Significant decision handed down in co-ownership of property and proprietary remedies case

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Today, Deputy Master Hansen handed down judgment in the case of William Simon Fattal v Elias Simon Fattal [2022] EWHC 950 (Ch), following a trial on 8 to 11 March 2022. David Holland Q.C. and Evie Barden acted for the successful Claimant in the case, which is a significant decision regarding the co-ownership of property and proprietary remedies pursuant to a void disposition or mistake. The case arose from a dispute between two brothers about the ownership of a flat in Nottingham Terrace. The flat had been acquired by the Claimant in 1972 in his sole name but was transferred to the Defendant by a transfer dated 24 January 2014, which both parties agreed was not a gift and was intended to be for fair value. The Claimant’s position was that he was the sole beneficial owner of the property from 1972, but, in around 1990, he made a proposal to his brother to transfer the flat for £400,000. His case was that he transferred the property in the mistaken belief that the Defendant had paid him the agreed figure of £400,000 and sought relief from the consequences of that mistake. The Defendant’s position was the brothers had formerly jointly owned the property and that he provided consideration for the acquisition of his brother’s half share in the property, by a sum being allocated in the accounts of one of the many companies which were jointly owned by the brothers, a director’s loan account, a trust account or a similar device. The Master found that, while the brothers were content to treat the property as the Defendant’s shared home with the Claimant, there was no evidence of a common intention that the brothers would share the property beneficially at the outset or subsequently, coupled with detrimental reliance on the strength of the common intention. The Master also found that the Defendant had not paid the Claimant for the acquisition of the Claimant’s beneficial interest in the property, following the 1990 proposal. As a result of those conclusions and the Defendant’s knowledge that he had not paid the Claimant from April 2018, the Master found that the Defendant held the property on constructive trust for the Claimant, relying on the analysis in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 and Ali v Dinc [2021] 2 P & C R 19, being the first reported decision applying the analysis by Sarah Worthington Q.C. in Ali v Dinc that a constructive trust can arise in such circumstances. Additionally, he held that the Claimant was entitled to have the voluntary transfer rescinded on the basis it was made as a result of a mistake under the principle in Pitt v Holt [2013] 2 AC 108 and that, in any event, the property was held on a resulting trust. In addition, the Master found that the Defendant had no beneficial entitlement to the rental income received from letting the property to third parties from 22 January 2014 onwards, such that he was unjustly enriched by the receipt of those monies at the expense of the Claimant as a result of the mistake the Claimant was labouring under and ordered an inquiry into the damages payable from that date.

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