Legal notes: A good deed for today

A validly executed deed must be “delivered” to bring it into effect. But this requirement is not be confused with the physical delivery of a document. A deed is delivered when a party’s words or actions indicate an intention to be bound by it, at which point the deed comes into effect and becomes irrevocable. Parties who sign documents before completion of a transaction, but do not want them to take effect immediately, may choose to deliver them “in escrow” – ie subject to one or more conditions being fulfilled first. Alternatively, they can entrust their documents to an agent with instructions on when and how to deal with them, in which case section 1(5) of the Law of Property (Miscellaneous Provisions) Act 1989 presumes, for the benefit of purchasers of land or interests in land, that conveyancers have authority to deliver them.  Xenos v Wickham [1867] LR 2 HL 296 established that someone who signs a deed can deliver it without parting with physical possession of it. But it must be clear that the maker intended the deed to take effect and to become binding, however that intention was displayed.  Guarantees Umrish Ltd v Gill [2020] EWHC 1513 (Ch); [2020] PLSCS 121 raised an intriguing question. Bobby Gill had signed the signature pages of four guarantees, in the presence of his wife, who witnessed his signatures. He then scanned and forwarded the pages by email to the recipients of the guarantees. The transaction went ahead and, when things began to go awry, the recipients of the guarantees asked for the original documents, or a full copy of them.  It is not clear whether the guarantor responded to these requests. But the recipients of the guarantees called on them anyway, demanding payment of all sums due, including £1.5m of principal and interest. And, in the legal proceedings that followed, the court was asked to decide whether the guarantor’s email attaching the scanned signature pages constituted “delivery” of the guarantees.  The guarantor claimed that his actions were simply a gesture of goodwill – and relied on Bibby Financial Services Ltd v Magson [2011] EWHC 2495 (QB). In that case, a guarantor signed a deed of guarantee in a pub and handed it to the other party. But the court accepted that he had not “delivered” the guarantee because the parties had understood that it would be amended to reflect typed and manuscript amendments before finalising the deed.  Subjective intentions The guarantor claimed that he had understood that there was going to be a completion meeting at which the parties would sign all the documents and become bound by them – which had not happened. But the judge was satisfied that the guarantor understood that the electronic transmission of the signed signature pages indicated his intention to become bound by the guarantees immediately. However, the judge stressed that the subjective intentions of the parties were irrelevant. The grantor’s intention may be of the greatest importance, or determinative, in cases where a document has not been sent to the other side and has never left the grantor’s custody. But different considerations apply where an executed document is sent to the other party. What matters, in such circumstances, is the objective assessment of what was done.  So the court must ask whether a reasonable recipient would have understood the maker to have delivered a document unconditionally. And Bank of Scotland v Henry Butcher & Co [2003] EWCA Civ 67 was authority for the proposition that a person who executes a document containing a clear statement that it has been “executed and delivered as a deed”, and sends it to the other party without indicating that it is not in fact being delivered as a deed, cannot subsequently rely on some uncommunicated intention to claim that the document was in fact delivered not as the deed it purported to be, but merely in escrow. Delivery The guarantor had argued that greater formality was required for delivery – in the form of handing over the completed documents with his original signatures on them. But the judge decided that this was unrealistic in an age of instant communication. The guarantor had plainly delivered the guarantees unconditionally to the recipients, as indicated on the face of the documents that he had signed. Looking forwards The law requires deeds to be in writing and to be properly executed, attested and delivered – which has caused difficulties for those completing documents in lockdown, even though the Land Registry has relaxed its requirement for wet ink signatures temporarily and is accepting “Mercury scanned signatures” for the time being.  But electronic documents will, in general, satisfy a statutory requirement for writing: see Golden Ocean Group v Salgaocar Mining Industries Pvt Ltd [2012] EWCA Civ 265 and J Pereira Fernandes SA v Mehta [2006] EWHC 813 (Ch). And the Law Commission has suggested that electronic equivalents of wet ink signatures are legally valid (see Electronic Execution of Documents (Law Com 386)), while this latest decision confirms that even wet ink signatures can be delivered electronically.  In the light of these developments, and the availability of electronic signature platforms, which enable those signing and witnessing to add their signatures to documents electronically, we now have the technology and the capability to create, execute, attest and deliver deeds electronically, which would transform the conveyancing process. It is to be hoped that the Land Registry will move in this direction soon. Key points A party who sends a scanned copy of his signature, on an identified document, to a counterparty signals his intention to be bound by it, unless he states otherwise Consequently, guarantees signed in wet ink had been delivered electronically Allyson Colby is a property law consultant