Execution of deeds and the Mercury Tax Group case

In the Mercury Tax Group case, the judge commented that a deed signed by an individual was not effectively executed because the signed signature pages had been attached originally to an early, incomplete draft of the deed, then detached from the draft and transferred to a later, complete and amended version of the deed.

The substitution of the signature pages affected the validity of the deed.

The case illustrates that there are dangers in having a party sign a draft deed before the final agreed version of the deed is available. It confirms that, for effective execution of a deed, the signature (and attestation (if relevant)) must form part of the same physical document constituting the execution copy.

The case warns against the practice of "recycling" signature pages. So far as deeds are concerned, one should avoid:

• holding signature pages "in escrow", then attaching them to final agreed versions
• detaching signature pages from an execution copy, sending them to the signatory, then reattaching scanned copies of the signed signature page to the execution copy
• creating one complete, signed execution copy out of multiple signed counterparts
• correcting a mistake in, or recording changes to, an executed document by creating a new version and transferring the previously signed pages into the new version.

The case is an important reminder to observe execution formalities and to maintain the integrity of execution copies (including signature pages) as distinct physical entities before, during and after signing.

Although the case concerned a number of documents that all took the form of a deed, it may also impact on signing practices adopted in connection with ordinary contracts.

Reference: Mercury Tax Group case (High Court, Nov 2008)