Dean Ralph v David Ralph
| Jurisdiction | England & Wales |
| Judge | Sir Geoffrey Vos,Lord Justice Peter Jackson,Lord Justice Popplewell |
| Judgment Date | 22 July 2021 |
| Neutral Citation | [2021] EWCA Civ 1106 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Appeal No: A2/2021/0108 |
[2021] EWCA Civ 1106
Sir Geoffrey Vos, MASTER OF THE ROLLS
Lord Justice Peter Jackson
and
Lord Justice Popplewell
Appeal No: A2/2021/0108
Claim No: F10CL247
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION
The Honourable Mr Justice Morris
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
HH Judge Monty QC
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Clifford Darton QC and Mr George Woodhead (instructed by Verisona Law) for the claimant/appellant, Dean Ralph
Mr Robin Green and Mr Riccardo Calzavara (instructed by Porter & Co Law Ltd on a pro bono basis) for the defendant/respondent, David Ralph
Hearing date: 13 July 2021
If this draft Judgment has been emailed to you it is to be treated as ‘read-only’. You should send any suggested amendments as a separate Word document.
Sir Geoffrey Vos, Master of the Rolls:
Introduction
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 so as to remove a manuscript cross from box 11 that said that “the transferees are to hold the property on trust for themselves as tenants in common in equal shares”, on the grounds that, as HH Judge Monty QC (the trial judge) held on the evidence, no such thing had actually been agreed between the defendant father (David) and the claimant son (Dean) who were the transferees.
The essential background can be taken from the trial judge's judgment at [2]–[3]:
“2. This is a claim by Dean for a declaration as to the beneficial ownership of 6 Homedale House, 3 Brunswick Road, Sutton, and for an order for sale … under the Trusts of Land and Appointment of Trustees Act 1986.
3. Dean and David are registered as the owners of the property, which was bought in their joint names in 2000. It is common ground that David, who was then living at the property with his partner (who later became his wife) and their five children, of whom Dean is the eldest; in 2000, the youngest child was around 11 years old, and Dean was 19 years old. David could not obtain a mortgage advance – which he needed to buy the property – on his income, and he asked Dean to help out, as Dean was working and earning. The property was bought in October 2000 for £84,500, of which £76,050 was borrowed from Halifax, and David paid the balance. Dean did not contribute to the purchase price. Dean and David both used the services of a firm of solicitors to act for them in connection with the purchase and the mortgage. There was, apparently, one meeting with the solicitor, when the contract was signed …”.
The essential findings of fact can also be taken from the trial judge's judgment at [34]–[35]:
“34. I am entirely satisfied, having heard the evidence, that it was never intended by either Dean or David that they should be joint owners in equity. In my judgment, the position was this. Dean became a joint owner purely to assist with the purchase, so that the mortgage advance could be obtained. There was no discussion with the solicitor about how the property should be held. However and whenever the cross in box 11 came to be placed there, it did not represent the true intention or understanding of the parties. I do not accept that Dean would not have become a joint owner unless he was acquiring a beneficial interest; I do not accept that David told him that it was a good investment for him (emphasis added), although it may have been that he agreed to be a joint purchaser because the purchase was a good and sensible investment for the family as a whole. I do not accept that Dean made payments towards the mortgage. It is right of course that Dean was liable for the mortgage, but I am not convinced that he would not have become an owner unless he was acquiring a beneficial interest. Dean made no contribution to the purchase price and no contribution to the mortgage (save indirectly). There is no evidence of any legal advice having been given by the solicitor; neither Dean nor David say that any was given. In my judgment, the cross in box 11 was placed there because it was assumed that since this was a joint purchase, the property would be held jointly in equity. In fact, that assumption was plainly a mistake; it did not represent the true and enduring intention of the parties.
35. In my view, it is wholly improbable and unlikely that David would have been making an immediate gift to Dean of half of the property, to the exclusion of any interest which Dean's siblings or their mother might otherwise have, giving Dean the immediate right to a half share and to an occupation rent from his parents. If it was intended that Dean was acquiring an interest because of his liability under the mortgage, then Dean would have paid a share of the mortgage from the outset; in my view, his payments whilst he was living at the property were not payments towards the mortgage at all.”
