The defendant father purchased a house with a mortgage arranged on his income and that of his son, the claimant, since the son’s income was required for the mortgage lender to agree to the loan. The property was conveyed in joint names to the father and son in equal shares but the father made the mortgage payments and paid the difference between the mortgage loan and the purchase price. The father and son did not discuss beneficial ownership of the property themselves or with the solicitor whom they jointly instructed to act for them in the purchase, yet the transfer included a X in box 11 of the Land Registry TR1 form which stated that “the transferees are to hold the property on trust for themselves as tenants in common in equal shares”. Neither party signed the form as transferees. The son subsequently sought a sale of the property and a declaration that he was beneficially entitled to a half share in the property. The judge held that the TR1 had been filled in by mistake, the declaration in the TR1 could not stand, so that the son had no beneficial interest in the property which was held beneficially for the father alone. The son’s appeal was dismissed, the judge holding that although it was not appropriate to vary the declaration to declare that the father was the sole beneficial owner, the TR1 could be rectified by deleting the X so that there was no express declaration of trust at all.
On the claimant’s second appeal—
Held, appeal allowed. Common mistake rectification required the parties to have a common intention at the time the document was executed and a communication between them of that accord so that each party understood that they shared that common intention. There was in fact no accord between the defendant and the claimant as to the beneficial ownership of the property, the trial judge having found no continuing intention shared by the parties at the time the property purchase was completed concerning the beneficial interest that each was to hold. Since the trial judge had found that the parties had not discussed how the property was to be held, having simply given no thought to the matter, it was impossible to find any continuing common intention that there should be no declaration of trust in the TR1. Common mistake was not established, and accordingly rectification of the TR1 was refused (paras 22, 34–43, 47, 48).
Quaere. Whether the principles applicable to rectification of commercial contracts apply to property bought jointly by family members or whether such cases demonstrate special features in the same way as pension scheme cases and settlements to which different considerations apply (paras 26–30).
Clifford Darton QC and George Woodhead (instructed by Verisona Law, Portsmouth) for the claimant.
Robin Green and Riccardo Calzavara (instructed by Porter & Co Law Ltd, Sutton on a pro bono basis) for the defendant.