Hameed v Qayyum & Anor

This case concerns a flat at D House [London]. The defendants (Mr and Mrs Qayyum) are the registered proprietors. The claimant (Mr Hameed) applies for an order for the sale of, and a declaration as to the defendants' beneficial interests in, that flat (which I shall call "the Property").

There are two charging orders which the claimant has obtained. The first is dated 1^st February 2006 against the interest of the first defendant, Mr Qayyum, and the amount due thereunder is in the order of £260,000 plus interest. It might be thought that the fact of a charging order against his interest presupposed that he did have an interest. The claimant’s case is that he had a 50% interest. However, it is Mrs Qayyum's case that the first defendant had no interest and it is not disputed that she is entitled to take that point on this application.

The second charging order is dated 23^rd August 2007. That is against the interest of the second defendant, Mrs Qayyum for a much smaller amount.

In addition, the Property is charged to Nationwide Building Society to secure the principal sum of £200,000. That charge ranks ahead of the charging orders. The Property itself is worth around £450,000 - maybe a bit more - but no more than £500,000 at the outside.

Mr Qayyum was made bankrupt on 31^st October 2006 and was discharged from his bankruptcy on 31^st October 2007. The Official Receiver accepts that the charging order against Mr Qayyum's interest in the Property was made eight months prior to the bankruptcy order and that, even if Mr Qayyum had a 50% beneficial interest in the Property, there is no realisable equity which could be claimed in the bankruptcy proceedings. Accordingly, and unsurprisingly, the Official Receiver has taken no active part in these proceedings, the real contest being between Mr Hameed, the claimant, and Mrs Qayyum, the second defendant.

Mrs Qayyum resists the application for sale and contends that a declaration should be made that she is the sole beneficial owner of the Property. She does, however, accept that, whether her beneficial interest is 50% as the claimant contends or 100% as she contends, her interest is charged with payment of the debt due to the claimant pursuant to the charging order of 23^rd August 2007. She says, however, that, if it is once determined that she is the 100% owner of the Property, she will be able to raise a sufficient sum to pay that off.

I think it is right to say that, should I take that view, I will be prepared to give her a sufficient opportunity to put that proposal into effect before ordering any sale. However, she does recognise that, if the beneficial interest is held 50/50 as between herself and her husband (or, more strictly, her husband's trustee), she would have no prospect of raising sufficient funds to pay off the whole of the sums charged or the amount of her husband’s share, and realistically accepts through her counsel that the appropriate order would be an order for sale, though there might in that event still be issues as to what directions should be given in relation to a sale and when possession should be given up.

As things stand, the building in which the Property is situated is the subject of a major programme of works which will not be complete until at least October 2008, and it may be that, on any footing, no sale should take place until the works are complete. I say "it may be" because I have not heard argument on that point yet. What matters is the decision on the point of principle as to whether the Property is held 50/50 or as to 100% for the second defendant as sole beneficial owner, or in some other way. I say "in some other way" because Mrs Qayyum contends that, if her beneficial interest is not 100%, it is at any rate more than 50% because of substantial works of improvement carried out to the Property by her and, she says, at her own expense. In that connection she relies on section 37 of the Matrimonial Proceedings and Property Act 1970.

The claimant contends that Mr and Mrs Qayyum's beneficial interests are 50% each. The claimant also contends that, as between Mr Qayyum and Mrs Qayyum, the burden of the Nationwide mortgage, to which I have referred, falls solely upon the beneficial share of Mrs Qayyum, because, it is said, the borrowings were solely for her account.

Mrs Qayyum's case in outline is as follows. The Property was bought in 1991 with the assistance of a loan from Mr Qayyum's then employer, Bank of Credit and Commerce International ("BCCI"), the price and loan both being £165,000. It is asserted by Mr Semken for Mrs Qayyum that the evidence justifies me reaching the conclusion that at that time it was agreed and intended between Mr and Mrs Qayyum that she should be the sole beneficial owner of the Property, notwithstanding the fact that it was transferred to them as joint legal owners.

