Bibby Financial Services Limited –v- Magson & anor [2011] EWHC 2495 (QB)
The case involved a claim by a Bibby Group Company against directors of a company in respect of guarantees and warranties signed by them. There was considerable divergence in the evidence, but Magson and his co-director submitted that, although at a meeting with Bibby's representative, they had made manuscript alterations to the guarantees and warranties and had signed them, they had done so in the expectation that typed versions would subsequently be produced to them for signing and dating afresh. They maintained that as they had only signed the documents as a gesture of good faith and their intention to proceed, and that as corrected documents had never been produced, the guarantees and warranties had not been properly executed. It no doubt helped their evidence that the meeting at which the documents were produced and signed took place between 3 friends in a pub.
Section 74A (1) of the law of Property Act 1925 (LPA) and section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 provides that, in order for a document to be enforceable as a deed, it is necessary for it to be delivered as a deed.
The High Court upheld this argument on the evidence. Each document was in the form of a deed and was therefore required to be "delivered as a deed" within the meaning of the LPA. The critical thing is that the person who signs a deed has separately indicated that he intends to be bound by it: a mere signature is not enough. In this case, neither Magson nor his Co-Director had intended in technical sense to "deliver" the guarantees and warranties to Bibby after signing them at the meeting. It followed that neither was bound by them.
The dispute in this case was determined by the court as a matter of fact. It does highlight the danger of signing any document in unfinalised form. It would not have assisted in this case, but always consider including a statement that determines when the deed is deemed delivered and comes into effect, for example: "This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning
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.
