Ahmed Khan & Ors v Muhammed Iftekhar Khan

This appeal concerns a dispute among the six children of Fatima Khan (“Mrs Khan”) and the late Abdul Mubin Khan (“Mr Khan”). The eldest child, Muhammed, was the defendant in the proceedings in the court below. The claimants were Ahmed, Sarwar, Shalima, Farhana and Jennifer. Like the judge I shall refer to the parties by their given names, to Shalima, Farhana and Jennifer as “the Daughters”, and to Muhammed, Ahmed and Sarwar as “the Sons”.

The dispute is about the beneficial interests in freehold and leasehold titles in the names of one or more of the siblings in four properties (“the Properties”) in South London. In order of acquisition these were 14 Stapleton Road in Tooting Bec, 7 Essex Grove in Upper Norwood, 53 Norbury Crescent in Norbury, and 5 Ullswater Road in West Norwood.

The agreed facts help to set the scene. Mr Khan came to the UK from Bangladesh in 1962. Mrs Khan joined him in 1975, following their marriage in Bangladesh in 1968. All six children of the marriage were born in the UK.

Halim Khan, the son of Mr Khan’s elder brother, came with Mrs Khan from Bangladesh at the age of two and lived with the Khan family while he was growing up.

Mr Khan, initially with a number of business partners, built up a restaurant business known as the Clapham Tandoori. The partners gradually dropped out of the business, and by the time the business was sold in 1992 he was the sole owner.

In 1980 Mr and Mrs Khan acquired a property at 64 Salford Road in their joint names. This was renovated, converted into three flats, and let out to tenants.

In April 1986 Mr and Mrs Khan acquired 14 Stapleton Road in their joint names with funds from the sale of one of the flats at 64 Salford Road and a mortgage. 14 Stapleton Road was also converted into flats and let out to tenants.

The family initially lived in a flat above the Clapham Tandoori. In February 1989 Mr and Mrs Khan acquired a family home at 74 Cricklade Avenue, in Streatham Hill, and moved into it with the children. Mrs Khan still lives there, together with Ahmed, his wife Khairun, and their two children.

In 1992 Mr Khan sold the Clapham Tandoori.

In 1998 the remaining two flats at 64 Salford Road were sold, and 7 Essex Grove was acquired with the proceeds of sale. Initially it was bought as a freehold property in the name of Farhana, with a mortgage in her name.

On 17 March 2004 the freehold of 14 Stapleton Road was transferred to Muhammed. He took out a mortgage of £240,000 and paid off the original mortgage owed by Mr and Mrs Khan.

In 2005 Farhana and her husband divorced. It appeared at one stage that her former husband intended to claim a share of 7 Essex Grove in the divorce proceedings. In the event she gave up any claim to a share in the matrimonial home in Birmingham and in return her former husband did not pursue a claim against 7 Essex Grove.

Leasehold titles of the three flats at 7 Essex Grove were granted by Farhana to Muhammed in 2005. He paid off the existing mortgage over 7 Essex Grove (in the name of Farhana), using a mortgage on one of the flats. The other two leases were granted to Muhammed for no consideration.

53 Norbury Crescent was purchased in March 2005. The freehold title was registered in Muhammed’s name.

In September 2006 5 Ullswater Road was purchased with the aid of mortgage funding. The freehold title was registered in Muhammed’s name. It was agreed that the deposit came from a mortgage over one of the other Properties. At the trial, the claimants said the mortgage was over either 14 Stapleton Road or 7 Essex Grove and Muhammed said that it was over 7 Essex Grove.

In April 2007 Muhammed purchased another property, 49 Middlesex Road, using mortgage finance raised against 7 Essex Grove. Farhana subsequently went to live at 49 Middlesex Road.

In June 2007 the freehold title to 7 Essex Grove was transferred from Farhana to Ahmed for no consideration.

In the same month the freehold title to 5 Ullswater Road was transferred from Muhammed to Ahmed, and three long leases of the flats in the property were granted to Muhammed for no consideration.

In 2008 Muhammed mortgaged flat 3 at 7 Essex Grove for about £184,000. £50,000 of the money so raised was passed to Shalima to help her to pay her debts. Shalima repaid that money to Muhammed between 2008 and 2013.

On 2 May 2008 Mr Khan died. He left no will, and 74 Cricklade Avenue passed to Mrs Khan by right of survivorship.

In July 2009 the freehold interest in 14 Stapleton Road was transferred from Muhammed to Ahmed, and three long leases of the flats at the property were granted to Muhammed for no consideration.

Purple Panda Nurseries Limited (“Purple Panda”), a company in which Muhammed has an interest, was incorporated in 2011. It began operating a nursery at 53 Norbury Crescent in 2013, and continues to do so.

In August 2016 title to 49 Middlesex Road was transferred from Muhammed to Farhana.

Hence by the time of the proceedings, the legal titles to the leasehold flats at 14 Stapleton Road, 7 Essex Grove and 5 Ullswater Road were held by Muhammed, while the legal title to the freehold at each was held by Ahmed. The flats were let to tenants. The freehold title to 53 Norbury Crescent was held by Muhammed, and is subject to a lease to Purple Panda.

The claimants contended that the leasehold and freehold interest in 7 Essex Grove were held beneficially for the Daughters, while the leasehold and freehold interests in the other three properties were held beneficially for the Sons. They contended that Mr Khan had been responsible for and had funded the acquisition of the properties.

In respect of 7 Essex Grove, the claimants contended at the trial that there was an express trust of the property (sufficiently evidenced by an email signed by Muhammed dated 12 October 2013) or a constructive trust, either (a) of the type found in De Bruyne v De Bruyne [2010] EWCA Civ 519 (“De Bruyne”), where the legal owner was prevented from treating an asset as his own because, given the basis on which it was acquired, it would be unconscionable for him to do so, or (b) arising from the common intention of the parties and detrimental reliance on that common intention by the Daughters.

In respect of the three other properties, the claimants did not allege that there was sufficient writing to evidence an express trust but contended that there were constructive trusts for the Sons on the same two alternative bases.

The pleaded detrimental reliance was this. Ahmed asserted that he had carried out very extensive work on the Properties, without pay or below market rates, to the detriment of his own career prospects. Sarwar also asserted that he had worked on the Properties, though less extensively than Ahmed. Farhana said that she gave up her interest in her matrimonial home on her divorce in order to avoid her former husband making a claim on 7 Essex Grove, at a time when she did not own another property. Shalima and Jennifer contended that they gave up the security of knowing that Farhana was the legal owner who would be protecting their interest in the property.

The claimants sought orders for sale of the Properties. They also made a tracing claim against Muhammed for monies raised by way of mortgage finance against the Properties and then invested in other properties held for his sole benefit.

