WILLIAM SIMON FATTAL v ELIAS SIMON FATTAL

Where legal title to property is acquired in one person’s sole name, sole beneficial ownership is the starting point. That position may be displaced by proof of a different common intention, objectively inferred from the parties’ words and conduct, together with detrimental reliance. Mere occupation, payment of outgoings or a close relationship is insufficient.

A gratuitous transfer made under a sufficiently serious causative mistake may be rescinded where it would be unconscionable for the recipient to retain the property. Alternatively, where consideration was neither intended as a gift nor provided, the recipient may hold the legal title on presumed resulting trust. A claimant may also obtain personal restitution for benefits received through the mistake.

The claimant transferred a valuable flat, registered in his sole name since 1973, to his brother in 2014. The transfer recorded that the transferee had provided consideration for the original acquisition, although no money was paid under the alleged arrangement.

The claimant alleged that he had offered to sell the property to the defendant for £400,000 in 1990 or 1991, had not been paid, and had transferred the property in the mistaken belief that payment had been made. The defendant alleged an equal beneficial interest from acquisition and contended that payment had been made through company or trust accounts.

The central issues were beneficial ownership, payment, mistake, proprietary relief, and the period for accounting for rental income.

1. Judgment for the claimant. The claimant had always been the sole beneficial owner. The defendant failed to prove any common intention that the property should be beneficially shared, or any detrimental reliance. The property had been acquired and refurbished with the claimant’s money. The defendant’s occupation and payment of ordinary outgoings did not establish a constructive trust.
2. The claimant had made a proposal in 1990 or 1991 to sell the property for £400,000, but the proposal had not become a binding written agreement. The claimant proved, on the balance of probabilities, that the defendant had never paid the agreed sum or any other consideration. Resort to the burden of proof was unnecessary because the evidence enabled a positive finding.
3. The 2014 transfer was made in the claimant’s causative and sufficiently serious mistake that the defendant had paid for the property. In the circumstances, it would be unconscionable for the defendant to retain it. The transfer was therefore liable to rescission, and the defendant was ordered to transfer the property back.
4. The same result followed from a presumed resulting trust. There was no presumption of advancement between the brothers, no evidence of a gift, and no evidence of an intention inconsistent with retention of the beneficial interest.
5. The misrepresentation claim failed. The evidence established assumption by the claimant and passivity by the defendant, rather than an actionable representation.
6. The defendant knew by April 2018 that the claimant had not been paid. Nevertheless, the claimant was entitled to an account and inquiry into net rental income received from 22 January 2014. The defendant was unjustly enriched by retaining that income. An unpleaded change of position defence was too late.

First-instance judgment. The court granted a declaration that the claimant was the sole beneficial owner, ordered the defendant to transfer the property to him, and ordered an account and inquiry concerning rental income.