Electronic signatures are valid, but can a deed be executed remotely?

12th March 2020

Walker Morris’ Banking Litigation specialist explains a recent case which highlights inconsistencies and uncertainties within the law relating to the electronic/remote execution of deeds, and offers her practical advice.

Why is this case of interest?

Walker Morris has reported previously on the Law Commission’s 2019 Report which confirmed that electronic signatures are valid and can be used to execute documents. This was a crucial turning point in acknowledging that technological advancements are changing the way we do business, with face-to-face contact becoming less frequent, and that the law of England and Wales can, for the most part, keep pace. On 3 March 2020, the Lord Chancellor and Secretary of State for Justice issued a ministerial statement which agrees with the Law Commission’s conclusions.

As the Law Commission identified, however, the position is not straightforward when it comes to the execution of deeds (as opposed to other legal documents or contracts).

The Law Commission concluded that the current legal requirement that a deed must be signed “in the presence of a witness”, necessitates the physical presence of that witness.  The Commission’s view was that that remains the case even where both the person executing the deed and the witness are executing/attesting the document using an electronic signature.

The recent case of Man Ching Yuen v Landy Chet Kin Wong [1] is of interest because it considers the witnessing and execution of deeds and documents remotely – in the particular case, via video-link.

What legal and practical points arise?

Section 1 (3) of the Law of Property (Miscellaneous Provisions) Act 1989 provides that a deed will only be validly executed by an individual if it is signed by him in the presence of a witness who attests the signature.  The tribunal judge in this case agreed with the Law Commission that, when it comes to the execution of deeds, by virtue of that section, a witness needed to be physically present when the deed was signed.  The tribunal judge therefore concluded that remote viewing of a signature may not suffice.

However the judge also acknowledged binding authority that, while there is a requirement for a person executing a deed to sign in the physical presence of a witness, the witness was not required to sign the deed in the presence of the person executing the deed. Consequently, a witness can sign on a later date and the deed may still have been validly executed.

Given the subtleties and uncertainty surrounding the question of remote execution of deeds overall, and pending any definitive judicial ruling or change in legislation, best practice is for parties ensure that the witness to a signature of a deed is physically present when the deed is signed to ensure validity.

This case, along with the Law Commission’s recent findings and recommendations, emphasise the need for a review of the law of deeds generally – in particular the consideration of whether the concept of, and formalities relating to, deeds are fit for purpose in the modern commercial world.

What happened in the particular case?

Yuen v Wong involved two individuals and an alleged forgery of a TR1 Land Registry document (the Transfer) – a deed – which purportedly transferred a property from the joint names of the applicant and the respondent into the respondent’s sole name.

The respondent’s case was that the Transfer was signed at a meeting at her office in Hong Kong. The respondent’s solicitor (the Solicitor) virtually attended the meeting via Skype from her office in London, in order to witness the signing of the Transfer by both parties. The Solicitor then received the hard copy of the Transfer at her office a few days later, whereupon she signed it as a witness.

The applicant challenged the validity of the Transfer on the grounds that the Solicitor, who was acting as the witness, was not physically present at the time the parties signed the Transfer (the presence ground) and/or that the signature was not attested until some days later (the attestation ground).

The tribunal judge found that the signing had taken place at a meeting in Hong Kong with the respondent and applicant attending in person and the Solicitor attending via Skype. The judge was satisfied that the Solicitor had taken steps to verify the identity of the applicant including showing an identity card and a bank card with a signature.

However, on the presence ground, given the Law Commission’s conclusions regarding the necessary formalities for execution of a deed, remote presence via video-link or similar may not amount to physical presence and may not, therefore, suffice.

On the attestation ground, the tribunal judge noted that the recent case of Wood v Commercial First Business Ltd [2] is binding authority for the proposition that, while there is a requirement for a person executing a deed to sign in the presence of a witness, the witness was not required to sign the deed in the presence of the person executing the deed (or anybody else). As such, the Solicitor was not, herself, required to sign as a witness, on the exact same occasion as the applicant or the respondent.

The tribunal judge commented that one of the reasons why the Law Commission thought that physical presence of a witness was required for execution of a deed was so that attestation could immediately occur, whereas (as explained above) the Wood case has recently confirmed that contemporaneous attestation is not necessary.  Yuen v Wong therefore highlights inconsistencies and uncertainties with the law relating to the execution of deeds as it currently stands.

In the particular case, it was sufficient for the instant application that the tribunal judge simply concluded that the applicant had a realistic prospect of persuading a court or tribunal that the Transfer was not validly executed as a deed as the Solicitor was not physically present when it was signed – it was not necessary to actually decide the point.  The electronic/remote execution of deeds therefore remains ‘one to watch’ and Walker Morris will continue to monitor and report on developments.

[1] First Tier Tribunal (Property Chamber) 2020 (ref 2016/1089)

[2] [2019] EWHC 2205 (Ch)