It is of course now well established, since Stack v. Dowden [2007] 2 AC 432 (in particular paragraphs 58, 68 and 69), that the strong presumption in the case of a transfer into the names of joint proprietors in a domestic context, of which this is one, is that the legal and beneficial interests coincide. That presumption may be, however, rebutted by evidence to the contrary. I therefore turn to consider that evidence.

The evidence in effect is all from Mrs Qayyum. In her statement of 14^th January 2008 the matter is dealt with between paragraphs 4 and 11 and, to an extent, the following paragraphs. She says:

"The Property was purchased in February 1991 and registered with the Land Registry on 14^th March 1991."

There is no doubt that that is correct. She goes on to say:

"The Property was purchased by me with funds provided by my husband when he was no longer intending to live or work in the UK."

It is correct that the Property was purchased with funds provided by her husband. However, on the face of it, it was purchased by both of them, because the purchase was in joint names. There is some indication that initially, at any rate, she was described as the sole applicant for funds, but, however that may be and for whatever reason, the purchase was, in the event, in the names of both herself and her husband. She continues:

"In 1990 my husband moved from London to Abu Dhabi due to the relocation of the headquarters of BCCI. This move was intended to be for an indefinite period, but at the time my husband also had plans to retire to Bangladesh."

She then exhibits a contract of employment which reflected these facts, so she asserted. However, perusal of the contract of employment demonstrates that the posting to Abu Dhabi was for a maximum period of four years and, whilst that was in a sense indefinite, it was not unlimited. Moreover, as regards her husband's alleged plans to retire to Bangladesh, he was then in his forties. He was not a man of great wealth and his retirement to Bangladesh, if it ever took place, could be many years away.

I think it is evident (as was, to my mind, confirmed by Mrs Qayyum's answers in cross-examination) that should, as in the event happened, Mr Qayyum ever come back, he would be at liberty to reside in the Property. In the first instance, however, what Mr Qayyum was undoubtedly doing was buying a property for his wife's residence. That, however, is not the same as buying a property for her sole beneficial ownership.

She continues in her witness statement:

"I did not wish to move to Abu Dhabi with my husband for personal reasons and, as I was happily settled in London where I had been residing since 1973, I also had close relatives and friends in the UK."

I have no reason to doubt that that statement is correct, but I do not think it is determinative of the issue of beneficial ownership.

In paragraph 8 she continues:

"By the end of 1990 my husband was receiving a reduced salary from BBCI because they had provided him with living accommodation in Abu Dhabi. Consequently, he was unable to afford the mortgage payments of the flat that I was residing in at the time, C Gate Gardens, which was owned jointly by my husband and me. This was a large four-bedroomed flat which was too big for my own requirements."

Then in the next paragraph she says:

"My husband asked me if I would be agreeable to us giving up the C Gate Gardens flat on the basis that he would provide funds for me to purchase another smaller flat for myself. He informed me that he would do so by taking up a staff loan from BCCI and he would be responsible for the repayments. I agreed, and before leaving for Abu Dhabi he applied for the staff loan."

It is clear from that evidence that she, at any rate, regarded the loan application as being made ultimately by her husband, which is not surprising, because he was the only member of the BCCI staff involved. It is also not surprising (the Property being taken in joint names, though clearly with the intention of providing a residence for Mrs Qayyum alone, so long as Mr Qayyum was in Abu Dhabi) that she describes that as providing “another smaller flat for myself". That, however, as I have observed, is not conclusive of beneficial ownership.

She continues by saying:

"I located the Property myself which I chose because it met with my requirements as it was in a central location and had security by way of a 24- hour porter service. This was important to me, as I would be living on my own."

So she would be so long as her husband was in Abu Dhabi, but that is silent as to what the position would be should he no longer be there. She continues:

"The flat was in a totally dilapidated state, which I did not mind as I also wished to refurbish it to my taste."

In the next paragraph she says:

"The Property was purchased with the funds provided by my husband with the assistance of a BCCI staff house loan, which was applied for by my husband as he was an employee of BCCI. The loan was for £165,000 and was taken out in February 1991. The documentation for the loan was drawn up by BCCI, who required the Property to be registered in joint names. I understand that, as my husband was the BCCI employee, the loan was taken out in his sole name, and my husband assured me he would be responsible for the payments."

