The next item of business is a debate on motion S4M-12381, in the name of Fergus Ewing, on the Legal Writings (Counterparts and Delivery) (Scotland) Bill. This is the first bill under our new rules, which allow certain Scottish Law Commission bills to be scrutinised by the Delegated Powers and Law Reform Committee at stages 1 and 2. I put on record my gratitude to the committee for the work that it has carried out on the bill and for its contribution to improving the Parliament’s capacity to legislate. I expect further Law Commission bills to be considered in this way.
14:16
I echo you, Presiding Officer, in acknowledging that the bill is the first to have been considered under the new Scottish Law Commission procedure, so we are creating a piece of history today, albeit one that I suspect will appear in the minor footnotes rather than the front pages or forewords. Nonetheless, we must recognise that it is an important new development of our parliamentary procedure, and I am extremely grateful to the Scottish Law Commission for its work in providing us with the legislation.
I thank the Delegated Powers and Law Reform Committee for its detailed consideration of and support for the bill, and I thank other members of the Parliament, academics and those in the legal and business community who have expressed their support for the bill. I hope and expect that the new process, which we see coming to its conclusion in respect of the first bill today, will go some way towards increasing the implementation rate of commission reports. The late Donald Dewar often alluded to that in saying that, prior to the inception of devolution, Scotland was the only country in the world to have its own legal system but lack a legislature.
These views are widely shared across the parliamentary spectrum, and in the passage of the bill we have seen the process working well. I was particularly impressed with the way in which the committee took on its new role, so I look forward to successive commission bills being considered in this way. To use a non-parliamentary expression, bring them on.
I thank the Scottish Law Commission for the sterling work that it has done in producing a report that has met with widespread support. It makes the task of legislators much easier when the thoroughness and diligence of the commission results in a report that commands such widespread support, which has continued throughout the bill’s passage.
Although the bill is small and modest, it is an important piece of legislation that addresses the current uncertainty as to, first, whether execution in counterpart is competent under Scots law and, secondly, whether Scots law permits legal delivery of a paper document by electronic means.
The bill does two main things. First, it makes specific provision to enable documents to be executed in counterpart. The bill will put it beyond any doubt that that is permissible in Scots law, which there is currently great uncertainty about. The committee recognised that the uncertainty as to whether execution in counterpart is competent under Scots law appears to have led to a drift away from transactions being concluded under Scots law, with parties instead opting to conclude under the law of a different jurisdiction—for example, English law—in which execution in counterpart is recognised.
When Scots law is not used, that might have the knock-on effect of any consequential litigation not being in Scotland. A key aim of the bill is to address that drift. We want legal work to be undertaken in Scotland, in so far as that is possible, and we do not wish the law itself to be a reason why such enterprise should be conducted elsewhere. The bill will give the legal profession and the business interests that it represents the necessary confidence to use Scots law for transactions in which execution of a document in counterpart is part of the process.
Secondly, the bill provides for the facility to deliver—in the legal sense—traditional documents electronically. There are conflicting authorities on whether a paper document may be legally delivered by its electronic transmission to the grantee or to a third party such as a solicitor or agent for the grantee. The bill resolves that uncertainty so that any document that is created on paper may become legally effective by being delivered by electronic means such as email or fax.
I was heartened by the unanimous support for the bill’s general principles from the committee and from all the members who took part in the stage 1 debate. Given the bill’s permissive nature, it is not easy to quantify how significant its benefits will be, but it is clear that all participants in the process agree that it is capable of delivering benefits.
For example, Margaret Mitchell pointed to the positive impact that the bill would have on Scots law by helping to ensure that individuals and businesses that seek to undertake transactions in Scotland do not experience obstacles or delay. Jenny Marra commended the provisions on delivery by electronic means, which she saw as increasing efficiency and flexibility.
I believe that the most obvious benefit of the bill relates to transactions in which Scots law is the obvious choice to govern the transaction but is not used because of doubt over the legality of executing a document in counterpart. The bill will mean that parties will have the confidence to use Scots law.
The bill creates a helpful framework for a variety of transactions, including transactions involving parties in remote rural or island areas, where distance makes meetings more of an issue. A clear strength of the bill is that it provides a flexible and light-touch framework. I am sure that it will initially be used mainly by practitioners and their business clients for commercial transactions, but I share the view of one stage 1 witness that, by enabling parties to be more comfortable with the use of Scots law, it creates the potential for innovation to flow from that in the future.
I am grateful to all who gave evidence in writing and orally to the committee. In that evidence, suggestions were made that were worthy of our detailed consideration. We considered them thoroughly and concluded that the bill as introduced was fit for purpose and capable of achieving our policy aim. I take further comfort from the fact that the bill will have completed its parliamentary passage without any amendment; I do not know whether that, too, represents a new chapter in the history of our parliamentary proceedings.
