Keshwara v Keshwala

A payment towards the purchase price of property acquired in another person’s name ordinarily raises a resulting-trust issue. Evidence may rebut that inference by showing that the payment was a loan or was not intended to confer a beneficial interest. A finding that the advance was a loan defeats resulting-trust, common-intention-trust and constructive-trust claims based on that payment. On appeal, factual findings are not reversed merely because another view is possible. Intervention requires the conclusion to fall outside the generous ambit of reasonable disagreement, or a palpable misuse of the trial judge’s advantage in seeing and hearing witnesses. Costs remain a matter of discretion, with intervention reserved for the plainest case.

The appellant, the eldest son, contributed £11,168.80 towards his parents’ purchase of a leasehold property. He claimed that the property was held for him beneficially, or alternatively on trust for sale in shares determined by the court. The respondent, his younger brother, contended that the money was a loan, and later inherited the property under their mother’s will.

The Northampton County Court found that the contribution was a loan, allowed for a £1,000 repayment, and entered judgment for the appellant for £10,168.80 while dismissing his claim to a beneficial interest. The appeal challenged that factual finding and the costs order. The central issues were whether the payment gave rise to a beneficial interest and whether the trial judge’s factual and costs decisions could be disturbed.

The appeal was unanimously dismissed. The renewed challenge to the costs order was also dismissed.

1. Trust analysis. Ward LJ considered that the development of the purchase should have been the starting point. The appellant had originally been intended to be a purchaser and was making the only cash contribution. The later change of plan did not necessarily alter the character of the payment. On the facts as then understood, the payment could give rise to a classic resulting-trust issue. The principle stated in Dyer v Dyer, (1788) 2 Cox Eq. Case 92, at 93, was that a trust of the legal estate results to the person advancing the purchase money, subject to rebuttal by evidence of contrary circumstances.
2. Loan finding. The trial judge was entitled to determine the parties’ true intention by asking whether the payment was genuinely a loan. Proof that it was a loan would defeat a resulting trust, an implied trust based on common intention, and a constructive trust founded on a promise which induced the payment. Despite concerns about inconsistencies, improbabilities and aspects of the evidence, Ward LJ could not conscientiously conclude that the judge was wrong.
3. Appellate restraint. The appellate court should not use a narrow textual analysis to establish that a trial judge misdirected himself: Piglovski v Piglovska, [1999] 1 W.L.R. 1360, 1372H. The relevant question was whether the factual conclusion exceeded the generous ambit within which reasonable disagreement was possible. It was insufficient that the appellate court might have reached a different conclusion. The disadvantage of not seeing and hearing the witnesses also had to be respected: SS Hontestroom v SS Sagaporak, [1927] A.C. 37, 47. Lords Justice Jonathan Parker and Keene agreed with Ward LJ.
4. Costs. In the addendum, the court held that costs were a matter for the trial judge’s discretion and that appellate intervention required the plainest case of excess. That threshold was not met.

Judgment was entered for the appellant against the respondent for £10,168.80, set off against the costs payable by the appellant to the respondent. The appellant was ordered to pay the respondent’s costs here and below, subject to detailed assessment if not agreed.

• Court of Appeal (Civil Division): On 17 March 2004, the court dismissed the appeal and the renewed costs challenge: [2004] EWCA Civ 295.
• Northampton County Court: On 7 May 2002, His Hon. Judge Mayor Q.C. found that the appellant’s contribution was a loan, dismissed his claim to a beneficial interest, and awarded him £10,168.80 after allowing for a £1,000 repayment.