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Lord Goodhart: I am grateful to the Minister for giving such a full answer to this interesting question which is of wide general concern to the Committee. I recognise the importance of maintaining the rights of
The noble Baroness said: Amendment No. 75 is intended to clarify that even if the right to determine has become exercisable, if that right has been waived or relief against the determination or forfeiture has been granted so that the right to determine can no longer be exercised, no power remains to enter the fact on the register.
Put another way, the right to determine has arisen, but supposing that it comes to an end because, for example, there is a waiver or acceptance of rent by the landlord. Why then should the registrar enter that right to determine in the register, given that it has been satisfactorily dealt with? As currently drafted, the registrar can therefore put a blot on the title, even if the blot has been erased. I beg to move.
Baroness Scotland of Asthal: Once again, I am grateful to the noble Baroness, Lady Buscombe. As she says, Clause 64 gives the registrar a new and significant power to record on the register any right to determine a registered estate which has become exercisable.
We respectfully agree that the amendment draws out an important issue. Before making the entry, the registrar must be satisfied that the right to determine is still exercisable. It is unlikely that in practice the registrar would record a spent right on the register, but the clause as drafted does not make that clear. I am therefore grateful to the noble Baroness for having raised the issue.
I hope that she will not mind if, having said that I take her point, I prefer to take the matter away. I believe that there is scope to improve the drafting of the Bill still further and on that basis I am not able to accept the amendment in its present form. I accept the need for it and the principle behind it and therefore undertake to introduce a government amendment at Report stage. I hope that the noble Baroness will be content with that explanation.
The noble Lord said: Amendments Nos. 77 and 78 have been grouped together and relate to the same subsection of Clause 91. However, they have been tabled for different purposes and I shall deal with them successively. I can do so briefly.
As regards Amendment No. 77, the Law Society has expressed concern about Clause 91(6). It says that it is wholly unacceptable because it will not be possible to raise any question as to whether an agent had written authority to make the authentication.
Having attended the exhibition last week and heard the discussion, it may well be that there is an answer to that problem. If so, I should be grateful if the Minister could explain and put on record in the Committee why the concern of the Law Society is ill-founded.
Amendment No. 78 raises a different but small point. Why does Clause 91(6) apply only where the agent is an individual? Corporate bodies can be agents just as much as individuals. Although it is intended that the agents in this case will be conveyancing practitioners, if the agent is to be a solicitor the agent might well be a firm of solicitors incorporated as a limited liability partnership rather than an individual solicitor. I should have thought that in that case to avoid any problem it would be appropriate to delete "an individual" and insert "a person" to make sure that a corporate body can, if appropriate, be an agent. I beg to move.
Baroness Scotland of Asthal: Before I deal with these issues in detail, the authentication of documents will be scrutinised with great care by the rule committee. As the Committee will be aware, on that committee will sit representatives of the Law Society, conveyancers, members of the Bar, mortgage lenders and consumers. As a result of a suggestion of the noble Lord, Lord
I deal first with Amendment No. 77. I am grateful to the noble Lord, first, for his presentation and, secondly, giving me the opportunity to put on the record the Government's response to this issue. The Committee will be aware that Amendment No. 77 seeks to remove in its entirety subsection (6) of Clause 91. Perhaps it is helpful to explain what Clause 91 is intended to achieve before considering the specific and rather narrow role of subsection (6). Clause 91 is part of the preparation for electronic conveyancing. Under that clause electronic documents will be introduced into the conveyancing process gradually. At first, there may be only a few electronic documents. Perhaps the first will be charges which are signed only by one party and do not give rise to stamp duty. The idea is to learn through that limited experience as we move further into the electronic world.
Eventually, we may all have our own electronic signatures. That appears to be the way that it will develop in future, but we are not there yet. That is, however, too far into the future for that contingency to be built into the first electronic conveyancing process. We may, therefore, have to rely in the early stages on the authentication of electronic documents by the person who has been instructed to carry out the conveyancing process on an individual's behalf, typically a solicitor or licensed conveyancer.
