For those who remember what being "an agent" was like, this section is particularly important.
As a broker the information you are expected to research and retain is enormous. In this newsletter we will attempt to update regularly in simple language—some proven, some not—some recent developments of claims, which will illustrate the pitfalls of simply "not knowing" or not remembering the latest cases and the lessons they provide.
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This newsletter deals with "the paperless office perils". Electronic documents are very timely and convenient to send and receive. But just like their counterparts, the paper document, special attention must be paid to the filing and storage of these "paperless" documents. This newsletter alerts you to you to some of the critical issues regarding how the courts will view it if you are faced with an Errors and Omission complaint against you regarding paperless documents and electronic signatures.
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1. Electronic Filing
In a recent audit of a brokers operations relating to file storage and accuracy, I was advised that one of the principals had over 3200 e-mails that were unfiled by specific client reference. The information in some of those e-mails was important to specific clients. Historic bulk file dumping is a practice that appears quite prevalent in some offices. If you, like me, get upwards of 100 emails on a busy day it is imperative that those e-mails with client important underwriting and claims information be filed appropriately. It can be disastrous if your file is called as evidence in an E&O claim made against you and you are not able to retrieve those instructions.
I asked our main claims counsel to give us the rules that apply to all of us if an E&O claim arises against you and you are asked to present "all documents relevant" to the matter: Here is the information he indicates we need to be aware of:
As to the production of documents for court purposes, briefly stated, all relevant, non-privileged documents, in whatever form they exist be it electronic, paper or any other form, are producible in the course of litigation and capable of being made exhibits at trial or on interlocutory proceedings.
Here is the definition of "document" from the Supreme Court Civil Rules as well as the Rule regarding document production obligations:
"document" has an extended meaning and includes a photograph, film, recording of sound, any record of a permanent or semi-permanent character and any information recorded or stored by means of any device;
Rule 7-1: Discovery and Inspection of Documents
List of documents
(1) Unless all parties of record consent or the court otherwise orders, each party of record to an action must, within 35 days after the end of the pleading period,
(a) prepare a list of documents in Form 22 that lists
(i) all documents that are or have been in the party's possession or control and that could, if available, be used by any party of record at trial to prove or disprove a material fact, and
(ii) all other documents to which the party intends to refer at trial, and
(b) serve the list on all parties of record.
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2. Applications and Electronic Signatures
Insofar as accepting electronic signatures on applications, proofs and releases there is no legal requirement in Canada. What I can say is that a signature on any agreement or other document is simply evidence that the agreement was made or the document created by the person purporting to sign it. Signatures are nothing more and nothing less. For example, you and I can agree that I sell you my car at whatever fair market value we decide and the written contract regarding that agreement has spaces for both our signatures. I give possession of my car to you and you give me money but only you sign the written contract. It would be very difficult for me to say to a court in those circumstances that I never agreed to sell my car and rely on the fact that I didn't sign the written contract as evidence of what I say. Contrary evidence to whether we in fact had an agreement would be me giving you possession of my car, me taking your money and that money being consistent with the value of the car. No judge would say that there was no agreement simply because I didn't sign the written contract.
Similarly with applications, releases, etc. A signature on an application is evidence that the person creating the application is in fact the person identified in the application - nothing more, nothing less. I've seen cases settled on terms of money in exchange for a signed release where the person required to sign the release refuses because of whatever reason, usually settlor's remorse. Courts routinely look to the correspondence leading up to the settlement and the terms of the settlement itself in determining if a settlement has in fact occurred irrespective of the releasing party's refusal to sign the release. We are now starting to see cases involving waivers of liability where the waivers are electronically signed and are still enforceable because all the other hallmarks of an agreement are present.
As we move toward a more digital/electronic society original and even copies of signatures will become less and less part of the efficient operation of commerce and, in some respects, less important in the context proving documents.
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If you have any questions or input please contact Carson Thompson at ProFormBC for further discussion and details.
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