There was no valuation evidence at the trial. However, given their locations and the sums that the parties agree have been raised against them by way of mortgage finance, the judge found it was reasonable to assume that each of the Properties was valuable.

Muhammed’s position at the trial was that Mr Khan had always intended that he, as the eldest son, should be the beneficial owner of the Properties, and that the various transactions were all carried out with that end in view. He accepted that Ahmed had done some work on the Properties, but asserted that he had received payment for it and therefore that he did not suffer any detriment. He denied that Sarwar had carried out any significant work on the Properties. If and to the extent that Farhana had suffered any detriment, this was more than compensated for by the acquisition of 49 Middlesex Road for her to occupy, and its subsequent transfer into her name without a requirement to repay the deposit to Muhammed.

The judge recorded that Muhammed’s position had changed during the proceedings. As to 7 Essex Grove Muhammed had contended at one stage that he had purchased the leases. However in his oral evidence he said instead that the leases were a gift and that he took them as a favour to his father as the burden of managing them was too great. He also contended that the leases had been granted to him in return for paying off his father’s debts. Muhammed also contended that he had acquired some of his interests in 14 Stapleton Road in return for paying off Mr Khan’s debts.

Muhammed contended that he had borne all the stress and responsibility associated with ownership of the Properties, as well as the financial risk of borrowing against them.

Muhammed also denied in respect of 7 Essex Grove that there was sufficient written evidence of any express trust for the purposes of section 53(1)(b) of the Law of Property Act 1925 (“the LPA”). He counterclaimed for an account of rent paid to Ahmed by tenants at the flats at 14 Stapleton Road, and for the transfer of the freehold title to 14 Stapleton Road from Ahmed's name into his own name or that of a person nominated by him. He also sought an order for the termination of the tenancies at 14 Stapleton Road and an order for immediate access to each of the flats at 14 Stapleton Road.

The judge, Saira Salimi, sitting as a Deputy High Court Judge, found for the claimants and made orders for sale of the Properties, together with ancillary orders.

The judge had a number of sources of evidence. She heard from each of the parties. She also heard from Mrs Khan, Halim Khan (the parties’ cousin), Khairun Khan (Ahmed’s wife), and some other individuals. She noted that, though there were shortcomings in the disclosure from both sides, there was also a reasonable volume of documentary evidence, including WhatsApp messages.

The judge recorded that all of the parties were in varying degrees unsatisfactory witnesses whose credibility was questionable. She noted their hostility to one another. She was accordingly cautious about accepting their evidence without corroboration.

The judge also recorded that Mr Khan left no documentary evidence of his intentions concerning the Properties. He also left no will. The witnesses agreed that it was not the family’s way to write down intentions or involve lawyers. The events stretched back to the 1980s. The judge was therefore faced with the difficult, though not uncommon, exercise of finding the facts where much of the oral evidence had to be treated with caution and where there were gaps in the documentary record.

The judge concluded that Mr Khan had always had a plan to acquire a family property portfolio and that he made all material decisions about the Properties at all times until his death in 2008. She found that he had intended at all relevant times that he would remain in charge and have the net income during his own lifetime but that, subject to his interests, 7 Essex Grove was to belong to the Daughters and the other Properties were to belong to the Sons.

The judge rejected Muhammed’s case that Mr Khan had always intended that Muhammed would take the full ownership of the Properties. She specifically rejected his evidence that he had acquired interests in the Properties in return for paying his father’s debts or had otherwise provided consideration for them. She held that there was no evidence that Mr Khan had any debts beyond the mortgages on 74 Cricklade Avenue and 7 Essex Grove and 14 Stapleton Road, which were more than covered by the rental incomes on those properties. She found that Muhammed had entered into a mortgage over 14 Stapleton Road in 2004 when he received the freehold and that the proceeds were used to pay the existing mortgage over 14 Stapleton Road and to fund the purchase of 53 Norbury Crescent .

The judge found that Muhammed held his leasehold interests in 7 Essex Grove for the Daughters. The email of 12 October 2013 satisfied the formal requirements of section 53(1)(b) of the LPA. Alternatively there was a constructive trust of those leaseholds in 7 Essex Grove in favour of the Daughters on the basis of the De Bruyne line of cases. At the time of the creation of those interests Farhana held the freehold of 7 Essex Grove on trust for Mr Khan for life and then for the Daughters, and Muhammed acquired the leasehold interests on the basis of a common intention or understanding of all the parties that the property would be held for the Daughters. As a further alternative the judge held that there was a common intention between Muhammed and the Daughters that he would hold the property for them, and that Farhana had established detrimental reliance by giving up her interest in the matrimonial home on her divorce. The judge was unable to find that the other Daughters had acted to their detriment or that they had any say in the decision to transfer the leasehold interests in it to Muhammed.

The judge found that there was a constructive trust based on the De Bruyne line of cases in favour of the Sons over Muhammed’s interests in the other three Properties. She held that when Muhammed had acquired his interests in those properties it was on the basis of a common understanding (including that of Mr Khan) that he would hold them for Mr Khan for life and then for the Sons and that it would now be unconscionable for him to deny those trusts. There was also such a common understanding between the parties when leasehold interests were granted to Muhammed in 2009, after the death of Mr Khan. The judge held, alternatively, that it was the common intention of Mr Khan and the Sons that these properties would be held on trust and that Ahmed relied on that common intention to his detriment by carrying out building work on the houses. She was not satisfied, on the other hand, that Sarwar had suffered any detriment in reliance on the common intention. The judge concluded that this did not matter as no detrimental reliance was required for a De Bruyne-type constructive trust.

The judge did not specifically address the question whether detrimental reliance by one putative beneficiary of a common interest constructive trust was sufficient to create a trust in favour of all the putative beneficiaries. This issue is raised by the grounds of appeal.

The judge made an order for sale of the Properties and also ordered Muhammed to account to the claimants under several heads for the benefits he had received.

Muhammed originally sought permission to appeal on nineteen grounds. The order giving permission limited it to some of the original grounds. Muhammed served revised grounds of appeal containing eight grounds. The respondents complained that these went beyond the permitted ones. Muhammed accepted the force of some of these complaints and served a further revised version of the grounds of appeal and supporting skeleton and applied at the outset of the appeal for permission to rely on these. There was one remaining point of disagreement about revised ground 5. Mr Dumont KC for Muhammed did not press ground 6.

With the revised numbering, the remaining grounds are:

The claimants served a respondent’s notice seeking to uphold the judge’s order on the grounds that where there is a common intention that property will be held for several beneficiaries, detrimental reliance by any of them is sufficient to give rise to a constructive trust in favour of all.

