Mother who raised action for reduction of disposition against son wins appeal after judges rule forged deed was void

Lady Paton

A mother who raised an action seeking reduction of a forged disposition which purported to convey a property to her son for “love, favour and affection” has successfully appealed to have the deed set aside.

Judges in the Inner House of the Court of Session allowed an appeal by Therese Chalmers, who sought reduction of the disposition by which her ex-husband Paul Chalmers - who purchased a flat in Glasgow in his wife’s name without her knowledge - transferred title to their son Chris Chalmers, the defender in the action.

Lady Paton , Lady Smith and Lord Drummond Young heard that the appellant and her former husband were formerly the sole partners in Rentier Property, a family business which rented out a number of properties and which was handled by the husband before it was dissolved with the signing of the minute of agreement, with him continuing on with the business.

The action concerned the transfer of ownership of a flat at 38 Hotspur Street in Glasgow, which was owned by one of the former couple’s sons, the defender.

The property was purchased in 1998 and all the correspondence with the family solicitors who acted in the purchase indicated that it was Paul Chalmers who instructed it.

Mrs Chalmers told the Lord Ordinary that she did not know about the purchase of the property and that she only found out about it during divorce proceedings which followed the couple’s separation in 2008.

The division of property including those properties that formed part of Rentier Property portfolio was one of the issues in the divorce action, but the flat at 38 Hotspur Street was not included as part of the matrimonial property.

Mrs Chalmers told the court that her then husband had refused to co-operate in making full disclosure of matrimonial assets and that nothing was ever said by him throughout the divorce about Hotspur Street.

However, the condescendence in the action of divorce, which set out Ms Chalmers’ understanding of the matrimonial property, did make averments to the effect that she had discovered that the flat was formerly registered in her name.

Mrs Chalmers acknowledged that if the disposition had been reduced before the divorce settlement it would have formed part of the matrimonial property and fall to have been dealt with as part of the settlement. She also acknowledged that she had signed the Minute of Agreement in the knowledge that her signature on the disposition had been forged.

Her solicitor told the court that at the time of entering into the minute of agreement she and Ms Chalmers were fully aware that the disposition in favour of her son had been signed in 2006 and registered in 2008 and was aware that Ms Chalmers denied signing the disposition.

She said that the reason why an action of reduction of the disposition was not commenced before then was that Mrs Chalmers was already engaged in one Court of Session action and it was thought better to wait until it had been concluded before raising another action.

Ms Chalmers’ case against her son was not just that he was a passive recipient of a windfall to which he was not entitled, but that he was an active participant in a fraud perpetrated on her.

However, having regard to the fact that it was never intended that Ms Chalmers should have any beneficial interest in the property, that she delayed raising this action beyond the signing of the minute of agreement and that the defender did not participate in any fraud on the pursuer, the Lord Ordinary, Lord Boyd of Duncansby, refused to grant decree of reduction.

Before the appeal court, it was submitted that the Lord Ordinary erred in law.

The appellant argued that the 2006 disposition was “void, a nullity”, because the granter’s signature in the disposition had been forged.

It was submitted that the court had no discretion whether or not to grant reduction, but must do so unless exceptional circumstances were made out, namely that the pursuer had adopted or authorised the forged signature.

No such exceptional circumstances had been proved. Accordingly the forger – thought to be her son – “had to bear the consequences of his own actions”.

Esto there was any question of the court’s discretion, the Lord Ordinary had erred in its exercise because he had taken irrelevant considerations into account and had left relevant considerations out of account.

He had decided in favour of an applicant, the defender, who “did not have clean hands”.

Delivering the opinion of the court, Lady Paton said: “In our opinion, a forged disposition is a nullity. It is wholly void, not merely voidable. Only in exceptional circumstances may a forged disposition have any effect, the exceptional circumstances being where the person whose signature has been forged expressly or impliedly authorises or adopts the forged signature as his or her own.

“Furthermore, we consider that the system of Scottish land registration could be subverted if it were possible to forge a signature on a disposition which was duly registered, and then put forward equitable circumstances supporting a contention that the forged disposition should not be reduced, with the ultimate result (in the context of land tenure) depending upon the discretion of the court.

“In the present case, there is no evidence that the pursuer expressly or impliedly authorised or adopted as her own the forged signature on the 2006 disposition. We therefore agree with counsel for the pursuer that the Lord Ordinary erred in law by adopting the approach of an exercise of discretion. The deed is null and of no effect, and the pursuer is entitled to decree of reduction.”

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