Stay within the lines

Eileen Day and her husband bought a property at 25 Ashby Road, Southampton in 1954, in joint names. It was vested in Day on her husband’s death in 1976. In May 1985, Day executed a general power of attorney in favour of solicitor Alan Froud, who executed a conveyance transferring the property into the names of Day and her son, Terence. The conveyance expressed that the property was to be held as beneficial joint tenants.

Day drew up a will in November 2008, in which she claimed to leave the property between her six children equally. She died the next month. As the position stood, the property passed by survivorship to Terence, the respondent in Day & Anor v Day [2013] EWCA Civ 280.

The appellants, who were two of the deceased’s other children and (along with the respondent) the executors of the will, sought to rectify the conveyance. They wanted the property to be held by Day and the respondent on trust for her absolutely so it could pass under the terms of the will.

They argued that the conveyance was executed so the respondent could raise funds by way of a mortgage and that it was no part of the agreement that the respondent would acquire a beneficial interest in the property. Furthermore, they said that the conveyance terms were an error that should be rectified.

The respondent admitted the purpose of the transfer but argued that “there was no express or implied agreement that (he) should not acquire a beneficial interest in the property”. In effect, he argued that there was no discussion or consensus between him and his mother about beneficial ownership and that, therefore, he “denied that it was contemplated that the beneficial ownership should not pass to him”.

No intention

The critical question, Mr Recorder Chapman QC said, was whether the conveyance failed to embody Day’s intention. He concluded that, as a finding of fact, Day never intended or understood that the conveyance vested a beneficial interest in the respondent. That said, the recorder felt unable to make an order for rectification as the conveyance was not executed by Day herself but, rather, by Froud, her attorney.

His reasoning was that, in executing the conveyance in the terms it contained, Froud was acting within the scope of his authority and without any mistake as to those terms or their effect. The recorder said he felt “absolutely no satisfaction in reaching that conclusion” and gave permission to appeal.

No benefit

On appeal, the High Court overturned the first instance judgment and the claim for rectification was allowed. Giving the lead judgment, Lord Justice Etherton said that the doctrine of rectification was: “… concerned with intention, or rather the mistaken implementation of intention, rather than the power and authority to effect a particular transaction.”

The Chancellor of the High Court said the recorder’s assumption that the general power of attorney, by virtue of its very generality, authorised Froud to execute a conveyance as he saw fit was incorrect.

Broadly speaking, the chancellor considered that Day’s intention was the deciding factor and there was no evidence of her intention to confer any beneficial interest to the respondent.

While not scathing, the judgment appears to suggest that the solicitor’s interpretation of his level of autonomy was somewhat generous and that he acted over and above the instructions given to him.

Practitioners acting under powers of attorney for clients who retain capacity should ensure that they understand instructions before exercising authority. If ?in doubt, seek clarity, or the law may intervene.

Matthew Evans is a partner at Hugh James

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