The position therefore (on Mrs Qayyum’s evidence) is that Mr Qayyum had purchased a property for his wife's occupation which would, for all practical purposes, be hers but for which he would pay, in return for her giving up the C Gate Gardens flat. That makes it sound as if she was giving up some valuable equity in one flat, from which it might be inferred that she was obtaining some valuable equity in another flat. However, on the evidence as it emerged, the C Gate Gardens flat had no equity. It was mortgaged to the hilt - and possibly beyond - to Eagle Star and, in the events which happened, it was simply handed back to Eagle Star some while later and there was no equity which was ever realised, either for Mr Qayyum, for Mrs Qayyum or for anyone else. It is accordingly not appropriate to regard this as an exchange of one equitable interest for another, or as a case where Mrs Qayyum contributed to the purchase price of the Property.

The position is that Stack v. Dowden applies and I have to consider whether, on the evidence, the presumption of a joint beneficial interest is rebutted. Thus far, in my judgment, it is not. However, she goes on to say:

"I spent my own money in renovating the Property, which included renewing two bathrooms and the kitchen as well as complete rewiring and plumbing."

She then develops that and says that the costs would have been in excess of £30,000, though the records no longer exist.

On the evidence it turns out that, at least in part, if not substantially, the monies that were used for the refurbishment were monies which arose from the sale of a previous property that the parties had owned prior to the acquisition of the C Gate Gardens flat, namely, a property in Middlesex, in respect of which there was some equity. That equity was jointly owned by the parties and Mrs Qayyum confirmed that no steps had been taken to separate the one party's interest from the other, so that what was in fact being applied towards the refurbishment was joint funds. There is nothing in that to displace the presumption that the Property was acquired jointly beneficially.

On 5^th July 1991 disaster struck: BCCI was liquidated on a global basis on the intervention of regulators. This caused Mrs Qayyum immense distress. There was concern that the liquidators would call in all the loans straightaway and that that would in some way expose Mrs Qayyum to liability under the BCCI loan. She described to me that the week from 5^th to 12^th July 1991 was the worst week of her life, until matters were resolved by an execution of a document on 12^th July 1991. I accept her evidence that that was the sequence of events.

Mr Russen (for reasons which are not difficult to divine because the original of the document which Mrs Qayyum claims was executed on that day has gone missing) asserts that the evidence that a document existed in 1991 has been invented in response to the claim that his client brought subsequently.

I do not accept that assertion. I believed Mrs Qayyum when she told me that this was the result of the seven days' panic which occurred in 1991. In order to make that proposition good, Mr Russen pointed to what he considered were inconsistencies and inaccuracies in the document itself - the deed of trust that was signed on 12^th July - and in particular the assertion upon which it is apparently based, that Mr Qayyum had been in Abu Dhabi since the year before.

A perusal of the employment contract indicates that Mr Qayyum took up residence in Abu Dhabi (or at least took up his post in Abu Dhabi) on Christmas Day the year before, so the contemporaneous evidence is consistent with Mr Qayyum's assertion in the document. Accordingly, I do not find that a sufficient reason to reject the evidence of the document.

The document also purports effectively to record that this always had been the sole beneficial property of Mrs Qayyum. However, I consider that to have been wishful thinking, based upon the perceived exigencies of the situation following the BCCI collapse. I do not think that anyone had given any detailed thought to it before then. But they did give detailed thought to it in July, and the effect of the document, in my judgment, subject to its admissibility, is that that changed the beneficial interest so that, as from that date, Mrs Qayyum became the sole beneficial owner.

Having said that, I do think there are inaccuracies in the recitals. I do not think it is right (as recital 3 states) that the beneficiary invested substantial monies which were entirely her own. They were substantially (or at least in part) hers and her husband's.

It is correct, as recital No. 2 records, that Mr Qayyum purchased the Property for the residence of his wife, but that is not conclusive as to beneficial ownership.

Recital No. 4, which concerns the beneficiary providing her services for the upkeep and running of a named restaurant, is, in my judgment, just a bit of flannel to bolster the trust deed.

