Analysis
The claimant was the son of the defendant. The parties were the registered owners of a residential property. The property was purchased through a mortgage which was obtained using the claimant’s earnings. The defendant paid the balance of the purchase price meaning that the claimant made no contribution. The TR1 was signed by the transferors but not the claimant and defendant as transferees, but nevertheless contained a manuscript cross in Box 11 recording that ‘the transferees are to hold the property on trust for themselves as tenants in common in equal shares’. The claimant claimed a declaration that he was a joint beneficial owner and an order for sale under the Trusts of Land and Appointment of Trustees Act 1996. The trial judge dismissed the claim, holding that there was no common intention that the claimant would become a joint beneficial owner. Rather, the claimant had become an owner only to assist with the purchase, and the cross in Box 11 was a mistake.
At a first appeal to the High Court it was held that while it was not appropriate to vary the declaration to say that the property was held on trust for the defendant alone, it was appropriate to rectify the TR1 by deletion so that there was no express declaration of trust at all: the trial judge had found that the TR1 did not reflect the parties’ agreement or common intention and had made a positive finding of a common intention that the defendant was the sole beneficial owner. The trial judge had therefore correctly decided the beneficial interest in accordance with the principles of a common intention constructive trust. The claimant appealed on the grounds that rectification was impermissible because there was no positive subjective common agreement between the parties at the time of the declaration of trust and no sufficient outward expression of accord.
Held:
Allowing the appeal and refusing the rectification of the TR1:
The question as to whether the principles applicable to rectification of commercial contracts (paras 14-25) apply in this situation would be left open as they were not fully argued (paras 26-31).
It was not necessary to decide the case by reference to whether or not there was an outward expression of accord or whether it was taken to have occurred tacitly because the trial judge did not find any continuing common intention at the time of completion as to the beneficial interest each was to hold. There was no suggestion in the trial judge’s findings that he thought it had been proved that the parties had a continuing common intention that the property should not be held for themselves in equal shares, or indeed that they had reached any agreement in relation to beneficial ownership. If there was no common intention, the question of outward accord did not arise. There was no finding by the trial judge that the parties had reached an agreement in relation to legal title only, and it was impossible to find a sufficient or continuing common intention that there should be no declaration of trust in the TR1 (paras 34-43).
JUDGMENT SIR GEOFFREY VOS, MASTER OF THE ROLLS: Introduction [1] The bulk of the cases that have concerned common mistake rectification have been between commercial parties and related to commercial contracts. The question here, however, is whether a Land Registry transfer form TR1, signed by the transferors but not by the transferees, should be rectified …Continue reading "Ralph v Ralph [2021] WTLR 1443"