This case serves as a useful reminder that once a party has signed, sealed and delivered a deed (other than a guarantee), it becomes binding on that party even if the other parties have not yet executed it, except where such failure to execute imposes an additional burden on the other parties. Parties should consider a contemparous exchange if there is any risk that all parties will not be bound at the same time.
This case arose over a Deed of Settlement in relation to a mortgage (Deed) between Katherine Pratap (Pratap), the lender, the mortgage service provider and the broker. The Deed was signed, sealed and delivered by the first 3 parties on 4 June 2013. However, the broker only executed the Deed on or about 7 June 2013 at which point Pratap sought to amend a confidentiality clause in the Deed.
Young AJ in the Supreme Court of New South Wales was originally concerned that the Deed may not have become effective and that Pratap had withdrawn her authority to have the Deed properly delivered before it had become perfected by the broker signing it.
However, in ultimately holding that the Deed was effective, Young AJ found that except in the case of guarantees, “once a person has signed, sealed and unconditionally delivered a deed that deed is binding on that person even if there is a party to the deed who has not executed it or delivered it unless the failure of that third party will throw an additional burden on the other parties”.
See the case.