Inglorest Investments Ltd v Campbell & Anor

Where a company claims an equitable interest in registered land acquired in an individual’s name, it must prove the asserted basis of entitlement. A resulting trust requires proof that the company’s money funded the acquisition. A contractual claim requires proof of the oral agreement and its essential terms. Later documents recording beliefs about ownership may be insufficient, especially where title remained registered in the individual’s name and the company’s accounts did not record its purchase. Part performance must point to the alleged contract; cessation of rent alone is insufficient. Constructive trust doctrine must be used cautiously where it would circumvent statutory writing requirements. A claim may be barred by laches, but where the substantive claim fails, that issue may remain undecided.

Inglorest Investments Ltd claimed the freehold reversion of 18 Queensgate Place, acquired by Stephen Dean in 1968 and registered in his name. Inglorest had previously acquired the beneficial interest in the long lease and was then in members’ voluntary liquidation.

Its primary case was that Dean orally agreed to sell the freehold to it for £9,550 and that the agreement was enforceable through part performance or equity. Alternatively, it claimed that Dean had used Inglorest’s money to buy the freehold, creating a resulting trust. The estate’s personal representatives denied those claims and relied on laches, acquiescence and delay.

The Deputy High Court Judge rejected the claims and declined to decide laches. Inglorest appealed on the ownership, contract, part-performance and constructive-trust issues. The respondents served a notice concerning laches.

1. Appeal dismissed. The Court of Appeal upheld the Deputy High Court Judge’s findings that Inglorest had acquired neither a beneficial interest under a resulting trust nor an enforceable contractual right to the freehold.
2. Inglorest’s resulting-trust case failed because the judge found that Dean paid the £6,500 purchase price himself. The accounting entries showed the price and legal costs as debited to Dean’s current account with Inglorest. The company could not maintain both that it had bought the freehold through Dean’s money and that Dean had owned it beneficially and agreed to sell it.
3. The burden of proof was on Inglorest to establish the alleged oral contract and payment of £9,550. The authority in Davis v Whitby [1974] 1 Ch 186, relied on for a presumption of regularity and legality, was far removed from the present situation. The later spreadsheets and documents showing that Dean, his advisers, the liquidator and the personal representatives treated the freehold as belonging to Inglorest did not compel the claimed inference. Registration in Dean’s name, the absence of expenditure on the freehold in the liquidator’s statements under the Companies Act 1948, and the commercial improbability of a company in liquidation purchasing the freehold from its sole shareholder supported rejection of the contract claim.
4. Section 40 of the Law of Property Act 1925 applied because there was no written memorandum. Inglorest failed to prove part performance. The evidence did not establish payment of the alleged purchase price, and stopping payment of the £50 ground rent did not evidence a contract to buy the freehold. The authority in Steadman v Steadman [1976] AC 536 was considered in addressing the issue.
5. The constructive-trust argument also failed. No common intention that the freehold should vest in Inglorest was proved, and the absence of proof that Inglorest paid the purchase price made the trust difficult to establish. The court approved the judge’s caution against using constructive trust to circumvent statutory requirements for writing or part performance.
6. Laches, acquiescence and delay were unnecessary to decide. Mummery LJ observed that, had Inglorest established an enforceable contract, he would have been slow to permit laches to deprive it of the benefit for which it had paid, given that the delay was intertwined with Dean’s handling of his own and the company’s affairs. Joyce v Joyce [1978] 1 WLR 1170 was mentioned in the argument on that issue.
7. Maurice Kay LJ and Sir Martin Nourse agreed with Mummery LJ. The order was: appeal dismissed, with Inglorest to pay the respondents’ appeal costs, subject to detailed assessment if not agreed.

• Court of Appeal (Civil Division) [2004] EWCA Civ 408: appeal from the Chancery Division dismissed. The court upheld the declaration that the freehold formed part of Stephen Dean’s estate, the dismissal of Inglorest’s counterclaim, and the cancellation of its caution.
• High Court, Chancery Division: Mr David Mackie QC, sitting as a Deputy High Court Judge, made the order on 15 July 2003. The citation of that decision was not stated in the judgment.