The bill is a compact but vital piece of legislation that will provide certainty in relation to execution in counterpart and electronic delivery of traditional documents in Scots law. We are confident that it will meet a clear and pressing demand from those who are likely to be affected by it and, in my view, its value in bringing clarity, flexibility and certainty to the law cannot be overstated. I hope that future Scottish Law Commission bills that are selected for this process meet with the same level of consensus and success.
It is my duty and pleasure to move the motion. I move,
That the Parliament agrees that the Legal Writings (Counterparts and Delivery) (Scotland) Bill be passed.
Thank you, minister. In relation to your question about whether this is the first bill to have had no amendments, I confess that I do not know, but I suspect that it is not. I can think of a couple of candidates, but I will check and will try to answer the question by the end of today’s meeting.
I point out to all members that throughout this afternoon we have some time in hand so, if members wish to take interventions or to expand on the very important points that I know that they have to make, I will be more than happy, as will the Deputy Presiding Officers, to allow them time to do so.
14:25
Thank you very much, Presiding Officer. It is notable that the bill is a departure, but on whether it is the first bill to remain unamended, I and others look forward with great interest to hearing from you, Presiding Officer, before the day is over.
As has been said, the Legal Writings (Counterparts and Delivery) (Scotland) Bill is perhaps not the stuff of legend and it may not even attract many newspaper column inches outwith the specialised press, but as the Presiding Officer and the minister have said, it is significant in its own way. It is the first bill to come through the new process led by the Delegated Powers and Law Reform Committee. I, too, thank the committee for its diligence in that matter.
The new process reflects our shared experience as a Parliament; it is a timely innovation, as the powers and responsibilities of the Scottish Parliament are set to increase substantially in the period ahead. The bill is also in itself a modernising statute in that it seeks to bring the law up to date in the electronic age. The ways in which individuals and companies do business are changing and will continue to change, so it is important that our legal system keeps up with that process.
The case for devolution over the past 40 years has been based on many arguments, both great and small. Since 1999, this Parliament has initiated major changes in social policy, but at the same time we have also made small but important adjustments to statute in order to reflect changes that have been made elsewhere. However, the need to adapt Scots law to reflect change in the modern world has been recognised for even longer; it is now 50 years since the Scottish Law Commission was established to keep the Scottish legal system under review.
Mr Ewing referred to the late Donald Dewar; for Scots lawyers like him and John Smith the process of continuously updating Scots law was an important one, and the Scottish Law Commission was therefore seen as a very valuable institution. The United Kingdom Parliament, in their view, lacked the capacity to deliver in a timely and efficient manner all the reforms of Scots law that would be required. With the best will in the world, the parliamentary time that is available at that Parliament was simply never going to be enough.
Devolution was, of course, promoted for much wider reasons, but a devolved Scottish Parliament has had the additional benefit of offering a way around delays in enacting law reforms on which everyone was agreed. It is fair to say that this devolved Parliament has taken a little time to work out the best way to deliver that objective, but there is no need to apologise for that. This is, after all, a maturing institution. We have from the beginning passed legislation to clarify the law: for example, to conform to European human rights legislation, which is fundamental to the constitution of the Scottish Parliament and the founding act of Parliament that created it. However, we are now moving on to a new phase, and I think that the committee’s focus on law reform will prove useful to both the Parliament and the legal profession, while the whole Parliament remains responsible—as it is today—for the final outcome.
The substance of the bill is also welcome. We live in an age of electronic communication and in an age of ever more rapid technological change. The Scottish Law Commission has rightly identified areas of uncertainty in the application of Scots law to contractual arrangements in this electronic age, and has produced measures to resolve those. This is what the bill is all about: it is about making clear the terms on which signatures of counterpart documents can form a single agreement, and how delivery by electronic means can have the same effect as delivery of a physical document.
As the minister said, there has been little dissent from the terms of the bill, other than through increased clarity being sought. That consensus in support will doubtless be reflected in our debate today.
It is important to recognise that the agreement that is represented by the bill applies to the current position; it would be a mistake to assume that passing the law will be enough to address the impact of technological change on the terms of Scots law. It will do for now, but it is certainly an area that the Delegated Powers and Law Reform Committee and the Parliament will have to revisit before too long. The nature and pace of technological change are such that we will be back here to repeat the process in order to meet the next challenge—whatever it may prove to be—that renders uncertain the existing status of legal rules and procedures.
Even as members of this very young Parliament, we have seen quite dramatic change since the first election in 1999. Those of us who were members at the outset were rightly pleased that the Parliament was ahead of the game in enabling us to communicate by email to respond quickly to our constituents and to access information from across the Parliament and beyond. However, the scope of electronic networking has grown dramatically since then, and although the Scottish Parliament was trailblazing in its adoption of new technology compared with older parliamentary institutions, we have had to work hard to stay in touch with the people we represent.
