of agency, nor does it compel agents to use electronic signatures. It is fundamental to the Government's approach that the electronic conveyancing system must be secure and trusted and must be developed in partnership with the stakeholders.

Subsection (6) is a technical provision intended to remove the need to ask whether an agent had written authority. It is relevant to the statutory provisions that require an agent to be authorised in writing. The amendment would undo the effect of the subsection. Essentially, it would provide that if a document to which clause 91 applies is authenticated by an agent, the agent will be deemed for the purposes of any enactment to be authenticated as the agent under the written authority of his or her principal if the agent had actual written authority to do so or subsequently obtained it. The end result would be a regular request for evidence of the authority, making the procedure for electronic conveyancing somewhat less electronic and somewhat more cumbersome than it need be.

I know that the hon. Gentleman is always anxious to avoid unnecessary bureaucracy and encumbering the processes of business, so I hope that he will feel able to withdraw the amendment.

Amendment No. 67 would remove the power of the chief land registrar to require, as a term of a network access agreement, that the person authorised to use the network for transactions would have to use it for specified transactions. The intention of that power is to maximise use of the network and thereby the benefits that it will bring. Network access agreements are the agreements that the Land Registry will enter into with people who want access to the Land Registry network.

As I understand it, the fear is that the power will be used to lock practitioners, especially those who sign up in the early days, into a system that does not work as it was intended. That fear is misplaced for several reasons. It is strongly in the interests of the Land

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Registry to ensure that all users, especially early users, have all the help that they need. If early users have a successful experience of the system, more will follow more quickly, which is what we want to happen. Even in the long term, it may be necessary to have some kind of phasing-in arrangements for firms as they join the network.

Mr. Cash: On a point of order, Mr. Illsley. The hon. Member for Torbay (Mr. Sanders) is asleep.

Mr. Wills: We should resume our discussion of amendment No. 67. I shall be happy to bring the hon. Member for Torbay up to speed in due course.

The system's development process will include testing and piloting, and the roll-out programme will be incremental, allowing experience to be gained and lessons to be learned.

The Government will develop electronic conveyancing in consultation with conveyancing stakeholders and will work with their commercial partners through whatever corporate, joint venture or partnership structures may be required to develop the infrastructure of electronic conveyancing. As the Land Registry will be moving into new waters, some of the arrangements may be relatively novel. Some of those being contemplated have given rise to a re-examination of the legislative cover for joint public-private ventures by the Land Registry. To ensure that those in the private sector can have complete confidence in the powers of the Land Registry to enter into whatever commercial arrangements might be necessary, and to ensure that it has the flexibility to do so, the Government will table some extremely technical amendments at the next stage of the Bill.

Electronic conveyancing will succeed only if practitioners are willing to use it. The power can be constrained by rules that can be made only under the affirmative resolution procedure. In the light of the events of the past three months, we are all increasingly aware of the need to have back-up systems in place to cover any eventuality. The electronic conveyancing system will be designed with this in mind.

There are also positive reasons why the power proposed is necessary. It will help drive conveyancing towards the desired end of the fully electronic system, it will maximise return on investment for the Government and users. It is a building block on the way to a full electronic system. I hope for that reason the hon. Member for Stone will feel able to withdraw amendment No. 67.

Amendment No. 68 seeks to remove from schedule 5 the provision that places fulfilment of obligations under a network access agreement ahead of all conflicting obligations. This may be surprising at first sight, but it is in fact essential, because the requirements of a network access agreement may create conflicts of interest. The precise scope of the potential conflicts will be ascertained only when the rules governing network access agreements have been framed. This will, of course, only be after extensive consultation and affirmative resolutions in both Houses of Parliament. The Bill must therefore provide

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a solution. It provides that the obligation under the network access agreements prevails and discharges the other obligation to the extent that the two conflict.

Discussing conflicts of interest in the abstract may be rather alarming, but the sorts of obligations that might conflict with obligations owed to clients will be limited to those which seek to make the register more up-to-date or complete. Those are matters where there is a strong public interest in having the information available. The provision is fundamental to the hoped for gains in relation to the transparency and management of chains of transaction. Without this provision clients could, in effect, contract out of the system of electronic conveyancing that the Bill seeks to put into place.

Mr. Stephen O'Brien (Eddisbury): The Minister will be aware that I have not been able to participate in a good deal of the Committee's deliberations. As a solicitor who has not practised for 14 years, I do not think that it is a declarable interest, but I am concerned that the absolute sanctity of the solicitor-client relationship and the obligations of confidentiality should be fully taken into account in all that the Minister is saying. I can well understand, for efficacy reasons, the thrust of some of the arguments that he is putting forward, but I am concerned that we have not discussed confidentiality in this context.

Mr. Wills: Of course we recognise that. In the sense that the hon. Gentleman is concerned, it is not a threat at all. We are concerned to make sure that we realise the full gains of what is possible out of this. We have discussed on previous occasions the full value of having a more transparent market. It is in everyone's interests that that should happen. We think that this amendment would actually damage that possibility. I hope that I have given enough reassurances to enable the hon. Member for Stone to withdraw this amendment.

Amendment No. 69 removes the deemed authority of an authorised person under a network access agreement acting as an agent to sign—that is to authenticate—an electronic contract or disposition on behalf of his or her principal. This deemed authority exists only in favour of a third party and only if the agent has expressly claimed the authority in the electronic disposition. The person claiming the authority would of course be bound by the terms of his or her network access agreement.

The reason for the provision of schedule 5(8) is that there is no general implied authority that an agent may sign a contract or disposition for his or her principal. This means that where an agent signs as such, the other party to the transaction is entitled to call for evidence of the actual authority under which he or she claimed to be acting. The requirement for paper evidence of that authority would operate to defeat some of the benefits of electronic conveyancing by reintroducing a paper document. This is simply not necessary in the regulated environment of the electronic conveyancing network.

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Of course there will be fears that honest practitioners may be innocently caught up in the snares of some clever fraudster. I have already confirmed that the present self-denying practice of the Land Registry in relation to its right of recourse will continue.

The anxieties about what we might call the agency provisions have, perhaps, been heightened by the possibility that electronic signatures might not be commonplace for some time to come. It could follow that conveyancers will have to act as agents in the signing of documents more frequently than at present, but time alone will tell whether that will be the case. In any case, as I mentioned in another context, the underlying principles in the electronic and paper worlds remain the same.

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Deeming one person able to do something on behalf of another is a serious matter but in this case, I think that it is a reasonable and proportionate step to take. I hope that, in the light of those comments, the hon. Member for Stone will withdraw the amendment.

We acknowledge that new clause 1 raises an important consumer protection issue. Section 22 of the Solicitors Act 1974 makes it a criminal offence for an unqualified person to undertake certain conveyancing tasks for reward. The new clause seeks to ensure that section 22 will still apply when communication with the Land Registry is undertaken electronically and the documents that transfer or charge interests in land are accepted, or required to be, in electronic form.

Those are legitimate concerns. I am pleased to be able to confirm that electronic documents in clause 91 will come within section 22. Similarly, an application to the Land Registry or the lodgement of electronic documents with the Land Registry through the network will still be an application or lodgement if done electronically.

Before I invite the hon. Gentleman to withdraw the new clause, I thank all hon. Members and you, Mr. Illsley, for bearing with me in what, I am afraid, has been a long and technical explanation of a long and technical list of amendments dealing with important aspects of the Bill. The hon. Gentleman has raised important issues and I am grateful to him for that and for allowing me to put comments about them on the record. I hope that, in the light of my explanation, he will feel able to withdraw all the amendments and the new clause.

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Prepared 13 December 2001