In the light of the recent Mercury case
(R on the application of Mercury Tax Group
Limited and others v HMRC  EWHC 2721 (Admin) (13 November
2008), Ian Jamieson of Solomon Harris
examines it's ramifications for Cayman Islands firms engaged in
The Mercury case involved the execution of search
warrants for a tax investigation in the UK. The parties involved
had attached the executed signature pages from early drafts of a
deed to the final version (which was different from the draft
originally signed) in order to complete. The court held that as the
parties had not executed the final version, the deed in question
In this case, there were significant differences between the
draft signed and the final version of the document and there was
also a question of a potential tax fraud. Notwithstanding this, the
ratio of this decision is applicable to all contracts dealing in
land and deeds which are governed by English law.
Historically, the practice of using pre-signed signature pages
while a contract is being agreed is widespread as a method of
saving time, but following Mercury, once a deed or a contract
dealing with land had been executed or signed, it will need to be
re-executed if further amendments are required and the parties wish
to be sure that the document in question will be valid and
enforceable. It should be noted that this does not apply to any
gaps which need to be inserted upon completion.
The court in Mercury did acknowledge case law which
stated that a contract can be amended after signature where such
amendments are acknowledged by the parties. This will not however,
validate a document in the situation where a signature page has
been removed from a materially different version in order to be
affixed to a later agreed document.
The current view is that Mercury does not affect simple
contracts (other than those relating to land), only deeds and
probably does not prevent the execution and delivery of a deed
being confirmed electronically by scanning and e-mailing a complete
version of the signed and witnessed document in question.
2. Going forward
When dealing with documents governed by English and (by
implication) Cayman Islands law, practitioners should avoid:-
holding pre-signed signature pages and affixing them to
finalised versions of documents;
amalgamating multiple signed counterparts into one document
signed by all parties;
sending signature pages to a client and affixing scanned
versions to the agreed documents; and
changing an executed document (with the consent of all the
parties thereto) and then swapping over signed pages from the old
to the new version.
Clearly, on most occasions involving English law governed
documents, Cayman practitioners will be dealing with English
counsel who will be arranging for the execution of the documents in
question. On a practical level, it is probably worthwhile
mentioning these issues to them should a document need to be
re-executed in order to ensure that they are not running the risk
When dealing with Cayman law governed deeds, Cayman
practitioners should (where possible) arrange a physical closing
where the documents are printed off in their entirety beforehand
and executed by the parties involved. If, as is more common, the
parties are dealing with a "virtual" closing, then as a
matter of best practice, the whole of the documents in question
should be e-mailed to the client, with a request that they print
off the entire document (with appendices, if any), execute the same
and return them to their lawyers.
The various UK Law Societies are preparing some guidance on
execution and completion procedures which should clarify best
practice in relation to virtual completions, but until such
guidance is received, then it would be wise to err on the side of
caution when dealing with the execution of such documents.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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