Delivery
51The appellant's argument that the guarantee had not been delivered proceeded on the assumption that the guarantee was a deed. It is long established law that delivery is essential to a deed: R J A Morrison, H J Goolden, R F Norton, Norton on Deeds (2nd ed, 1928), at 10; Scook v Premier Building Solutions Pty Ltd [2003] WASCA 263, 28 WAR 124, at [23]-[24], per Steytler J (with whom McKechnie and Hasluck JJ agreed).
52It is common ground that delivery is required where a deed is executed, not only by an individual but by a corporation: see Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers (1977) 2 NSWLR 109, at 118-119, per Helsham CJ in Eq: A J Bradbrook, "The Delivery of Deeds in Victoria" (1981) 55 ALJ 267, at 270-272.
53The requirement for delivery has its origins in the symbolic significance of a manual transfer of a document: A J Bradbrook, at 267. But for at least two centuries, the requirement of "delivery" has been capable of being satisfied without physical delivery or transfer of the deed to the promisee or anyone else. Norton on Deeds states (at 13) that:
"Delivery may be effected by words alone, or without words by the acts or conduct of the party, from which it can be inferred that he intended to deliver the deed as an instrument binding on him."
54It is for this reason, that it held in Xenos v Wickham (1867) LR 2 HL 296, that a deed can be delivered even though it never leaves the possession of the party executing it: see at 323, per Lord Cranworth. Indeed, there is much older authority to that effect: see, for example, Doe d Garnons v Knight (1826) 5 B & C 671; 108 ER 250; Hall v Palmer (1844) 3 Hare 532; 67 ER 491; Fletcher v Fletcher (1844) 4 Hare 67; 67 ER 564; Re Way's Trusts (1864) 2 De G J & S 365; 46 ER 416.
55In Xenos v Wickham, Blackburn J (whose opinion was upheld by the House of Lords) stated (at 312) the principles as follows:
"no particular technical form of words or acts is necessary to render an instrument the deed of the party sealing it. The mere affixing the seal does not render it a deed; but as soon as there are acts or words sufficient to shew that it is intended by the party to be executed as his deed presently binding on him, it is sufficient. The most apt and expressive mode of indicating such an intention is to hand it over, saying: 'I deliver this as my deed;' but any other words or acts that sufficiently shew that it was intended to be finally executed will do as well. And it is clear on the authorities, as well as the reason of the thing, that the deed is binding on the obligor before it comes into the custody of the obligee, nay, before he even knows of it ..."
56This passage was approved by the Privy Council in Macedo v Stroud [1922] 2 AC 330, at 337, per Viscount Haldane; see also Stromdale & Ball Ltd v Burden [1952] Ch 223, at 230, per Danckwerts J. Since no physical delivery of a deed is required, some caution should be exercised before using the expression "constructive delivery" in the present context: cf Peel Valley Mushrooms Ltd v Corporate Investment Australia Funds Management Ltd [2000] NSWSC 958; 35 ACSR 535, at 542 [22]-[25], per Santow J.
57Blackburn J stated in Xenos v Wickham that the mere affixation of the seal does not render a document a deed. But a document in the form of a deed which has been signed and sealed is presumed to have been delivered: Hall v Bainbridge (1848) 12 QB 699; 116 ER 1032. The presumption may be rebutted, for example where the circumstances show that the parties executing counterpart deeds did not intend to be bound until the deeds were exchanged: Hooker v Christian Brothers.
58The question in the present case is not (as the primary Judge seems to have thought) whether, on the evidence, the guarantees had been delivered to the Developer. Physical delivery is not required for a deed to be effective. The critical question is whether the party executing the deed has evinced an intention to be bound immediately.
59In Xenos v Wickham, it was said that the question of whether a party had evinced an intention to be bound by a deed was a question of fact for the jury: at 309, per Piggott B; Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps [1985] VR 70, at 78, per Tadgell J. Both parties in the present case accepted that the Bank's intention, for the purpose of determining whether the deed had been delivered, was to be ascertained objectively by reference to the words used by and conduct of the Bank and the facts attending the execution. This approach is consistent with the statements of principle in Norton on Deeds and in Xenos v Wickham, where Blackburn J emphasised the significance of the acts or words of the promisor: see also Ansett v Comptroller, at 79, citing Bowker v Burdekin (1843) 11 M & W 128, at 147; 152 ER 744, at 751, per Parke B: Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310, at 355, per Kennedy J.
60Some reference was made in argument to Mr Winnick's subjective state of mind at the time the guarantees were executed and the copies sent to Mr Madden. The evidence as to Mr Winnick's state of mind at the time was inconclusive. In any event, his subjective opinions are not relevant to the question that must be addressed, namely whether the acts of the Bank or the statements made on its behalf demonstrate an intention that it should be immediately bound by the guarantees.
61With due respect to Mr Ashhurst's submissions, the acts and words of the Bank point overwhelmingly to an intention that the Bank should be immediately bound by the guarantee. The Bank executed the document with the appropriate formality, including the affixation of the seal in the presence of a witness. This may not have been enough, of itself, to constitute delivery, but the Bank sent the documents by facsimile to Mr Madden, as Mr Segboer had instructed. The Bank was told by Mr Segboer that Madden Associates was the project manager for the Developer.
