England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR N STRAUSS QC
(Sitting as a deputy High Court Judge in Chancery Division)

		Royal Courts of Justice Strand London WC2 Thursday, 25th October 2001

1. LORD JUSTICE KENNEDY: Lord Justice Mummery will give the first judgment.
2. LORD JUSTICE MUMMERY: Ugara Singh Lohia, the appellant, appeals from the decision of Mr Nicholas Strauss QC, sitting as a Deputy High Court Judge in the Chancery Division on 6 July 2000.
3. This is a long running family dispute concerning the beneficial ownership of a residential property at 41 Aberdeen Road, London N5 ("the property"). The judge rejected the appellant's contention that at the time of the death of his father, Man Singh Lohia ("the father"), in 1971 he and his father held the property as tenants in common in equal shares, even though his father was the sole registered proprietor of it.
4. The appeal is brought with the permission of the judge.

The Facts

5. The father came to England in 1954. He and the appellant lived in Bristol until they moved to London and bought the property on 16 December 1955. It was agreed that they would buy the property together and that they would own it in equal shares. The purchase price was £1,650. Today the property is worth over £500,000. It was transferred by the seller into the joint names of the appellant and his father. £1,300 of the purchase price was left outstanding and secured by a mortgage back to the seller. The mortgage was paid off at the rate of £12 a month, the final payment being in April 1967. The mortgage was discharged in July 1967. The appellant paid the greater part of the balance of the purchase price as well as paying the expenses of the purchase.
6. The appellant lived with his father and his brothers in the property, parts of which were let out. The rent was used to help with the mortgage repayments and outgoings. If there was a shortfall the father and his sons made equal contributions to the repayments of the mortgage and the outgoings.
7. On 14 April 1965 the father was registered as the sole proprietor of the property. No copy can be found of any document by which the property was transferred to the father by the appellant. There are no letters or other documents explaining the circumstances of the transfer or shedding any light on the reason for it. No money changed hands. The case has proceeded on the basis that the transfer was a voluntary one.
8. On 20 February 1971 the father died intestate. Letters of administration were granted on 13 October 1972 to a younger son, Joginder Singh Lohia. At that time he was also living in the property with his family. He signed an assent on 17 April 1974 vesting the property in the joint names of himself and the appellant as tenants in common in equity. The assent was silent on the size of their respective beneficial interests. They were registered as joint proprietors of the property. The brothers and their families continued to live in the property until Joginder Singh Lohia and his family left in November 1977.
9. Unfortunately, relations between the appellant and his brother deteriorated. Joginder Singh Lohia claimed that he and his family had been locked out of the property, He started proceedings in 1987, claiming an occupation rent in respect of the property on the footing that it was held in trust for the appellant and himself as tenants in common in equal shares and that he had been excluded from the enjoyment of the property. Little progress was made in bringing the proceedings to trial. In 1992 Joginder Singh Lohia died. Letters of administration to his estate were granted to his widow and to Darbra Singh Lohia. On 11 August 1992 they were substituted as plaintiffs in the proceedings. They are the respondents to this appeal.
10. The appellant resisted the proceedings, claiming that he was entitled to a 75 per cent beneficial interest in the property, made up of the half share vested in him when the property was acquired jointly with his father in 1955 and half of his father's half share in the property to which he became entitled on his father's intestacy.