For young people under 30, the internet is not just another tool, but is part of the definition of how we live; the internet is as much an accepted part of ordinary life as phones and aviation were a generation ago. If that means that constant change and adaptation are required in Parliament, the same is true for business, both in Scotland and further afield. Marketing is increasingly done online; contracts—thanks to the bill—will go the same way; and the whole idea of how people do business will come to reflect the virtual environment in which we all live and work.
The bill is useful, not because it will bring businesses flocking to these shores, but because it will ensure that Scotland and Scots law do not get left behind. The process of law reform as it is exemplified by today’s debate does not give Scotland a novel competitive advantage, but ensures that we are not at a disadvantage and that our Parliament delivers on one of the purposes of devolution.
The focus of Scots law must continue to be on the justice system to ensure that our courts are first and foremost about delivering justice for the people of Scotland. The bill can help to ensure that we also have a legal system that is modern, up to date and fit for purpose, and that our courts can settle business disputes effectively and efficiently and can therefore support Scottish business and the economy.
On that basis, I am pleased to welcome the bill and to offer the support of the Labour Party.
14:32
Insomniacs might regard the bill as the equivalent of Mogadon, but to former lawyers such as the minister and myself, it is beyond fascination, because the substance of the bill is important.
I, too, echo the tributes that have been paid to the Scottish Law Commission and the Delegated Powers and Law Reform Committee, both of which have performed important functions in getting the bill to its current legislative state.
As we have heard, the bill seeks to improve the way in which legal documents are signed and brought into legal effect under Scots law. It is true that there is currently a great deal of uncertainty among legal practitioners as to whether documents can be executed in counterpart. Sources from the 18th century indicate that it is an acceptable practice, but that is not widely recognised within the legal profession and so in Scotland signing ceremonies, or round robins, of one document have long been the practice for executing documents. However, for multijurisdictional transactions, which are now commonplace in the commercial world, that can prove to be costly and inefficient. It is the case that parties to contracts have often opted instead to use English law or even New York law instead—both of which permit execution by counterpart. That is not a positive place for Scots law to be, so the desire to reform this area of contract law is understandable.
Although I am unconvinced that the bill will give Scots law a so-called competitive advantage, as the stage 1 report highlights, it will put Scotland in a more equitable position with other jurisdictions, as Mr Macdonald suggested.
However, I want to sound a couple of cautionary notes as the bill concludes its passage through Parliament this afternoon. The first is that section 1(4) provides that the single executed document may be made up of all the counterparts or might comprise one entire counterpart, together with the pages on which the different signatures have been subscribed. That may have practical advantages, but if the document is registered in the books of council and session, that means that the remaining counterparts will potentially be lost. That practice has implications if, at some point in the future, a solicitor wants to check the additional counterparts for inaccuracies or inconsistencies, or if it is suspected that there has been a fraud. Indeed, the policy memorandum underscores the importance in practice of preserving documents where the transaction involves “loans or leases of land.” However, under the new regime, the paper trail would not provide a complete picture.
The Faculty of Advocates gave evidence to the committee on that point. It expressed concern that execution in counterpart could lead to different parties signing different versions of a document, either through error or fraud. Robert Howie QC explained:
“If one permits execution by the exchange of the back pages of a contract, each signed by a particular party, plus the front page, it is all too easy for the rogue or fraudster to amend the critical stuff in the middle of the sandwich.”—[Official Report, Delegated Powers and Law Reform Committee, 30 September 2014; c 22.]
However, the faculty was in the minority in that view and was unable to provide quantifiable evidence in support of its concerns.
I presume that Miss Goldie would acknowledge that the public will expect the Faculty of Advocates, as professionals, to give a high level of attention to the need to administer documents thoroughly in order to ensure that the kind of difficulties to which Miss Goldie alluded will be prevented on as many occasions as possible.
I imagine that, in practice, it is more likely to be practising solicitors than advocates who will deal with the transmission of the documents and the advice to clients on executing them. I will come to that in a moment—it is a point well made.
The minister was perhaps not convinced of the need to lodge amendments at stage 2 to provide additional safeguards. I have some sympathy with that view; I understand that the risk of fraud and error is not new. However, even though the faculty’s concerns were ultimately dismissed, it is my view that it put forward valid concerns.
The obligation to register a document in the books of council and session is not mandatory. To come to Mr Pearson’s point, there is an imperative on the Law Society of Scotland to issue practice guidance notes to practitioners to ensure that there is retained physical evidence of to what signatories believe they are putting their names.
Will Annabel Goldie take an intervention?
I am into my last minute, Mr Don, so I will just proceed—
I can give you a bit more time, if you wish.
Presiding Officer, how can I refuse?
I am grateful, Presiding Officer, and I thank the member for taking the intervention.
As I heard the evidence to the DPLR Committee, there was essentially a recognition that if we allowed two different documents—because that is what counterparts are—we would open up the box to their being different. We could do it no other way. Therefore the member has probably reached the right point by saying that the professionals involved need to ensure that the two, or multiple, copies are available for inspection later. That is the best evidence that we have. However, there is no alternative to having execution in counterpart other than having several copies, which could be different.
