IN THE MATTER OF SHAFQAT MOHAMMAD MAJEED (IN BANKRUPTCY)

An application by bankruptcy trustees for a declaration of beneficial ownership, possession and sale of a family home, or alternatively repayment of money advanced, fails where the evidence establishes that the advance was a loan secured informally against the borrower’s interest and was later repaid. The court must assess witness evidence in the context of the evidence as a whole. A criminal conviction or a witness’s interest in the result does not, without more, require rejection of that witness’s evidence. Where a court sitting in public is asked to exclude a witness, exclusion requires good reasons making it appropriate in the particular circumstances.

The applicants were trustees in bankruptcy seeking declarations and related relief concerning a property registered in the names of the respondents. They alleged that the bankrupt had acquired a 50% equitable interest by paying £125,000 towards the second respondent’s confiscation liability, creating a constructive trust. Alternatively, they claimed repayment of a loan.

The respondents maintained that the money was advanced as an informal loan, with the second respondent’s interest standing as security, and that the loan was repaid in Dubai in 2017. The central issues were the terms of the 2015 arrangement and whether repayment had occurred.

1. Application dismissed. The applicants failed to establish that the 2015 payment was made in return for an equitable interest in the property or that it created a constructive trust. Their alternative claim also failed because the loan had been repaid.
2. The court found that the arrangement agreed orally between Mr Majeed and Mrs Ali, acting for her husband, was an indefinite, interest-free loan of £125,000. The second respondent’s 50% interest in the property was agreed to stand informally as security. The absence of a formal charge or written agreement did not alter the factual character of the arrangement.
3. The evidence established, on the balance of probabilities, that the loan was repaid on 20 December 2017. The UAE loan agreement, its date and amount, the consistent evidence of the respondents and Mr Majeed, and the surrounding circumstances supported that conclusion. The absence of a receipt and the opacity of Mr Majeed’s financial affairs did not outweigh the evidence as a whole.
4. Once repayment was established, the constructive-trust claim could not satisfy the unconscionability threshold, and nothing remained due on the loan claim. It was therefore unnecessary to determine the detailed legal arguments concerning constructive trusts, informal mortgages or statutory formalities.
5. In assessing credibility, the court considered consistency, documentary evidence, inherent probabilities, demeanour and the surrounding circumstances. Criminal convictions and personal interest were relevant factors but did not require automatic rejection of testimony.
6. Applying Luckwell v Limata, a witness present in a public court should be excluded only where there are good reasons why exclusion is appropriate in the particular circumstances. No such reasons were established.

The court dismissed the application and reserved costs for further submissions.