J U D G M E N T

1. LORD JUSTICE JACOB: This is an appeal, with my permission, from a decision given on 6 May 2005 of Her Honour Judge Williams sitting in the Kingston County Court. The dispute is between Mr and Mrs Ahmad, on the one hand, and Mrs Ahmad's brother, Mr Gould. It concerns a property in Weybridge. The judge said that the Ahmads, who hold the legal title of the property, are also the holders of the entire beneficial interest in it. Before the judge, Mr Gould contended that he was the entire beneficial owner, alternatively, that he had an interest by way of a constructive or resulting Trust. Now, only the latter is contended for.

2. At the time of the purchase of the property in the names of Mr and Mrs Ahmad, Mr Gould was coping with financial and matrimonial difficulties. The Ahmads were living in Texas and had just sold a flat in Bristol. They said they wanted to buy a United Kingdom property as an alternative investment by way of keeping a foothold in the United Kingdom. At the time Mr Gould was in the process of selling his former matrimonial home.

3. The judge found that there was an express agreement between the parties, which is set out in paragraph 10 of Mrs Ahmad's witness statement. That says that the agreement was:

"(i) My husband and I would buy the property as an investment and as a home for him [Mr Gould].

(ii) We would permit him to buy the property from us when he was able at the then market price.

(iii) He would pay the mortgage instalments in lieu of rent. In practice he would pay the money directly to us, and we would make the payments. In addition, he would pay all the other outgoings."

4. Against that express agreement, it is said that two matters create an interest in the property for Mr Gould. First, a payment of £37,000 into Mrs Ahmad's bank account. This was a payment after the purchase had been made. Mr Gould gave no express reason for the payment and Mrs Ahmad did not even know about it until she found out about it from reading her bank account statements. According to the judge, she assumed that the money was intended as a payment towards future mortgage payments or perhaps towards the future purchase of the property by the defendant. She commented that she thought it might have some implications for his bankruptcy situation, but did not pressurise him to explain it.

5. The second way in which Mr Gould says he acquired an interest was that he achieved a price reduction in the purchase price of the premises from £260,000 to £250,000. This was achieved because the vendors of the property were actually buying his property and he achieved a price reduction on both. He says that, in all, he contributed £47,000 towards the purchase price and should have a beneficial share accordingly. He also paid some £300 towards the costs of the mortgage survey.

6. The difficulty with his case is that the agreement, which the judge found proved, is inconsistent with Mr Gould having any interest in the property. The words I have underlined indicate that he would be entitled to buy the house at the market price, not a share in the house or anything of the kind.

7. There were further difficulties in the way. Given that there was no express agreement or understanding of anything of the kind about the basis of the £37,000 payment, it is impossible to say that there was any common understanding that it should represent an interest in part of the house. It is conceded that the money was paid. It is conceded that it should be repaid or credit given against anything that is owed by Mr Gould. But you cannot create an interest in property by just paying money into somebody's bank account. It is said that the letter before action indicates that it was thought to be for something other than repayment of mortgage. That may be possible, but the judge's finding is that Mrs Ahmad had speculated that it might be for such a purpose.

8. In my view it does not matter what Mrs Ahmad speculated as to why the money was paid. It is clear that it was not clearly and unambiguously paid for an interest in the property. There is no reason for Equity to spell out any kind of implied agreement to that effect. Likewise, the reduction in the price of £10,000 is something which the judge found was unknown to the Ahmads. It is submitted that they ought to have realised that there had been a price reduction because the paper documents showed there was, but I do not see why that could in any way impose a Trust or beneficial interest even if they had spotted such a price reduction. How it came about, or anything of the kind, was never put to them, nor was it ever suggested that they should give credit for it in the form of an interest in the house.

9. In short, and there really is no more to be said about this case than this, once the judge had made the factual findings of the agreement between the parties which he had done, there was no room for either a resulting Trust or any other mechanism for creating an interest in the property. It may be that, in addition to giving credit for the £37,000, credit should be given for the £10,000, either as a matter of fairness but I do not go into the detail of whether the law would require credit to be given. The plain fact is that the judge's findings of fact are unimpeachable on this appeal. They are consistent with a letter which had been written by Mr Gould to his CVA supervisor. That is the end of the matter.

10. In my judgment, the appeal must be dismissed.

11. LORD JUSTICE MOORE-BICK: Mr Wagstaffe, on behalf of the appellant, accepts that if this case is to succeed, it is necessary for him to be able to identify either an express or implied agreement between the parties that the money paid by the appellant to his sister and the sum by which he says he negotiated the reduction of the purchase price of the property was to inure to his benefit in the form of an interest in the property.

12. He submitted that the amount of the payment, together with the benefit he obtained for the claimants in the form of a reduction in the price of the property, was if itself sufficient in the context of the relationship between the parties to give rise to an inference that there had been an agreement of that kind. Whichever way he puts the case, one of the essential matters upon which he relies is what he says was an agreement between the claimants and the defendant that the property would be sold to the defendant at some time in the future. Against that background he submitted that payments and benefits of the size that one finds in this case can only be understood as having been provided as a means of acquiring a corresponding beneficial interest in the property.

13. In my judgment that submission faces formidable difficulties. In the first case, the defendant not tell the claimants that he had negotiated a reduction in the price of the property of £10,000, nor did he explain the basis upon which it had been obtained. It is impossible, therefore, for him to suggest that one can infer an agreement between the parties that the reduction in price should operate as the purchase of a beneficial interest on his part. Equally, the judge has found, and his findings are not open to challenge, that, although the defendant transferred the sum of £37,000 to his sister's bank account about a week after the purchase of the flat had been completed, he said nothing about the purpose for which that money had been transferred. The judge's findings that Mrs Ahmad was uncertain whether the funds were intended to be an advance payment in respect of future mortgage payments or as a payment on account of a future purchase of the property is itself sufficient to demonstrate that its purpose was ambiguous. That seems to me to make it extremely difficult to contend that there was sufficient clarity about what was being done to enable the court to conclude that there was an agreement between the parties arising out of their conduct that these funds were to be treated as purchasing a partial interest in the property.

14. In any event, these arguments seem to me to face an even greater difficulty, namely, the terms in which the judge found that the parties had reached agreement. Having heard them give evidence, the judge found that they had made an agreement in the terms put forward by the claimants, namely, that they would buy the property as an investment and as a home for the defendant, that they would permit him to buy the property from them at a later date when he was able to do so at the then market price, and that he would pay the mortgage instalments in lieu of rent in the meantime.

15. Mr Wagstaffe submitted that that was tantamount to a present agreement to sell the property to the defendant for completion at some time in the future and that therefore the payment made to the sister’s bank account and the benefit provided to the claimants in the form of the reduction in the purchase price of the property should properly be regarded as having been made with a view to a partial purchase of that interest.

16. In my judgment, the agreement as found by the judge does not bear that construction. It is noticeable in particular that the agreement was not that they would sell him the property, much less that they were then selling him the property, but that they would permit him to buy the property from them at a later date if and when he was able to do so at the then market price. In my view that was nothing more than an agreement in principle to enter into a contract at a future date if and when the defendant was in a position to buy the property.

17. For all those reasons, I am quite satisfied that there is no basis in this case for reaching the conclusion that the funds paid by the defendant to his sister or the benefit made available by the defendant in the form of the reduction in the purchase price of the property can be regarded as having been made pursuant to any form of agreement of the kind he suggests. Indeed, it is not consistent with the agreement which the judge found to have been made between the parties.

18. In those circumstances, I, too, am satisfied that this appeal must be dismissed.

Order: Appeal dismissed