The dilemma is how we, as a legislature, strike that balance. To be fair, there is a genuine attempt to do that. I have proffered my view of what the professional body that is responsible for solicitors in Scotland might think of doing; it has a useful role in that respect.
I would also be minded strongly to urge Parliament to commit to undertake post-legislative scrutiny of the bill once its provisions are implemented. Scotland is a small country and the legal profession is fairly contained. I do not think that it would be difficult to secure evidence and find out how the bill is working in practice.
Those are what I described as cautionary concerns. The bill received cross-party support at stage 1 and no amendments were lodged at stage 2. It is broadly non-contentious. I can confirm that the Legal Writings (Counterparts and Delivery) (Scotland) Bill has the support of the Scottish Conservatives today.
14:39
My experience says that this is a real issue and it is not a particularly new issue. On one occasion, 25 years ago, I had to fly from Vienna to San Francisco so that a contract could be signed. I had a very nice dinner with a director at Bank of America, who was the other party to the contract, I had a good night’s sleep, and then I got a taxi back to the airport and flew to Glasgow. I spent a total of 14 hours in San Francisco and for most of that time I was sleeping. Anything that helps us to address such situations—which, frankly, are a waste of time and money—has to be good news.
Quite reasonably, Annabel Goldie raised the issue that, potentially, different versions of a document could be signed in the belief that they were the same version. One issue that I pursued in the committee at stage 1 of the bill—with the Faculty of Advocates and with others—is harnessing the power of mathematics and of electronics to inhibit that particular possibility. It is perfectly possible, with a public algorithm and a public key, to derive a hash that represents uniquely a particular document. A single dot, comma or letter being changed in the document would result in a different key, so even if there were multiple copies, it would be possible to know whether those multiple copies were identical by the application of appropriate technology.
The bill does not provide for that option but it formed part of the consideration of the bill and I hope that, at some future date, we will be able to return to that subject and enable and require that procedure to be used.
I seem to recollect that a similar mechanism was used by Mary Queen of Scots, yet some of her letters were intercepted, which ultimately led to her demise. Would the member care to comment on how effective that mechanism may be in reality?
Mr Stevenson, can we keep to the topic of legal writings?
I was referring, of course, to some of the stage 1 discussions. I will simply say that of course we should consider the decryption work of George Scovell, who worked for Wellington and broke the codes of Napoleon. That is a much more significant thing. However, that is beyond the scope of the debate and perhaps cannot be fitted in, even in a generous six minutes.
The real point that came up and which we put to witnesses at stage 1 was whether we should create the electronic infrastructure in Scotland so that a single copy can be held in one place and signing can be done electronically from dispersed geographic positions. There was some acceptance by witnesses that that was a good idea, but it was an idea that they would like to be the second jurisdiction to implement rather than the first. However, there comes a time when we have to be bold and perhaps take up that option.
Sometimes we have to take such things for granted if we cannot understand some of the mathematics that make them possible; in mathematics, there are P problems and NP problems. In essence, the NP problems are the ones that cannot be solved and the encryptions that we use these days are of that character.
The Faculty of Advocates and others in the legal profession are, not unreasonably, intensely conservative in their approach. They want to move in small steps, test, confirm that things work and provide the necessary security. However, the danger with the process that the Law Commission undertakes—it involves a rigorous examination before fully developed proposals are brought to Parliament, which is extremely helpful—is that all the contentious and difficult bits have been removed from the proposals, so we end up with something that is the lowest common denominator, to some extent.
Although the bill levels the playing field for Scotland and enables us to stand shoulder to shoulder with jurisdictions that allow counterpart operations, it does not take us ahead of the pack. The witnesses agreed that there was scope for returning to the issue in the future.
We must be confident, if we decide to hold contracts in a central database, that a document’s confidentiality will be protected. That raises a difficult issue for Governments of whatever complexion, and wherever they may be based. Governments naturally have a difficulty with absolutely secure secrecy of information, conversations and communication, but in this case we will not get commercial adoption unless that assurance is present.
We will need to return to looking at how—as the committee heard in evidence sessions—we can provide absolute security in a legal framework that places such onerous responsibilities on those who use that kind of unbreakable encryption and security to respond to legal requests for access. That has been done before—it is not particularly new—and we need to return to the subject.
In appearing before the committee, lawyers showed that they were willing to listen to the arguments but would proceed slowly. Indeed, it was 25 years ago that I was invited by the Faculty of Advocates to talk to its members about whether it could introduce a secure email system. They listened politely, but decided that they would not do so.
Lewis Macdonald spoke about the new generation, and how people under 30 view the electronic world. It is 35 years since I sent my first email, so some things have been around for an awful long time. We need to think about how rapidly things move on.
My grandfather was born when Abraham Lincoln was President; my father was conceived before the Wright brothers flew; and I was 11 years old when the first transatlantic telephone cable came into operation. Every life takes us forward, and we may have to speed things up a wee bit in the legal world to ensure that we keep up with the pack and that we can draw new business to Scotland rather than simply protect the business that we have.
