Why Deeds Matter. Doing it Right Matters. And Here’s Proof.

Why Deeds Matter. Doing it Right Matters. And Here’s Proof.

The job of a Notary is to ensure so far as possible that the format and wording and other processes, such as witnessing, and legalisation, of the documents which cross his desk are all compliant with the requirements of all relevant legal jurisdictions.

So if the document is for Florida, and is a Power of Attorney made by a company it needs to comply not only with the English law – including at least the Law of Property (Miscellaneous Provisions) Act 1989, the Powers of Attorney Act 1971 and The Companies Act 2006 – but also with the law of Florida including the provisions of The 2015 Florida Statures at Chapter 709.

So, in accordance with Statute Chapter 709 section 2105 subsection 2, there must be two witnesses to the signature, not only one as English law requires.

It is all very well to write this down in a blog, as if I were answering an exam question. But in the real world, things are different.

Only last week I had a client walk out of my office complaining that I am “overly pedantic”. This, because he had been told that his Deed for Florida needed to be signed in my presence and also before two witnesses. So, he produced to me the Deed, ready to sign whilst I was watching. However, there were two signatures to the paper already. He explained that those were the signatures of the “witnesses”, who could not attend the meeting.

Deep breath.

The problem, when you are trying to get the papers right, is that even when clients don’t say that I am overly pedantic, I suspect they are possibly thinking it. Am I milking it? It costs more time to do it right after all, so is the reason I try to insist on getting it right, simply to maximise my fees? After all, what does it truly matter, in the real world, if things are only “nearly right”?

And when I am challenged to give an example, I often find that I am relying on hypotheticals, on exam question scenarios, which is not what the client is asking for.

So I am pleased to read the following words written by a fellow Notary Mr Victor Warner. In them he identifies an actual real life case before the courts where a failure to meet the formalities of the law has had very significant consequences indeed.

Millions of pounds intended to benefit one set of pensioners are to be paid to others.

Compensation payments, legal payment, huge losses of money and time and pension entitlements flowing from a simple failure to sign in the presence of witnesses. And this is a case where no-one was misled and no fraud whatsoever was involved.

Victor writes “One of the pains of being a notary is getting documents, such as powers of attorneys, signed as deeds. Quoting the law and what Brooke’s says rarely brings home the effect of not signing a document as a deed.

But finding modern cases: 1. where a document needs signing as a deed; and 2. the document was not signed as a deed; and 3. where the court spells out the consequences of the failure to sign the document as a deed are rare in England and Wales.

It is almost impossible to find cases from Europe: 1. where a document needed signing as a deed in England; and 2. the document was not signed as a deed; and 3. the European court held that the document was not validly signed because the document was not signed as a deed, even though the way the document was validly signed in the European Country concerned.

I have not found the impossible, but this note provides details from a recent English case where the consequences about what can happen if a document is not properly signed as deed are spelt out: link here Briggs v. Gleeds (Head Office) [2014] EWHC 1178 (Ch), [2015] 1 All ER 533 The facts of the case of Briggs are far more interesting (at least for notaries, if not for pension lawyers) than the law applied: estoppel.

This note concentrates on those facts, and is an illustration of the danger: letting someone else have the opportunity to have a say on whether a document is validly executed (such as a judge); of someone not understanding (apparently) how different types of legal persons execute documents (such as, in this case, a firm of pension administrators).

The key facts. An employer (the defendant) (D)) is a traditional (Partnership Act 1890) partnership (and accordingly any deed needs signing by each of the partners (and if they are an individual, each partner needs to have her/his signature witnessed)); D set up a pension scheme for employees of the partnership;

The scheme was set up in 1974 before the enactment of Law of Property (Miscellaneous Provisions) Act 1989 with an interim deed. A definitive deed was signed in 1979; Subsequent to the coming into force of the 1989 Act (from 1991 to 2010) the employer signed 30 deeds.

They were not signed in accordance with the 1989 Act (that is each partner did not sign in the presence of a witness); A third party organisation was responsible for pension administration and they prepared the deeds (Aon Group, who were, it appears, hired by the pension trustees and not the employer).

For the partners, the Aon Group had failed to provide wording in the signature block of the deeds that the partners’ signatures needed to be witnessed; The Aon Group had, for the trustees of the pension scheme, added the necessary wording that the trustees’ signatures be witnessed.

