Bibby Financial Services Ltd & Anor v Magson & Ors

A deed is enforceable only if the person who signed it intended to be bound by it. Signature and physical delivery to the apparent beneficiary are insufficient where the document was handed over merely for amendment, replacement or later execution. The court must determine objectively whether delivery occurred, including by considering the parties’ words and conduct. Where documents are signed subject to agreed amendments and are not intended to take effect until corrected and re-executed, they have not been delivered as deeds. The same principle applies to deeds executed by companies.

Bibby Financial Services Limited and Bibby Invoice Discounting Limited claimed sums from Richard Magson and Robert Stuart Franklin Scott under personal guarantees and warranties connected with proposed invoice-discounting arrangements for QCFS Limited. The defendants contended that the documents had been signed at a preliminary meeting but were subject to manuscript amendments, correction and later execution. They also disputed the underlying liabilities and alleged breaches.

The central issue was whether the guarantees, warranties and invoice-discounting agreement had been delivered as deeds and thereby became legally operative.

1. Claims dismissed. The claims by Bibby Financial Services Limited and Bibby Invoice Discounting Limited against Mr Magson and Mr Scott failed.
2. Under Law of Property (Miscellaneous Provisions) Act 1989, section 1(3), an individual’s deed must be signed in the presence of an attesting witness and delivered as a deed. Under Law of Property Act 1925, section 74A, a company’s deed must likewise be duly executed and delivered.
3. Delivery is a question of intention. The relevant intention is whether the person who signed the instrument intended to be bound by it. Mere signature is insufficient. Physical transmission to the intended beneficiary is also insufficient if, viewed objectively, the instrument was handed over only as an escrow, for amendment, or pending replacement and re-execution. The principles were explained in Hawksland v Gatchel (1601) Cro. Eliz. 835 and Watkins v Nash (1875) LR 20 Eq 262.
4. The judge accepted the defendants’ account of the meeting at which the documents were signed. The documents were marked or intended to be amended, and the parties contemplated that corrected versions would be produced and executed. They were not intended to take effect on signature or when handed to Bibby’s representative.
5. Accordingly, none of the guarantees, warranties or the invoice-discounting agreement had been delivered as a deed. Mr Magson and Mr Scott were not bound by their guarantees or warranties, and QCFS was not bound by the relied-on invoice-discounting agreement. The claims were therefore dismissed. The judge also concluded, in any event, that breaches of warranty concerning the invoices had not been proved.