The Judgment

11. The issue of the extent of the appellant's beneficial interest in the property turned on the circumstances in which the father became registered as sole proprietor of the property in 1965. The appellant denied in evidence that he had ever seen, signed or authorised any transfer of his interest in the property to his father. He contended that he had continued to pay his share of the mortgage repayments until the mortgage was discharged in 1967 and that when his father died in 1971 he became entitled to half of his father's 50 per cent interest in the property.
12. The judge held that there must have been a transfer to the father in 1965 in order to enable him to become registered as sole proprietor of the property. The judge formed an unfavourable view of the appellant's reliability as a witness on the issue of the transfer. He rejected the appellant's suggestion that a transfer of his interest in the property to his father had been forged or was fraudulent. The judge held that it was more probable that a deed of transfer was made in the father's favour as part of some kind of family arrangement.
13. The judge also rejected the appellant's submission that if, contrary to his primary contention, there was a valid deed of transfer of his interest to his father in 1965, his beneficial interest in the property did not pass because a presumption of a resulting trust in the appellant's favour arose from the voluntary nature of the transfer. The judge held that the presumption of a resulting trust arising from a voluntary conveyance had been abolished by Section 63 (3) of the Law of Property Act 1925. The judge also declined to make an inference that the appellant did not intend to benefit his father in a transfer. It must have been executed to enable him to become registered as sole proprietor. On this point the judge referred again to the probability that the transfer was made as part of the family arrangement in order to benefit the father. The legal position was therefore that the father was the sole beneficial owner of the property at the time of his death. The property formed part of his estate. On his intestacy, Joginder and the appellant became entitled to it in equal shares. The beneficial interests in the property were not held in the proportions of one-quarter and three-quarters contended for by the appellant.
14. On the exclusion issue the judge found in favour of the appellant. He dismissed the claim against him for an occupation rent. Although the two brothers and their families had undoubtedly fallen out, the judge found that the appellant had not, by his conduct, driven Joginder and his family out of the property. There was no misconduct on the appellant's part which would justify the finding of exclusion. There is no cross-appeal against that part of the judgment.

The Appellant's Submissions

15. On behalf of the appellant Mr Sohante developed two grounds of appeal. The first was one of fact. He attacked the judge's conclusion that the transfer of the property into the name of the father was, or was part of, a family arrangement. The second ground was one of law turning on the effect of Section 60 (3) of the Law of Property Act 1925 on the application of the presumption of a resulting trust in the case of a voluntary conveyance. Mr Sohante accepted, however, that if he failed in his appeal on the factual ground he was bound to fail, on the facts as found by the judge, in seeking to reverse the judge's decision that there was no resulting trust in favour of the appellant.
16. Mr Sohante's main submission on the first ground was that there was simply no evidence of a family arrangement under which a deed of transfer was executed by the appellant in favour of his father. In his evidence the appellant had denied there was any family arrangement. The respondents had not called any evidence to prove that there was one. There was no evidence of what the terms were of any family arrangement. No original or copy deed of transfer or agreement had been produced. The judge's finding of a family arrangement was, in Mr Sohante's submission, mere speculation on his part unsupported by any oral or documentary evidence.
17. Alternatively, Mr Sohante submitted that the conclusion of the judge that the father was the sole beneficial owner of the property at the date of his death was against the weight of the evidence. It was improbable. It was agreed that the appellant had acquired a half share in the property on its acquisition. Why should he have given his share to his father in 1965? There was no evidence of any good reason why he should have done that. The evidence was that after 1965 the appellant had continued to receive half the tenants' rent and to pay half of the mortgage repayments and his share of outgoings. How could that be consistent with his having given his interest in the property to his father?
18. Mr Sohante contended that the judge ought to have held that the appellant and his father continued to hold the property until the father's death as tenants in common with equal shares as established on the acquisition of the property. There was no change in that position at any time.
19. I am unable to accept these criticisms of the judgment. The appellant's evidence was that, if his signature appeared on a transfer of the property to his father, then it must have been forged, though he added that he did not believe his father had forged the transfer. The judge rightly recognised that this issue was not easy to resolve in the virtual absence of any documentary evidence. The events in question had also occurred many years previously. The judge had, however, seen and heard the appellant give his evidence and seen it tested in cross-examination. The judge expressed doubt as to the appellant's credibility on the forgery issue. In the end, whilst confessing that he felt no certainty on the point, the judge concluded that on the balance of probabilities there was some kind of family arrangement which led to the transfer being made. He said of the appellant's evidence:

" ..... I must therefore ..... conclude, again on the balance of probabilities, that he was unwilling to explain the nature of the arrangements which led to the transfer."

