A handwritten amendment to a debenture, which was made after it was executed, did not invalidate it

A contract that is altered after it has been executed will be invalid if the alteration is material and has not been agreed by all of the parties: Pigot’s Case (1614) 11 Co Rep 26B. The rule applies if the alteration affects the very nature and character of the instrument or is “potentially prejudicial” to the obligor’s legal rights or obligations: Raiffeisen Zentralbank Osterreich AG v Crossseas Shipping Ltd [2000] 1 WLR 1135. Pickenham Romford Ltd (in administration) v Deville [2013] EWHC 2330 (Ch); [2013] PLSCS 193 provides useful guidance on the application of the rule. The point arose during a dispute between creditors about the validity and priority of a debenture that had been registered at the Land Registry. The argument about the validity of the instrument was triggered by a manuscript reference to a title number, which appeared in the schedule to the debenture. The title number in question was opened in 2009 and related to a lease that was granted in 2006, which suggested that the manuscript insertion in the debenture was made after the debenture was executed in 2005.  The defendant, who claimed an interest in the property himself, argued that the amendment had resulted in the wrongful registration of a fixed legal charge, as opposed to an equitable charge, over the leasehold interest. He argued that the insertion constituted a material alteration to the document and that the debenture was void unless the alteration was made with the approval of the parties to the instrument. The judge rejected the claim. He reminded the parties that the alteration must be deliberate; it is not enough if it is made accidentally or mistakenly and that it is questionable whether the rule applies to alterations made by a stranger. There was no evidence as to when and by whom the alteration was made. However, the certified copy of the debenture on the lender’s solicitor’s file included a blank schedule. The handwritten title number appeared in the schedule in the copy of the debenture supplied by the Land Registry during the course of the proceedings. Consequently, it was possible that the insertion was made by somebody at the Land Registry – and, if this was the case, it was difficult to see why this should invalidate the document. The judge took the view that the debenture would also be valid, even if were to transpire that the lender’s solicitors had amended it themselves. The insertion was not material and had not prejudiced the borrower’s interests. The estate represented by the handwritten title number was created after the date of the debenture, but the debenture gave the lender a fixed equitable charge over the leasehold interest from the moment that it was granted, which had secured the lender’s priority. The borrower had covenanted with the lender to execute a legal mortgage over any property not already effectively charged to the lender and had not complained when the lender was registered as the proprietor of a legal charge. Consequently, the defendant had no cause to complain about the validity of the instrument. Allyson Colby is a property law consultant