Pankhania v Chandegra [2012] EWCA Civ 1438  Court of Appeal

In July 1987 the claimant's uncle had wished to purchase a property but was not eligible for a mortgage. The claimant, aged 19, agreed to help purchase the house on behalf of his uncle. The uncle paid the deposit and the house was conveyed to the claimant and defendant who was the uncle's sister. The remainder of the purchase price was provided by mortgage taken out by the claimant and defendant. There was an express declaration of trust to the effect that the claimant and defendant held the beneficial interest in equal shares as tenants in common. The intentions of parties were that the uncle would eventually live in the property and they would sell their shares to him. The defendant married and lived in the property and paid the mortgage but this was not intended to be a long term arrangement. However, she later changed the locks and refused entry to the claimant and refused to sell to the uncle. She claimed that it was always her intention to use the house as her matrimonial home. The uncle died in 2003 and the claimant then started making payments on the mortgage. The claimant then sought an order for the sale of the property and division of the net proceeds of sale in equal shares. The trial judge found for the defendant and refused to order sale. The claimant appealed as the judge had made no mention of the express declaration of trust.

Held:

The order for sale was granted and the division of the proceeds in equal shares was ordered.

Mummery LJ:

"In the absence of a vitiating factor, such as fraud or mistake, as a ground for setting aside the express trust or as a ground for rectification of it, the court must give legal effect to the express trust declared in the transfer. In the absence of such claims the court cannot go behind that trust. The understanding that the property was to be the defendant's matrimonial home, the fact that the claimant never actually lived there, and the fact that he had no involvement in the property other than lending his name to the purchase of the property for the purpose of obtaining a loan on mortgage from the Market Harborough Building Society in 1987 have never been coupled with any counterclaim by the defendant to set aside or to rectify the express trust."

Back to lecture outline on Express trusts or co-ownership in Land Law