The issues conveniently fall under four headings: the declaration of trust over 7 Essex Grove (grounds 1 and 2); the De Bruyne-type constructive trusts over each of the Properties (grounds 3 and 4); the common intention constructive trusts (ground 5 and the respondents’ notice); and the judge’s consequential orders (grounds 7 and 8).

I start with the second group of issues as the judge found that all of the Properties were subject to a constructive trust arising under the De Bruyne principle. I shall call these “acquisition constructive trusts” to distinguish them from common intention constructive trusts.

It helps to begin with the authorities.In Rochefoucauld v Boustead [1897] 1 Ch 196 (“Rochefoucauld”), the plaintiff was the owner of certain estates in Ceylon subject to a mortgage. She was divorced. The mortgagee wished to call in the mortgage and the plaintiff was not in a position to find the money. She was concerned that her husband would try to purchase the estates from the mortgagee. She agreed with the defendant that he would buy the estates from the mortgagee for an amount sufficient to pay off the mortgage debt and that the defendant would have a charge over the land in respect of all sums advanced by him for the purchase and of all sums that might be advanced by him to work the estates as a coffee plantation. The plaintiff brought an action seeking a declaration that the defendant had purchased the estates as a trustee for her. The defendant contended that the estates had been conveyed to him as beneficial owner and relied (among other defences) on the absence of any writing signed by the defendant, as required by section 7 of the Statute of Frauds. Kekewich J held that no trust was proved. The Court of Appeal held that even if the letters signed by the defendant did not contain enough to satisfy the requirements of section 7, the evidence as a whole established that the defendant had purchased as a trustee for the plaintiff. The Court held that the Statute of Frauds did not prevent proof of a fraud and, indeed, that it would be a fraud in equity for a person to whom land is conveyed as a trustee and who knows it is so conveyed to deny the trust and claim the land as his own.

In Bannister v Bannister [1948] 2 All ER 133 (“Bannister”), the plaintiff orally undertook to the defendant that she would be allowed to live in a cottage rent free for as long as she desired and, on that basis, the defendant agreed to sell him that and an adjacent cottage. The judge found as a fact that the defendant would not have sold the cottages to the plaintiff unless he had agreed to let her stay in the one she occupied for as long as she liked. The defendant conveyed the cottages to the plaintiff for £250. The judge found that the value of the cottages would have been £400 with rent restricted tenants and £500 with vacant possession. The oral undertaking was not contained or reflected in the conveyance. With the consent of the defendant the plaintiff later went into occupation of all but one room of the cottage, with the defendant remaining in that room. The plaintiff then brought possession proceedings against the defendant, contending that the defendant occupied as a tenant at will and that the tenancy had been brought to an end by notice to quit. The defendant counterclaimed for a declaration that the plaintiff held the cottage in trust for her life. Both the judge and the Court of Appeal found that there was a constructive trust on the basis that the bargain was that the plaintiff as transferee would take subject to the life interest of the defendant, the trust arising as soon as the absolute character of the conveyance was set up to defeat the beneficial interest; and that the creation of the constructive trust did not depend on the conveyance itself being fraudulently obtained (in the sense that the grantee had a fraudulent intention at the time of the conveyance). The equitable fraud consisted in the grantee’s assertion of the absolute interest in contradiction to the basis on which the land was acquired; and the legal owner could not rely on the Statute of Frauds or the Law of Property Act to defeat the beneficial interest. Nor was it necessary that the oral arrangement under which the conveyance was made should include any express stipulation that the grantee was to hold as trustee. It was sufficient that the arrangement should include terms under which some sufficiently defined beneficial interest in the land was to be taken by another. In reaching these conclusions the Court of Appeal referred to several cases including Rochefoucauld.

Bannister was followed by a further decision of this court in Neale v Willis [1968] 19 P&CR 836. At page 839 Lord Denning MR (with whom Diplock and Sachs LJJ agreed) said:

“That case [Bannister] shows that if a person who takes a conveyance to himself, which is absolute in form, nevertheless has made a bargain that he will give a beneficial interest to another, he will be held to be a constructive trustee for it for the other. He cannot insist on the absolute character of a conveyance to himself for the purpose of defeating a beneficial interest which according to the true bargain is to belong to another.”

In De Bruyne a husband (H) initiated the winding up of a trust in which he and his five children were discretionary beneficiaries. Under an agreement signed by the husband on behalf of himself and the children, when the trust was finally wound up, the trustee gave H some shares formerly held by the trust. H passed the shares to his wife (W) before arranging for them to be sold. Some of the proceeds were spent on living expenses, but the remainder was used to acquire shares in a family company which owned some family properties. In ancillary relief proceedings between W and H, W contended that the original shares had belonged to H absolutely and that the shares in the family company also belonged to H. H contended that he had held the original shares on trust for his children and that the shares in the family company were therefore also held on trust for them. The judge concluded that H had obtained the original shares on the basis of a “common intention” constructive trust; that H’s intention should be attributed to the children, as he was their guardian; and that there had been detrimental reliance by the children by reason of their loss of their status as discretionary beneficiaries. The children were therefore entitled to the shares. The Court of Appeal dismissed the appeal, but on a different analysis of the case. They held that it was artificial and unrealistic to apply the principles designed to resolve issues of beneficial ownership between adult cohabitees (common intention trusts). The children could not realistically be regarded as privy to any common intention or understanding. However, equity treated H as being subject to a constructive trust because of the circumstances in which the property came into his hands as transferee. The principle, which did not depend on showing detrimental reliance, could arise where there was unconscionable or inequitable conduct in the form of a denial or refusal to carry out an agreement to hold the property for the benefit of a third party, when the agreement to do so was the only basis on which the property was acquired (see para 51). This principle did not depend on actual fraud. Nor did the beneficiaries have to be parties to, or even know of, the agreement under which the defendant received the property.

As Patten LJ explained at [51]:

“It is not necessary in such cases to show that the property was acquired by actual fraud (although the principle would apply equally in such cases). The concept of fraud in equity is much wider and can extend to unconscionable or inequitable conduct in the form of a denial or refusal to carry out the agreement to hold the property for the benefit of the third party which was the only basis upon which the property was transferred. This is sufficient in itself to create the fiduciary obligation and to require the imposition of a constructive trust. The principle is a broad one and applies as much to inter vivos transactions as it does to wills: see Rochefoucauld v Boustead [1897] 1 Ch 196, [1897] 66 LJ Ch 74; Bannister v Bannister [1948] 2 All ER 133.”

