Raj Kumari Passi & Ors v Roshan Lal Hansrani

In disputes over beneficial ownership within a family, legal title is only the starting point. The court must first construe any written declaration of beneficial ownership. If none is decisive, it should ascertain any common intention constructive trust from the whole evidence. A resulting trust is a last resort, based on actual contributions and the surrounding circumstances.

Written transfers which deal only with legal title do not determine beneficial ownership. A claimant asserting an interest inconsistent with the legal title bears the burden of proof. Evidence of later conduct, rent distributions, financial circumstances and family dealings may be relevant, particularly where legal title has historically been separated from beneficial ownership. An informal property manager may owe fiduciary obligations to account for rent without being a contractual agent or trustee of the money.

The claim arose from a dispute between a brother and his three sisters concerning beneficial ownership, rent, loans and family jewellery connected with eleven properties. The parties had conducted extensive intra-family property transactions without recording their arrangements in writing.

The claimants sought declarations of beneficial ownership, possession and title rectification, rental accounts, repayment of loans and an account of their mother's assets. The defendant counterclaimed beneficial ownership of several properties, repayment of loans and consequential transfers.

The central questions were the beneficial ownership of the disputed properties, the effect of written transfers and declarations, whether the defendant was liable to account for rent, and whether the parties owed one another money.

The court determined the substantive issues substantially in favour of the defendant on beneficial ownership, while granting limited declaratory and accounting relief to the claimants.

1. Equitable ownership. The presumption that equity follows the law was rebuttable on the balance of probabilities. The court applied the equitable toolkit: first construe any written declaration; then determine whether a common intention constructive trust arose; and only as a last resort consider a resulting trust based on actual contributions.
2. The 2011 transfers of 159 Nansen Road and 11 Egginton Street transferred legal title but were silent on beneficial ownership. They therefore did not determine the equitable interests. The defendant proved sole beneficial ownership by constructive trust and, alternatively, resulting trust. The claimants held the legal title on bare trust for him and were ordered to transfer it to him under Trusts of Land and Appointment of Trustees Act 1996.
3. The express beneficial declarations concerning 163 Nansen Road and 10 Sawley Street were determinative. The claimants were therefore entitled to declarations that they were the legal and beneficial owners. The defendant had no beneficial interest in those properties.
4. The express declaration that Mother and Roshan held 45 Thurlby Road as beneficial joint tenants prevented the claimant from establishing a 50% beneficial interest. Roshan therefore had the beneficial interest by survivorship.
5. For 76 Romway Road, Roshan retained a 50% beneficial interest. The court recognised alternative constructive-trust, resulting-trust and agreement analyses, and left any buy-out or sale order for consequential submissions.
6. The defendant was not a contractual managing agent and was not a trustee obliged to segregate rent. He nevertheless owed fiduciary obligations arising from his role in receiving rent for the claimants. He was required to account for rent from November 2019 onwards on properties in which the claimants had beneficial interests. Earlier claims concerning 76 Romway Road were barred or defeated by acquiescence and equitable considerations.
7. The claimant failed to prove the alleged £89,000 loan. The defendant proved unpaid loans of £40,000 owed by each of two claimants, subject to set-off against the rental account. The jewellery and cash claims substantially failed, save that the defendant agreed to share the jewellery Mother was wearing when she died.