The bill is an excellent piece of legislation, and I am sure that all members of the committee very much welcome the gracious comments with which the Presiding Officer opened the debate. I look forward to hearing what our committee convener has to say if he is called to speak; I see that his button is pressed. I am happy to support the bill, and I hope that the Delegated Powers and Law Reform Committee gets many more opportunities to engage in the overwhelming excitement that is legislation in the Scottish Parliament.
14:47
I want to reflect briefly on when we last voted on the bill at stage 1, and on the scrutiny of the bill that we have undertaken in committee. As members will be aware, the then Subordinate Legislation Committee’s remit was extended in 2013 and, as the Delegated Powers and Law Reform Committee, we scrutinise not only subordinate legislation and the delegation of powers, but Scottish Law Commission bills of the kind that we are debating today. Indeed, this is the first time that a recommendation of the Scottish Law Commission has been brought to the Parliament under the new arrangements.
The bill that Parliament is asked to consider has already been passed unopposed and unamended at stage 1 and stage 2, as has been mentioned, and I see no reason for Parliament to reject it at stage 3. I believe not only that the general principles of the bill are sound, but that—as I will explain—there is a demonstrable need to modernise our contract law in Scotland. The bill proposes to clarify how a document can be executed in counterpart, and it will expressly permit the delivery of paper legal documents electronically.
In supporting the bill, I hope that Parliament can give clarity on key concepts in Scots law and practice; reflect changes in technology and business practice; and make a wider contribution to the Scottish economy. The Scottish Law Commission has, in its work, highlighted the need for the bill and demonstrated that there is support for reform across the legal, academic and business communities.
The Scottish Law Commission identified two problems with commercial and contract law in Scotland that the bill could address. The commission highlighted the need for clarity in respect of counterparts, because it is not certain that a legal document can be brought into effect if it is signed in counterpart. The commission also called for clarity in respect of the law on delivery, because it is not clear whether a paper contract can be said to have been delivered if it is sent and received electronically. The commission’s view is that the law as it stands is not fit for purpose. The letter of the law in Scotland is out of step with contract law in neighbouring jurisdictions and with common legal and business practice.
The committee heard evidence that businesses in Scotland sometimes choose to use English rather than Scots law to govern agreements because counterparts are permitted south of the border. That disincentive to use Scots law is compounded by the legal uncertainty over methods of delivery, and it could harm our economic competitiveness. By allowing the use of counterpart signatures as an option to execute a contract and by allowing contracts to be delivered electronically, we could help businesses to make savings on time, travel and accommodation.
As I said in the stage 1 debate, only a limited number of people in a business are authorised to sign legal documents on behalf of the company and the law here currently requires more of them than is required of their counterparts elsewhere. The bill is an opportunity to remove a disincentive to conducting business in Scots law and to make it easier for parties to enter into commercial contracts and transactions. With some small but significant changes, we can bring contract law up to date and make it for fit for purpose. For that reason, I will support the bill.
14:51
This is an interesting point to have reached, partly because, as many members have mentioned, this is the first bill that has been dealt with by the Delegated Powers and Law Reform Committee, and partly because there is relatively little in the bill. Even speaking third among the back benchers, I find myself with nothing much left to say about the substance of the bill. However, that is actually no bad thing, because I would like to consider the process of getting to where we are.
I thank my colleagues on the committee for their diligence and their careful consideration of the bill. There were one or two moments when we wondered just what we were doing next, because we had not gone through the process before. For example, we wondered how to handle the process when there are no amendments at stage 2. The minister still had to turn up and we read through the section numbers. However, we have got there, and it has been an interesting experience.
As members have said, Parliament has historically never found enough time for the repair and maintenance of Scottish law. We now have the opportunity to do that. We have done it on some occasions, even within my time. I recall in the previous session the Sexual Offences (Scotland) Bill, which came to the Justice Committee from the Scottish Law Commission. Bill Butler brought us a member’s bill on damages that came from the Scottish Law Commission, and we had the Long Leases (Scotland) Bill, which we started in session 3 but which I think was finished in session 4—that was another one that came from the commission. We have managed to do some of that work, but there was a general recognition that it had not been going fast enough and that we needed to find another way of operating.
In the second session of Parliament, we had two justice committees, but I have not found anybody who thought that that was a good way forward or anyone who wants to go back to that. However, given that the legal system is firmly within the Justice Committee’s remit and that we know—I know it very well, because I sat on the committee for all of the previous session—that the Justice Committee has a large number of things to do, the Parliament has a bit of a problem in moving all the stuff through.
The current idea was considered in session 3, but it really came to a head only in this session. I well recall an invitation from Roderick Campbell to a meeting on 15 June 2011—you may recall it, too, Presiding Officer—at which the Scottish Law Commission gave one of its periodic presentations to us. Christine Grahame, the Justice Committee convener, and Bruce Crawford, the then Cabinet Secretary for Parliamentary Business and Government Strategy, were there. That was the start of the process because, at the meeting, we said that officials ought to go away and consider whether we should change standing orders. That was the date on which the process that we are just completing started.
