Natwest Bank Manager Signing as witness on personal guarentee ????

[Jarvis31]

Hello,

I am new to this forum and would like some advice on a personal guarantee as the bank are calling it up from 8 years ago.The document is the Limited Guarentee by an Individual of a Third Party's Obligations Secs 27 ( 7/95 ) which is signed and witnessed as a deed. This deed was signed as witness by the bank manager whom misled me to sign ( another story ) my question is as there is no case law except Seal v Claridge (1881) A party to a deed may himself not witness it. Please can someone advise ?

Thank you.

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I can't give a full answer on this as I am unsure regarding personal guarantees but under the Law of Property (Miscellaneous Provisions) Act 1989 a party to the deed cannot be an attesting witness i.e. if the executing individual is party to the agreement, then it will only be valid if it is signed in the presence of an independent witness.

Couple of cases law similar to Seal v Claridge which may or may not be of relevance:

Freshfield v Reed (1842) - which I believe was followed by Seal v Claridge

Logbook Loans Ltd v OFT 2011

Re Selby-Bigge 1950

Briggs & ors v Gleeds (Head Office) & Ors 2014

Just as a note, even though the document may have not been witnessed there are in some cases where the doctrine of estoppel can apply and therefore prevents you from denying that the deed is valid.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Thank you for getting back to me as I think I have asked one of those questions that are difficult to answer.Would it be the case with the personal guarantee / debenture being a business loan for a company where one guarantor had a legal charge and my liabilty was unsecured?

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

I'm sorry not sure I'm following your last post, are you asking whether the personal guarantee/debenture could be viewed as an executed deed or are your asking something else?

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Sorry,

I just need to know if the bank that is lending the money can sign and witness a personal guarantee as I signed a deed / debenture / indemnity as a personal guarantee with the bank manager as a witness and not an independent person.

[leclerc]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis31, I did use the report button on here to ask if site team could take a look at this thread because the case law was interesting in that could a bank manager who represents an interest in the agreement witness a signature of a person signing the document. I don't know the answer myself but it is an interesting point to make as to whether legally the bank manager is representing an interest in the contract or whether he is acting as a private citizen in witnessing the signature. I'm just not sure enough to advise whether it is the former or the latter.

[MissFM]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Hi Jarvis

I would have agreed with Rob above, but this seems unequivocal (my emphasis):

A party to a deed cannot be a witness to another party:
Freshfield v Reed
[1842] 9 M&W 404 and
Seal v Claridge
[1881] LR
7 QBD 516. So a trustee’s signature should not be witnessed by
another party – eg another trustee. But the witness does not need
to be independent. Witnessing by an employee, agent or director
of another party is acceptable:
Peace v Brookes
[1895] 2 QB 451;
Northern Bank Ltd v Rush
[2009] NICh 6 and
Log Book Loans Ltd
& Nine Regions Ltd v OFT
[2011] UKUT 280 (AAC).

From

http://www.freshfields.com/uploadedF...%20secured.pdf

Plenty of references to case law that may be useful.

What do you mean by the BM "misled" you to sign? Maybe that could affect the enforceability?

x

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Thank you for your help , the bank is calling in a personal guarantee from 8 years ago of which my business partner put her house as security and they repossessed it and now they are demanding it from me. We both got legal advice as advised and I was told by the bank as I lived at the property I may have an interest in it and asked me to sign on that premise I was not told about my liability and the property was in my partners name.As I say I just need to know if the bank manager whom gave my partner and I the deed after we signed he signed straight after where it says after signed and delivered as a deed my signature in the presence of then the bank managers details. So I just need to know if he can do that as he is a member of the party of the deed, there is no case law or any situation where this has been done I think but it is a straight forward predicament of which the bank are threatening legal action.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

If there is no case law on my situation where do I stand?

[MissFM]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

If you can post up the document with all your personal details removed then those with relevant legal expertise will be able to advise you better on any possible route to challenging its enforceability - the more info you can give the more relevant the advice x

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Jarvis, your problem is quite complex and I can supply you with some generalised information surrounding deeds and points that you can raise however you should not rely upon the information as to accuracy or anything else that I provide as a basis for making any legal decisions. Any reliance you wish to place on the information is entirely at your own risk.

Couple of questions:
1. The document would be useful to view if you can upload
2. If you can't upload the document can you provide us an actual date when the supposed "deed" was signed by all parties.

Difference between a simple contract and a deed - A deed requires additional formalities which is beyond just a signature in order to be enforceable. For example, deeds are generally enforceable despite a lack of consideration (something for something) and overcomes the issue of consideration. Probably the more important distinction is, the limitation period of a contract is 6 years whereas a deed has a limitation period of 12 years. I suspect that could be why the bank wanted it to be signed as a deed rather than a contract. Now as far as I am aware, in order for the 12 year limitation period to apply, it has been argued that it must be regarded as a speciality (for example a seal on the document) although I doubt this would hold up in court, so lets assume 12 years.

I wont go into it but in certain circumstances it is required by law that certain transactions must be in the form of a deed. A guarantee does not have to be in the form of a deed but must be in writing.

4 formalities of a deed consisting of common law and statute.
1. Must be in writing;

2. Face value requirement, meaning that it must be clear form the face of it that the document is a deed. Standard wording such as "this deed is made on" or "signed as a deed by"

3. Execution, the instrument must be validly executed as a deed by the person making it. Depending on the legal personality of the executing party, the formalities will differ. In this case if it is the bank then it is a company who is the executing party (signed by an agent who has authority i.e. the bank manager). Therefore as you say this was done on or around 8 years ago, the Companies Act 2006 does not apply and the CA 1985 applies. Under this Act, two ways can apply to execute a document - by a common seal or by a director and secretary of the company or two directors each signing the document in whatever words to be executed.

