Kanval v Kanval  EWHC 853 (Ch)
Elizabeth Fitzgerald (instructed by Dewar Hogan) appeared for the successful defendant in this High Court dispute over the beneficial ownership of a family home.
The parties were three of eight brothers. In 1999, the Claimants, Imran and Javaid Kanval, purchased a first property, ‘Osterley’. Soon after, four more brothers moved in: Urfan, Raza, Abid and the Defendant, Rizwan. With the exception of Abid, who was still at school, all the brothers began splitting the mortgage repayments and other household expenses. Osterley was sold in 2004 and, after a period of renting, the proceeds used to purchase a second property, ‘Sutherland’. This time, the title and mortgage were in the joint names of Javaid and Rizwan. The six brothers all lived in the house at various times, together with their wives and children. In 2011, legal title to Sutherland was transferred into Rizwan’s sole name.
The Claimants’ case was that it had been agreed, at the time of purchase, that Sutherland would be held for the two of them beneficially and that the position remained the same, except that Rizwan had since purchased a 4% interest from Javaid. Rizwan, on the other hand, supported by the other three brothers and their mother, argued that an entirely different agreement had been reached. Following their purchase of Osterley, he said, Javaid and Imran agreed that the working brothers would contribute to the household expenses and would enjoy a beneficial interest in the property proportionate to their contributions, and that Abid would enjoy a fixed share. The same arrangement was expressly repeated for Sutherland, save that Raza dropped out of the picture. Rizwan claimed to have subsequently bought out all the other brothers, including the Claimants, so that he was now the sole legal and beneficial owner.
The Claimants denied that they had parted with their interests in the property. Imran denied that he had agreed to sell at all and (initially) relied on the absence of writing as preventing a valid disposition of his equitable interest (s.53(1)(c) Law of Property Act 1925). Javaid claimed to have only sold Rizwan a 4% share of the property and not his full interest. Alternatively, Javaid alleged misrepresentation on the basis that Rizwan had misled him by claiming to have less money available than he in fact did.
The Judge held in favour of the Defendant and declared Rizwan to be the sole legal and beneficial owner of Sutherland. He adopted Rizwan’s account of the agreement between the brothers, which gave rise to a constructive trust under which each of the brothers had a share that fluctuated in accordance with their contributions. This was described as an ‘ambulatory’ trust of the kind referred to in Stack v Dowden  UKHL 17 by Lady Hale  and Lord Neuberger . In reaching his decision, the Judge stated that the presumption that equity follows the law was of limited significance in the “unusual circumstances” of this case, particularly in light of the fact that all parties agreed that the beneficial interest in Sutherland had not reflected the legal title at the point of purchase.
The Judge also dismissed the Claimants’ arguments as to the subsequent dispositions. He found as a fact that Imran and Javaid had agreed to sell their interests to Rizwan. There was no issue over s.53(1)(c) LPA 1925 since an agreement to sell an equitable interest for consideration gives rise to a constructive trust and engages the s.53(2) exception for “the creation or operation of resulting, implied or constructive trusts” (Neville v Wilson  3 WLR 460 at [157-158]; Singh v Anand  EWHC 3346 (Ch) at 144(j)-(l); Hasan Dalkilic v Metin Pekin  EWHC 219 (Ch) [308-309]). Javaid’s claim for misrepresentation was rejected on the basis that he had been paid the price he had asked for, based on a calculation of the value of his own interest. Therefore, although Rizwan had made false representations as to his finances, these were not material and had not caused Javaid to enter the sale since Javaid only needed to know that Rizwan could afford to pay the price asked.
The decision is available here.
Pupil, Falcon Chambers
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