In Archibald v Alexander [2020] EWHC 1621 (Ch) a mother and her three children agreed orally that the mother would fund the acquisition of a house to be placed in the name of herself and one or more of the children as joint tenants to hold it for the mother for her life and after her death for her children equally. The house was transferred into the names of the mother and one of the children, P. The county court judge held that the house was held by P on constructive trust for herself and her two siblings. On an appeal Fancourt J upheld that decision. One of the issues was whether there was sufficient detrimental reliance by the siblings to create an equity in their favour under a constructive trust. At paras 28 and 32 Fancourt J concluded that the principle in Rochefoucauld applied, i.e. (as he put it) that if property is transferred gratuitously to a person only on the basis of their agreement to hold it on trust for some other person, equity will not allow the transferee to keep the property for themselves. He described such a trust as arising from the terms of the agreement on the basis of which the property was transferred to a volunteer, and not from any detrimental reliance by the beneficiary. Fancourt J held that the defendants’ siblings could enforce the trust.

Fancourt J neatly captured the two kinds of constructive trust in para 32. As he explained, common intention trusts arise when the owner of a property has expressly or impliedly promised or agreed with another person that they have, or will have, an interest in it. An informal promise of that kind cannot be enforced against the owner unless the promisee has reasonably changed their position in reliance on the promise. Acquisition constructive trusts, by contrast, arise where a property is transferred into the name of the owner on the basis of their agreement to hold the property on trust for another. The owner only obtains the property on the terms of the agreement and equity does not permit them unconscionably to refuse to give effect to the terms. The trust arises from the terms on which the property was transferred, not from detrimental reliance on the agreement by the beneficiary.

I agree with Fancourt J’s analysis with one qualification. Fancourt J might be read as suggesting that acquisition constructive trusts arise only where the transfer was gratuitous. This is not a necessary condition for an acquisition constructive trust. In Rochefoucauld the defendant, Mr Boustead, acquired the property by taking out a separate mortgage and also, as part of the arrangements, made advances towards the running costs of the estate. This was against a charge over the property to secure his outlay. In Bannister the defendant bought the cottage albeit at a substantial undervalue. In Neale v Willis the defendant bought a property and only part of the purchase price was supplied by the person to whom the defendant had undertaken he would hold the property on trust for another. Hence the principle is capable of applying to purchasers, but the extent and nature of any value given by the recipient of the property are likely to be material to the question whether a trust arises in the given circumstances.

I turn to the arguments advanced on this appeal. The first challenge to the judgment concerned the pleadings. Mr Dumont submitted that the claimants had not pleaded the claim for an acquisition constructive trust in respect of 7 Essex Grove and that the pleading in relation to 53 Norbury Crescent and 5 Ullswater Road was indirect and unclear.

The sequence of pleadings was this. In their Particulars of Claim the claimants set out the history of dealings with the Properties and alleged that Muhammed held his various interests in the Properties on constructive trust. As part of their case, the claimants alleged detrimental reliance on a common intention. They also alleged that Mr Khan’s intention when causing the various interests to be put in Muhammed’s name was that they would be held on trust for the children. In his Defence Muhammed denied the alleged intentions of Mr Khan or his siblings. He also denied that the siblings had relied to their detriment. In the Reply, the claimants countered the latter point by expressly relying on the principles illustrated by Archibald v Alexander. The pleading in the Reply was restricted in terms to 14 Stapleton Road, 53 Norbury Crescent and 5 Ullswater Road.

At the trial the claimants gave the court a list of issues which included a separate question for each Property whether there was a “De Bruyne-type constructive trust” over Muhammed’s interests. The judge explained at para 101 of the judgment that, while not formally agreed, counsel for Muhammed did not object to the list of issues. The claimants’ opening skeleton argument addressed the acquisition constructive trust claim for each of the Properties. So did Muhammed’s skeleton argument. There was no suggestion at any stage of the trial that it was not open to the claimants to assert an acquisition constructive trust over each of the Properties, including 7 Essex Grove. The trial proceeded on that basis and the judge clearly thought that there was such a claim when preparing her judgment.

Mr Dumont did not contend that Muhammed had been taken by surprise at the trial or had suffered any prejudice by reason of the claimants asserting an acquisition constructive trust over all the Properties. There was no suggestion that Muhammed would have called any other witnesses or asked different questions in cross-examination. In my view the judge reasonably understood that the claims to acquisition trusts were within the scope of the issues at trial and Muhammed has suffered no injustice from her ruling on them. Given the way the case was argued, it would indeed be contrary to the interests of justice for Muhammed to seek to upset the judge’s ruling on this point on the basis of a belated complaint about the pleadings taken only on this appeal.

Turning to the substantive appeal, Mr Dumont argued that the authorities showed that for an acquisition constructive trust to arise there must have been some fraud on the part of the acquirer. He said that the cases required the defendant to have procured the transfer. He argued that on the judge’s findings, Muhammed had not procured any transfer of the Properties into his own name. This argument appeared to suggest that, for an acquisition constructive trust to arise, the transferee must have deliberately persuaded another person to make or cause the transfer to be made into the transferee’s name with a view to obtaining the property at the expense of the intended beneficiaries. On this argument the kind of “procurement” needed is akin to wrongdoing. I do not think that the cases suggest or hint at any such requirement. They show that where a person has taken title to a property on the agreed basis that he or she will hold it (at least in part) on trust for another, equity may, depending on all the circumstances, regard it as unconscionable for that person to go back on the agreed basis and deny the rights of the other. It is the transferee going back on the agreed basis of acquisition that equity regards as unconscionable. Some of the cases call this equitable fraud, but that is really a shorthand label for unconscionable conduct.

In Rochefoucauld the fraudulent conduct consisted only in the defendant, knowing that the transfer of the land was to him as a trustee for the plaintiff, subsequently denying the trust and asserting beneficial ownership of the land (see p. 206). There is nothing in the decision to suggest that the defendant had a dishonest intention at the time of the transfer into his name. At p. 206 Lindley LJ, giving the judgment of the court, said that: “it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself.” Equity does not allow the Statute of Frauds to be used to commit a fraud (see p. 207).

Bannister and De Bruyne (para 51) both state in terms that it is unnecessary for the claimant to establish actual fraud, which might arise in a case where the person acquiring the property already intended at the time of the transaction to deny the claims of the other and obtained the property through pretences. As Patten LJ explained in De Bruyne, that kind of fraud might itself give rise to the trust, but it is not necessary. For the same reasons where the cases speak of “procurement” they mean no more than that the acquiring party has agreed or undertaken to take the title into their name on the basis that they will hold it for others. As Patten LJ said in para 52, what gave rise to the trust was the agreement of H to hold the acquired property on trust and the later denial of the trust.

Mr Dumont submitted next that the events as found by the judge were insufficient to create an acquisition constructive trust. He said that, as a minimum, what was needed was clear evidence of an agreement that the transferee of property will hold it on trust. He noted that the claimants had alleged in their Particulars of Claim that there was a family meeting in 2004 at which the family, including Muhammed, agreed that 7 Essex Grove would be held for the Daughters and 14 Stapleton Road would be held for the Sons. The judge was not persuaded that anything as formal as a family meeting had taken place (see para 76 of the judgment). Mr Dumont contended that the judge did not identify any other moment when the parties had reached an agreement of the kind required.

