Property – beneficial interest – Charitable trust – High Court declaring respondent local authority sole legal and beneficial owner of site acquired by claimant on behalf of appellants – Appellants appealing – Whether respondent holding land wholly or partly on charitable trusts – Appeal dismissed
Bridge Park was an old London Transport bus depot. In about 1981, the first appellant founded the second appellant to establish a centre in the London Borough of Brent that was owned and managed by the local black community for themselves, not beholden to anyone else, which, by its very nature, would empower that community and would prevent unrest.
The appellants identified Bridge Park as a site and pursued its acquisition as a place where they could realise their vision. Because it had no financial resources of its own, the second appellant involved the respondent local authority in the project which acquired the site on 5 May 1982 for £1.8 million and legal title was transferred into its name.
The purchase price was made up by grants from other government bodies, including £700,000 from the Greater London Council (GLC) paid pursuant to a deed dated 21 June 1982. The balance of £834,500, was paid by the respondent itself.
The respondent subsequently wished to redevelop the site as a leisure and community facility. In order to do that, it wished to sell part of the site. The appellants objected to that sale on the basis that the respondent held the land on trust because it was an asset of the second appellant since the grants provided to acquire the land were monies given to the second appellant.
The High Court held that the respondent was the sole legal and beneficial owner of the land: [2020] EWHC 2526 (Ch). The appellants appealed.
The issue was whether the respondent held the land wholly or partly on charitable trusts; either because such a trust arose when it acquired the land or because of the way in which the money was raised.
Held: The appeal was dismissed.
(1) The fact that property was held for charitable purposes did not necessarily mean that it was held on charitable trusts. Where, as in this case, there was no suggestion of wrongdoing, and the arrangements alleged to give rise to the trust were contained in writing, whether they gave rise to a trust of any kind depended on the proper interpretation of those written arrangements. Whether a trust was created and what were its terms had to depend upon the construction of the undertaking. The question for the court in every case was whether the parties intended the money to be at the free disposal of the recipient.
The appellants argued that the property had been held on some form of resulting or constructive trust for the second appellant because the grant monies used to fund the purchase of the site had been granted specifically to the second appellant. Therefore, they should have been considered to be contributions by the second appellant to the purchase price of the property: Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 and Twinsectra Ltd v Yardley [2002] 2 AC 164; [2002] PLSCS 203 considered.
(2) In the present case, the argument was that not only were the monies provided by the GLC not at the respondent’s free disposal, but also that the underlying property asset was and remained similarly encumbered. It was important to distinguish between the two.
When one looked for the GLC’s intention in making the grant, the deed stated that it was desirous of contributing the sum of £700,000 to the respondent towards the expenses of providing the property for the community project. There was nothing said there about the continuing operation of the community project once the building had been provided; still less anything about the fate of the building if, for whatever reason, the community project came to an end.
The respondent acquired the land on 5 May 1982; and that fact was recited in the deed. It was not until a few days later that the GLC agreed, subject to covenant, to make any monies available; and not until 21 June 1982 that the deed was made. An agreement subject to covenant, like an agreement subject to contract, could not have imposed any legal obligation on the respondent. Nor was it possible to see how the coming into existence of the deed some six weeks after the respondent acquired the property could retrospectively have altered the basis upon which the respondent had acquired it. A trust could not have arisen before the monies were paid over. Any trust arose out of the receipt of the monies on terms, and not before.
(3) When the money was advanced, the lender acquired a right, enforceable in equity, to see that it was applied for the stated purpose, to prevent its application for any other purpose. That prevented the borrower from obtaining any beneficial interest in the money, at least while the designated purpose was still capable of being carried out. Once the purpose had been carried out, the lender had his normal remedy in debt.
In this case, the respondent applied the money it received from the GLC on the purposes for which it agreed to apply the money; namely to contribute to the provision of the building for the community project. Once the monies had been applied to the agreed purpose, the trust came to an end: Twinsectra and Challinor v Juliet Bellis & Co [2015] EWCA Civ 59; [2015] PLSCS 44 considered.
The trust property (if any) was the monies, rather than what it was spent on, where it was spent for the agreed purpose. It was neither inequitable nor unconscionable for the respondent to assert an unencumbered title to the land in circumstance where, on failure of the agreed purpose to which the monies had actually been applied, it had entered into a legal obligation to repay not merely the original sum contributed by the GLC, but an agreed percentage of the open market value of the land, if higher. In that respect, equity would follow the law. The ultimate question was whether the donor has made an out-and-out gift for charitable purposes. In the present case, the judge was correct to find that no charitable trust was created on the respondent’s acquisition of the property.
Michael Furness QC and Stephen Cottle (instructed by Hogan Lovells International LLP) appeared for the first appellant; Peter Crampin QC (instructed by Axiom DWFM Solicitors, of Edgware) appeared for the second appellant; Katharine Holland QC and Matthew Smith (instructed by Bevan Brittan LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Brent London Borough Council v Johnson