If a company appointed an individual to act on behalf, I believe this would then be deemed as a contract and not a deed - I'd need to look into this but does depend on the wording of the document.

if the executing party is the individual, then the provisions under the Law of Property (Miscellaneous Provisions) 1989 apply - S.1 (3) to be precise. A deed is validly executed as a deed by an individual only if:
1. it is signed by him in the presence of a witness who attests the signature or at his direction and two witnesses are present to attest the signature and it is delivered by person or someone authorised to do so.

As previously stated a party to the deed cannot be a witness. Quite rightly as Miss FM pointed out that a witness does not need to be independent.

4. Delivery, a deed must be delivered which is a another common law requirement. This can be conditional or unconditional and if the deed has been handed to you after signatures have taken place, could be argued that the delivery was effective at the time it was handed to you. However there must be a clear intention to be bound for a deed to be delivered.

A deed could be defective if all the requirements above have not been complied with and therefore could not take effect as a deed. Where a deed is expressed as a deed but not executed properly then it is possible for it to have effect as a contract provided that all the elements of a contract, the transaction of the document does not require it to be in the form of a deed and in the case of a company, those who signed it had authority to do so.


So that's the law as far as i believe now the key question is whether or not the bank manager is deemed to be a witness. Going back to MissFM's post in that the witness does not need to be independent, I would argue that the purpose of a witness is to provide unbiased evidence of what was signed and by whom it was signed by, but also someone who has no interest in the deed. The bank manager clearly has some form of interest as he/she is signing on behalf of the company as an agent with authority and in my view cannot also be a witness to attest to it. It is my opinion that for a deed to be effective, you need 3 people, the two parties and a third person to witness the signings.

Now as this appears to be a deed of guarantee, you could potentially argue that you have signed it under undue influence and/or misrepresentation. It is good practice for banks to advise that before signing, you should seek legal advice on the matter or alternatively ou should attend a meeting with the bank who should explain the extent of your liability, rights and also advise to seek legal advice. Unfortunately, I am no expert in guarantees and indemnities so I can only stretch as far as that.

Overall the argument to this would be that subject to whoever is the executing party, that the witness signature of the bank manager is a conflict of interest as he/she is representing the bank who has already signed the supposed deed and is therefore not a true witness. Whilst a witness does not need to be independent as above, a witness must be someone who is not party to the deed. There is grounds to argue that although the bank manager is acting on behalf of the bank to sign, he/she is still a party to the deed and therefore is not a witness which in turn invalidates the supposed deed and is not enforceable/defective. I suppose that if another employee of the bank was to sign as a witness the in my view this would validate the deed or, if it was your partner who signed as a witness, then that could potentially be deemed as a valid execution.

If the deed is not in fact an executed deed, I am guessing the bank can rely on it being a contract providing that it fulfils the requirements of a normal contract, however your argument will be that the claim is statute barred as the limitation period is only 6 years to make a claim from when the cause of action arose (this depends on when this arose i.e. from the date of the breach of contract). Failing that you could also argue the undue influence/misrepresentation option.

As i said earlier, a copy of the document will always help, personal information redacted.

[FlamingParrot]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

If the deed is not in fact an executed deed, I am guessing the bank can rely on it being a contract providing that it fulfils the requirements of a normal contract, however your argument will be that the claim is statute barred as the limitation period is only 6 years to make a claim from the date of the document. Failing that you could also argue the undue influence/misrepresentation option.

As i said earlier, a copy of the document will always help, personal information redacted.

The Limitation Act refers to the cause of action rather than the date of the contract and there needs to be at least six years without any payments or written acknowledgment of the debt for it to apply. I don't think the OP has told us what the personal guarantee was for, a business loan or an overdraft. :noidea: If it was a business O/D, the current account could have been used up until recently, we don't have the dates. If the loan was secured, the CoA could be the repossession of the property and resulting shortfall. :ohwell: It's also not clear who repossessed the property, was it the first mortgagee or the bank who issued the loan and the guarantee and found there wasn't enough equity in the house to repay the loan in full, or someone else (such as another lender with a second mortgage on the property). :confused2: It should also be borne in mind that the limitation period for shortfalls on secured loans is 12 years and not 6. :mmph:

[R0b]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

Would it be the case with the personal guarantee / debenture being a business loan for a company where one guarantor had a legal charge and my liabilty was unsecured?

I think this is what Jarvis has meant the guarantee was for a business loan for a company if i am reading this correct?

Thank you for correcting me FlamingParrot - it was late at night So yes limitation act will apply in the case of when the cause of action arose and not the date of document (i now have edited). However, correct me if I am wrong but unsecured loans only have a 6 year limitation period?

I think until we receive the document and more information is provided then it is all just speculation. I think first port of call would be for Jarvis to get all documentation relating to the matter before any response can be formulated.

[FlamingParrot]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

You are correct about the 6 year limitation period for unsecured loans, however, when the 6 years start to run would depend on the history and the type of account. With an overdraft it will be from when the bank issued a final demand to recall the O/D.

[Jarvis31]

Re: Natwest Bank Manager Signing as witness on personal guarentee ????

DEED.pdf

Please find attached.
Thanks.