20. In my judgment the judge was entitled to reach this conclusion, having had the advantage of seeing and hearing the appellant give his evidence. On the basis of the very limited amount of solid information, the judge had to decide on the civil standard of proof what was the more probable explanation of how and why the father came to be registered as sole proprietor. It cannot be said, in the light of his assessment of the appellant's evidence, that the judge's inference from the available material as to the probable explanation for the transfer to the father was unsupported by any evidence or was against the weight of the evidence or was an inference which no reasonable court could have made in all the circumstances.
21. The judge's finding as to a family arrangement under which the property was transferred to the father is also sufficient to rebut any presumption of resulting trust to the appellant which might arise from the voluntary nature of the transfer. In the light of Mr Sohante's concession, it is therefore unnecessary to express a final conclusion on his interesting legal argument that the presumption of a resulting trust arising on a voluntary conveyance had not been abolished by Section 60 (3) of the 1925 Act. That subsection provides:

"In a voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee."

22. In his judgment the judge summarised the rival submissions on this point. He reviewed the authorities and referred, in particular, to the considerable body of academic literature cited to him. He included in his judgment a lengthy quotation from the excellent monograph by Dr Chambers on Resulting Trusts, published in 1997, at pages 18 and 19. The judge's conclusion on this question is set out on page 16 of the transcript. The judge said:

"I agree with Mr Chambers' view that, on a plain reading of Section 60, the presumption has been abolished. It seems to me that Section 60 (1) establishes a general rule that a conveyance should be construed according to the words it uses so that [it] is possible to tell from it who holds the legal and beneficial interest in the land. Consistently with this, Section 60 (3) provides, in effect, that a voluntary conveyance means what it says; it is not necessary to use additional words to make it effective. It is likely that by 1925 the suspicion with which gifts of land were formerly viewed, which was at least one of the underlying reasons for the presumption, would no longer have been regarded as material, and the purpose of Section 60 (3) was accordingly to do away with the presumption of a resulting trust in the cases of voluntary conveyance and to make it necessary for the person seeking to establish a resulting trust to prove it. Another consideration is that Section 60 (3), unless so construed, would be something of a trap for the unwary conveyancer, since the suggestion implicit in its wording that it is no longer necessary to use the old formula would be misleading, except in cases in which the presumption of advancement applied.

As against all this, the countervailing consideration, that Section 60 (3) on this view would change the law with regard to real property alone, and therefore would lead to different conclusions in relation to real and personal property in the same situation, does not seem to me to be a factor of sufficient potency to displace the natural construction of the section.

Accordingly, I hold that a voluntary conveyance does not give rise to a presumption of a resulting trust. This view appears to be supported by the weight of academic opinion, albeit without any such detailed analysis as to be found in Mr Chambers' work."

23. The judge then referred to a whole mass of academic literature discussing this point.
24. In my judgment the question raised by Mr Sohante is so inextricably bound up in centuries of English legal history that it would be bold for this court to pronounce upon it without having heard very extensive argument, preferably in the context in which a decision on the point was crucial to the outcome of the case. The complexities appear from the succinct summary of the historical position to be found at page 171 of Cheshire and Burn Modern Law of Real Property 16th Edn:

"B Voluntary Conveyances

If a feoffment were made before the Statute of Uses to a stranger in blood without the receipt of a money consideration (i.e. a voluntary conveyance), and without declaring a use in favour of the feoffee, the rule was that the land must be held by the feoffee to the use of the feoffor. The equitable interest that thus returned by implication to the feoffor was called a resulting use. The effect of the enactment by the Statute of Uses that a cestui que use should have the legal estate was, of course, that the legal estate resulted to the feoffor. In order to prevent this it became the practice in the case of such a conveyance to declare in the habendum of the deed that the land was granted `unto and to the use of' the grantee. The repeal of the Statute of Uses by the legislation of 1925 would, in the absence of a further enactment, have restored the original rule, and it might have led practitioners to believe that the expression `to the use of' was still necessary in order to render a voluntary conveyance effective."