The assessment of this challenge requires a deeper analysis of the judge’s findings of fact. As a preliminary observation, I note that at the trial the parties devoted comparatively little time to an analysis of the De Bruyne line of authorities, and the main battleground was between two broad accounts of the facts: the claimants saying, on the one hand, that Mr Khan’s intention (shared by the parties) was that the Properties would be held for his children (in the way described above), and Muhammed, on the other hand, saying that Mr Khan meant him to have the Properties for himself. The parties’ focus was on these contested histories and they did not focus as closely on the formulation of the requirements of an acquisition constructive trust as they did on this appeal.

Turning to the judge’s findings, as already noted, in 1980 Mr and Mrs Khan acquired 64 Salford Road and let out three flats. In 1986 Mr and Mrs Khan acquired 14 Stapleton Road in joint names using funds from the sale of a flat at 64 Salford Road. Building work was carried out at 14 Stapleton Road by members of the family, particularly Mr Khan and Ahmed. In February 1989 Mr and Mrs Khan acquired 74 Cricklade Avenue.

In 1998 the remaining three flats at 64 Salford Road were sold and 7 Essex Grove was acquired with the proceeds of sale. The freehold was placed into the name of Farhana. There was also a mortgage in her name. Hence, on the judge’s findings, 7 Essex Grove was acquired using the resources of Mr and Mrs Khan. Farhana also took out the mortgage on Mr Khan’s instructions. The flats in 7 Essex Grove were let out to tenants. Farhana used the rent to pay the mortgage and then paid the balance to Mr Khan. Farhana’s evidence (which the judge accepted) was that it was always understood that the property was to belong to her and sisters after the death of Mr Khan. In 1998 there was a poor relationship between Muhammed and Mr and Mrs Khan. This was the reason why 7 Essex Grove was put in the name of Farhana and not Muhammed. Mrs Khan gave evidence (which the judge accepted) that 7 Essex Grove was registered in the name of Farhana on the understanding that she was holding it for the sisters.

In March 2004, the freehold of 14 Stapleton Road was transferred to Muhammed. He took out a mortgage of £240,000 and paid off the original mortgage. The judge accepted the evidence of Mrs Khan that at the time of the transfer Muhammed was told that the property was for the three brothers. The judge recorded Mrs Khan’s evidence that there was a shared understanding at the time of the transfer to Muhammed that the property was held for the three sons. The judge found Mrs Khan generally to be a credible witness.

The judge recorded the claimants’ case that the reason for the transfer into Muhammed’s name was so that a mortgage could be raised on 14 Stapleton Road to be used to acquire further properties for the brothers. This indeed happened in March 2005 when funds were raised to acquire 53 Norbury Crescent.

The judge considered and rejected Muhammed’s case that the transfer of 14 Stapleton Road into his name was in return for repayment of Mr and Mrs Khan’s debts.

As already noted, the judge rejected the claimants’ case that there was a family meeting in 2004 at which it was expressly agreed that 14 Stapleton Road would be held for the Sons and 7 Essex Grove for the Daughters. She was not satisfied that there was anything as formal as a family meeting.

The judge recorded the evidence of Khairun Khan (Ahmed’s wife) that in 2008 Mr Khan said that one of the properties was being held for his daughters and the others for his three sons, and her unchallenged evidence that Muhammed accepted in a conversation in 2011 that 14 Stapleton Road was to be shared between the three brothers, but that 53 Norbury Crescent and 5 Ullswater Road were owned 50/50 between him and Ahmed.

The judge found that Mr Khan had continued to be actively involved in renovation work on 14 Stapleton Road after the transfer of the freehold to Muhammed. Ahmed acted as landlord and received the rent. Ahmed’s accountant gave evidence (accepted by the judge) that he understood that the property was held 1/3 each by the brothers. Ahmed received the rent on 14 Stapleton Road for Mr Khan until his death and thereafter for the benefit of the Sons. The judge found that Ahmed carried out work on the property and that he was not paid anything for this during Mr Khan’s lifetime.

The judge referred to WhatsApp messages in 2020 in which (as she held) Muhammed acknowledged that 14 Stapleton Road, 53 Norbury Crescent and 5 Ullswater Road were held for the Sons. The judge interpreted them as making a distinction between Muhammed’s shares in the Properties, described as his “inheritance”, and “his own property”, which was separate. The judge held that they were evidence of a common understanding between him and the claimants regarding all of the Properties.

The judge found in a conclusory paragraph that Muhammed had acquired his interests in 14 Stapleton Road as part of Mr Khan’s plans for the expansion of the family’s property interests for the benefit of himself and his sons and that it was unconscionable for Muhammed now to deny the trusts. This conclusion was expressed as a shared understanding, which, given the judge’s finding that Mr Khan remained in charge of all decisions concerning the Properties during his lifetime, I read as meaning an understanding shared by Muhammed and Mr Khan at all times until the latter’s death. As to the events concerning 14 Stapleton Road after Mr Khan’s death the judge concluded that there was a common understanding between the parties that the interests in the property would be held on trust for the Sons.

Reverting to further events concerning 7 Essex Grove, in 2005 Farhana and her husband divorced. Also in 2005 Farhana, as the freehold owner of 7 Essex Grove, granted leaseholds in three flats at 7 Essex Grove to Muhammed. He paid off the existing mortgage over the property with funding from a new mortgage secured against one of the flats in it. Muhammed gave no consideration for the creation of the leases.

The judge addressed Muhammed’s case that the grant of the leases in 7 Essex Grove was a gift to him from Mr and Mrs Khan, and that it relieved them of the burden of management. She found that this could not be reconciled with the evidence that Mr Khan continued to take an active and energetic interest in all the Properties including 7 Essex Grove until his death in 2008. As already noted, the judge rejected Muhammed’s positive case that he took the leases of the flats in return for paying the debts of Mr and Mrs Khan.

The judge set out the email of 12 October 2013 in which Muhammed stated that he had never wanted 7 Essex Grove in his name. The email said, “[t]his belongs to three sisters as stated clearly … I never wanted this property in my name … So you guys have a block of flats that have at least 40-50% equity not to mention a valuable home should you need it.” The judge noted that Muhammed could not explain this email, which, on its natural meaning, said that he held the leaseholds of 7 Essex Grove on trust for the Daughters.

The judge reached a conclusory finding that there was a common intention on the acquisition of 7 Essex Grove and on the creation of the leaseholds in 2005 that the beneficial interests in the freehold and leaseholds should be held on trust for Mr Khan during his lifetime and thereafter for the Daughters.