Against this background, the trial judge dismissed Dean's claim on the basis that “David has satisfied me on the facts on balance of probabilities, to the necessary convincing standard, that the TR1 was completed by mistake”, “[t]he declaration in the TR1 cannot stand”, and that it followed from his factual findings that Dean had “no beneficial interest in the property”, which was “held beneficially for David alone”.
A first appeal to the High Court was dismissed by Mr Justice Morris, who, at the risk of over-simplification, founded his approach on the decision of the Court of Appeal in Pink v. Lawrence (1978) 36 P & C R 98 ( Pink) where it was sought to impugn an express declaration of trust in favour of joint owners. Buckley LJ (with whom Eveleigh LJ and Sir John Pennycuick agreed) had said that “once a trust has been effectively declared, it can only be got rid of either by rescinding the document containing the declaration of trust on the ground of fraud or mistake or rectifying it in the appropriate manner to vary or delete the declaration of trust” (see Pankhania v. Chandegra [2012] EWCA Civ 1438 ( Pankhania) at [17] per Patten LJ and [27] per Mummery LJ).
Morris J held that, whilst it was not appropriate to vary the declaration to say that the property was held on trust for David alone, since that had not been agreed at the time [76], it was “appropriate [on the evidence] to conclude that the TR1 could be rectified by deletion i.e. by removing the “X” from the second box in box 11”, so that there was no express declaration of trust at all. The trial judge had clearly found that “the express declaration of trust in the TR1 did not reflect the parties' agreement or common intention”, and had not made “a positive finding of a common intention at the time of sole beneficial ownership held by [David]”. In those circumstances, the trial judge had correctly decided the beneficial interests under the principles enunciated in Stack v. Dowden [2007] UKHL 17 ( Stack) and Jones v. Kernott [2011] UKSC 53 ( Jones).
The main ground of Dean's second appeal (for which Bean LJ gave limited permission) is that the rectification permitted by the judges below was inadmissible because there was no positive subjective common agreement between Dean and David at the time of the declaration of trust, and no sufficient outward expression of accord, as required by the Court of Appeal's recent decision in FSHC Group Holdings Ltd v. GLAS Trust Corpn Ltd [2020] Ch 365 at [176] (“ FSHC”). David relies in his Respondent's Notice on the contention that there can, in law, be a sufficient outward expression of accord without express communication, at least in the family context.
In addition to the central question of an outward expression of accord, Dean also challenges Morris J's conclusions, contending them to amount to an impermissible partial rescission of a contract for which consideration had been paid, a failure to consider whether it would be inequitable to grant the relief claimed, and a misapplication of the doctrine of common intention constructive trusts.
The procedural background
There were a number of unsatisfactory features to the procedural background to this case.
First, David's claim for rectification of the declaration of trust contained in the TR1 was never pleaded.
Secondly, the notes to the version of form TR1 that was being used in 2000 were never produced. The current edition suggests that “[i]f there is more than one transferee and panel 10 [box 11 in 2000] has been completed, each transferee must also execute this transfer to comply with the requirements in section 53(1)(b) of the Law of Property Act 1925 [section 53(1)(b)]”. Section 53(1)(b) provides “(1) Subject to the provision hereinafter contained with respect to the creation of interests in land by parol — … (b) a declaration of trust respecting any land … must be manifested and proved by some writing signed by some person who is able to declare such trust …”. The trial judge proceeded (at [18] and [21]) on the basis that HHJ Paul Matthews had decided in Taylor v. Taylor [2017] EWHC 1080 (Ch) ( Taylor) that it made no difference to the validity of the declaration of trust in this situation if the TR1 was signed by the transferor, but not by the transferees, because a properly completed TR1 could only be impeached on the grounds of fraud, undue influence, mistake or proprietary estoppel (see Pankhania). I confess to some doubt about the correctness of HHJ Matthews' decision on that point, but since it was not raised or argued by David, I shall assume the validity of the declaration of trust for the purposes of this appeal, and leave the point to be considered again if...
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