Another reminder from the courts of the need to take care when communicating by email to avoid unwittingly entering into a legal commitment.
Back in 2019 we reported on the case of Neocleous v Rees, in which a property contract contained in a series of emails was held to have been validly signed by a solicitor on behalf of his client, by the automatic generation of the solicitor’s name, occupation, role and contact details at the foot of one of the emails.
This decision caused senders of email communication to consider the implications of their name and other details being automatically inserted as a footer in the email and whether disclaimer wording needed to be included to prevent a contract being inadvertently created. While the decision was in a property context, it had a more general application.
There is a new Court of Appeal decision reported on 14 December 2022, Hudson v Hathway  EWCA Civ 1648 (14 December 2022) (bailii.org) and this is interesting as a development of the decision in Neocleous v Rees. The Neocleous decision was County Court so this latest decision from the Court of Appeal is more authoritative.
The case related to equitable ownership of a family home purchased in joint names (Mr Lee Hudson and Ms Jayne Hathway), initially with equal ownership rights, where the unmarried parties later separate. Hathway claimed an increase in her equitable share in the family home. There were certain e-mail communications between Hudson and Hathway which expressed their common intention that Hathway should have the whole equitable interest in the family home. The issue was whether those e-mail communications complied with the necessary statutory formalities to be binding.
The technical point was whether the relevant emails that effected the release by Hudson of his interest in the property to Hathway under section 36(2) of the Law of Property Act 1925 satisfied section 53(1) of that Act. Section 53(1)(c) relevantly provides that "a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will."
A series of emails included one in which Hathway said:
"So that we can move forward and get to a point of completely severing our financial connections, your suggestion, as I understand it, is you get sole ownership of your shares and pension, I get the equity from the house, the house contents, savings and income from endowments. Is that right? If so, then I will accept this and will do everything I can to get the house ready for sale as soon as the situation with the oil spill is resolved."
And in response Hudson communicated the following:
“Yes, that’s right. … Under this arrangement, I’ve no interest whatsoever in the house, so whilst I will continue to contribute, I won’t do so forever.”
This email was subscribed “Lee”.
There was no dispute that the emails were “writing” as defined in Schedule 1 to the Interpretation Act 1978, but were they signed?
There is no relevant statutory definition of “signed”. The touchstone for determining what is a signature is an intention to authenticate the document and applying that principle, examples in the case law decisions as to what may amount to a signature include a printed name; the name on a telegram form; or a rubber stamp.
The Court of Appeal said that it is a general principle of statutory interpretation that an Act of Parliament is regarded as “always speaking.” What that means is that the words of the Act should generally be interpreted so as to cover new technological developments which the legislators might not have foreseen, if they conform to the policy of the relevant Act.
The Court considered the case law authority (including Neocleous v Rees) and confirmed that there is a substantial body of authority to the effect that deliberately subscribing one’s name to an email amounts to a signature. Since so much correspondence takes place nowadays by email rather than by letters with a “wet ink” signature, the judge thought that it was entirely appropriate that the law should recognise that technological developments have extended what an ordinary person would understand by a signature. The Court concluded that the emails were “signed” for the purposes of section 53(1) of the Law of Property Act 1925 and, therefore, by those emails the beneficial interest in the relevant property was released by Hudson to Hathway.
Another judge in the case said “Mr Hudson added his name “Lee” to the bottom of the e-mails. That is an entirely conventional way to end (or “sign off”) an e-mail and I have no doubt that it satisfies the requirement in the authorities that it was added to authenticate the document. Adding your name at the end of an e-mail confirms that the e-mail comes from you. That seems to me enough to mean that the e-mail is signed by you for the purposes of s. 53(1) LPA 1925.”
This case is also interesting from a property/trust perspective. The Court of Appeal decided on the point of principle (but not to decide the case) of whether a constructive trust can arise simply as a matter of common intention without the need to show any detrimental reliance on that intention. The Court’s conclusion was that in the absence of signed writing, detrimental reliance remains a key component in establishing a common intention constructive trust.
Key takeaway point
This is an authoritative decision supporting the continuing need to be cautious with email communications. Before adding your name to an email, consider what the implications are of this authentication of the email and whether you wish to be bound by the contents of the email, or whether you need to caveat the email.
Hudson v Hathway  EWCA Civ 1648 (14 December 2022) (bailii.org)