I also pay tribute to the many officials under your jurisdiction, Presiding Officer, who thought through how we could change the standing orders and brought forward workable standing orders that we have used. I really am pleased; those officials have to do that work, and they did it diligently and effectively. That is where we started from.
The bill that we have before us fits the standing order requirements. There is a wide degree of consensus among key stakeholders about the need for reform and the approach recommended, which of course has been demonstrated by the fact that there are no amendments. The Scottish Law Commission did its consultation so well that the Government found no need to consult, and I have to say that when the committee consulted in the normal way we did not bring up very much that had not been said before.
Where should we be going? That is what I would like to address over the next couple of minutes. We know that we need to keep Scots law up to date. As Lewis Macdonald and others have pointed out, modern practice is changing, not just in commerce but in the way that we do business. Only the other day I was looking at some pension funds that I could have accessed online, set up online, paid into online and from which, in due course, I could have received payments online. Some of our quite complicated legal transactions are now being conducted online and we need to ensure that we have a legal system in which the inevitable errors and faults can be negotiated.
Not only do we live in the time of the internet but, as a result of that, we have multinational interactions in our normal, everyday lives. We also have, I would suggest, more multicultural families—more families that are the result of partnerships across nations, because we can now physically move around so much more.
Given that that is the environment in which we have to legislate, in which we are trying to operate and in which we must make Scots law workable, I suggest that we will need to do more of the kind of thing that we have done. We are both well aware, Presiding Officer, that a small bill on succession has been proposed, which will be the next bill for my committee. I am sure that both you and the Government will ensure that it fits the criteria as they currently stand and I have no doubt that you will do that faithfully. However, having read the consultation on how we might amend succession law, I have to say that finding things that are non-contentious will be rather more difficult than it has been with this bill. I therefore suggest to you, Presiding Officer, and the chamber that we need to start thinking about whether there should be a wider remit for my committee or any other; I would not want to say what the process should be. We need to ensure that we can look after the repair and maintenance of Scots law—in particular, perhaps, private law—without it having to go through the Justice Committee, for all the reasons that we now well understand.
I commend the bill to Parliament and I thank my colleagues for their diligence in the work that has been done.
14:57
It is evident from the tenor of today’s debate that the bill has cross-party support, and I restate my party’s support for it. It is fair to say that members have focused largely on the advantages of the reforms in the bill. That is wise, because there has been considerable doubt as to whether documents can be executed in counterpart under Scots law, and the bill provides the necessary clarification for legal practitioners.
I acknowledge the need to adapt and change our centuries-old legal system to meet the exigencies of the modern age. I am pleased that Scottish businesses will no longer be deterred by the impracticalities of the signing ceremony or the round-robin process that has been the hallmark of getting deeds executed to date.
Many members—including Lewis Macdonald, Stewart Stevenson and Margaret McCulloch—recognised that the increased speed of transactions and potential savings in travel and accommodation costs will no doubt benefit the business community, and that is to be welcomed. However, I reiterate that the issue of safeguards remains. In his opening speech in the stage 1 debate last year, the minister emphasised that
“the approach has been to ensure that the legislation is permissive and as flexible as possible.”—[Official Report, 25 November 2014; c 36.]
I fully accept that that is a well-intentioned approach, but I am a little anxious that the new arrangements could facilitate fraud or, more conceivably, error. As I said in my opening speech, I realise that those are both possibilities under existing arrangements and I understand that execution in counterpart is an optional process, but most practitioners and their clients will opt to adopt what is proposed in the bill.
As parliamentarians, we have to guard against even theoretical or notional risks. Although the committee and the stage 1 witnesses were satisfied that such risks were negligible, and I respect their conclusions, I do not fully agree with that assessment.
On the potential for fraud and error, Stewart Stevenson made a characteristically interesting observation about the role of mathematics and electronics. I would comment in more detail on that, but I am not sure that I understood it all. However, I understood Mike MacKenzie’s colourful addendum to Mr Stevenson’s speech about the potentially terminal consequences of overreliance on such techniques.
I again urge the Parliament to seriously consider post-legislative scrutiny of the bill at some appropriate point in the future to ensure that, if any loopholes have emerged, we can deal with them. I also reiterate that the Law Society of Scotland should issue to practitioners practice guidance notes to ensure that signatories know what they are signing and that the agreed signed version or a copy is retained in a physical form, whether that is a PDF file or a paper copy.
Does Annabel Goldie agree that contract documents often consist of huge piles of paper, with a cover sheet that is signed by both parties, and that, in principle, there is nothing to prevent fraudulent or accidental substitution of some of the meat or filling in the sandwich, even under current procedures?
