Vajpeyi v Yijsaf

A resulting trust is presumed where property is acquired in one person’s name but another provides purchase money. The presumption is one of fact and its strength depends on the circumstances and the common-sense inference those circumstances support. It may be rebutted by comparatively slight evidence where the presumption is weak. The court may consider the parties’ conduct and the length of time before the alleged beneficial interest is asserted. Prolonged failure to claim an interest, unexplained by credible evidence, may help rebut the presumption. A written agreement expressly providing that a secured loan carries no interest prevents an interest term being implied. A payment is treated according to the transaction it discharged, rather than its mere existence.

The claimant alleged that she had contributed £10,000 towards the defendant’s purchase of 108 Brigstock Road and was beneficially entitled to a proportionate share under a resulting trust. The defendant said the money was a loan which he had repaid. The claimant also alleged that a £100,000 balance arising from the sale of 2 Warminster Road remained outstanding, while the defendant relied on payments totalling £95,929.89 and sought redemption of the security. The central issues were whether the £10,000 resulting-trust presumption had been rebutted, whether the two loans had been repaid, and whether interest was payable.

1. 108 Brigstock Road. The court accepted that the claimant’s contribution raised a presumption of a resulting trust. Applying the common-sense approach described in Pettit v Pettit [1970] AC 777, the strength of the presumption depended on the circumstances. Here it was weak. The defendant was a young man seeking to buy an investment property, while the claimant was older, professionally established and able to borrow the money. A loan was a plausible explanation.
2. The presumption was rebutted by the cumulative evidence. The defendant’s account was preferred. The claimant allowed him to collect the rents for nearly 21 years, did not assert a beneficial interest until 2001, and said nothing about such an interest when the £100,000 loan was secured on the property in 1994. Those circumstances supported the conclusion that the £10,000 was a loan, not a capital contribution.
3. The court confirmed that resulting-trust claims are not subject to a limitation period, but held that delay may itself assist in rebutting the presumption where no credible explanation is given. The presumption could also be rebutted by comparatively slight evidence where its initial strength was low, following the approach in Fowkes v Pascoe (1875) L.R. 10 Ch 343 and McGrath v Wallis [1995] 2 FLR 112.
4. Repayment and interest. The £10,000 loan was repaid. The £100,000 loan was repaid to the extent of £95,929.89, leaving £4,070.11 outstanding. The written agreement expressly provided that the charge should contain no provision for repayment of interest. Accordingly, no interest was payable.
5. The claimant’s claim failed except for the admitted balance of £4,070.11. The defendant’s counterclaim succeeded in principle, subject to satisfactory provision for that balance. Costs were reserved for later determination if not agreed.