Hameed v Qayyum & Anor

Where property is transferred into the joint names of domestic partners, the starting presumption is that their legal and beneficial interests coincide. That presumption may be rebutted by evidence, including a later effective declaration of trust. An oral agreement varying an existing equitable interest is generally subject to section 53 of the Law of Property Act 1925, but an agreement acted upon may give rise to a constructive trust under section 53(2). A later unacted-upon oral agreement does not produce that result. Where the parties expressly agree that secured borrowing is for one party’s account, the borrowing may be charged against that party’s beneficial share. Expenditure on improvements increases a beneficial interest under section 37 of the Matrimonial Proceedings and Property Act 1970 only where the statutory requirements are satisfied, including substantial expenditure after the relevant beneficial interests were established.

The claimant held charging orders against the interests of Mr and Mrs Qayyum in a flat. He sought an order for sale and declarations concerning their beneficial ownership. Mrs Qayyum contended that she was the sole beneficial owner, relying on a 1991 deed of trust and, alternatively, expenditure on improvements under section 37 of the Matrimonial Proceedings and Property Act 1970.

The court had to determine the parties’ beneficial interests, the effect of an oral agreement made in 2004 in connection with a Nationwide mortgage, whether a later alleged oral reversal was effective, and how the mortgage debt should be allocated between the parties.

1. The claimant succeeded. The property was held by Mr and Mrs Qayyum in equal beneficial shares, at the latest from completion of the Nationwide mortgage in September 2004.

2. On acquisition, the presumption identified in Stack v Dowden [2007] 2 AC 432 applied. The evidence did not establish that Mrs Qayyum had acquired the property beneficially alone. The refurbishment expenditure was substantially funded from jointly owned equity and did not rebut the presumption.

3. The deed executed on 12 July 1991 contained operative words declaring that Mr Qayyum held his interest on trust for Mrs Qayyum absolutely. Despite defects in its recitals, it was an effective declaration of trust and made Mrs Qayyum sole beneficial owner from that date.

4. The copy deed was admissible. The original was presumed to have been stamped, but the evidence displaced that presumption. An undertaking by solicitors to have the copy stamped and tender the fee was sufficient. The court followed the approach in Ellen Nally v John Nally [1953] Irish Reports 19, supported by London & County Banking Company v Ratcliffe (1881) 6 Appeal Cases 722.

5. The 2004 oral agreement was acted upon when Mr Qayyum entered into the Nationwide mortgage, gave a personal covenant and treated himself as owning an unencumbered half share. It therefore generated a constructive trust within section 53(2) of the Law of Property Act 1925. The alleged late-2005 reversal was not proved and, even if made, was unacted upon and ineffective under section 53.

6. The Nationwide borrowing was expressly for Mrs Qayyum’s account as between the parties. It was therefore chargeable first against her 50 per cent share. The claim under section 37 failed because substantial improvement expenditure had occurred before September 2004 and later expenditure was not substantial.