This was expressed in terms of a common intention but, given the findings that Mr Khan decided upon and directed all of the transactions concerning the Properties, and that Muhammed gave no value for the acquisition of the leases, in my judgment this inevitably amounts to a finding that there was an agreement or understanding between Muhammed and Mr Khan (who directed Farhana to grant the leases) that Muhammed would hold leases of 7 Essex Grove on trust for Mr Khan for life and then for the Daughters.

53 Norbury Crescent was acquired in March 2005 in the name of Muhammed using (in part) the proceeds of a further mortgage over 14 Stapleton Road. Muhammed injected no value. There was also a new mortgage over 53 Norbury Crescent itself. The judge recorded that the claimants contended that it was acquired with a view to creating a nursery or care home business as a source of income for Mr Khan. The judge noted that the family members then living at 74 Cricklade Avenue signed a deed of consent in connection with a mortgage on 53 Norbury Crescent itself. She held that this supported the claimants’ case that at the time 53 Norbury Crescent was acquired there was a fall-back intention that 53 Norbury Crescent would become the family home if planning permission for a nursery or care home could not be obtained. This was of course at odds with Muhammed’s case that he would be the sole beneficial owner. The judge also accepted Mrs Khan’s evidence that Mr Khan and Ahmed worked on 53 Norbury Crescent after the acquisition, including the construction of an extension. She also accepted the evidence of Ahmed that he was involved in negotiations about the level of rent being paid by Pangea (a business in which Muhammed was involved) at a meeting in February 2008. The rent payable by Pangea for the letting of 5 Ullswater Road was discussed at the same meeting. The judge found that Ahmed took part in those discussions because he had an interest in the two properties.

The judge made a conclusory finding that Mr Khan had directed the purchase of 53 Norbury Crescent for his own benefit during his lifetime and thereafter for the benefit of the Sons, and that he remained involved with the property after the acquisition. She held that there was a common understanding between the parties that this was the basis on which it was held. Given the continuing involvement of Mr Khan in directing the purchases, and the finding that the acquisition was funded by a mortgage over 14 Stapleton Road, this necessarily includes the proposition that Mr Khan shared the same “common intention”. Again, though expressed in the language of common intention, in my judgment, the facts found by the judge necessarily entail, first, that Mr Khan made the decision that Muhammed should take the legal title and, second, that Muhammed acquired his interests in 53 Norbury Crescent on the agreed basis that he would hold the property on trust for his father for life and then for the Sons. It cannot realistically be suggested, given the judge’s findings about Mr Khan’s continuing control over the family’s property empire and the way that the acquisition was funded from the other properties, that Muhammed did not undertake that he would hold the property on this basis. He could not have thought that he was to have the property himself. The judge’s findings are only consistent with the conclusion that, absent that shared basis, Mr Khan would not have directed the acquisition of the property into Muhammed’s name.

The final property, 5 Ullswater Road, was acquired in September 2006 in the name of Muhammed. The judge recorded that the unchallenged evidence of Shalima was that Mr Khan found the property. The judge accepted Halim’s evidence that 5 Ullswater Road was in very poor condition and that Mr Khan and Ahmed carried out construction works there. It was turned into flats which were then let to Pangea. As already noted, the judge found that Ahmed was involved in negotiations about the rent being paid by Pangea for 53 Norbury Crescent and 5 Ullswater Road at a meeting in February 2008. She concluded that that was because Ahmed had an interest in the two properties.

At para 100 of the judgment the judge said that she was unable to make a firm finding about the initial finance for the acquisition of 5 Ullswater Road. She held however that it came from a remortgage over either 7 Essex Grove or 14 Stapleton Road. She found that Mr Khan was the directing mind in respect of the purchase. Muhammed gave no value. The judge reached a conclusory finding that 5 Ullswater Road acquired with the intention that it should be held on the same terms as 14 Stapleton Road and 53 Norbury Crescent and that that was how the parties treated it. She said that there may be a question whether the Daughters had a claim in the property to the extent that the money was raised on 7 Essex Grove rather than 53 Norbury Crescent. Though the judge did not definitively answer Issue 12 (i.e. whether there was a De Bruyne-type constructive trust) her answers to Issues 13 and 14 show that she had concluded that there was such a trust over the property. Given her earlier findings about the way in which Mr Khan directed the acquisitions, the judge’s conclusions in relation to 5 Ullswater Road can only realistically be read as a finding that Muhammed obtained his interests in 5 Ullswater Road on the agreed basis that he would hold them on trust for Mr Khan for life and then for the three brothers. On the judge’s findings, Muhammed could not have thought that he was acquiring interests in the property for his own benefit.

Drawing the threads together: (1) The judge found that each of the Properties was acquired as part of Mr Khan’s ambition to create a family property business. (2) 14 Stapleton Road and 7 Essex Grove were acquired (at least in part) using Mr and Mrs Khan’s own resources, together with new mortgages over the properties themselves. (3) 53 Norbury Crescent and 5 Ullswater Road were acquired through a combination of further mortgages over 14 Stapleton Road and 7 Essex Grove and new mortgages over the properties themselves. (4) Muhammed gave no value for any of the legal interests he acquired in the Properties. (5) Mr Khan decided which properties to buy and directed the various transactions (including the creation of the leaseholds over the flats). (6) Mr Khan remained involved in the Properties until his death in 2008. He received the net rent on at least some of them. (7) The decisions about which of his children (including Muhammed) should hold the legal interests in the Properties were taken and directed by Mr Khan during his lifetime. (8) The judge found that there was a common understanding or intention (she used the terms interchangeably) at every stage that (subject to Mr Khan’s lifetime entitlements) 7 Essex Grove would be held for the Daughters in equal shares and the other properties would be held for the Sons in equal shares, irrespective of who held the legal interests. The judge found that this common understanding or intention applied at every relevant stage in the transactions. (9) The judge found that the dispositions that occurred after Mr Khan’s death were on the basis of a common understanding that 7 Essex Grove would be held for the Daughters and the other properties for the Sons. (10) As already explained, though not always spelt out in the judgment, the judge’s findings entail that Mr Khan and Muhammed shared these common understandings and intentions.

In my judgment, these findings of fact lead inevitably to the further conclusion that Muhammed acquired his interests in the Properties on the basis of his acceptance that he would hold them on trust for his father during his lifetime and then for his siblings. This was seen as a natural way of doing things within the family as he was the oldest son. Moreover, under the trusts Muhammed was himself to receive a one-third beneficial share in three of the Properties.

