Clause 91 - Electronic dispositions: formalities

Land Registration Bill [Lords] – in a Public Bill Committee at 10:00 am on 13 December 2001.

Alert me about debates like this

Photo of Bill Cash Bill Cash Shadow Attorney General 10:00, 13 December 2001

I beg to move amendment No. 64, in page 33, line 5, leave out paragraph (c).

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to take the following:

Amendment No. 65, in page 33, line 15, at end insert—

'', and, for the purposes of section 7 of the Trustee Delegation Act 1999 (c. 15), the agent is to be treated as the attorney of the principal appointed under a power of attorney.''.

Amendment No. 66, in page 33, line 15, at end insert—

''only if he has previously obtained actual authority in signed writing from his principal; and in the absence of such actual authority, the principal may subsequently ratify the authentication of his agent.''.

New Clause 1—Solicitors' Act 1974—

''Solicitors Act 1974

For the purposes of section 22 of the Solicitors Act 1974 (c. 47)—

(a) a document in electronic form is an instrument, and

(b) obtaining access to a network provided under section 92(1) for the purpose of seeking an alteration in the terms of the register or of submitting a document in electronic form is making an application or lodging a document for registration under this Act at the land registry.''.

Amendment. No. 67, in schedule 5, page 53, line 18, leave out paragraph (a).

Amendment No. 68, in schedule 5, page 54, line 16, leave out paragraph 6.

Amendment No. 69, in schedule 5, page 54, line 27, leave out paragraph 8.

Amendment No. 85, in clause 91, page 33, line 5, after ''certified'', insert—

''( ) each electronic signature was made by, or with the authority of, the person whose signature it purports to be,''.

Photo of Bill Cash Bill Cash Shadow Attorney General

This is a substantial group of amendments, and it will take a little time to go through them.

The object of amendment No. 85 is as follows. Users of the conveyancing system, including not only members of the public buying a home but commercial enterprises and inward investors buying factories and offices in England and Wales, and the conveyancers

acting for them, should not be left in doubt about whether a forged or impersonated signature might be held as binding on them. The law should make it clear that, in the case of electronic documents as in the case of paper ones, individuals, firms and companies are not liable when they have neither made nor authorised the signature.

Organisations that provide electronic access to facilities have developed a practice of transferring to the user of the facilities the risk of forgery of the access control code. By their examples, we offer the access terms of the providers of access to the national land information system, and the statutory terms applicable to electronic filing of income tax and value added tax returns. For example, Searchflow has said:

''The Customer warrants that it/he/she will keep confidential and secure all user names and passwords used in relation to the Services and accepts that use of a user name and password allocated to a Customer shall constitute sufficient authority to the Company to perform the Services and be entitled to payment for so doing.''

Teramedia has said:

''You [the customer] are responsible for all use, activity and charges associated with or arising out of your use of Territorium, including any unauthorised charges or use by a third party using your subscription, user name and/or password.''

MacDonald Dettwiler has said:

''You will be liable for all charges incurred through the use of your TransAction Online Password.''

The Value Added Tax (Amendment) Regulations 2000 (SI 2000 No. 258) state that

''the person making the return to the Controller shall be presumed to be the person identified as such by any relevant feature of the electronic return system.''

The Income Tax (Electronic Communications) Regulations 2000 (SI 2000 No. 945) as amended by the Income Tax (Electronic Communications) (Miscellaneous Amendments) Regulations 2001 (SI 2001 No. 1081) states:

''If it is necessary to prove, for any purpose, the identity of—

(a) the sender of any information delivered by means of electronic communications to an official computer system, or

(b) the recipient of any information delivered by means of electronic communications from an official computer system,

the sender or recipient (as the case may be) shall be presumed to be the person recorded as such on an official computer system unless the contrary is proved.''

A common feature of all these examples is that if someone other than the user is able to impersonate the user successfully by obtaining control of a copy of the user's access mechanism, the user is either bound by the consequences, or in the last case, carries the burden of rebutting a presumption of responsibility.

Access mechanisms may take the form of a user ID combined with a password or cryptographic key, or a number of other mechanisms. For the purposes of any practical scheme of electronic conveyancing, all such mechanisms involve supplying the password, key or other security data to a PC which forms part of the computer network that also has access to the internet. There are no available secure operating systems for PCs and the security risks to which they are vulnerable are notorious, and have been authoritatively expounded by no less an institution than the National Security Agency in the United States. A book entitled, ''The Inevitability of Failure: The Flawed Assumption

of Security in Modern Computing Environment. Proceedings of the 21st National Information Systems Security Conference HTTP://, October 1998.''

The risk of surreptitious copying of security information from a PC, or its subversion to carry out transactions other than those apparent to and intended by the user, are risks that solicitors' firms are in no position either to eliminate or to bear.