As to recital No. 5 (to the effect that the beneficiary contributed to the maintenance and upkeep of the Property by payment of a service charge), she did act in this way, but there is no evidence indicating that the contributions came out of her sole monies and, even if they did, they would simply be running expenses which the current occupier could fairly be expected to pay without that being indicative of beneficial ownership.

Recital No. 7 provides that the trustee, that is to say, Mr Qayyum, had agreed to execute the deed to acknowledge the fact that the Property was purchased solely for the beneficiary as her residence. That, it seems to me, is an ambiguous phrase. That may well have been the motivation, but purchasing a property for someone as their residence is not the same as purchasing it for that person’s sole beneficial interest, especially when the purchaser is putting up all the money and is taking a joint transfer.

The recital continues that the trustee claims no beneficial interest in the Property and has the intention of retiring in Bangladesh. That may well have been his intention at some distant point in the future, but it was far from being his current intention.

The recital continues to say that due to the trustee's natural love and affection for the beneficiary, he has agreed to grant his BCCI staff benefit interest at the end of his service period to the beneficiary. I am not entirely sure what that means but do not think it matters for present purposes.

The operative parts of the deed are significant. The operative words are very simple. They say:

"Pursuant to the said agreement, the trustee hereby declares that he holds his interest in the said property on trust for the beneficiary absolutely and recognises his contract and obligation of Meher to the beneficiary under Muslim law."

I can forget Muslim law for present purposes. The critical words are that he "holds his interest in the said property on trust for the beneficiary absolutely". I have no doubt that those words, despite some of the deficiencies in the recitals to which I have referred, are fully effective and that, subject to admissibility, that declaration of trust had full effect in accordance with its tenor; and that, as from 12^th July 1991, Mr Qayyum held his interest on trust for Mrs Qayyum as the beneficiary absolutely. That means that, as from that date, she was the sole beneficial owner.

It is said that the deed is not admissible for a number of reasons. The first is that it is not stamped. It appears that at the time it should have been stamped under the 1891 Stamp Act, schedule 1, as a declaration other than a sale. This would have involved next to nothing in stamp duty. Figures have been bandied about, to include interest and penalties, but none of them has exceeded £30.

Reference was made to McGuane v. Welch [2008] EWCA Civ No. 785, at paragraph 27, for confirmation, which would surprise most people, that section 14 of the Stamp Act is still alive and kicking. In that case a litigant in person was unable to give an undertaking to stamp because, as a litigant in person, he was not an officer of the court.

In the present case I am offered an undertaking by Mr Semken's solicitors for Mrs Qayyum, and so it seems to me that that problem ought to be averted. There is some question mark over whether the Stamp Office would accept the money, but, if they do not, then it seems to me that the solicitors would end up holding the money to the order of the Stamp Office until such time as the Stamp Office saw the light of day. I am quite satisfied that it would be proper to devise an appropriate form of undertaking and, subject therefore to the other point that is made, I would regard the deed of trust as admissible.

The other point that is made on the stamping aspect is that there is no original. There is only a copy. That itself produced a riposte from Mr Semken, to the effect that it should not be assumed that the original was not stamped, and in that respect he referred to Henty and Constable (Brewers) Ltd v. Inland Revenue Commissioners [1961] 1 WLR 1504, 1515, where Lord Justice Danckwerts said:

"It is not enough to say that there is no reason to suppose that the transfers were stamped. Nor is it enough to say that the circumstances raise a suspicion that the transfers were not stamped. That is not proof of anything."

Mrs Qayyum's evidence (which I accept) is that no-one took any steps formally to destroy, obliterate or alter the deed of trust. It has simply got lost over a period of time. As I have said, I accept that evidence which I think was evidence of truth. Accordingly (Mr Semken says) as the original cannot be found, it must be assumed that it was duly stamped. I agree with him that that is the starting point. However, on the evidence, Mrs Qayyum confirmed that the document was something of a home-made affair. It was produced by her husband, having discussed the matter with a financial adviser. It was produced for her signature at the Property. They executed it and it never left her possession. She kept it at the Property. Nevertheless, it is now lost. The speculation is that it was the victim of a flood. Other evidence was to the effect that the Property was used over a number of years in connection with the BCCI employees’ claims in the liquidation, with which Mr Qayyum, following his return to England, was heavily involved. This activity would have generated large amounts of paperwork. It is possible that the Deed is somewhere among that paper. However that may be, as Mrs Qayyum never consciously parted with the deed, which as far as she was concerned remained at the Property, it follows that it never went off to the Stamp Office for stamping. Accordingly, I consider the presumption to be displaced on the evidence.

