Key Point

  • A legal charge given by an individual must be executed in the presence of a witness, in order to be valid;
  • If the charge document appears on its face to be incorrectly executed, the chargor will not (absent other conduct) later be estopped from relying on such defects to invalidate the charge; and
  • Notwithstanding, an invalid legal charge may well take effect as an equitable charge

The facts

Trustees executed a legal charge in 2003 to secure monies lent by Bank of Scotland plc. The trustees' signatures were not attested by a witness and this was plain from the document. As such the legal charge was invalid. The Bank argued that the trustees were estopped from denying the validity of the legal charge, due to a written representation from the trustees' solicitor that the legal charge had been executed. The Bank had relied on that representation by lending monies.

The Decision

The Court held that estoppel could not be invoked where the legal charge does not even appear, on its face, to be executed correctly. It was content that the requirements of Section 2 of The Law of Property (Miscellaneous Provisions) Act 1989 were met. This permitted the Court to find that whilst the charge failed as a legal charge, it could take effect as an equitable charge.


On the estoppel point, there are good public policy reasons why claims of this nature should fail. The Bank (or its solicitor) should have spotted the error. It is interesting to note in this regard that the Bank instructed one of the trustees to act as its solicitor (whilst he also acted for the trustees) on the transaction.

Bank of Scotland plc v. Waugh & Ors