The changes made to the interests in 7 Essex Grove are telling. The property was initially in the name of Farhana, but in 2005 Mr Khan wished to protect it from Farhana’s husband in the divorce proceedings. He also feared that there might in the future be similar claims by his other daughters’ spouses and wanted to protect the property from that risk too. The creation of the leases helped bring this about. Muhammed’s October 2013 email concerning 7 Essex Grove is also instructive. He said that he had never wanted 7 Essex Grove to be in his name and that the property belonged to the Daughters.

In my judgment the facts found by the judge lead inevitably to the conclusion that Mr Khan would not have caused the freehold and leasehold interests to be put into Muhammed’s name otherwise than on the basis that he would hold them on the agreed trusts. Against this factual background, the judge’s conclusions that it would be unconscionable for Muhammed to deny the trusts in favour of his siblings was amply made out.

I am unable to accept the submission that for an acquisition constructive trust to arise the claimant must be able to pinpoint with precision the moment when a concluded agreement was reached. In my judgment, the court is entitled to consider the entire course of dealings between the parties and draw appropriate inferences. The principles were accurately summarised by the judge and I consider that she applied them correctly and reached the conclusions that were available to her on the evidence.

Mr Dumont submitted separately in relation to 5 Ullswater Road that because the judge had been unable to determine whether the deposit was funded from 7 Essex Grove or 53 Norbury Crescent, there was no adequate basis for an acquisition constructive trust in favour of the Sons. He argued that if the money came from a mortgage over 7 Essex Grove, any claim would have to be brought by the Daughters. I am unable to accept this argument. As explained above, Mr Khan remained the decision-maker over all of the Properties. The judge found that he remained interested in them during his lifetime. If the funding for 5 Ullswater Road came from a mortgage over 7 Essex Grove, on the judge’s findings, that was because Mr Khan (who directed the transactions) decided that should happen and he brought it about. As explained above, the judge found that Muhammed had acquired his interest in 5 Ullswater Road on the same understood basis as for 14 Stapleton Road and 53 Norbury Crescent (i.e. that it would be held for Mr Khan for life and then for the Sons). For the reasons already given, the judge’s findings entail that, if Muhammed had not agreed to hold his legal interest in 5 Ullswater Road on these terms, those interests would not have been put into his name. He provided no value for the acquisition. On the basis of those findings, whatever the source of funding of 5 Ullswater Road, it was unconscionable for him to deny the trusts. Another way of putting the point is since the claimants consist of the Daughters as well as the other Sons, together they have a better claim than Muhammed to 5 Ullswater Road, and together they can require Muhammed to carry out the trusts. As the judge said, the Daughters may possibly have separate claims in respect of the use of money raised on 7 Essex Grove to fund the purchase of 5 Ullswater Road, but that question was not raised on this appeal.

For these reasons I would dismiss grounds 3 and 4 of the appeal.

As already explained the judge concluded that the email of 12 October 2013 sufficiently manifested and proved the trust over 7 Essex Grove.

Section 53(1)(b) of the LPA provides as follows:

“(1)

Subject to the provisions hereinafter contained with respect to the creation of interests in land by parol –

[...]

(b)

a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.

(2)

This section does not affect the creation or operation of resulting, implied or constructive trusts."

It was common ground before the judge and this court that the requirements of the section may be satisfied if the trust is manifested and proved by a subsequent acknowledgement by the trustee (see Lewin on Trusts (20^th ed) at para 3-012, referring to Forster v Hale (1798) 3 Ves. Jr 696).

In Rochefoucauld at p. 206 the Court of Appeal explained (by reference to the Statute of Frauds) that it was not necessary that the trust should have been declared in writing in the first instance; it suffices if the trust can be proved by some writing signed by the defendant and the date of the writing is immaterial.

To recap, the email of 12 October 2013 included these passages:

“I want Essex Grove out of my name by 2014. This belongs to the three sisters as stated clearly.

I never wanted this property in my NAME. I did it because no one else had the responsibility, care or inclination to deal with it.

You are not even grateful to the fact that between myself and Ahmed we have maintained, argued with neighbours, improved, fought against tenants, blood sweat and tears, cleaned toilets. So you guys have a block of flats that have at least 40-50 percent equity not to mention a valuable home should you need it.”

Mr Dumont did not contend before us that the email did not sufficiently refer to Muhammed’s interests in 7 Essex Grove. This was realistic as read in context the email was concerned with 7 Essex Grove and the interests held in that property were the leaseholds over the flats.

Mr Dumont argued that the email did no more than discuss arrangements within the family. I am unable to accept this. It made clear statements about the ownership of 7 Essex Grove. The property and the beneficiaries were identified and Muhammed made clear that he was holding his interests on trust, though without using that language.

Mr Dumont also argued that the email was concerned only with the equity of redemption in his interests, subject to mortgages over them. But this was not what the email said. On a natural reading, it said that 7 Essex Grove belonged to the Daughters and that Muhammed had never wanted it in his name. It also explained that the equity in 7 Essex Grove was worth 40-50% of its value. It was not saying that any trust declared or acknowledged by Muhammed was only over the equity. It said that the property itself belonged to the Daughters. There may be questions about the extent to which (as between Muhammed and the Daughters) any mortgages or charges over 7 Essex Grove had been properly entered into. But issues of that kind cannot affect the acknowledgment that as between Muhammed and the Daughters, it is entirely their property.

Mr Dumont also submitted that the email could not amount to sufficient evidence of the trusts alleged by the claimants because it said nothing about the life interests of Mr Khan. I reject that submission. The section requires writing to manifest the trust; it does not require the writing to set out the terms of the trust in full. The section requires sufficient evidence of the beneficiaries and the existence of a trust (compare Forster v Hale at p. 707). This view is reinforced by reading the provision in light of its purposes: to prevent false, perjured, claims to interests in land under trusts (see National Iranian OilCompany v Crescent Gas Corp. Ltd. [2025] EWCA Civ 1211 (“National Iranian Oil”) at paras 77 and 78). Promoting that purpose does not imply that the owner of the land should have to set out the full terms of the trust in the relevant document. All that is required is a sufficient acknowledgement. By the date of the email Mr Khan had died and any previous life interest he had held had ended. The trust was capable of being manifested without the need to refer to the earlier, now extinguished, interests of other beneficiaries.

I consider that the email was either itself a declaration of trust or that it manifested an earlier express trust of 7 Essex Grove in favour of the Daughters. Muhammed submitted that it could not (on the judge’s findings) be seen as the latter because the judge did not in her judgment identify any earlier declaration of trust.

It was not clear at the hearing before us whether anything materially turns on this point, but for completeness, I consider that, on the judge’s findings, Muhammed declared a trust over his interests in 7 Essex Grove in favour of his father for life and then for the Daughters at the time when he acquired them.

