Lexis Nexis protocol for virtual statutory declarations

The following protocol is reproduced by the Law Society with permission from Lexis Nexis.

Produced in partnership between Helen Coverdale of LexisPSL Restructuring & Insolvency and Phillip Patterson of Hardwicke Chambers.

Background

Statutory declarations are a necessary part of insolvency proceedings, most commonly where a company enters members’ voluntary liquidation (MVL) (see section 89 of the Insolvency Act 1986 (IA 1986)) and where a company enters administration by an out of court appointment (see the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 3.17).

References:

Insolvency Act 1986, s 89

Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 3.17

Section 20 of the Statutory Declarations Act 1835 (SDA 1835) prescribes the form of the statutory declaration to be given is as set out in Schedule to SDA 1835. Although this gives the form of words to be used, it makes no other prescription as to the formal requirements to be followed. The practice in this area is therefore largely customary.

References:

Statutory Declarations Act 1835, s 20

Custom dictates that the person giving the statutory declaration and the solicitor administering in it are in the same place. However, in response to the coronavirus (COVID-19) pandemic, the UK government introduced social distancing rules in March 2020. This created uncertainty over whether statutory declarations in insolvency proceedings could still safely be made and administered in person, and whether, in the alternative the process could validly be completely remotely using real-time video conference technology such as Zoom or Skype.

The Temporary Insolvency Practice Direction (April 2020)

To address this uncertainty, on 6 April 2020 a Temporary Insolvency Practice Direction (TIPD) was introduced. It is intended to assist court users during the coronavirus pandemic by avoiding the need for parties to attend court in person and to deal with some of the problems arising from the need for courts to operate with limited staff and resources, including statutory declarations.

References:

Temporary Insolvency Practice Direction (TIPD)

TIPD, para 9 states that where IA 1986, Sch B1 requires a person to make a statutory declaration and that declaration is made by way of video conference, provided the person authorised to administer the oath attests that the statutory declaration was made by way of video conference and the declaration itself also states this, any defect or irregularity arising solely from the failure to make the statutory declaration in person shall not by itself be regarded as causing ‘substantial injustice’.

References:

TIPD, para 9

IR 2016, SI 2016/1024, r 12.64 provides that the court may declare that any formal defect or irregularity will not invalidate the relevant insolvency proceedings, unless the court considers that ‘substantial injustice’ has been caused by the defect or irregularity which cannot be remedied by any order of the court. Therefore, if an appointment were challenged on the basis that the related statutory declaration had been carried out by video conference, the administrators and the appointor(s) would be able to rely on IR 2016, SI 2016/1024, r 12.64.

References:

IR 2016, SI 2016/1024, r 12.64

TIPD expressly refers to statutory declarations made under IA 1986, Sch B1, ie in relation to the out-of-court appointment of administrators. However, there does not seem to be any principled basis for confining paragraph 9 to that specific use of statutory declaration. It seems likely that the guidance given would be equally applicable to statutory declarations in other insolvency proceedings, such as MVLs. In this spirit, Companies House has also confirmed that it is accepting declarations of solvency made by video conference—see: Video Declaration of Solvency accepted by Companies House, LNB News 09/04/2020 83 and Companies House accepting insolvency forms via email amid coronavirus (COVID-19), LNB News 07/04/2020 90.

References:

TIPD, para 9

For further details on the TIPD, see: Issue 96 of Insolvency Service’s Dear IP published, LNB News 06/04/2020 90 and Practice Note: The Temporary Insolvency Practice Direction (April 2020).

Process for making a statutory declaration by video conference

Find an authorised person to administer the statutory declaration

A statutory declaration may be made in the presence of:

  • a solicitor
  • a notary of the public
  • any other authorised person, such as a commission for oaths

Most commonly, a solicitor will administer the statutory declaration and for the purpose of this Checklist we assume this to be the case.

The solicitor should be independent, so should be from a different firm than the solicitor advising the client on the insolvency proceedings. A list of qualified solicitors is available through the Law Society website.

Make the statutory declaration

The use of technology provides several options for making a statutory declaration by video conference. The following options are not prescriptive or exhaustive, rather suggest alternative methods of making the declaration.

Option one

  • the person making the declaration (P) arranges a time to call the solicitor administering the declaration using video conference (eg Skype). The parties should confirm their identities
  • P signs the declaration in sight of the solicitor and says the following prescribed form of words, amended to reflect the nature of the statutory declaration:

‘I (name) do solemnly and sincerely declare that [insert appropriate wording]

And I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1835’

  • P should confirm that the statutory declaration was made remotely. For example, by using the following form of words:

‘I confirm that this statutory declaration was made by video conference.’

  • P emails an electronic copy of the signed declaration to the solicitor
  • the solicitor prints a copy of the signed declaration, attests that the statutory declaration was made by video conference, and signs their copy of the document, including their name and address. The solicitor may attest that the declaration was made by video conference by, instead of stating that the declaration was declared at their firm’s office, stating that it was declared ‘by video conference’ or Skype
  • the solicitor emails the document duly signed by both parties back to P

Option two

  • P signs the declaration and emails a copy to the solicitor
  • the solicitor prints a copy of the signed declaration and calls P using video conference technology. The parties should confirm their identities
  • P should say the following prescribed form of words, amended to reflect the nature of the statutory declaration:

‘I (name) do solemnly and sincerely declare that [insert appropriate wording]

And I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1835’

  • P should confirm that the statutory declaration was made by video conference. For example, by using the following form of words:

‘I confirm that this statutory declaration was made by video conference.’

  • the solicitor prints a copy of the signed declaration
  • the solicitor signs the copy of the document, inserting their name and address. They should attest that the statutory declaration was made by video conference. For example, instead of stating that the declaration was declared at their firm’s office, the solicitor may state that it was declared ‘by video conference’ or Skype
  • the solicitor emails the document duly signed by both parties back to P

Payment

SDA 1835, s 19, prescribes that the fee for administering a statutory declaration is due and payable upon making and subscribing such declaration (our emphasis added).

References:

SDA 1835, s 19

Normally, the fee is paid in cash to the solicitor at the time the statutory declaration is made. Where the declaration is made by video conference, P may send the payment to the solicitor’s account in advance of the declaration being made. Alternatively, it may be possible for the parties during the call to agree and acknowledge that the fee is due and payable with P promising to send the payment to the solicitor’s account as soon as reasonably possible after the declaration is made.