Court Of Appeal Allows Appeal & Refuses The Rectification Of A TR1 Form

The Court of Appeal has very recently delivered its judgment in the case of Ralph v Ralph [2021] EWCA Civ 1106, whereby an appeal not to allow rectification of a deed was allowed.

Ralph v Ralph

Background

David and Dean Ralph are father and son respectively and the registered legal proprietors of a property, which was purchased in 2000. At the time of purchasing, David was unable to obtain a mortgage on his sole income and Dean being the eldest of five children was working and could show an income. Dean assisted David by becoming a second applicant to the mortgage but did not contribute to the deposit, nor the monthly mortgage payments.

At the time of instructing property lawyers to purchase the property, neither David nor Dean were advised of what beneficial ownership was or how it could impact either of them going forward. Furthermore, neither were advised to take independent legal advice regarding beneficial ownership. David and Dean had never discussed beneficial ownership and therefore intention of the way the property was held or the division of sale proceeds was not discussed either.

Upon completing the Land Registry TR1 document, the solicitors acting in the conveyance assumed that the parties were to hold the beneficial interest as tenants in common in equal shares and inserted an X in the box of panel 11 of the form reflected such assumption.

Dean issued a claim against David, whereby he sought a declaration by the Court that the property was held by the parties as tenants in common in equal shares and an order for sale. The Claimant’s claim was based upon the express declaration of trust created by the TR1 form. David defended the claim on the basis that the TR1 had been completed by mistake and no such trust existed – the beneficial ownership of the property lay solely with him.

At first instance, the Judge summarised that there was a requirement to decide in what proportion the beneficial interest in the property was held, as there was an executed TR1. In order to detract from the trust created by the TR1, a new trust would have to have been created, or it would have to be shown that the TR1 could be impeached on the grounds of fraud, undue influence, mistake or proprietary estoppel.

The Judge decided that on the balance of probabilities the Defendant could show that the completion of panel 11 was a mistake and there was no common intention by the parties for the property to be held in such a way. Therefore, it was found that the X in panel 11 could be deleted.

Appeal decision

Dean appealed the decision and judgment was delivered recently. The appeal was allowed and rectification of the TR1 was refused for the following reasons:

• There was no finding that David and Dean agreed on legal title only;
• There was no agreement as to the sharing of beneficial interests, nor any discussion about how the property should be held. Therefore, it was impossible to find sufficient, or any continuing common intention that there should be no declaration of trust in the TR1;
• David never expected to be a 100% owner of the beneficial interest and Dean had no expectation that he would get a full 50%;
• David nor Dean had considered the matter of beneficial ownership whatsoever; and
• Although Dean’s evidence was rejected, he had in fact been burdened with the legal liability of a mortgage, which prevented him from purchasing a property with his wife.

The Courts did convey their disappointment at the fact that the case had not concluded by means of alternative dispute resolution.

Moving forward

If you are considering purchasing a property in similar circumstances, do remind yourself that it may be that a TR1 does not cover your circumstances and that you should seek independent legal advice.

If however, you are in a similar situation, it is important to obtain legal advice as soon as possible, so you know how best to proceed.