The High Court has recently considered a summary judgment application brought by Bank of Scotland Plc in relation to claims concerning a charge over a property and monies lent to a trust.

The Facts

These proceedings concerned a long running dispute between Bank of Scotland Plc (the “Bank”) and John Thomas Waugh and other members of his family.

This action concerned a charge over a property known as Asquorn House, which the family trust granted the Bank in August 2003 (the “Charge”) and monies due under a facility letter dated 18 July 2007, the terms of which referred to this security.

Though the Charge over Asquorn House was signed by the trustees, the trustees’ signature had not been duly attested. The Charge did not therefore comply with section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 (the “LP(MP)A 1989”) which requires a validly executed deed signed by an individual to be signed in the presence of a witness.

In view of the above deficiency, the trustees made an application to HM Land Registry for the cancellation of the Charge affecting the title to Asquorn House. In response to the trustee’s application, the Bank sought a declaration that the trustees were estopped from denying the validity of the Charge and, as a fall back, that the Charge was effective as an equitable mortgage and/or that it was entitled to perfect the Charge pursuant to its standard terms and conditions.

The Bank sought summary judgment of its claim against Mr Waugh in relation to Asquorn House and the monies due under the facility letter dated 18 July 2007.

The Decision

On the facts, the Court found that there was “no realistically arguable defence to the [Bank’s] claim for the sums due under the facility letter” and, accordingly, the Bank was found to be entitled to summary judgment in respect of the monies due.

Since, however, it was clear that the Charge was not on the face of it a deed and had not been executed in accordance with the LP(MP)A 1989, the Court held that the trustees were not estopped from relying on the invalidity of the Charge. Mr Waugh was entitled to a declaration to this effect.

As the Charge was not validly executed as a deed, it was found by the Court to be void for the purposes of conveying or creating a legal estate in accordance with section 52 of the Land Registration Act 2002. The Charge was, however, found to take effect as an equitable mortgage since it was signed by the parties and contained all the terms that had been agreed.

In oral submissions, the Bank contended that it could perfect its security by executing any necessary documents on the trustees’ behalf pursuant to the power of attorney that had been created by clause 15 of the Bank’s standard conditions. Though the Court saw force in these submissions, Mr Waugh had not had the opportunity to respond to them. The point was therefore left to be dealt with when the matter is relisted for the handing down of the judgment.


The decision of the High Court illustrates the circumstances in which an invalidly executed charge may still take effect as an equitable mortgage. However, whether the Bank shall be entitled to perfect its security by virtue of the power of attorney created under its standard mortgage conditions remains to be seen.

For further information, please contact Georgina Squire or the Partner with whom you usually deal.