Court of Appeal allows appeal against an order for rectification of a TR1: Ralph v Ralph [2021] EWCA Civ 1106

22.07.2021

The Court of Appeal has allowed a second appeal against an order for the rectification of a Land Registry transfer form TR1.  The decision reversed the earlier judgments of HHJ Monty QC and Mr Justice Morris who had found that the declaration of joint beneficial ownership contained in this form (section 11) should be deleted on the grounds of common mistake thereby depriving the Appellant of a half-share in the property concerned.

The decision returns to issues last considered by the Court of Appeal in Pankhania v Chandegra [2012] EWCA Civ 1438 and is likely to be of considerable importance to practitioners who advise co-owners and indeed lenders on the beneficial ownership of properties that are registered in joint names.

Giving the leading judgment of the Court, Sir Geoffrey Vos, Master of the Rolls held that the TR1 could not be rectified on the facts of the case because the Trial Judge had not found a “continuing common intention” for the TR1 to contain no declaration of beneficial ownership, but only an absence of agreement or indeed discussions between the purchasers as to such ownership.  Drawing a distinction between the absence of agreement and an actual agreement, Sir Geoffrey Vos (with whom LLJs Peter Jackson and Popplewell agreed) found that “no agreement” could not be equated with “an agreement” for the purposes of rectification even if, by deduction, this was the correct legal analysis of the parties’ failure to agree, as:

“The law does not make contracts for people unless they have … agreed to them or shown a continuing common intention as to the term or terms in issue.”

Whilst the judgments in Ralph in once sense re-affirm the decision in FSHC Group Holdings Ltd v GLAS Trust Corpn Ltd [2020] Ch 365 that on a claim for rectification for common intention the search is always one for the parties “subjective intentions” in another they raise more questions than they answer because, on the basis of the Respondent’s case, the Court:

  • declined to decide whether the test in FSHC was in fact the correct test for claims to rectify a TR1 rather than those lower requirements which apply in cases of voluntary settlements (see Re Butlin’s Settlement Trust [1975] Ch 251);
  • doubted whether HHJ Paul Matthews had been right to find in Taylor v Taylor [2017] EWHC 1080 (Ch) that it made no difference to the validity of a declaration of beneficial ownership that it was contained in a TR1 that had been signed by transferors and not the transferees.

Given the observations of Lady Hale at 66 to 68 of her speech in Stack v Dowden [2007] 2 AC 458 as to the failure of cohabitants to agree their beneficial interests prior to the purchase of a property or to understand the nature of their agreement even when they do, the decision in Ralph is unlikely to be the last word on this thorny subject.

Clifford Darton QC and George Woodhead acted for the successful Appellant instructed by Nigel Cole and Marie Forbes of Verisona Law.

A copy of the judgment of the Court of Appeal can be found here.

Clifford and George have discussed the case with Estates Gazettes on their ‘On the Case Podcast’ which can be listened to here.

The case has been covered by The Times.

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