“You Knew Perfectly Well What You Were Signing”

(Do not sign a property transfer hoping that it will not complete! – Property Litigation)

On the 1st of February 2024 the Chancery Division heard a claim* by Claimants against a number of Defendants, including a commercial lender and a firm of solicitors. The claim was about the sale (or as claimed “purported sale”) of a property previously owned by the Claimants.

When a property is being transferred at the Land Registry the usual form of transfer to sign is a “TR1” form. The Claimants had signed one, and now sought to set aside the transaction.

The Claimants argued the principle of “non est factum”, essentially claiming that the written agreement to transfer was invalid because it was signed by mistake without understanding its meaning. The technical point here is that, they claimed (if successful), that this would render the contract “void ab initio”, essentially invalid from the outset. The remedy claimed was that the Register should be rectified in accordance with the Land Registration Act and that they should, therefore, be reinstated as owners of the property.

Amongst other things, the Court held that the Claimants had known perfectly well that they were signing a TR1 and that it would effect the transfer of the property. Whether or not they had hoped that the sale would never complete, or perhaps that it would be reversed very soon after, was insufficient to support the claim of non est factum. The fundamental purpose and sole characteristic of the TR1 is to transfer a property, and the Court held that the Claimants had understood it as such. The parties could not be said to be at odds. The Court went further and explained that the only type of mistake that could have applied here in any event would, if proven, render the TR1 “voidable” rather than void (as above) and therefore the power of the Court under the Land Registration Act (Schedule 4) to alter or rectify the Register on the grounds of mistake, would not have been engaged in any event.

This goes to show that the Courts will take a robust line when the impact of the document is clear, and where the evidence surrounding the signing of that document supports the fact that the parties to it were fully aware of it, what its purpose was and what the impact would be. The Court will not entertain attempts to unpick such an agreement at a later date.

(* Baylis & another v Haider & others [2024]All ER (D) 40 (Feb))

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