We are not aware of any cases where attacks of this kind have yet been carried out. By no means are all cases reported, but it should be noted that comparatively few systems are yet available to be attacked by these means, which offer opportunities comparable in value to those which would arise in electronic conveyancing. The criminal community is alert to use impersonation to exploit security weaknesses where they appear, as is illustrated by an article in the Financial Times on 16 October 2001, by James McIntosh, entitled, ''New code aims to help stamp out share theft''. He writes:

''In an attempt to eradicate a multi million pound crime involving the theft of shares, stockbrokers and share registrars have agreed on a new code of practice. More than GBP 2 million worth of shares have been stolen by criminals impersonating shareholders and telling registrars they have moved house so that they are given a replacement share certificate which enables the shares to be sold on. The code, which is being kept confidential, will list warning signs for brokers and registrars so that checks can be made more easily on suspicious transactions.''

For these reasons the Law Society would regard it as unacceptable for solicitors to carry the risk of their electronic signature keys being obtained and misused by third parties. The use of presumptions in statutory terms and their contractual equivalents, should be ruled out by clear statutory language such as we have proposed. The effect should be that, as is the case for paper documents and their signatures, it is for the relying party to prove that a disputed signature was made by or with the authority of the purported signatory. That is consistent with the law as it applies to paper documents, and with the Australian legislation to which we have referred. This provision should be of general application to conveyancing documents, whether or not they purport to be executed by solicitors or agents.

When the relevant amendment was moved in the House of Lords, my noble Friend Baroness Buscombe stated:

''If technology is developed which can effectively eliminate the risk of the user being impersonated, then relying parties will find their burden of proof easy to discharge. We believe that currently available technology is very far from succeeding in this objective, even having regard to proposals for smart cards or biometric identifiers. Relying parties face real risks in accepting electronic signatures, which may amount to undetectable forgeries, but it would be wrong as a matter of policy to allow them to solve the problem by transferring the risks to purported signatories. Where relying parties are major institutions, such as the Land Registry, other government agencies or financial institutions, they are far better placed than firms of solicitors . . . to promote the development of technology to eliminate the risks. That is a further reason for ensuring that they continue to carry those risks.''—[Official Report, House of Lords, 8 November 2001; Vol. 628, c. 313.]

Before turning to new clause 1, I shall deal with amendment No. 65. The Trustee Delegation Act 1999 reinforced the two trustee rules in the Law of Property Act 1925 by providing that it was not satisfactory for a single attorney to act for two trustees. That consumer protection should not be sacrificed when electronic transfers are executed. The 1925 Act put in place some ineffective consumer protection by ensuring that some transactions could only be done by at least two trustees, the idea being that one such person could not access somebody else's money. The Trustee Delegation Act sought to bolster that by preventing one person being appointed the attorney for two joint owners, which would mean that that person acted for two trustees and therefore nullified such protection as there was. The Law Society seeks through this amendment to ensure that electronic disposition arrangements do not undermine this recently strengthened consumer protection.

New clause 1 relates to section 22 of the Solicitors Act 1974. It aims to establish consumer protection that would limit technical Land Registry work to solicitors and certain other conveyancing professionals. Licensed conveyancers are authorised by section 22 of the Solicitors Act 1974 by virtue of section 11(4) of the Administration of Justice Act 1985. All professionals entitled to carry out conveyancing are therefore treated equally by the amendment, which would mean that consumer benefits are extended as widely as possible. Current registration restricts the right to do technical land registration work for payment to suitably qualified professionals. Although the restriction appears in the 1974 Act, licensed conveyancers and others qualified and authorised to do conveyancing are included. It would be wrong if the introduction of electronic conveyancing weakened this consumer protection. Although the Law Society proposal seeks to extend the current provision to ensure that it covers new forms of working, its intention is to maintain the status quo.

Rather than taking the Committee through every detail of amendments Nos. 67, to 69, I refer hon. Members to pages 53 and 54 of the Bill. Amendment No. 67 would leave out paragraph 2(2)(a) to schedule 5, which deals with questions relating to terms of access. It is not necessary for the Committee's convenience for me to read it all out because it is there on the record. Amendment No. 68 deals with the overriding nature of network access obligations and proposes leaving out paragraph 6 to schedule 5. Amendment No. 69 deals with presumptions of authority and seeks to leave out paragraph 8.

Amendment No. 85 is a new amendment dealing with electronic signatures. Although it was included as a later amendment, I opened my remarks with it because that was the natural sequence in which I wanted to discuss matters. We are dealing with complicated amendments. The manner in which you have grouped them, Mr. Illsley, has a certain amount of coherence, but that does not alter the fact that the

topic is complicated. I hope that I have adequately explained to the Committee what we have in mind and I would be grateful for a response from the Minister.

Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department) 10:15, 13 December 2001

In speaking to amendment No. 64, I will also speak to the other amendments in the group: amendments Nos. 65, 66, 67, 68, 69, 85 and new clause 1. I will crave your indulgence, Mr. Illsley, to detain the Committee on this for a little while. As the hon. Member for Stone said, the amendments are technical and complex, but they are also fundamentally important and in many ways they go to the heart of the Bill.

The amendments relate to electronic conveyancing and, in particular, to the authorisation of electronic documents, their authentication by agents, remuneration for their creation and network access agreements. Much of the ground here has already been covered in another place, but it is such an important subject that it will bear some repetition.

Amendment No. 64 would, as the hon. Gentleman explained, remove the condition that each electronic signature to an electronic document in clause 91 must be certified. The concepts of electronic signature and certification are taken from the Electronic Communications Act 2000. The definitions there are wide and technologically neutral. Certification is, basically, any

''valid means of establishing the authenticity''

or ''integrity'' of the signed electronic document.

It is important to understand what we mean by that. The present probability is that the system of electronic signatures for electronic conveyancing will be some form of public key infrastructure. Electronic or digital signatures are something of a misnomer. They are not an electronic facsimile of a manuscript signature, but a block of information derived mathematically from the document being signed and a private encryption code or key unique to the individual who is going to sign or authenticate the document. A digital certificate is the means by which recipients of electronic messages can be assured of their provenance. The certificate associates a person or organisation with that person's unique but publicly available encryption code or key.

To cut a very long story short, under the system the originator uses a signing or private key to sign a message, then sends the complete message with its digital signature to the recipient. The recipient then uses a verification or public key to verify the origin of the message. As long as the originator has kept his private key secure, the recipient knows that the message came from the originator.

During implementation consultations, detailed discussions will need to take place with conveyancers and, no doubt, their insurers about measures that can practically be put in place to ensure key security. However, additional arrangements are needed to ensure that public keys are exchanged securely, and to assure recipients as far as possible that originators are indeed who they claim to be. To achieve that, third parties need to be introduced in order to act as certification authorities. Their role will be to vouch that a particular public key has been given to a particular individual. That assertion is made in

another electronic document, the digital certificate, which is itself digitally signed by the trusted third parties and owner certification authorities.

The question arises of who such authorities might be. The Electronic Communications Act 2000 makes provisions for a statutory scheme of cryptography service providers, but so far it has not proved necessary to implement them. Nor are there are plans to do so, given the Government's support for the formation of a voluntary industry co-regulatory scheme for certification authorities, which was established as a limited company in April 2000. The Government have agreed that certificates issued under the scheme that meet their identification requirements can be accepted as satisfactory evidence of the identity of an originator in an electronic transaction with Government. Five different companies are now registered under the scheme and are undergoing the approval process. Those or future companies are likely to be the certification authorities for individuals who will themselves acquire electronic certificates.

As electronic conveyancing is at the forefront of e-commerce, it has wisely been assumed that the number of individuals who will themselves acquire digital signatures in the short term is likely to be comparatively small. That is why the Bill envisages the possibility that conveyancers will sign documents electronically on their clients' behalf. Although conveyancers could doubtless use one of the commercial certification authorities approved under the scheme, there is an obvious possibility that their professional regulatory bodies might think it appropriate to assist the profession by acting as the certification authority. A similar scheme is already operating in British Columbia, where the Law Society is the certifying authority.

During recent consultation on electronic conveyancing, 75 per cent. of respondents agreed that certification should be required, so the provision does not lack general support. Overall, response to certification as a condition was very positive. There were obviously concerns about how the system will work in practice, but that is hardly surprising given the system's present embryonic state.

The Law Society did express doubt about the workability of certification, but that view does not appear to be widely shared. It may have been influenced by the thought that only electronic signatures of solicitors can be trusted. From that point of view, electronic signatures themselves are unnecessary, but we think that too narrow an approach.

Having said that, I should make it clear that we do not underestimate the very real challenges that the Land Registry and practitioners face in adopting, and adapting to, electronic conveyancing. I am confident, however, that both the Land Registry and forward looking practitioners who are eager to provide the best services for their clients will work constructively with the Government to develop a system that works. That is in everyone's interests, and in the light of those comments I hope that the hon. Gentleman feels able to withdraw the amendment.

I turn to amendment No. 85. The hon. Member for Stone mentioned the Australian precedent. I appreciate that the Commonwealth of Australia's Electronic Transactions Act 1999 expressly restates Australian common law in relation to the attribution of communications. However, in this Bill, which relates to land registration rather than e-commerce in general, we have adopted a different approach. We have left the general law alone and dealt with only the specifics of land registration. I also note that the Australian statute provides a default position from which the parties may derogate, and that it is concerned with the question of who is bound, rather than whether an electronic communication is acceptable. For those reasons, I do not think that it provides a compelling precedent.

