Suman Bhatia v Christopher Purkiss & Anor

Rectification of a transfer for common mistake requires convincing proof that the document failed to record either a prior concluded contract or a common intention which both parties understood to share. That test applies equally in a family context. Informal dealings and the absence of documentary evidence may be relevant to the assessment, but they do not alter the substance of the test or remove the natural presumption that a signed instrument records the parties’ intentions.

Where no different common intention is established, the presumptions concerning jointly held property apply. An adverse inference from an absent witness is discretionary and should be drawn only in appropriate cases. Security given for a company’s borrowing is not, without more, a personal loan to the company or its controller.

The claimant and her son were the registered joint owners of a residential property. The claimant alleged that her son had been added to the title solely to facilitate mortgage borrowing, while the property was intended to belong beneficially to her alone. She sought rectification of the TR1 and a declaration of sole beneficial ownership.

The first defendant, the liquidator of a company against which the son had a substantial judgment debt, opposed rectification and sought enforcement of a charging order by sale. The claims were tried together. The central issues were whether there had been a common intention or agreement for sole beneficial ownership, whether the TR1 had been completed by mistake, and whether an order for sale should be made.

1. Rectification test. The claim was dismissed. Applying FSHC v GLAS Trust Corp Ltd [2020] Ch 365, the claimant had to provide convincing proof that the TR1 failed to record a prior concluded contract or a common intention which both parties shared and understood the other to share. The same test applied despite the family relationship. The family context was relevant to the evidence and inherent probabilities, but did not alter the legal test (paras [48]-[54]).
2. The evidence did not establish any agreement or outward expression of accord that the property would belong beneficially to the claimant alone. The unreliable witness evidence, the absence of contemporaneous support, the son’s residence at the property, the mixed sources of purchase money and the commercial irrationality of the alleged mortgage arrangement pointed towards beneficial joint ownership (paras [107]-[130]).
3. The court found that the TR1 had probably been signed and copied while the declaration of trust box was blank, and that the box was probably completed later by the conveyancing solicitor or staff. That did not establish mistake. In the absence of a proved contrary intention, the presumptions identified in Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776 applied, pointing to beneficial joint ownership (paras [136]-[139]).
4. The court declined to draw an adverse inference from the conveyancing solicitor’s absence. The principles in Wisniewski v Central Manchester Health Authority [1998] PIQR 324, as explained in Magdeev v Tsvetkov [2020] EWHC 998 (Comm) and Manzi v King’s College Hospital NHS Foundation Trust [2018] EWCA Civ 1882, confer a discretion which must be exercised cautiously and in light of the overriding objective (paras [87]-[96]).
5. The Sale Application succeeded in principle. The issue had been overtaken by a possession order obtained by the mortgagee, but an order for sale would have been proportionate given the judgment debt and the claimant’s and her daughter’s ability to obtain alternative accommodation (paras [140]-[142]).