I accept that, and I think that most practitioners or people signing such contracts will be absolutely clear that they want to know what the document is and what they are signing. The bill makes clear a mechanism for ensuring that that can be done. However, the point is that people can in good faith negotiate a contract and reach an agreed position that they distil into the final version of the contract document, then get a signing copy of the document and a page to execute, and then return the executed page, only to find that, through mere error, that page has been appended to an earlier version of the contract. That mistake could happen simply because we are departing from physically attaching the signature to the thing.
I am not disagreeing for a moment with the proposition that we need to modernise procedure and, as I have said, I welcome the bill. However, I point out that this is a fairly major departure from what has happened in the past, and there is a potential for difficulty. All that I want to be sure about is that we try to minimise that. The Law Society has a role to play in that mitigation, as does the Scottish Parliament.
15:02
As someone who is not a member of the Delegated Powers and Law Reform Committee, I am grateful for the opportunity to wind up the debate on Scottish Labour’s behalf. I am sure that there will be those in the public gallery and watching us on television who are in awe at Annabel Goldie’s obvious excitement about and gushing enthusiasm for analysing the detail of the bill, which is mirrored by Fergus Ewing’s obvious delight in introducing the details of the bill in the Parliament today. I am wide-eyed at Nigel Don’s description of our debate as arriving at a very interesting conclusion.
However, to put aside those observations, although the issue that we are dealing with is in truth not the most pressing issue for the Scottish public, the details of what we discuss in relation to the bill will be critical to members of the public at key times in their lives.
The member has made the most important point, which is that this is all about how the legal system works. The public do not care about or want to know how the system works, but they want a system that works. Our job is to ensure that that system is good and effective.
I am grateful to Nigel Don for that observation. It gives me comfort to know that I have made a point in the chamber that someone found relevant.
A point was made about whether our modern approach to signing documents in an electronic form adds complication and difficulty to knowing how the documents have been compiled. In that context, I observe that such difficulties perhaps pertain to the generation to which one belongs. There is no doubt that our younger generation of legal minds might well find it far easier to collect material electronically and do so correctly and accurately than to collate paper in the way that we have done throughout our working lives.
I am with the member in what he is saying. However, I have been party to a 3,500-page contract. It is unlikely that that would be in the front of any single mind, yet a single signature is needed. Whatever system we have, there are practical difficulties that do not get us away from the need for trust and oversight of those whom we trust.
I agree completely. I merely remember that in a previous life I was responsible for creating documents that thousands of people had to refer to in undertaking their duties. When those documents were typewritten, any amendments to individual pages resulted in a complete reassessment of every page thereafter to ensure accuracy. As the member suggested, once the electronic age came along, any changes were brought to the author’s attention electronically and one could see whether any amendments had been made to a document, who made them, at what time and on what date. That is enormously valuable to those who might sign off a document, who know that its authenticity can be relied on.
I am grateful to the Delegated Powers and Law Reform Committee for the work that it has done on the bill. It is a novel piece of work that shows that the Parliament’s system can operate and can deliver a number of practical outcomes that the public will overlook but will no doubt find valuable in times ahead.
I had to access civil law recently, and it took six months to process the paperwork and transact a piece of business in a relatively innocuous set of circumstances. If that time and frustration can be avoided by the use of electronic communication, that only speaks well for the law and for the way in which business can be transacted in Scotland in the 21st century.
The proposal in the bill will make Scots law more attractive to its users. It simplifies what has until now been a relatively complex process in terms of the handling of paper, never mind the content of the paper. One might say that it introduces an element of the 21st century into our Scots civil law process.
There might be some lessons to be learned on the criminal justice side. A similar process pertains to the handling and signature of warrants. The time that it takes to obtain warrants for search, arrest or the interception of communications is an issue across Scotland. I would like to think that those on the criminal side will look at what has happened to see what lessons can be learned.
The Delegated Powers and Law Reform Committee has provided a valuable service. It has modernised Scots law to some extent and has made it more relevant. We should acknowledge the Scottish Law Commission’s role in producing legislation whose time has obviously come, in that it has passed so easily through the Parliament, with due scrutiny and examination.
Miss Goldie made a very important point about reviewing the operation of this new practice, particularly in relation to the threat of fraud or incompetent handling. That review will tell us whether, regardless of the ease with which the bill is being passed, the bill is effective and efficient in its outcome. One hopes that the electronic transfer of signatures will be deemed to be a door opening to Scots law becoming attractive internationally and that, in due course, people will wonder what all the fuss was about.
15:10
I thank all the members who contributed to the stage 3 debate on the Legal Writings (Counterparts and Delivery) (Scotland) Bill. I will address some of the points that were made in the debate. First, on when we intend to bring the legislation into force, the answer is as soon as possible. On the assumption that the bill is passed today, we hope to commence the substantive provisions about three months from now.
