Mistakes, Misrepresentation and Protected Trust Deeds

The Background

Taking our current caseload as a small sample, debtors seem to becoming more inventive at trying to avoid a Trustee realising equity in property. One of the current trends is to argue a fixed amount of contribution was agreed (when it was not) or to say that there was an inducement to sign up deed. The recent case of Dunn v Roxburgh is a decision of Lord Drummond Young on a debtor’s attempt to reduce a trust deed on the grounds of fraud and negligent misrepresentation by the Trustee. In short, the debtor claimed he had been tricked into signing and therefore the deed should be reduced (therein avoiding a forced sale of his property).

The Facts

The debtor claimed that pre-appointment a representative from the Trustee’s practice called at the his home to obtain his signature on the trust deed. It was claimed that the Trustee’s staff repeatedly told the debtor that his home was not at risk provided he continued to make the agreed payments under the trust deed. The effect of the trust deed was of course to convey all of the debtor’s assets to the Trustee, therefore leaving the Trustee with the responsibility of realising the equity in the debtor’s home. The debtor claimed that he had been tricked into signing, and had he realised his home was at risk he would not have signed. For the Trustee it was claimed that this was a (apparently straightforward) case where a debtor had failed to co-operate; there was certainly nothing to support a misrepresentation by the Trustee .

The Decision

At this stage Lord Drummond Young was issuing an opinion on a debate where the Trustee argued that even if the debtor proved everything they said, the evidence would not support a fraud that allowed reduction of the Trust Deed. The court agreed with the Trustee. The debtor argued that the Trustee’s representative had said that his home was not at risk provided he fulfilled his obligations under the trust deed. The court pointed out that this was actually correct-the point seemed to be that the debtor refused to accept that there were obligations in relation to the equity in his home!. Lord Drummond Young therefore found in favour of the Trustee and dismissed the action.


This decision is not particularly legally significant in itself. However, it gives an example of one of a growing number of such challenges. It also sets out the requirements that a party must fulfil in order to successfully establish a claim of fraud or misrepresentation. For example, written pleadings are required clearly showing the facts, the context of what was said, and when, as well as a requirement to show that that the IP, or representative on their behalf, led the debtor to believe something that was inconsistent with the documents that the they signed. Clearly the onus is on the debtor to prove that there was fraud or misrepresentation and this is a positive decision for IP’s in that the claim was rejected.

BBM Solicitors specialise in advising IP’s in both contentious and non-contentious matters (including transactional work). Contact: Eric Baijal (emb@bbmsolicitors.co.uk) or Alasdair Baijal (agb@bbmsolicitors.co.uk).

This briefing note is current 18th March 2013 and is our understanding of the position described at that date. Legal advice ought to be taken before relying on its terms (particularly to ensure the law has not changed).