Amendment No. 85 seems to imply that different consequences should flow from the creation of an unauthorised electronic document than flow from the creation of an unauthorised paper document. Such a distinction is completely unacceptable. It is fundamental to the protection of consumers and businesses that established principles of law that already apply to paper transactions should apply to electronic documents.

To explain how the Bill deals with the concern about unauthorised electronic documents that the amendment seeks to address, we should consider—briefly—the story of Mr. Smith, a go-ahead but rather careless conveyancer acting for the seller of Swindon Fields, which, as members of the Committee will remember from previous encounters, is a prime piece of registered land. Mr. Smith intends to transfer the land electronically. He has the details of his electronic signature clearly posted on his office wall. Unfortunately, his senior clerk is the dishonest Mr. Creep, who uses Mr. Smith's signature to authenticate the transfer as agent for the seller. The transfer is then registered at the Land Registry and the purchase moneys disappear into a bank account somewhere else in the world.

As a result, Mr. Smith's client is no longer the owner of the land; the owner is someone who has not paid Mr. Smith's client for it. That is not as it should be. The way to remedy the situation is to apply the long-established principles of rectification of the register and indemnity. Rectification and indemnity allow the Land Registry or the courts to put matters right by applying the general law in a way that is fair to all parties involved. Swindon Fields—the example that I cited—might be the buyer's home, and if so it is unlikely the register would be rectified. Instead, it is likely that the seller would be indemnified by the Land Registry, even though the registry had done nothing wrong.

The remedies of rectification and indemnity are two of the greatest advantages of registered land over unregistered land, and they will apply in the electronic world. Of course, having paid the seller, the registry could then exercise its right of recourse against Mr. Smith, whose carelessness is the root of the problem. As a matter of practice, the registry would do so only if Mr. Smith had been negligent or fraudulent. Innocent,

competent practitioners have nothing to fear. If they have acted in accordance with the terms of their network access agreement and have taken the sensible steps needed to preserve the system's security, they should not bear the liability for harm caused by the careless, malicious or criminal actions of others.

As indemnity is paid by the Land Registry, we can be confident that the terms of network access agreements will be constructed in a way that will minimise the opportunity for fraudulent behaviour. In creating the terms for these agreements, the registry will, as always, work with conveyancers to create a system that is acceptable to the registry, and to practitioners and their insurers. The rules relating to network access agreements will, of course, be subject to an affirmative resolution procedure.

I have repeatedly made it clear that the Government are determined to work with stakeholders to develop robust and secure electronic conveyancing systems. We believe that that is the way ahead, rather than amendment No. 85. When the same amendment was moved by the Baroness Buscombe in the House of Lords, she stressed the need for conveyancers, consumers and businesses to have confidence in the robustness and security of the electronic conveyancing system. That is right, and the Government are confident that it will be achieved. Equally right is the likelihood that no system will ever be completely fraud-proof. Where we part company with Opposition Members is that we do not conclude from the fact that solutions have not yet been designed that they can never be designed or that practitioners cannot be expected to bear any liability for the use, or abuse, of their own electronic signatures.

Photo of Bill Cash Bill Cash Shadow Attorney General 10:30, 13 December 2001

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?

Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department)

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.

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.

Photo of Bill Cash Bill Cash Shadow Attorney General

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

Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department)

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

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.

Photo of Bill Cash Bill Cash Shadow Attorney General

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

Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department)

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

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.

Photo of Stephen O'Brien Stephen O'Brien Opposition Whip (Commons)

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.

Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department)

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.

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.

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.

Photo of Bill Cash Bill Cash Shadow Attorney General 10:45, 13 December 2001

I am deeply grateful to the Minister for that exposition. He will appreciate that those who are engaged in such matters professionally have an enormous amount at stake, as does the Land Registry. As he said, the matter goes to the heart of the Bill, addressing questions such as will the system work, how will it work, and what circumstances will apply if there is a collapse in the system. I do not think that any of us have the slightest doubt that the Bill takes us into a new age. As we have said several times, much credit must be given to those who put it together.

My former partner drafted the Solicitors Act 1974, soon after I had arrived in the office, as I recall. He died quite recently, so I mention that as a small memorial to him.

Given all the considerations and complications of the proposals—not because I want to be curmudgeonly or even simply because I want to be sure that every Committee member is alive and aware of the debate that has happened—I am reluctant to withdraw the amendment. I am sorry if I disappoint the Minister, but I think that he knew that this was coming. I press the amendment to a division.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 10.

Division number 5 Adults Abused in Childhood — Clause 91 - Electronic dispositions: formalities

Aye: 3 MPs

No: 10 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

Clause 91 ordered to stand part of the Bill.

Clause 92 ordered to stand part of the Bill.