The Aon Group had provided some signed instructions to the employer, but these were intended for a company (that is the Aon Group had failed to realise, or not bothered to check, that the employer was not a company, but a collection of individuals (a partnership)).

The problem with the 30 documents only came to light when the trustees of the pension scheme changed their legal advisers in 2010

Among the deeds not properly executed included: several deeds dealing with changes to the trustees; a deed (in 1997) to close a final salary pension scheme and replace it with a money purchase scheme (with 100 employees then choosing to join).
Relevant points from the judgment
1. The judge decided (unsurprisingly) that the deeds did not meet the formal requirements of a valid deed in accordance with the 1989 Act That is the deeds were not executed in the presence of a witness (and there was no wording to indicate that a witness was needed (such as ‘signature of witness’, ‘in the presence of’), or a signature which appeared to be that of a witness).
2. Accordingly members of the scheme (the claimants) could deny that the deeds had been validly executed (i.e. estoppel was not available to the defendant employer).
3. To decide otherwise, the judge found, would be to defeat the objective behind the 1989 Act. The requirement to sign in the presence of a witness, according to the judge, was: 1. to limit the scope for disputes; 2. to allow parties to have confidence that the signature of another party was genuine because it was attested; 3. to give some form of protection to a signatory who was under a disability; and 4. to emphasise to a signatory the importance of their act.
4. The judge distinguished the case from an earlier one, link here  Shah v. Shah [2001] EWCA Civ 527, [2001] 3 All ER 138. In that case, a party’s signature on a deed was ‘witnessed’, i.e. it appeared to be formally valid. In fact, the witness had not been present when the party signed.
5. The judge in Briggs held that the fact that a deed was apparently valid on its face in Shah but not in Briggs was the critical distinction as to whether estoppel could be invoked. To allow the use of estoppel where a document was not apparently valid on its face would mean that the deed cannot be taken at its face value, and lead to uncertainty. In effect, a person looking at a deed should be able to tell whether it is validly executed by simply looking it at, particularly as a deed can have a long lifespan, which can easily extend well beyond the time that those involved in the deed are around or any surrounding correspondence to the deed remains in existence.

Consequences The words of the judge are better than any summary as to the consequences of the continuing failure to sign a series of documents as deeds:
.. …Where, therefore, a document that was intended to take effect as a deed needed to be executed by partners [of the employer], each partner’s signature should have been attested by a witness. In the case of some 30 documents relating to the Scheme, that did not happen.
Were that to mean that the documents are all ineffective, the Scheme’s deficit on an ongoing basis could be increased by some £45 million.

…. The conclusions I have arrived at above will nonetheless mean that [the employers’] attempts to contain the costs of the [Pension] Scheme will have been largely ineffective. None of the deeds that were meant to establish money purchase sections, to require members to make contributions, to reduce the rate of accrual, to cut the rate of pension increases and to close the Scheme to further accrual will take effect as intended

…I am very conscious that this judgment has serious implications for the [Pension] Scheme and [the employer]. Nor will it be advantageous to all of those who have in the past been regarded as members of the Scheme.

In particular …, I take the view that employees who “joined” the [Pension] Scheme following the introduction of the 1997 money purchase section without being chartered quantity surveyors did not in fact become members (although that is not to say that they will not have acquired any rights as a result of the contributions to the [Pension] Scheme made by them and by [the employer] for their benefit).

Other members of [the employer] stand to receive what could fairly be called a windfall.
Unfortunate consequences are, I am afraid, unsurprising when so many documents have not been validly executed.

Comment.This case is a reminder, if needed, that the statutory requirements set out in the 1989 Act are applied strictly by some judges. A simple (clerical) oversight (no doubt), buried for over 20 years, has led:
1. to a pension scheme’s deficit increasing by a multi-million amount; and
2. to likely highly expensive and time-consuming work necessary to unravel the changes to the pension scheme made over many years. Particularly sobering as it appears everyone knew what was happening over the years, and no-one was trying to act in an underhand manner, or take advantage or was not aware of the changes to the pension scheme.

Thank you to Victor for letting me use his text. He has written two legal textbooks, links to the bookshop are here and here.

So what’s the moral of the story?
Listen to your Notary. “Pedantic” or not, He is trying to help! Link to a song. I’ve told you before, you can’t do that.

As ever, Please do contact me whenever you need Notarial certification or Legalisation – at http://www.atkinsonnotary.com or phone me on 0113 816 0116 (internationally 0044 113 8160116)