25. The authors go on to quote Section 60 (3) of the 1925 Act. It would certainly appear from the language and statutory context of Section 60 (3) that (1) the provision rules out any possible argument that a resulting trust should be implied merely from the absence of the words "unto and to the use of" in a conveyance which had hitherto been included in conveyances for the reasons explained in Cheshire and Burn; and (2) there is nothing in the subsection which precludes the implication of a resulting trust in the case of a voluntary conveyance by reason of circumstances other than the omission of the words "unto and to the use of" from the conveyance.
26. On the point whether the effect of the 1925 Act is to abolish the presumption of a resulting trust arising from a voluntary conveyance, I would prefer to express no concluded view, as it is unnecessary to do so for the disposition of this appeal.
27. In brief, my judgment is that this appeal fails on the crucial and unassailable finding of the judge that there had been a family arrangement under which the property had been transferred into the sole name of the father. I would dismiss this appeal.
28. SIR CHRISTOPHER SLADE: I agree with the judgment of Lord Justice Mummery and will add only a few observations of my own.
29. Before the appellant's father was registered as sole owner of the property on 14th April 1965 the Land Registry must have received a form of transfer which, on the face of it, appeared to have been executed both by the father and the appellant, who had been the former joint registered owners, in favour of the father. Even though no copy of the transfer is now available, it can be assumed with certainty that, in the absence of such a transfer, the Land Registry would not have been prepared to register the father as sole owner. This is the essential starting point in this case.
30. A note on the Land Registry's file states that the transfer was not for value. No other notes or correspondence have been found to explain it. The appellant's evidence was that he had never joined in signing the transfer, that he had not authorised it and he had no recollection of it. One possible hypothetical explanation was that his signature had been forged. But this explanation was rejected by the Deputy Judge and has not been pursued in argument by Mr Sohante on behalf of the appellant in this court. We have therefore to proceed on the assumption that, contrary to the appellant's evidence and his stated recollection, he did indeed sign a form of transfer in favour of his father in 1965.
31. In these circumstances the court can do no more than draw inferences as to the intentions of the two parties at the date when they signed the form of transfer. As at that date, they were the joint legal owners of the property, holding on trust for themselves as tenants in common in equity. It seems to me, as it seemed to the judge, that the only intention one can, on any reasonable analysis, impute to the two parties in executing the form of transfer is that, for some reason or other, they intended that thenceforth the entire legal and beneficial interest in the property should become vested in the father to the exclusion of the appellant.
32. The Deputy Judge in his careful judgment inferred that the motive which actuated them was some kind of family arrangement, the details of which must necessarily remain obscure because the appellant was unwilling to divulge them. I see no reason whatever to disagree with this inference; no other possible motive has been suggested in argument before us.
33. In disputing that the intentions of the parties were as found by the Deputy Judge, Mr Sohante prayed in aid the facts that even after the father had been registered as sole proprietor, the appellant continued to pay his share of the payments due under the mortgage on the property. But this was by no means inconsistent with the existence of some kind of family arrangement, particularly since the appellant was continuing to live in the property.
34. In the end, whatever may have been the precise motives which led the two parties in 1965 to agree that thenceforth the father should become the sole legal and beneficial owner of the property, I am satisfied that the Deputy Judge was fully justified in concluding, on the evidence, that they did so agree. In the circumstances I too would prefer to express no views on the knotty question whether the presumption of resulting trust on the voluntary conveyance of land survives the enactment of Section 60 (3) of the Law of Property Act 1925. As the Deputy Judge pointed out, his finding that a transfer of the appellant's beneficial interest to his father was intended would negative any such presumption.
35. In his clear and succinct argument, Mr Sohante has said everything that could be said in support of this appeal, but, for the reasons I have given and for the further reasons more fully stated by Lord Justice Mummery, I, too, would dismiss it.
36. LORD JUSTICE KENNEDY: For the reasons given by both my Lords, I, too, agree that the appeal must be dismissed.
Order: Appeal dismissed with costs subject to Legal Services Community assessment.