I have recently seen a lifetime Trust deed some 10 years old in which all parties, ie the settlors and the trustees have all witnessed the deed for one another. I am aware that under caselaw parties cant witness for each another and on the face of it I believe that means the deed is invalid.
I am also aware contract law cant be relied upon here as it relates to a land transaction.
The trustees now want to sell the property but the conveyancers are also querying the validity. One of the settlors has passed away but the other is still alive.
Is it simply the case the trust has failed and the property still passes under their estates? Is there any other advice or steps that can be offered up to the parties at this point?
The deed is defective for the reasons you give. It cannot therefore have conveyed a legal estate to the trustees. So what is the position in equity and is there an equitable remedy? What is the registration position if registered land is involved?
There cannot be an estoppel because the deed is invalid on its face. As you say as it is gratuitous it cannot be construed as a contract (compare Bank of Scotland v Waugh [2014] EWHC 2117 (Ch)).
Can it be construed as a declaration of trust which would only need to be in writing and has no witnessing requirement? That will depend on the drafting but it is not unknown for a DOT to be in the form of a deed.
Otherwise you are stuck with the “rule” that Equity will not assist a volunteer to perfect an imperfect gift. The Court has come very close to doing that in Pennington v Waine [2002] EWCA Civ 227. The two detailed judgments are impossible to simplify here and deserved to be read. The case concerned shares but in principle that matters only in the different modes of transfer. Where a donor purports to transfer an asset by way of gift (as opposed to making a DOT) it is necessary for him to have done all he can in his power to make that transfer effective. Both judges referred with approval to Lord Browne Wilkinson’s memorable comment in Choithram v Pagarani that despite the above “rule” Equity “will not strive officiously to defeat a gift”. That case pushed the boundary, and so does Pennington, as to what precisely the donor must do to be held to have done all he could.
On the facts the donor was found by what she did to have done enough and furthermore to have rendered it unconscionable for her to have then resiled from her gift and that went for her PRs too after her death.
Pennington has been criticised as going too far. It certainly creates uncertainty as it depends on the “court’s evaluation of all the relevant considerations”: para 64. It is not clear to me at least whether the outcome of the unconscionabliity is that the donor has effected a valid equitable assignment of her equitable interest (needing only writing for land) or a constructive trust has arisen by operation of law within the exception of s53(2) LPA 1925. It would seem that the donee would then be able to call for a transfer of the legal interest.
It may not be possible to convince the purchaser’s solicitors (still less HMRC or other third party) that a gift has already taken place in law without some kind of legal proceedings, even if all relevant parties who would benefit from the gift’s being either valid or void could agree to some compromise. How to proceed therefore needs the expertise of a litigation specialist to advise on the best route to take.
Thank you Jack that’s incredibly thorough and kind of you to take the time to reply. I will digest but I think I agree counsel’s opinion and/or litigation is the likely next step.