Razaq v Shaheen

In a dispute between joint legal owners, the court must determine their actual intentions as to the beneficial shares at the time of the conveyance. Clear contemporaneous documents and other evidence may establish those intentions directly; a formal declaration of trust is not required.

The parties’ intentions concerning their relationship are distinct from their intentions concerning beneficial ownership. Where the latter are clearly established, the court cannot reconstruct or impute different shares by reference to the former. Alleged deceit, fraud or misrepresentation affecting entry into the transaction must be raised by an appropriately pleaded claim or counterclaim.

The claimant appealed against a decision awarding the defendant 90 per cent of the beneficial value of a property acquired in their joint names. The parties had completed documents indicating that the property was to be held in equal shares, but their relationship ended shortly after completion.

The Recorder found that the claimant’s commitment to the relationship had changed before completion and reconstructed the parties’ intentions, treating the defendant’s understanding of the relationship as relevant to the beneficial ownership. The central issue was whether the Recorder was entitled to move beyond the parties’ documented and admitted intention to hold the property equally.

1. Appeal allowed. The property was declared to be, and to have been, held by the parties in equal beneficial shares.
2. The governing enquiry was the parties’ intentions at the time of the conveyance concerning the beneficial shares in which the property was to be held. The approach in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 did not permit the court to disregard clear evidence of actual intention.
3. There was an important distinction between the parties’ intentions concerning their relationship and their intentions concerning beneficial ownership. The claimant’s lack of commitment to the relationship, and the defendant’s misunderstanding of it, did not deprive her of the intention she had expressly manifested that the property should be held equally.
4. The court may consider wider contextual matters where there is no clear evidence of actual intention. It may then infer intention from the evidence and, if necessary, impute an intention. That wider enquiry was unavailable here because the contemporaneous documents and the defendant’s evidence established a common intention to hold the property in 50/50 shares.
5. Direct evidence of intention is not confined to a trust deed, an express declaration of trust or another document satisfying section 53 of the Law of Property Act. The documents generated during the purchase, together with the defendant’s admission in evidence, constituted direct evidence.
6. If the defendant’s case was that deceit, fraud or misrepresentation induced her to enter into the conveyance, that issue required an appropriately pleaded counterclaim. It could not be used within the Part 8 declaration claim to alter the beneficial shares. On the Recorder’s findings such a claim would probably have succeeded, but no such claim had been made.

• High Court (Queen’s Bench Division): Appeal from the decision of Mr Recorder Matthews dated 10 January 2020. The appeal was allowed and the property was declared to be held in equal shares.