62The Bank's covering letter to Mr Madden stated that it was in a position to be able to provide the bank guarantees to assist Mr Segboer in the construction of the Centre development. The letter did not say that the Bank would execute the guarantees at some future time or when some stated contingency was satisfied; it attached copies of the executed guarantees. Not only that, but the Bank stated that the originals of the guarantees "will be forwarded in due course". This was an unequivocal statement. The Bank gave no indication that the originals would be handed over to Mr Segboer if he so requested, nor did it suggest that the originals would be forwarded only if Mr Segboer gave his approval. The Bank clearly implied that there was no obstacle to forwarding the originals, thereby confirming to the Developer that the executed guarantees were intended to take immediate effect. Mr Winnick's expression of hope that "this is sufficient", if anything, reinforces the conclusion that the Bank considered that nothing more needed to be done in order for the guarantees to be binding according to their terms.
63I am inclined to doubt whether it matters whether Mr Madden or Madden Associates was specifically authorised by the Developer to receive the guarantees, or copies of the guarantees, on its behalf. Mr Segboer instructed the Bank, once the guarantees had been approved and issued, to send them by facsimile to Madden Associates, identified by Mr Segboer (correctly) as the Developer's project manager. The obvious inference is that this was the means by which the Bank was to communicate to the Developer and its financier (NAB) that the guarantees had been issued and were binding on the Bank. Even if Madden Associates was not specifically authorised by the Developer to receive the guarantees on its behalf, the Bank's action in forwarding the guarantees to the entity it had been instructed was the Developer's project manager objectively demonstrates that it was communicating its intention to be bound by the guarantees it had executed.
64In any event, as Mr Hughes correctly submitted on behalf of the Developer, there was ample evidence that Madden Associates was authorised to receive the guarantees issued by the Bank in favour of the Developer. Madden Associates, by letter dated 9 September 2005, offered to provide to the Developer a range of professional services required to manage the project. These included:
- providing an overall project program identifying:
"key activities and milestones and the critical dependencies necessary to meet the agreed project staged completion dates";
- reviewing and reporting on proposed contractual documents for compliance with the Developer's needs and to minimise the Developer's risks;
- manage and co-ordinate "all programming requirements"; and
- reviewing progress with contractors and subcontractors on "primary issues" such as financial matters.
65In addition, the standard conditions of engagement stated that the Developer authorised Madden Associates to act as the Developer's agent:
"in regard to the project as set out or implied in this agreement and in the particular building contract adopted for the project, if applicable" (cl 4).
66If it was necessary to decide, I would conclude that Madden Associates was authorised by the Developer to receive the guarantees on its behalf. This conclusion is strengthened by the fact that on 10 February 2009, Mr Madden forwarded to the Developer the copy guarantees that had been held in Madden Associates' files since March 2007. The inference from this conduct is that Madden Associates was authorised to receive and hold the documents on the Developer's behalf until the Developer asked for them.
67Reference was made in argument to the judgment of Brereton J in Yu v Brownvalley Investments Pty Ltd [2010] NSWSC 253. In that case, his Honour without reference to the authorities on delivery of deeds, found that delivery of a bank guarantee to a favouree had not been authorised and that the favouree was therefore not entitled to enforce the guarantee. These findings did not affect the result of the case, since a replacement guarantee issued by the bank was held to be enforceable by the favouree. Brereton J's reasoning appears also to have been influenced by a finding that the party providing the first guarantee understood that if it retained possession of the original guarantee, the favouree could not redeem it. I do not think the case is of assistance on the issue of delivery in the present case.
68Mr Ashhurst submitted, in reliance on observations in Scook v Premier Building, at [25], that it is permissible, in ascertaining the promisor's intention, to take into account later events as well as circumstances prior to or contemporaneous with the alleged delivery of the deed. I assume, without deciding, that such events can be taken into account.
69The subsequent events relied on by Mr Ashhurst, if anything, strengthen the inference that the Bank intended to be bound by the guarantee no later than when the copy guarantees were sent to Madden Associates. After Mr Winnick received the original guarantees from Mr Segboer in March 2008, he wrote the word "CANCELLED" on them. He did this on the faith of Mr Segboer's false representation that the guarantees were no longer needed. By purporting to cancel the guarantees, Mr Winnick was recording that they were no longer operative. Nothing Mr Winnick did or said indicated that the guarantees had never been valid and effective. Thus in his conversation with Mr Richardson on 10 February 2009 (see at [35**] above), Mr Winnick asserted that the Bank cancelled the guarantees in good faith, just as it had issued them in good faith. The reason he gave for cancelling the guarantees was that, once the originals are returned, they "are deemed no longer to be required by the favouree".
70None of the other matters relied on by Mr Ashhurst led to any conclusion other than that the Bank intended to be bound by the guarantees once they were executed and copies sent by facsimile to the Developer's project manager. One such matter was said to be the fact that a copy of the guarantee was not sent to NAB, one of the promisees. As Mr Hughes, who appeared for the Developer, pointed out, there was no evidence as to whether or not the copy guarantee was sent to or received by NAB. However, on the assumption that NAB did not receive a copy, that fact does not indicate an intention by the Bank not to be immediately bound by the guarantee. Physical delivery of a deed to a promisee was never essential for the deed to be "delivered" in the relevant sense. In any event, the Bank forwarded the copy guarantees to the Developer's project manager. Since NAB was named as a promisee, and was known by the Bank to be the Developer's financier, an objective observer would reasonably conclude that the guarantees would come to the attention of NAB in due course.
71In my opinion, the primary Judge was correct to conclude, although not exactly for the reasons he gave, that the guarantees were delivered by the Bank no later than 15 March 2007 and thus were valid and effective according to their terms.