Bank of Scotland Plc v John Thomas Waugh and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeJudge Behrens
Judgment Date21 July 2014
Neutral Citation[2014] EWHC 2117 (Ch)
Date21 July 2014
Docket NumberCase No: 3 NE 30105

[2014] EWHC 2117 (Ch)




The Court House

Oxford Row

Leeds LS1 3BG


His Honour Judge Behrens sitting as a Judge of the High Court in Leeds

Case No: 3 NE 30105

Bank of Scotland Plc
(1) John Thomas Waugh
(2) Kathleen Waugh
(3) Timothy Rohan Gray
(4) Iain Ernest Williams

Ian Wilson (instructed by Shepherd and Wedderburn LLP) for the Claimant

John Waugh appeared in person and on behalf of his wife Kathleen Waugh

Hearing date: 17 June 2014

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Judge Behrens

In this judgment I shall adopt the following abbreviations:

Bank of Scotland plc

The Bank

HM Land Registry

The Registry

John Thomas Waugh

Mr Waugh

Kathleen Waugh

Mrs Waugh

Sintons Law and/or Sinton & Co


The Nelson Trust

The Trust

Timothy Rohan Gray

Mr Gray

Iain Ernest Williams

Mr Williams

Trustees of the Nelson Trust

The Trustees

Asquorn House 20 – 22 Borough Road, North Shields

Asquorn House

The Law of Property (Miscellaneous Provisions) Act 1989

The 1989 Act

The Charge dated 8 th August 2003 of Asquorn House

The Charge




These proceedings form part of a long running dispute between the Bank and Mr Waugh and other members of his family. The Bank has provided banking facilities to the Trust since 2002. It has provided loans to the Trust pursuant to various facility letters and taken a number of securities.


This action is concerned with the charge granted over Asquorn House in August 2003 and the monies due under a facility letter dated 18 July 2007. There is also a claim against Mr Williams under a limited guarantee but it forms no part of this application.


Asquorn House


It will be necessary to set out the facts surrounding the grant of the charge in a little detail later in this judgment. It is however clear that the charge was duly signed by the Trustees and registered in October 2003 under title TY202264.


Although the charge was duly signed by the Trustees it is plain on the face of the charge that the Trustees' signature was not attested. Accordingly there was no compliance with section 1(3) of the 1989 Act. There is a further error in the charge in that it ascribes to the Trust a registered office at Nelson House Stroud. In fact the Trust is not a registered corporation and the Trustees are individuals.


As a result of these errors the Trustees have made an application to the Registry for cancellation of the charge/rectification of the register. That application is stayed pending the outcome of these proceedings.


In these proceedings the Bank seeks a declaration that the Trustees and/or the Trust are estopped from denying the validity of the charge. As a fall back it seeks a declaration that the charge is effective as an equitable mortgage and/or that it is entitled to perfect the charge pursuant to its standard terms and conditions.


In this application the Bank seeks summary judgment of its claims in relation to Asquorn House. On 11 th June 2014 Mr Waugh presented an application to the Court in which he sought to dismiss the claim summarily. As there is a civil restraint order against Mr Waugh the papers were referred to me to consider whether the application should be issued. I took the view that the application was so closely related to the Bank's application for summary judgment it should be issued and heard at the same time. Accordingly it was issued on 16 th June 2014.


The Facility Letter


The facility letter is dated 18 th July 2007. It is addressed to the then Trustees (Mr Waugh, Mrs Waugh and Mr Gray). It offers a working capital facility of £3,000,000 subject to its terms which include reference to security. The letter is not signed on behalf of the Bank but was countersigned by the Trustees.


Mr Gray is not a party to this application. I was told that there was subsequent correspondence under which his liability was limited to the assets of the trust.


In this application the Bank seeks summary judgment against Mr and Mrs Waugh of the sums due under the facility letter. As at 9 th April 2014 these sums amounted to £1,970,791.66. There are no updated figures.


Mr Waugh has submitted a number of possible defences to each of the claims. Due to their wide ranging nature it is convenient to deal with them later in this judgment.


The facts


The Trust


The Trust was created pursuant to a Deed of Settlement dated 16 th June 2000. The original trustees were Mrs Waugh, Ms Armstrong and Mr Gray. Mr Gray was a solicitor and a partner in Sintons (a Newcastle firm of solicitors). Ms Armstrong died in 2004 and was replaced by Mr Waugh as a trustee on or about 30 th April 2004.


