Ahmad & Anor v Gould

An express agreement that legal owners will permit another person to buy property later at the then market price is ordinarily an agreement in principle for a future contract, not a present sale or grant of a beneficial interest. A payment into an owner’s bank account does not itself create an equitable interest without a clear common understanding that it was made to acquire such an interest. An uncommunicated reduction in the property’s purchase price likewise cannot support an inference of an agreement for a beneficial share. Where the parties’ proved agreement is inconsistent with a resulting or constructive trust, equity will not imply one.

This was an appeal by the defendant from a decision given on 6 May 2005 by Her Honour Judge Williams in the Kingston County Court. The claimants, who held the legal title to a Weybridge property, succeeded in establishing that they also held the entire beneficial interest.

The defendant, the first claimant’s brother, had contended that he was the entire beneficial owner or, alternatively, that he held an interest under a constructive or resulting trust. His case relied on a payment of £37,000 after completion and a £10,000 reduction in the purchase price which he had negotiated. The trial judge found an express arrangement under which the claimants bought the property as an investment and as the defendant’s home, while permitting him to buy it later at the then market price. The central issue was whether the payment and price reduction nevertheless created a beneficial interest.

1. Disposition. The appeal was dismissed. The claimants remained entitled to the entire beneficial interest in the property.
2. Effect of the express agreement. Lord Justice Jacob held that the agreement found by the trial judge was inconsistent with the defendant having a beneficial share. It provided that he could buy the property later at the then market price, rather than that he already owned an interest in it. Lord Justice Moore-Bick similarly characterised the arrangement as an agreement in principle to enter into a contract at a future date if and when the defendant was able to buy. It was not a present agreement to sell or a partial purchase.
3. The £37,000 payment. The defendant had not explained the purpose of the payment, and the trial judge found that the first claimant was uncertain whether it was an advance against mortgage payments or a future purchase. That ambiguity prevented any inference of a sufficiently clear agreement that the money purchased a beneficial interest. Payment into another person’s bank account cannot, without more, create an interest in land.
4. The purchase-price reduction. The claimants were unaware of the reduction and were not told how it had been obtained. Even if they might have noticed the documentary discrepancy, that could not impose a trust or beneficial interest. There was no agreement that the reduction should be credited in that form.
5. Conclusion. The trial judge’s factual findings were unimpeachable and left no room for a resulting trust, constructive trust, or other mechanism creating an interest in the property. The court noted that credit for the £37,000, and possibly the £10,000, might arise separately, but did not decide whether the law required such credit.

• Court of Appeal (Civil Division): In [2005] EWCA Civ 1829, the appeal was dismissed.
• Kingston County Court: Her Honour Judge Williams held that the claimants held the entire beneficial interest in the property and rejected the defendant’s constructive and resulting trust case.