That is not the end of the matter, because, although Mr Semken’s solicitors are prepared to have the copy stamped, Mr Russen says that is not enough: the original has to be stamped. There is no reasoned English authority directly on point, but the Irish authority of Ellen Nally v. John Nally & Ors [1953] Irish Reports, page 19, is direct authority to the contrary, apparently on the basis of the Stamp Act 1891, section 14 itself. This was a decision of Kingsmill Moore J, who relied upon sub silentio (if I am allowed to use that expression) authority of the English Court of Appeal in London & County Banking Company v. Ratcliffe, (1881) 6 Appeal Cases 722. Kingsmill-Moore J observed as follows:

"In that case, as appears from a passage in the judgment of Lord Blackburn at page 730 of the report, the Lords Justices of the English Court of Appeal permitted to be read, as evidence of the contents of the original, a copy, duly stamped as an original, of a memorandum which had been destroyed while still unstamped. It would appear, therefore, that it was the practice of the English Court of Appeal to receive such documents in evidence, and I propose to adopt and follow that practice in the present case."

That seems to me to be eminently sensible and desirable and I would therefore apply that to this case, unless compelled by authority to reach the contrary conclusion (which I am not), and accept an undertaking in appropriate form (to be discussed) from Mr Semken's solicitors to have the copy stamped and a fee to be duly tendered.

In those circumstances, it seems to me that the deed is admissible. I should add that I consider that the provisions of the Finance Act 1999, to which I was referred very properly by Mr Russen and which refers to the stamping of duplicates as well as counterparts, seems to me to support that conclusion.

I need not in those circumstances consider the delicate matters of human rights to which Mr Semken referred. It seems to me it would be a bold step for me, albeit a delightful one, to hold that section 14 contravenes the human rights legislation within weeks of the Court of Appeal having applied it. It does however seem to me, on the face of it, wholly disproportionate in the present case for direct evidence of beneficial ownership of a flat worth approaching £500,000 to be excluded because of the non-recovery of stamp duty not exceeding £30. I need say no more about that because I propose to accept the deed in evidence upon the faith of the solicitor’s undertaking to which I have referred.

Where does that get us? We get to the position where, despite the fact that I consider that the Stack v. Dowden presumption was not displaced on acquisition, it is displaced by the deed of trust, in that, as from that date, Mr and Mrs Qayyum held the Property on trust for Mrs Qayyum alone.

That is not an end of the matter. In June 2004 Mr and Mrs Qayyum applied for a substantial mortgage advance from Nationwide Building Society on the security of the Property. At this stage Mr Qayyum was subject to a freezing order at the suit of the claimant in the present action. An advance was duly made in September 2004, by which time the BCCI charge had apparently been discharged following the release of the BCCI debt as part of the resolution of employee claims in the liquidation of BCCI.

At around this time, Mr Qayyum had approached his wife and put to her a dilemma. He was of the understanding (as indeed was she) that the effect of the freezing order was that he had to be able to demonstrate that he had free assets in excess of the limit fixed under the freezing order, and that he himself was unable to charge his share in the Property, if he had one, to fund his defence.

Mrs Qayyum was very supportive of her husband. She wished him to be able to defend the proceedings and therefore agreed that thenceforth Mr Qayyum should be released from his trusteeship of 50% of the beneficial interest in the Property, with the inevitable effect that the Property would thereafter be held by Mr and Mrs Qayyum in the interests 50/50. The precise date of this agreement cannot be specified with precision. I shall refer to it as “the 2004 Agreement”.

