In order to be effective, an instrument intending to be a deed, must be signed by the individual creating the deed in the presence of a witness who attests the signature, according to the Law of Property (Miscellaneous Provisions) Act 1989. Therefore where a deed is to be signed on behalf of a partnership, and is required to be executed by one or more partners, each partner’s signature must be attested by a witness.
It is no surprise then, that when a recent case* came to the judgment , the High Court ruled, upon discovering that certain deeds of amendment had been defectively executed, that the changes to a final salary pension scheme that they purported to make were invalid.
From 1991 onwards, thirty documents were executed which were characterised as deeds and which purported to make changes to the pension scheme, but the signatures of the partners who executed them were not witnessed, contrary to the legal requirements. The relevant deeds covered important changes such as equalising benefits between sexes, adding two money purchase sections, closing the final salary section to further accrual and replacing trustees.
The court found that these deeds had no effect and that therefore the scheme’s members were not prevented from arguing that the defective deeds had not been validly executed. The employer attempted to claim that the consultants advising at the time the deeds were signed had impliedly represented that the deeds could be executed in the manner appropriate for a limited company, and further that the employer had relied on those representations to its detriment, and that therefore an estoppel (rule preventing a person from denying or contradicting something previously asserted which he has encouraged or permitted another party to accept) by representation had arisen. However, the court held that an estoppel could not be called upon where a document did not even appear on its face to comply with the execution requirements.
The consequences for the particular scheme and employer in this case were extremely serious – some employees who thought they had joined the scheme after the introduction of the money purchase section had never in fact become members. Others who thought that the accrual of their final salary benefits had ceased received a significantly higher final salary entitlement. The headline cost to the scheme is said to be in the order of £45 million! Mr Justice Newey concluded that “unfortunate consequences are, I am afraid, unsurprising when so many documents have not been validly executed”.
This should act as a warning to all pension scheme employers, or anyone intending to create a deed for that matter, to ensure that the relevant legal requirements for execution are always followed.
*Briggs & Others v Gleeds & Others  EWHC 1178 (Ch)