If a key instrument requiring a signature (ie a loan or mortgage) has not been signed but surrounding documents which refer to the instrument have been signed, what can lawyers do?

A helpful provision available in such circumstances is section 126 of the Instruments Act 1958 (Vic) which provides:

126 Certain agreements to be in writing

(1) An action must not be brought to charge a person upon a special promise to answer for the debt, default or miscarriage of another person upon a contract for the sale or other disposition of an interest in land unless the agreement upon which action is brought, or a memorandum or note of the agreement, is in writing signed by the person to be charged or by a person lawfully authorised in writing by that person to sign such an agreement, memorandum or note. (underlining added)

The key words here are ‘memorandum or note’. The authorities on s 126 provide that a written memorandum or note can be joined or linked to a document regarding a dealing in land to constitute a binding agreement.

Statute of Frauds

The words ‘memorandum or note’ are a historic legacy from the Statute of Frauds. The underlying principle is that “The Statute of Frauds is intended to suppress not evidence but fraud”: Fauzi Elias v George Sahely & Co (Barbados) Ltd [1983] 1 AC 646 at [655] per Lord Scarman for the majority.

The Statute of Frauds required certain kinds of contracts to be in writing, particularly regarding dealings in land. The Instruments Act requires the same, including interests in land (s 126) and guarantees (s 129).

The requirement for instruments to be in writing extends to circumstances where material terms are contained in one document (unsigned for whatever reason) but references to the document and a signature are contained in a separate memorandum or note. Where this occurs, the documents may be joined together to satisfy all formal requirements.

The documents must expressly (or by implication) refer to each other: Harvey v Edwards Dunlop & Co Ltd 39 CLR 302 [at 307] per the majority of Knox CJ, Gavan Duffy and Starke JJ:

The Statute of Frauds requires (a) an agreement in writing or (b) a memorandum in writing of agreement. It is well settled that any document signed by the party to be charged or by some person authorised by him which contains all the essential terms of the agreement is a sufficient memorandum. It is also well settled that the memorandum “need not be contained in one document; it may be made out from several documents if they can be connected together”. They may be connected by reference one to the other; but further, “if you can spell out of the document a reference in it to some other transaction, you are at liberty to give evidence as to what that other transaction is, and if that other transaction contains all the terms in writing, then you get a sufficient memorandum within the statute by reading the two together.” (underlining added).

Harvey v Edwards adopts the concepts from a long line of English authorities, including Fauzi Elias v George Sahely & Co (Barbados) Ltd [1983] 1 AC 646 at page 654 wherein Lord Scarman cited with approval Timmins v Moreland Street Property Co Ltd at page 655:

“it is still indispensably necessary, in order to justify the reading of documents together for this purpose, that there should be a document signed by the party to be charged, which, while not containing in itself all the necessary ingredients of the required memorandum, does contain some reference, express or implied, to some other document or transaction. Where any such reference can be spelt out of a document so signed, then parol evidence may be given to identify the other document referred to, or, as the case may be, to explain the other transaction, and to identify any document relating to it. If by this process a document is brought to light which contains in writing all the terms of the bargain so far as not contained in the document signed by the party to be charged, then the two documents can be read together…” (underlining added)

Their Lordships accept this passage as a correct statement of the modern law. The first inquiry must, therefore, be whether the document signed by or on behalf of the person to be charged on the contract contains some reference to some other document or transaction.... The Statute of Frauds is concerned to suppress not evidence but fraud. In seeking a sufficient memorandum it is not necessary to shoulder the further burden of searching for a written contract. Evidence in writing is what the statute requires….. If, therefore, a document signed by the party to be charged refers to the transaction of sale, parol evidence is admissible both to explain the reference and to identify any document relating to it. Once identified, the document may be placed alongside the signed document. If the two contain all the terms of a concluded contract, the statute is satisfied.(underlining added)

In Ken Morgan Motors Pty Ltd v Toyota Motor Corporation Australia Ltd Supreme Court of Victoria 2163 of 1991 (unreported) Ashley J said at page 102:

The plaintiffs did not contend that Exhibit “G” had either been signed by or that Tyler TFA to sign it. But it was submitted that a note or memorandum sufficient to satisfy s 126 may be found in more than one document. So, where a written document signed by the party to be charged incorporates or refers to another document which is relevantly unsigned but which contains the agreement, the two documents together will satisfy the requirements of s 126. (underlining added)

It appears to me that the proposition advanced on the plaintiff’s behalf is correct.

In ANZ Banking Group Ltd v Widin 26 FRC 21 at 29 per Widin J, the Federal Court held:

There can be no doubt that, in an appropriate case, two or more documents may be read together so as to constitute a sufficient memorandum in writing. …. There can be no doubt that, if the note signed by the party to be charged refers expressly to some other document in such a manner as to incorporate it by reference in the note signed, the two documents may be read together: Thomson v McInnes (supra). However, as Griffith CJ with whom Barton and O’Connor JJ agreed, said in that case (at 569):

“But the whole contract must be shown by the writing. The reference, therefore, in the document signed must be to some other document as such, and not merely to some transaction or event in the court of which another document may or may not have been written.”

It is not now essential that the reference to the second document be express. Rather it is sufficient if the reference arises by necessary implication… As Griffith CJ pointed out in Thomson v McInness at 569:

“The reference may, of course be made in various ways. Whether there is a reference or not depends, first of all, upon the construction of the document which is signed.”

Summary

An unsigned instrument may satisfy the requirements of s 126 of the Instruments Act and be binding if:

a separate memorandum or note;
refers to the instrument or agreement expressly or by implication;
the memorandum or note is in writing (for example an email, a statutory declaration, etc); and
the memorandum or note and the instrument together objectively contain all the terms of an agreement.