That raises the question of whether the beneficial interests changed. Mr Semken contends that an oral agreement to the effect referred to by Mrs Qayyum was ineffective because of section 53 of the Law of Property Act 1925. I shall refer to the terms of that section which are well known, but which it is occasionally prudent to remind oneself of. Section 53(1) provides:

"(1)

Subject to the provision hereinafter contained with respect to the creation of interests in land by parol —

(a)

no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;

(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;

(c)

a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will."

I apprehend that it is section 53(1)(c) which applies in the present case, but, whichever subsection it is, writing is required. Subsection (2) provides that:

"(2)

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

Mr Russen (for Mr Hameed) puts forward a number of answers to this. He says, in the first instance, that there is no disposition of an equitable interest. There has instead been a disclaimer. He refers to In re Stratton's Disclaimer[1958] 1 Ch 42, pages 54-5, and In re Paradise Motor Company [1968] 1 WLR, 1125, in particular at 1143B-D.

I do not think this is a case of disclaimer at all, as a consideration of Re Paradise in particular demonstrates. What the case is authority for is the proposition that an attempted gift is ineffective if the donee disclaims before he has accepted it. In the present case there is no doubt that Mr Qayyum accepted the arrangements which were put in place in 2004. Accordingly, this is not a case of disclaimer.

What happened after the 2004 Agreement is that the mortgage with Nationwide Building Society was entered into. Mr Qayyum became a covenantor, as did Mrs Qayyum, and the whole Property was charged with repayment of the sum borrowed. The parties nevertheless took care to ensure that the whole of the advance was paid into an account of Mrs Qayyum's. She then lent certain monies from that account to Mr Qayyum and, on the evidence, he repaid those monies by April 2005. Accordingly, the parties on this particular occasion, faced with what they perceived to be the threat of the freezing order, were very careful to distinguish what their beneficial interests were and to ensure that (as between the two of them) Mrs Qayyum was the borrower.

On 8^th July 2005 Mrs Qayyum wrote to the claimant's solicitors saying that she would not rely upon the declaration of trust because this was cancelled the previous year. I have already held that there was no formal cancellation. What is more, had there been a cancellation of the document in the sense of the document being destroyed, that would not, as I understand the matter, affect the underlying disposition effected by the document.

What, however, is clear is that the parties agreed that, as from this time (and in particular in connection with the Nationwide loan), Mrs Qayyum would be treated as borrowing against her share, being a 50% share, and that Mr Qayyum would be regarded as having the other 50% share so that he could show this as his unencumbered assets. They may well have been, and probably were, acting under a misunderstanding of the position under the freezing order, but that is undoubtedly what they intended to do.

On 13^th July 2005 Mrs Qayyum confirmed the position again to Mr Hameed's solicitors, and said this:

"I would take this opportunity to advise further that as Mr Qayyum was involved in litigation with Mr Hameed, wherein assets belonging to him in the UK were frozen, he was in need of funds to meet legal expenses, he requested me to release him from the responsibility of holding his interest in our flat in trust for me so that he could continue to fund his legal costs. I agreed to release him of his responsibility and did this to alleviate the stress that he appeared to be under and affecting our home life. I had breast cancer and have been advised to avoid stress at all costs."

In the next paragraph she continues:

"I hope this will clarify the position and request you to kindly place both my letters before the Court."

The matter was also explained in a witness statement of Mr Qayyum made on 28^th February 2006. I have to say that I approach this with great caution, because Mr Qayyum has not been available for oral examination. However, the essential recital of the facts does not appear significantly to differ from Mrs Qayyum's version of events. In paragraph 12 he says this:

"In about August 2004, I was under pressure to produce legal costs amounting to a further US$250,000 to cover this litigation. I was conscious of my obligation under the freezing injunction to maintain worldwide assets of US$1.025m. I therefore approached my wife to agree to revoke the Deed of Trust so that I could recover a half share in the property as I needed funds to meet my legal expenses. I only subsequently became aware that I was legitimately entitled to make withdrawals for legal expenses and representation pursuant to para 6 of the freezing injunction without the need to approach my wife for her agreement. She orally agreed. In reliance on her agreement, I paid money for legal costs. I regarded myself as owning a half share in the flat as from the date of the oral agreement. My wife confirmed the agreement in her letters of 8^th & 13^th July 2005" (those are the letters to which I have just referred) "to which Mr Cooper refers in … his affidavit".