Mr Don raised the question of future bills adopting the new procedure, and he informed the Parliament that it is under contemplation that the second bill under the new procedure will be the succession bill, which I understand is expected to be referred to the Delegated Powers and Law Reform Committee when it is introduced in June 2015, subject to its meeting the necessary criteria for referral. Mr Don touched on that.
He also raised issues about the procedure adopted here and how it will be applied. That is not for me, so I will not go into that. However, I can say that the Scottish Government echoes the sentiment that he expressed and which I think underlay his criticism, which is that we require to have a process for the repair and maintenance of Scots law. That was a prudent comment and one on which it may be sensible to ponder further.
I turn to some of the substantive comments that were made on the bill both at stage 1 and here this afternoon. Annabel Goldie, in an extremely useful speech, for which I am grateful, raised and postulated a number of questions, most but perhaps not all of which were raised in the committee, some by the Faculty of Advocates, some by other members of the legal profession and others by her colleague John Scott. The first relates to fraud and error.
Fraud is something that MSPs and Parliaments cannot stamp out. It occurs. Sadly, it is part of life as we know it, and I suspect that it always will be, no matter what law is passed. However, my experience—and my belief—is that, in Scotland, fraud is rare and honesty is the norm. If that analysis is correct, it is something for which we should be extraordinarily grateful and something that we should cherish and foster as a society. However, we cannot rule out fraud.
I do not believe that anything in the bill increases the possibility of fraud. It may be argued that those who will have recourse to using the benefits of the bill, if one likes to put it in that way, will mostly be in the legal profession, advising businesses in the execution of what may well be highly complex documents. Mr Stevenson referred to his experience of one document having 3,500 pages, and many contractual documents have to be executed by tens or twenties of parties, or even more. Lawyers will tend to be involved, and I think it is reasonable to say, without putting lawyers on a higher plane of honesty relative to the rest of the populace—
Members: Hear, hear.
I am pleased to hear that there is general assent to that proposition about the honesty of lawyers. It is perhaps not something that one hears every day. Nonetheless, that seems to indicate that if there is a difficulty, it will not be fraud. Any difficulties that parties have with contracts may well relate instead to their content.
As soon as Scots law permitted documents to be valid without their requiring to be executed on every page, that could be said to have increased the propensity for fraud to be effectively accomplished. I believe it is the case, although I am certainly no expert, that until relatively recently—as recently as the early 1970s, or maybe even more recently than that—some documents, including wills, required to be signed on every page.
Of course, there is a particular reason for documents to be signed on every page, but are we really saying that, in Mr Stevenson’s example of a contract with 3,500 pages or, perhaps, four or five pages with several annexes, we should impose on society a legal system in which every page requires to be signed? It is plain that that would not be a sensible way to proceed, so we have moved away from it.
As soon as we move away from that approach, however, there is—in theory, at least—the propensity for fraud. I was able to demonstrate one example of such a fraud that has taken place. It is not a private matter but one that has come into the public realm and has been raised with ministers. It is the case of Brebner, in which the first page of a disposition was fraudulently replaced with another, which resulted in an enormous difficulty.
I accept that fraud occurs, but I believe that the circumstances in which the bill will be used will tend to minimise it. I should also say that a party is not bound by a document that they have signed as a result of a fraud. Somebody who is elderly might have been induced to sign a document against his or her will. If that happens as a result of fraud, the contract will be void. Similarly, if my signature is defrauded by somebody else, the contract will be void, not valid. Therefore, the law provides protections against fraud.
Error is more likely than fraud. I think that the witness from the Faculty of Advocates said so as well. The parties will simply not have validly executed in counterpart if they inadvertently sign different versions of a document, because the bill relates only to documents that are
“executed in two or more duplicate, interchangeable, parts”.
If the parties have signed different documents, its provisions do not apply.
I see that, all too soon, I am running out of time. I had meant to carry on for quite some time and comment on Mr Stevenson’s remarks. He managed to bring in references to Napoleon, Mary Queen of Scots and the Wright brothers. How he did that, I am not quite sure but, nonetheless, his speech was of occasional tangential relevance.
Ms Goldie’s speech was, by contrast, an example of painstaking forensic analysis of the highest quality, as we have come to expect over several years. I must bow to her superior research, because I have not looked at the 18th century precedent. The shame of it.
That notwithstanding, it is my pleasure to thank everybody involved in the bill who has been thanked already and another group that has not been mentioned: the officials who have provided their support to me in an exemplary professional fashion.
To make a serious point, the officials made sure that the points that the Faculty of Advocates made were pursued. On 28 November, I undertook to ask the Faculty of Advocates whether it had anything else to say. We did not get a reply, so one can infer that the faculty was satisfied with the responses that I gave to the Parliament with the benefit of advice from the Scottish Government civil service.
A range of good points have been made. Some other ones have been made as well. I welcome the cross-party support for the bill. It will make a difference. It will help to save a great deal of time and, perhaps, a little bit of money and will make a modest but positive contribution to the legal profession and, perhaps, enterprise in our country.
I commend the bill to the Parliament.
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