As you will know, section 106 agreements must be made by deed which in turn must be signed, witnessed and properly delivered. But what happens when it is logistically impossible (for example, owing to completion deadlines or geographical distance) to circulate one deed to all the parties required to sign?
In the modern age, one would think that virtual signings would be an ideal solution to this problem. This would entail the signature page of a deed being sent out to the parties for execution and returned for insertion into the final engrossed deed which can then be completed.
However, in the case of R (Mercury Tax Group Ltd) v HMRC (2008), the High Court held that transferring the signature pages from an incomplete version to the final version of a deed would not result in a validly executed deed. The court found that on the correct statutory interpretation of section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989, the signature and attestation by a witness must physically form part of the same document as the other clauses in the deed.
The Law Society guidance on virtual signings acknowledges that the Mercury decision prevails in relation to the execution of deeds.
So how do you get round the problem of execution when it is not possible to get all parties to sign the same document? The Law Society suggests that counterparts could be used. But, according to PINS the use of counterparts for section 106 agreements also gives rise to problems (see our previous blog on this issue).
Therefore, it appears there is no perfect solution to getting a section 106 signed by numerous parties where time is short. We would be interested to hear your thoughts and any recent experience on this.