Ahmed Khan & Ors v Muhammed Iftekhar Khan

A constructive trust may arise where it would be unconscionable for a legal owner to deny an agreed beneficial interest, even without detrimental reliance. Where detrimental reliance is relied upon, it remains relevant to the broader assessment of unconscionability. An email may satisfy the writing and signature requirements for a declaration of trust of land if it identifies the trust property, beneficiaries and trustee. Beneficial ownership may be established from the parties’ common intention and subsequent conduct. A trustee must account for trust property income and for mortgage funds raised against it.

Five siblings claimed that four London properties were held beneficially for them in two groups: three daughters in relation to one property, and three sons in relation to the other three. Legal title was held in different combinations by the defendant and one claimant. The claim relied on an express trust, constructive trusts based on unconscionability, and common intention supported by detrimental reliance. The defendant denied any trust and brought counterclaims concerning rent, title and possession. The court determined the beneficial ownership of each property, the accounting obligations, and the counterclaims.

1. 7 Essex Grove. The property was acquired, and its leasehold and freehold interests later dealt with, on the common understanding that it was held for the father during his lifetime and thereafter for the three daughters in equal shares. The defendant’s 2013 email identified the property, the beneficiaries and the trustee. It therefore manifested and proved an express trust under section 53(1)(b) of the Law of Property Act 1925. The same result followed from a constructive trust: it would be unconscionable for the defendant to take the property beneficially. The freehold claimant held it for the daughters.
2. Other properties. The defendant acquired 14 Stapleton Road, 53 Norbury Crescent and 5 Ullswater Road as part of the father’s plan to build family property interests for the three sons. It would be unconscionable for him to deny that basis. Constructive trusts therefore arose, notwithstanding that the evidence of detrimental reliance was stronger for Ahmed than for Sarwar. Ahmed’s unpaid work supported detrimental reliance; Sarwar’s work did not reach that threshold, but this did not defeat the claims based on unconscionability.
3. The court assessed the parties’ conduct, messages and documentary evidence with caution because the witnesses were generally unsatisfactory. The descriptions of a family business or enterprise were treated as shorthand, not as invoking a separate technical principle of family ownership.
4. The defendant was ordered to account for rental income, any undervalue in rent, and the use of mortgage advances raised against the properties. Ahmed was to account to the defendant for one-third of the rent from 14 Stapleton Road after December 2020. The unsupported parts of the defendant’s counterclaim were dismissed. Orders for sale were granted, with consequential matters reserved for further hearing.