Rehman & Anor v Ali & Ors

An intention to use land for the benefit of a community does not, without more, create a charitable trust. The court must identify a legally recognisable and enforceable restriction on the legal owners’ freedom to deal with the property. Community contributions may support a constructive trust of a charitable kind, but clear and convincing evidence is required where that would alter beneficial ownership. Unconditional donations to a religious institution do not ordinarily create resulting trusts, constructive trusts or estoppels. In assessing mesne profits, open-market rental value is not an appropriate measure where the defendant has obtained only control of a community facility and neither received nor deprived the claimant of that rental benefit.

The claimants, the registered owners of three plots used as a mosque, education centre and car parks, sought possession from the defendants. The defendants contended that the properties were held on charitable trusts for the Muslim community of Walsall, alternatively on private trusts or subject to proprietary estoppel. The court considered the original acquisition, later community contributions, a 2004 declaration of private trust, and the defendants’ subsequent assumption of control. The central issues were whether a charitable, resulting or constructive trust, or proprietary estoppel, had arisen, and what measure of mesne profits was appropriate.

1. Beneficial ownership and charitable trust. The claimants were entitled to possession. Although the original intention was to use the first plot as a mosque and to benefit the local Muslim community, that intention did not become a legal obligation. The claimants and their family had funded or borrowed the purchase price, and the evidence did not establish an intention to create a charitable trust.
2. A charitable trust could in principle arise through a constructive trust. Where a sufficiently large section of the community was induced to contribute financially or physically by promises that the resulting property would be held for charitable purposes, clear and convincing evidence would be required because beneficial ownership would be changed. The evidence here consisted of imprecise and ambiguous statements and did not establish the necessary promise, assurance or objectively ascertainable intention.
3. The 2004 declaration of trust, although potentially void for uncertainty as to the beneficiaries, showed that the claimants regarded the property as privately owned for the family and contradicted an intention to create a charitable trust. Later accounts referring to charity registration, community use, debt repayment and contributions could not retrospectively create a charity.
4. Contributions to the second and third plots were made for the benefit of the mosque and community, but that did not mean that the plots were acquired under charitable trusts. Unconditional donations to a mosque or religious institution ordinarily transfer ownership of the money and do not create a resulting trust, constructive trust or estoppel without a coherent representation, promise or assurance.
5. Mesne profits. The claimants were not entitled to damages measured by open-market rent. Applying the approach in Attorney General v Blake [2001] 1 AC 268, the measure had to reflect the benefit received by the defendants. The defendants had obtained control of a mosque operated for the community, not a rentable commercial benefit. The appropriate award was nominal damages of £500 jointly and severally to the date of possession, together with £6,269.82 for utility supplies.