Singha v Heer

An informal document does not create an express trust merely because it uses the word trust, and a trust can arise without that word. The court must determine the true effect of the document in its factual context. A promise to transfer property if a debt is not paid ordinarily describes security, not an immediate transfer of the beneficial interest. A later letter referring to holding property on trust or to an agreement and trust may evidence an earlier arrangement, but it does not itself declare a trust where its language is conditional or refers to a pre-existing transaction. On appeal, the court must decide whether the judge was wrong while giving appropriate weight to findings based on oral evidence. The appeal was dismissed.

Mrs Singha brought proceedings concerning the beneficial ownership of a property registered in the name of her former husband. She sought declarations and orders removing Mr Heer's caution and charge so that the property could be sold pursuant to a matrimonial property adjustment order.

Mr Heer relied on alleged 2001 agreements and three later letters from Mr Singha. The trial judge rejected the agreements as forged and held that the letters evidenced, at most, an informal arrangement or security rather than an express trust. The appeal concerned whether any of the letters, individually or together, declared a trust of the entire beneficial interest.

The appeal was dismissed. The Court of Appeal upheld the trial judge’s conclusion that none of the three letters, separately or together, declared an express trust of the entire beneficial interest.

1. Appellate review. The appellate court had to decide whether the judge was wrong, not merely whether his conclusion was reasonable. It was required to give weight to findings based on oral evidence where the trial judge had been better placed to assess the witnesses. It was not bound by those findings and had to set them aside if clearly wrong. A reasonableness-only approach was insufficient on questions of law or issues not dependent on the judge’s assessment of oral evidence. The approach in Central Bank of Ecuador v Conticorp [2015] UKPC 11 was applied.
2. Evidence and factual matrix. The forged 2001 agreements probably came into existence shortly before they were disclosed in 2011, after the letters had been written. They therefore formed no part of the factual matrix for construing the letters. The court could test conclusions based on oral evidence against contemporary documents, the parties’ motives and inherent probabilities, even though fraud was not alleged in relation to the letters. This was consistent with James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 and The Ocean Frost.
3. First letter. Any trust referred to in the first letter was subject to a condition subsequent that the parties’ affairs be resolved. The 2007 deed of confirmation, which liquidated Mr Singha’s liabilities at £245,000, fulfilled that condition. The subsequent charge securing a further sum was inconsistent with Mr Heer already owning the entire beneficial interest. The judge was entitled to find that any arrangement arising from the first letter had ended by 2007.
4. Second and third letters. The word trust was not conclusive. Although no special technical expression is required to create an express trust, the court must determine the true effect of the document in context. Paul v Constance [1977] 1 WLR 527 was accepted only to that extent. The conditional promise in the second letter to transfer the property if the debt could not be paid described a charge, not an immediate trust. The third letter referred to a pre-existing agreement and trust and did not itself declare one. If a prior trust had been relied upon, it would have had to be asserted and proved, and any writing evidencing it would have had to contain all its terms, as discussed in Smith v Matthews [1861] 3 De GF & J 138.

1. Court of Appeal (Civil Division): On 16 February 2016, the court dismissed the appeal.
2. Central London County Court: On 26 November 2013, His Honour Judge Gerald held, among other things, that Mr Heer held only 50 per cent of the beneficial interest in the property.