He then goes on to record that his wife has now changed her position.

That seems to me to be an accurate recital, so far as it goes, of what happened. What it misses out, of course, is the further stage of the Nationwide mortgage which was completed during this period and which formed the basis for generating at least some of the costs to which Mr Qayyum was referring, he borrowing those formally from his wife and, as I have said, subsequently repaying them.

There are two other letters to which I should refer. The first is a letter of 25^th January 2006 from Mrs Qayyum to Mr Hameed's solicitors. At that stage she was dealing with her husband's alleged interest in the matrimonial home - that is to say, his 50% alleged interest - and she pointed out that she intended to contest that for, amongst other reasons, "the monies that she had spent on home improvements, principally in 1991-1992 and 2004-2005, in the region of £50,000 to £60,000 and various other matters".

I mention that because it is now said in her evidence that by the end of 2005 (that is to say, before this letter) because of the discovery of the misunderstanding that had been induced in her by what her husband said, so she says, concerning the freezing order, she revoked the previous position and reverted to the situation, with her husband's consent, under which he would no longer be regarded as owning 50%.

After receiving a reply from Mr Hameed's solicitors, Mrs Qayyum wrote again on 29^th January, saying:

"With regard to my husband having a 50% beneficial interest in my flat … it was only agreed by me in response to a request by him and in what now appears to be a mistaken belief represented by him that I should not seek to rely on an agreement he made with me previously that he was holding his beneficial interest in the property for me, as he had to hold his alleged 50% beneficial interest in the property under a freezing order made by the court to withdraw monies for payment of his legal expenses."

She then went on to explain why it was that she was now claiming a 100% interest in the Property. She did not rely upon any further agreement with her husband, but on the fact that she was allegedly misled by the belief that was induced in her as to the effect of the freezing order. She also said that, as a result of that, he should now have an equal share in the liability under the mortgage, which could only arise (inferentially) if he also had an equal share beneficially in the Property, as she was treating liability for the borrowing (as between the 2 of them) as following the beneficial interests. She also said that account should be taken of the total monies invested by her.

None of those points was of relevance if in fact she had by then agreed, and her husband had accepted, that she should have 100% of the Property and that the 2004 Agreement was no longer of any relevance. I am therefore very sceptical as to whether or not there was any agreement to which Mr Qayyum assented in late 2005, or at any other time, reverting to the position under the deed of trust. However that may be, Mr Russen takes the point that that would itself be a disposition of an equitable interest to which 53(1)(c) would apply, and therefore, as the matter has not been acted upon, would be ineffective.

That takes one back again to section 53.

I need to consider what the position is, as a result both of the 2004 Agreement (which subsisted down to and beyond the taking of the mortgage with Nationwide) and of the agreement alleged to have been made at the end of 2005.

Mr Semken's point is that the 2004 Agreement is caught by section 53, and that, as I have rejected the “disclaimer” answer, Mr Qayyum, and therefore Mr Hameed, cannot rely on that oral agreement because of section 53.

However, as I have said, section 53(2) provides that the section does not affect the creation or operation of resulting implied or constructive trusts. It is clear that, as from 12^th July 1991, the Property was held on trust for Mrs Qayyum alone. Nevertheless, there is no reason why the parties should not subsequently change that if they so agreed and that agreement (though merely oral) was acted upon. If it was acted upon, it could give rise to a constructive trust which would take an oral agreement outside the section.

That much seems to be accepted, even after Stack v. Dowden (see the decision of the Court of Appeal in James v. Thomas[2007] EWCA Civ 1212, paragraph 24). What is needed is some compelling evidence of an actual agreement to change the beneficial interest, rather than inferences from conduct. Here, there is compelling evidence. There is the evidence of Mrs Qayyum herself, confirmed by her husband's evidence and her own letters in 2005, and the basic assumption in her 2006 letters from which she is now, for understandable reasons, trying to resile.

