Ribbons, wax or stickers: Determining when a deed is considered “sealed”

Written on 1 Oct 2020

Appeal court's decision on the validity of deeds is a reminder of the need to adhere to the legal requirements for the execution of deeds

The Singapore Court of Appeal (SGCA) had the opportunity in Lim Zhipeng v Seow Suat Thin and another matter [2020] SGCA 89 to consider whether the failure to comply with the sealing requirement in executing a deed would affect its validity.

The SGCA held that while a "seal" need not take on any particular form, there has to be some evidence of party's intention in executing a deed. Any markings or physical manifestations on the deed which serves as a seal would be strong evidence of such intention.

The appeal court also appeared willing to consider relying on the doctrine of estoppel to save deeds which have not been properly sealed, provided that estoppel has been sufficiently pleaded.

Facts and holding

In Lim Zhipeng, the appellant had extended a loan to a debtor, which was guaranteed by a guarantor – that is the respondent – via a deed of guarantee. The respondent had defaulted on the guarantee after making part payment and the appellant commenced action to enforce the guarantee.

The High Court found that the deed was not sealed and therefore not valid. Further, given that consideration had neither been pleaded nor provided, the High Court found that there was no enforceable agreement between the appellant and the respondent, and that the appellant was unjustly enriched by the part payment of the guarantee by the respondent.

On appeal, the SGCA accepted that a valid deed executed by an individual will have to be "signed, sealed and delivered" [27]. It held that the sealing requirement requires parties to have the requisite intention of executing a deed, following the English decision of First National Securities Ltd v Jones and another [1978] Ch 109 and the High Court decision in United Overseas Bank Ltd v Lea Tool and others [1998] 1 SLR(R) 373.

The physical manifestation of the "seal" on the deed or accompanying certificates to certify that a deed was made would be strong evidence of such an intention. The physical manifestation of a seal need not be in wax, and can be a ribbon, a sticker, or even a marking by the end of a ruler [30]. On the facts, it was undisputed that there was no physical manifestation of a seal on the guarantee or other evidence showing an intention to execute a deed. The SGCA was therefore reluctant to find that a valid deed has been executed.

That said, the SGCA was prepared to accept that the respondent may have been estopped from denying the existence of the deed. The standard testimonium and execution clause for a deed, contains the words "signed, sealed and delivered" or words to that effect. In the present case, similar words were used in the execution portion of the deed [40].

The SGCA was prepared to accept that these words may be regarded as a representation of fact that the deed was in fact sealed [45]. Such a representation of fact, if relied upon by the counterparty, can form the basis for arguing that the executor of the deed is estopped from denying that the deed was sealed. Correspondingly, he would be estopped from denying the validity of the deed.

This holding follows the reasoning in the English decision of TCB Ltd v Gray [1986] Ch 621 and is consistent with the holding in the Singapore High Court decision of Hishiya Seiko Co Ltd v Wah Nam Plastic industry Pte Ltd and another [1993] SGHC 7 (which the SGCA did not refer to). However, the appellant in the present case could not rely on the estoppel argument since the point was not pleaded.

While the SGCA held that the deed was not valid, it nonetheless found that there was a valid guarantee agreement existing between the appellant and respondent. The appellant's forbearance in taking legal action it was entitled to take against the debtor constituted good consideration for the agreement [69]. The respondent was therefore liable to repay the sums due to the appellant under the guarantee.

Osborne Clarke comment

This appears to be the SGCA's first decision on the validity of deeds in recent times and is a welcome reminder of the need to adhere to the legal requirements for the execution of deeds. These requirements should as far as possible be complied with to avoid blurring the lines between a deed and any other ordinary contract.

This decision has no implications on the execution of deeds by Singapore-incorporated companies, since legislative amendments have been passed in 2017 to do away with the need for such deeds to be sealed. It remains to be seen whether further legislative action will be taken to simplify the process for individuals executing deeds.

The SGCA's views on estoppel by representation also indicates a pragmatic approach towards the treatment of deeds which may not have been properly sealed. This is especially important in this period where the travel restrictions due to Covid-19 may make it more challenging for deeds to be executed and sealed in person.