Property – Bankrupt – Beneficial interest – Title to properties being registered in name of bankrupt son – Defendant trustees in bankruptcy treating properties as part of bankrupt’s estate – Claimant father claiming sole beneficial ownership of properties – Whether claimant entitled to rely on deed of trust – Claim dismissed
The claimant’s son was made bankrupt in September 2011 on the petition of a building company in respect of monies due for building work at the bankrupt’s home, a substantial property in Coventry. At the date of the bankruptcy, the bankrupt was also the registered proprietor of 16 other properties, comprised in 13 registered titles, in the Coventry area. They consisted mostly of small houses let to students, but included a site with three larger properties. The claimant argued that he was the sole beneficial owner of all 16 properties which he said were held on a bare trust for him. The claimant relied on a deed of trust dated on the day when the last of the properties was acquired in 2003.
However, he asserted that all the properties had been his sole beneficial property since they were purchased by him at various times between the 1980s and 2003. On that basis the claimant submitted that the deed of trust did not create any new trust but merely regularised and evidenced the existing position.
Accordingly, the claimant argued that the properties had never formed part of the bankrupt’s estate and sought an order that they be transferred to him, an account of the trustees’ stewardship of the properties and damages or equitable compensation arising from the trustees having acted in breach of trust by, amongst other things, causing the legal title in the properties to be vested in themselves at a time when they allegedly knew they were held on trust for the claimant and failing to transfer the titles to him on request. The defendants put the claimant to proof that the deed of trust was valid and created with the genuine intent of divesting the bankrupt of the beneficial interest in the properties.
Held: The claim was dismissed.
The beneficial interest in the properties was the same as the legal interest, in the absence of evidence to show a different interest, and the onus was on the person asserting that interest to prove it by convincing evidence. Insofar as an interest was said to arise by way of a common intention trust, the whole of the circumstances had to be looked at to determine whether such an interest existed and, if relevant, the extent of it. The relevant intention might be found from express words spoken or written, or by inference from the actions of the parties, as in the case of a resulting trust found on the basis of contribution to the purchase price. But in deciding what inferences were to be drawn from conduct, the court had to look at the relevant conduct as a whole: Stack v Dowden [2007] UKHL 17; [2007] PLSCS 82; [2007] 18 EG 153 (CS) applied.
The task of the court was almost always to find the actual intention of the parties, the first point of reference being what they had said, orally or in writing, as to that intention. There was no evidence (and no pleading) however of anything specific said or written at the time of acquisition or transfer of these properties, or in their subsequent management or dealings with them, to the effect that they were to be held on trust. If there was no expression of intention, the court might make inferences from their conduct, such as payment of or towards the purchase price. The inference was however, save in exceptional cases where an intention might be imputed even though there was no evidence that it was actually held, of actual intention.
The court was entitled to be wary of direct self-serving evidence of subjective intention, albeit retrospective, that the parties actually held that intention throughout, and that all their dealings were on that premise. Such evidence could not be relied on without independent corroboration. In the present case, the court had reached the overall conclusion, as to the testimony of both parties, that they would be prepared to give any evidence, written or oral, that they thought would assist them to keep the family assets away from creditors. On the evidence, substantially all the finance for acquisition of the initial properties had been provided by the claimant. However, he had chosen to have them all transferred to, or purchased in the name of, the bankrupt. In doing so he might have intended that they would be held on trust, but that was not the only possible intention, particularly in the context of the acquisition and management of family assets and family wealth. The contemporary objective evidence showed clearly that all the properties had been treated from the time they were acquired as belonging beneficially to the bankrupt.
Apart from the deed of trust, there was no evidence to show dealing with the properties or their income other than on the basis that the bankrupt was the beneficial owner. The court rejected the contention that there had been any trust established over any of the properties by the common intention of the bankrupt and the claimant at any time. The 2003 deed of trust had been created for the purpose of showing a position to third parties that was not the actual intention of the parties to it, by way of insurance against claims against the bankrupt. It was thus neither persuasive evidence of the prior existence of any trust nor legally effective to create a trust where none existed before. It was a sham in that sense.
Joseph Curl (instructed by Dent Abrams) appeared for the claimant; Andy Creer (instructed by Wright Hassall LLP, of Coventry) appeared for the defendants.
Eileen O’Grady, barrister