Mr Gray retired as a trustee on 20 th March 2013. Mrs Waugh resigned as a Trustee on 27 th March 2013. According to her Defence she retired on the grounds of ill health as a result of heart problems. She was replaced by Mr Williams.


The principal activity of the Trust was property development.


Asquorn House


On 1 st April 2003 Mr McLeod on behalf of the Bank wrote to the Trustees offering a restructuring of the existing working capital facilities and a bridging loan of £165,000 for the purchase of Asquorn House. The outline terms for the bridging loan included the provision of a charge over Asquorn House. The outline terms for the trading account overdraft had a similar provision.


In an undated letter Mr Waugh accepted the offer on behalf of the Trust.


On 9 th April 2003 the Bank instructed Mr Gray to act on its behalf in relation to the granting of security over Asquorn House. The letter made clear that the Bank was using its simple Certificate of Title Scheme. Amongst the instructions given to Mr Gray:

We will send you the Legal Charge … and any other relevant paperwork. You should arrange for the borrower to execute this and let us have a certified copy immediately.


Between 23 rd and 24 th April 2003 there was an exchange of correspondence between Mr Gray and Ward Hadaway as to the extent of their respective roles in the transaction. It was agreed that Mr Gray would be responsible for the investigation of title, making a report to the Bank, and the preparation and registration of the legal charge.


On 30 th July 2003 Mr Gray sent to the Bank the duly completed Certificate of Title and 7 lease reports. There were 10 units; 7 were let; the other 3 were to be let. The Certificate of Title included undertakings by Mr Gray to submit appropriate documents to the Registry to enable registration of the charge within the appropriate priority period.


The replies attached to the Certificate of Title indicated that the purchasers were Mrs Waugh, Ms Armstrong and Mr Gray (as the Trustees of the Trust), that the purchase price was £415,000 and that the loan comprised a term loan of £340,000 and a bridging loan of £165,000.


On 6 th August 2003 the Bank sent to Mr Gray the Charge for execution "by your client". A copy of the document as sent to Mr Gray is included in the bundle. As already noted it defines the borrower as:

The Nelson Trust whose registered office is Nelson House, Brimcombe Hill, Brimscombe, Stroud, … and whose company registration number is 03211815.


That statement is wrong. The Trust is not incorporated and does not have a company registration number. It provided for execution by the Bank and two of the Trustees and made no provision for the attestation of any of the signatures. The execution clause made it clear that the Deed was not delivered until the date of the Deed.


The charge was signed by all three Trustees and the Bank. None of the signatures was attested. An undated certified copy of the charge as signed was sent by Mr Gray under cover of a letter faxed on 6 th August 2003.

The letter includes:

It is imperative that we succeed in dealing with completion of this matter tomorrow.

Would you please confirm immediately on receipt of this fax that you will be able to send the funds tomorrow.


Mr Gray inserted the date of 8 th August 2003 on the legal charge and submitted it to the Registry. On 3 rd November 2003 Mr Gray wrote to the Bank confirming completion of the registration and enclosed the original charge.


On 21 st March 2013 the Trustees made an application to the Registry to rectify the register on the ground that it was not properly attested. On 12 th April 2013 the Bank's solicitors responded in detail to the application. As a result the First Tier tribunal has stayed the application pending the result in this case.

Terms of the charge


In the light of the Bank's fall back arguments it is necessary to set out some of the terms of the charge:


Under clause 2 the Trustees charged Asquorn House as security for the Secured Liabilities.


By clause 3 the charge incorporated the Standard Conditions. Those conditions define the secured liabilities as "all sums of money owed and all liabilities or obligations to be carried out by you as at any time and from time to time …"


Condition s 14 and 15 provide

You shall take whatever steps and execute whatever documents we may require for:

14.1. The purpose of perfecting and giving effect to the Charge …

15.1. You by way of security, irrevocably appoint us and any Receiver and each one severally to be your attorney (with full power to delegate) for you and in your name and as our act and deed:

15.1.1. To execute as a deed and perfect all deeds … which you ought to execute under the obligations and provisions contained in these Conditions …


The Facility...

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