Accordingly, as the 2004 Agreement was acted upon - in that Mr Qayyum entered into the Nationwide mortgage, thereby charging his share and giving his own personal covenant - I consider that the circumstances are apt to give rise to a constructive trust varying the trusts set out in the 12^th July 1991 document, so that as from, at the latest, the completion of the Nationwide mortgage in September 2004, the beneficial interests were held for Mr and Mrs Qayyum 50/50. As, further, it was the desire of the parties to demonstrate to Mr Hameed, as claimant in the main proceedings (then extant against Mr Qayyum and others), that Mr Qayyum had free assets which he was not charging, it must follow that, as from the completion of the Nationwide mortgage, any beneficial interest was severed and there was not simply a joint beneficial interest. The first of the charging orders would also have had the effect of severing any joint beneficial interest. As it happens, that, in my judgment, is what the position already was.

As regards the alleged abandonment of that position in late 2005, or whenever it was, it seems to me that that was not sufficient to give rise to a constructive trust. The parties did not act upon it. It was not anything other than an oral agreement, if indeed the agreement was made at all. As I have said, having regard especially to the 2006 correspondence, I am very sceptical about this alleged agreement. I would, if necessary, rule that, on the balance of probabilities, the agreement has not been made out. But, even if made out, it would be caught, in my judgment, by section 53 and there is nothing to create a further constructive trust so as to take it out of the section.

It is said by Mr Semken that it is inequitable for Mr Qayyum, or anyone claiming through him, to rely upon the 2004 Agreement because it was procured by a false statement made by Mr Qayyum to Mrs Qayyum, namely, as to the effect of the freezing order. I doubt very much whether Mr Qayyum could ever have said anything other than what he believed the effect of the freezing order to be, because he was not a lawyer. It is readily accepted by Mrs Qayyum that Mr Qayyum was in fact acting under a misapprehension and did genuinely believe that the effect of the freezing order was as he stated it to be, as did she. It seems to me, in those circumstances, that it is not inequitable for anyone claiming through Mr Qayyum to rely upon the 2004 Agreement; the more so as it has been acted upon and there is no proposal to unscramble it. Mr Quayyum gave a personal covenant which continues to bind his bankrupt estate and borrowed money from his wife which he expended on legal costs.

In those circumstances, it seems to me that the beneficial interest in the Property is (subject to the point on the Matrimonial Proceedings and Property Act 1970) held, and has since (at the latest) September 2004 been held, by Mr and Mrs Qayyum upon trust for each of them 50/50.

What then is the consequence of my findings? On the facts, it is clear that the borrowing that was taken from Nationwide was, as both parties agreed at the time, solely for the account of Mrs Qayyum (as between themselves). As a result of this agreement, the whole of the Nationwide advance falls to be charged in the first instance against Mrs Qayyum’s share, and therefore not against the share from which the claimant, Mr Hameed, seeks to recover the larger of the two judgments in this case.

Mrs Qayyum effectively accepted that this was the effect of what had been agreed in her two letters in January 2006 to which I have referred, though she sought then to readjust the position because of the alleged misrepresentation as to the effect of the freezing order. I have already held that this point does not enable her to resile from the 2004 Agreement. Likewise, it does not enable her to adjust the accounting between the parties.

Insofar as authority is needed for the charging of that advance on her share, reference was made by Mr Russen to In re Pittortou[1985] 1 WLR 59. Given the express agreement that there was in this case, it is probably unnecessary to refer to that case, but it is a makeweight if needed, and I agree with Mr Russen that that is the position in law.

I then turn to consider the position under section 37 of the Matrimonial Proceedings and Property Act 1970, and ask myself the question: has Mrs Qayyum acquired an increased share by reason of her expenditure on the improvements to the Property? I leave aside the fact that, on the evidence, it appears that the expenditure (or a substantial part of it, at any rate) was met out of the joint equity arising from the sale of the Pinner property. The fact of the matter is that by far the vast majority of the improvements upon which reliance is placed had taken place by September 2004, the date of the Nationwide mortgage, from which point (at the latest) the parties were treating themselves as holding 50/50.

In my judgment, for the beneficial interest to be altered under section 37, what is needed is substantial expenditure after this date. The expenditure thereafter was not, in the overall scheme of things, substantial, and therefore I rule that the claim under section 37 fails.

In the circumstances, the claimant is entitled to succeed.