Gifts cannot be revoked or set aside simply because donors wish they had not made them and would like to recover the property given. Absent some special circumstance, a gift is generally binding on a donor, who cannot recover his property unless he can show that there was some mistake of so serious a character that it would be unjust for the donee to retain it.
NRAM plc v Evans and another [2015] EWHC 1543 (Ch); [2015] PLSCS 167 concerned the discharge of a registered charge. The lender had sent the Land Registry a form of discharge after being informed by the borrowers that the loan secured by reference to a particular mortgage account number had been repaid. Had the lender checked its records before doing so, it would have discovered that the borrowers had reorganised their financial affairs and consolidated several different loans. As a result, the original loan had been redeemed and the borrower was given a new mortgage account number. So the debt remained, but the lender’s security had vanished.
The evidence suggested that the borrowers knew that the lender had intended to retain its security over their property. Indeed, repayments in respect of the new loan continued for several years. However, the borrowers were now arguing that the charge did not secure that loan. The judge disagreed. The charge secured “all of the money you owe us from time to time under any offer”, which was effective to cover the new loan.
The court has an equitable jurisdiction to set aside a voluntary disposition for mistake in the event of a mistake of sufficient gravity either as to the legal character or nature of the disposition, or as to some matter of fact or law that is basic to the transaction: Futter v Revenue and Customs [2013] UKSC 26. The court must consider the matter in the round and make a judgment about the justice of the case: Gillet v Holt [2000] EWCA Civ 66. Was there a distinct mistake? How central was it to the transaction in question? How serious were the consequences and would it be unconscionable, or unjust, not to correct it?
The judge ruled that the lender had made a serious mistake when it issued an e-DS1 to the Land Registry. That was careless but, in Futter, Lord Walker stated that it does not matter if the mistake is due to carelessness on the part of the person making a voluntary disposition, unless the circumstances are such as to show that he deliberately ran the risk, or must be taken to have run the risk, of being wrong. Nor need the mistake be known to, or induced by, the person or persons taking a benefit under the disposition.
The bank would not have issued the e-DS1 if it had been in possession of all the facts. The borrowers had taken the new loan thinking that it would be secured on their property and, having dealt with it as such, now possessed an asset that was unencumbered. It would be unconscionable to leave the mistake uncorrected and the lender was entitled to be re-registered as the proprietor of the charge in accordance with the rules that apply when altering or rectifying title to registered land. The borrowers were proprietors in possession, but had contributed to the mistake on the register by referring only to original loan account when they asked for a discharge.
Allyson Colby is a property law consultant