A trust may be declared by words or conduct: see Paul v Constance [1977] 1 WLR 527 at 531 where Scarman LJ said “that there must be clear evidence from what is said or done of an intention to create a trust”; and Ong v Ping [2017] EWCA Civ 2069 at para 58.

In National Iranian Oil at para 218 Zacaroli LJ said this:

“It may in a particular case be necessary to pinpoint the moment that a trust arises (for example where the timing of the creation of a trust is relevant for tax purposes), but that does not mean that no trust can be held to exist unless it is possible to point to a single occasion which constitutes the declaration of trust. The inquiry, as Ong v Ping shows, is a broader one than that: would the reasonable observer understand from a person’s words and conduct that they were manifesting an intention to hold property on trust for another.”

At para 205 he said:

“The question whether there has been a declaration of trust is a question of fact: Paul v Constance [1977] 1 WLR 527, per Scarman LJ at p.531H to p.532B. Unless the judge made an error in determining what constitutes, in law, a declaration of trust, the question on appeal therefore is whether there was sufficient evidence to justify the judge’s conclusion of fact.”

At para 144 he noted that the trust may be declared by implication from various letters (which need not be signed or dated). (Although Zacaroli LJ was in the minority in that case, the other members of the court were with him on these points.)

I have already addressed the judge’s findings in some detail. Muhammed acquired legal interests in 7 Essex Grove (the leaseholds) at the direction of Mr Khan and on the basis of a common understanding that he would hold them on trust for Mr Khan for life and then for the Daughters. On the judge’s findings, he accepted that the leasehold interests would be placed in his name on that agreed basis. This conclusion is indeed confirmed by the terms of 12 October 2013 email where Muhammed stated that he had never wanted the property to be in his name. I consider that Muhammed’s conduct in accepting the leasehold interests in his own name on this agreed basis was sufficient evidence of his intention to hold them on the agreed trusts from the time they were created. In my judgment this was sufficient evidence to justify the judge’s conclusion that there was an express trust.

As already explained, the judge decided in the alternative that Muhammed held his interests in the Properties under common interest constructive trusts. In light of my conclusions on grounds 1 to 4, it is unnecessary to address ground 5 or the respondents’ notice. We heard interesting arguments about these, particularly the question whether detrimental reliance by one putative beneficiary of such a trust is capable of giving rise to the beneficial interests of another putative beneficiary where the common intention was that both should have an interest in the property. In the light of her findings on the acquisition constructive trusts the judge did not need to examine that important and difficult question and we do not have the benefit of her reasoning about it. Counsel have been unable to find any directly applicable authority on the issue. I would prefer to say no more about the issue and leave it to a case where the outcome depends on the answer.

Ground 7 is that the judge should not in the exercise of her discretion have made an order giving conduct of the sale to a trust corporation, CTC, the directors of which are also partners of the claimants’ solicitors, Cripps LLP.

Mr Dumont argued that the judge should have allowed Muhammed or his solicitors to have conduct of the sale. CTC is not a firm of solicitors and cannot carry out the conveyancing, and it is not apparent that it owes any duty of care to Muhammed.

I can deal with this ground briefly. The order was made under CPR 40.1, which gives the court a discretion. The usual thresholds for an appeal against the exercise of a discretion therefore apply. There is no basis for considering that the judge’s decision was flawed. On her findings, Muhammed had roundly denied that the claimants had any interest at all in the Properties and had asserted that he was entitled to them all. She had also rejected his case that he had paid his parents’ debts in return for the Properties. She found that Muhammed’s denial of the trusts was unconscionable. She also concluded that some of his evidence was a recent fabrication. The dispute had already been rumbling on for some years before the trial. The result of the judgment was that he had no interest in 7 Essex Grove and only a one-third interest in the other three properties. As the judge said, there was hostility between the parties. In this setting, the judge’s decision to give the conduct of the sale of the Properties to the claimants’ solicitors was entirely reasonable. It would indeed have been counter-intuitive to leave the sale to a person who had denied the trusts and unsuccessfully contested the claims. The substitution of CTC for the solicitors was for sensible practical reasons, explained in emails sent after the consequentials hearing and before the order was drawn up.

I do not think there is anything in the suggestion that the costs will be increased. The directors of CTC are also partners in Cripps LLP. As for the suggestion that there would be no duty of care, which was not pressed, the order for the sale of the Properties contains conventional terms for determining the sale price of the Properties. Anyway it is hard to suppose that where someone is given conduct of a sale they do not owe a duty to those interested in the price.

Ground 8 is that the judge wrongly gave directions for expert evidence on the issue whether the rent charged by Muhammed for lettings of the Properties had been below the market rent (without ordering any account or inquiry as to such issue).

Mr Dumont submitted that there was no proper pleading that Muhammed had acted in breach of trust by failing to charge market rents to tenants. He also said that the judge had not made any finding of any such breach of trust. The order for an account required him to account for rents actually received under his lettings of the Properties. There was therefore no proper basis for the court to order expert evidence about market rents for such lettings.

Mr East showed that the claimants had pleaded a case that Muhammed had been in breach of trust by agreeing lettings of 7 Essex Grove, 53 Norbury Crescent and 5 Ullswater Road at less than market rents, and that he should account for the difference. He noted that the judge had concluded in para 132 of her judgment that the evidence appeared to show that Purple Panda had benefited from a discount for a longer period than might have been expected if the property had been let to it by a commercial landlord. The judge said that she could not reach a conclusion about this or the rentals charged on the other properties without expert valuation evidence. Mr East said that the course adopted by the judge in the consequentials order was made within the reasonable scope of her case management powers. Under that order there is to be an account of the amounts actually received by Muhammed and the evidence of a single expert on the market rents for equivalent lettings. It will then be for the claimants to decide whether to contend, as part of the accounting process, that there should be further remedies for any difference between the two.

I agree with the claimants that this was a case management decision. There was more than one course available to the court. Some judges might have concluded that, because of the absence of valuation evidence at the trial, it was too late for the claimants to seek to adduce evidence about market rents under the auspices of the accounting process. However, there were countervailing considerations. The trial focused predominantly on issues of beneficial ownership. Any issues concerning the rents that should have been charged may be regarded as ancillary and consequential. Had Muhammed succeeded in establishing absolute ownership of the Properties such issues would never have arisen. But in the light of the judge’s conclusions about beneficial ownership, I consider that she was entitled to conclude that the claimants had not shut themselves out from claiming ancillary relief including for any shortfalls from market rents. It was within the scope of her case management powers to decide that this issue could be further investigated in stages, with the first being the account of rents received and, the second, the expert evidence. For these reasons, I would reject this ground of appeal.

For these reasons I would dismiss the appeal.

I agree.

I agree that the appeal should be dismissed for all of the reasons given by Lord Justice Miles.