The prospect of professionals having their own electronic signature is not quite so far into the future. We believe that that will happen relatively soon. The professionals will have access to a secure network established by the Land Registry. Access will be permitted by means of a network access agreement between the professional and the Land Registry. The terms of that agreement will regulate the conduct of electronic transactions. The standards of conduct required will be high, whether the party to the transaction electronically signs in person or through his or her agent.
We appreciate the concern that to permit agents to sign electronic documents on behalf of their clients where those clients would themselves sign the equivalent paper document will increase the opportunity for fraud. However, perhaps I may assure the Committee that proper procedures to ensure that the terms of the agency are clearly understood will be necessary. The terms of network access agreements will provide an opportunity for control, and rules of professional conduct may well need to be developed. The detailed terms will be worked out in consultation with professionals and the industry.
We are not yet in a position to cross every "t" and dot every "i". Therefore, I am not able to explain precisely how it will work. However, I am happy to outline the area with which we are dealing. At the moment a significant and thorough development process is being undertaken. Constant vigilance will be required to ensure that standards are maintained.
If a transaction involves the authentication of an electronic document by an agent to prevent difficulties for the agent and the system as a whole, it is important, subject to proper safeguards, to minimise the occasions on which the action taken by the agent can be questioned. For example, electronic transactions will be made more cumbersome if an agent must supply hard copy evidence that his or her authority was given in writing. Whether or not the agent is acting within his or her authority will, as now, be a matter for the general law of agency. In this context Clause 91(6) is intended to facilitate electronic conveyancing in a very specific way. It makes clear that where statute requires an agent's authority to be in writing objections cannot be raised as to whether a solicitor or licensed conveyancer who had signed an electronic document had written, as opposed to merely oral, authority to do so. The agent will need authority from his client before proceeding with authentication, and he can be held to account to his client if he fails to acquire it. However, this subsection prevents the need for other parties to investigate if the associated formalities that should be observed have been complied with.
I hope that my comments have clarified why there is a need for this assumption to be built into the provisions relating to electronic documents. I also hope that I have dealt with the concerns raised by the Law Society and enabled the noble Lord to withdraw this amendment.
Amendment No. 78 moves in the opposite direction. It seeks to extend the benefit of the deeming provision in Clause 91(6) from individuals to both individuals and artificial legal persons, such as companies incorporated under the Companies Acts and other bodies corporate. Clause 91(6) was drafted with the authentication of electronic conveyancing documents by solicitors and licensed conveyancers very much in mind, because, as I have said, it is expected that in the early days of electronic conveyancing electronic signatures will not generally be held by members of the public. Signing electronic documents is, therefore, likely to be one of the services that professionals providing conveyancing services will offer to their clients. Under present dispositions those professionals are likely to be individuals.
However, I believe that the noble Lord has a point in relation to corporations. I am very grateful to him for pointing out in his amendment that it is possible that in the future corporations may offer the service of authenticating documents on behalf of others. Whatever kind of person authenticates the document, it is important to remember that he will be required to comply with the terms of the relevant network access agreement to be able to send the document to the Land Registry. These agreements are likely to include
The detailed terms of these arrangements will be a matter for consultation and careful consideration in the coming years as electronic conveyancing is developed, and they will have to change and be flexible to respond to those needs.
I understand the concern expressed about electronic signatures. It is our belief that the security and safeguards which will be inherent in the electronic system will be far greater than are currently available with a paper signature. Many of your Lordships will know that, regrettably, people are often asked to sign documents. Those signatures are not witnessed but are transposed. It is very difficult to have a proper trail to be able to verify whether that signature is actually the signature of the person signing. Therefore, it is our reasonable expectation that whatever the difficulties that may be inherent in the electronic system, it is likely to be much more secure than the present system.
The noble Lord, Lord Goodhart, was also concerned about the authentication not being capable of being challenged at all. His concern was that the agent's principal, in this case the conveyancer's customers, could not challenge an erroneous, negligent or fraudulent signature. We can reassure him that this will be possible and does not affect the law of agency, although the rules under the Bill will state how authentication should be done. The clause merely stops a buyer challenging the seller's authorisation. We believe that the Law Society will be reassured once it has seen the demonstration that the noble Lord had the advantage of seeing earlier. I hope that what I have said in relation to Amendment No. 77 assists. We shall consider Amendment No. 78.
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