Common Mistake, Rectification And The Danger Of Box-ticking

• Published date: 16 September 2021
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Real Estate and Construction, Charges, Mortgages, Indemnities, Financial Services, Trials & Appeals & Compensation, Conveyancing, Landlord & Tenant - Leases
• Law Firm: Gatehouse Chambers
• Author: Mr James Hall

The remedy of rectification for common mistake continues to be a fertile source of difficult cases and appellate decisions, the latest of which was handed down on 22^nd July 2021 in Ralph v Ralph [2021] EWCA Civ 1106. The judgment makes for interesting reading and throws up questions which may yet need to be answered in future cases, particularly regarding whether the doctrine of rectification for common mistake operates on the same principles for all types of contract or other documentary disposition and no matter what context they have arisen in (spoiler: there are already a couple of exceptions: and the Court of Appeal clearly thinks there may be more).

The background

In Ralph v Ralph a father and son, David and Dean Ralph respectively, contracted to purchase a property. David was unable to obtain mortgage finance alone and Dean, being 19 at the time of the purchase in 2000 and also having an income, was able to assist his father by joining in both the purchase and the mortgage loan. The Land Registry form TR1 used to effect the transfer had box 11 (of the standard form at the time: the equivalent option is now contained in box 10 on the current version of form TR1) ticked, thereby (purportedly¹) making a declaration of trust that the transferees are to hold the property on trust for themselves as tenants in common in equal shares i.e. a defined and separate 50% equitable share each ("the Ticked Box"²).

The trial judgment

Dean brought a claim for a declaration that he was a 50% beneficial owner of the property, and for an order for sale under TOLATA. The trial judge, HHJ Monty QC, found that David and Dean had simply not reached any agreement on beneficial ownership at all, that there was a mistake in the TR1 by way of the Ticked Box that could be rectified by deletion, and that the property was held beneficially for David alone (i.e. Dean was a mere legal owner and trustee for David). It appears there was no discussion as to beneficial ownership between David and Dean or between either or both of them and their conveyancing solicitor (who acted for them both³) prior to the transfer, and the TR1 was executed only by the seller/transferor⁴. Privately, David intended the property to be for the benefit of his family, but his intention thereby was rather nebulous (and note that Dean had other, younger siblings).

The first appeal

On first appeal, Morris J also found for David though (whilst agreeing that there could be rectification to delete the 'X' in the Ticked Box) on the apparently slightly different basis that, the trial judge having found that there was no common intention of sole ownership by David nevertheless, on Stack v Dowden/Jones v Kernott principles, David was the sole beneficial owner (informed by the fact that Dean had neither contributed directly to the purchase price nor made any mortgage instalment payments).

The second appeal

On the second appeal, Vos MR delivered the only substantive judgment. The key features...