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Qayyum v Hameed & Anor [2009] EWCA Civ 352

Appeal by wife against a finding that a property is owned in equal shares by her and her husband. Appeal dismissed.

The proceedings had arisen out of a remortgage of a property undertaken in the face of litigation and the imposition of a freezing order on the husband’s assets. The loan, which was to meet the litigation costs, was on a property that the husband had previously stated was held on trust for the wife. The full background to the proceedings is set out in a previous judgment Hameed v Qayyum [2008] EWHC 2274 (Ch)

In this appeal Etherton LJ found that the trial judge had been right to find that the husband and wife had entered into an agreement that created a common intention constructive trust and he rejected counsel’s argument that the husband had suffered no detriment. He also rejected the claim that the couple had entered into the agreement as a result of mistake and that precluded the creation of a constructive trust: while he agreed they had wrongly believed that the husband had to own half the property to avoid breaching the freezing order, the husband’s “innocent misrepresentation” to the wife and “their mutual mistake reflecting that misrepresentation, were not such as to preclude a constructive trust arising”. In support of his findings Etherton LJ cites Stack v Dowden reiterating that

“in deciding whether or not a common intention constructive trust exists, the court is searching for the result which the parties must be taken to have intended, and not for the result which the court itself considers fair”.

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Neutral Citation Number:  [2009] EWCA Civ 352
Case No: A3/2008/2006
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HHJ PURLE QC
HIGH COURT OF JUSTICE
CHANCERY DIVISION
HC07C03144
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27th April 2009
Before :

LORD JUSTICE PILL
LORD JUSTICE MOORE-BICK
LORD JUSTICE ETHERTON
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Between :

ASEFA QAYYUM  (Appellant)
  
AJMAL EBRAHIM HAMEED
MOHAMED ALI QAYYUM  (Respondents)

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Mr C.R. Semken (instructed by Messrs J Tehrani Solicitors) for the Appellant
The First Respondent appeared in person assisted by Claire Morgan, a solicitor, as his McKenzie Friend
The Second Respondent took no part in the Appeal

Hearing dates : 31st March 2009
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JUDGMENT
 
Lord Justice Etherton :

Introduction
1. This is an appeal by the Second Defendant, Asefa Qayyum (“Mrs Qayyum”), from an order dated 25 July 2008 of His Honour Judge Purle QC, sitting as a Judge of the Chancery Division.  The Order declared that: (1)  Flat 105 Dorset House, Gloucester Place, London, NW1 5AG (“the Property”) is owned by Mrs Qayyum and her husband, the First Defendant, Mohammad Ali Qayyum (“Mr Qayyum”), in equal shares; (2) as between Mrs Qayyum and Mr Qayyum, the liability to repay the indebtedness under a legal charge dated 27 September 2004 granted in favour of the Nationwide Building Society shall be borne by, and repaid primarily out of, the beneficial interest in the Property of Mrs Qayyum and borne only by the beneficial interest of Mr Qayyum to the extent that the value of Mrs Qayyum’s interest is insufficient to repay it.

2. Mrs Qayyum appeals on the ground that the Judge should have declared that she is the sole beneficial owner of the Property.

Factual Background
3. In 1990 Mr and Mrs Qayyum owned a property at Clarence Gate Gardens, London NW1.  Mr Qayyum was then employed by Bank of Credit and Commercial International (“BCCI”).  He was required that year to move to Abu Dhabi.  Mrs Qayyum did not wish or intend to move with him.  They decided to purchase a smaller property for Mrs Qayyum’s occupation.  In 1991 they purchased the Property for £165,000.00 with the benefit of a BCCI staff house loan of that amount.  They were registered as joint proprietors of the Property at HM Land Registry on 14 March 1991.

4. On 5 July 1991 BCCI was liquidated on a global basis, on the intervention of regulators.  By a deed dated 12 July 1991 (“the 1991 Deed”) Mr Qayyum declared that he held his interest in the Property on trust for Mrs Qayyum absolutely; and he covenanted to execute a transfer of his interest in the Property into Mrs Qayyum’s sole name, or to whom she might direct, when called upon by her to do so. 

5. On 9 May 2003 the Claimant, Ajmal Ebrahim Hameed (“Mr Hameed”), commenced proceedings in the High Court against Mr Qayyum and two other defendants for breach of contract in failing to pay a fee of US$1 million (“Mr Hameed’s Contract Proceedings”).  In August 2003 Mr Hameed obtained in those Proceedings a worldwide freezing order (“the Freezing Order”) against Mr Qayyum and one of the other defendants, Qaiser Mansoor Malik (“Mr Malik”).  It prohibited them from disposing of, dealing with or diminishing the value of any of their assets, whether or not they were in or outside England or Wales, up to the value of US$1,025,000.  The prohibition was expressed to apply, in particular, to certain specified assets, including the interest of Mr Qayyum in the Property.

6. In June 2004 Mr and Mrs Qayyum applied to the Nationwide Building Society (“Nationwide”) for a mortgage loan.  On 10 June 2004 Nationwide made them a mortgage offer of £200,000.00 subject to conditions.  The loan was intended by Mr and Mrs Qayyum to be used, in part, for Mr Qayyum’s legal costs in Mr Hameed’s Contract Proceedings and, in part, for other matters relating to the Property, including work to a bathroom, payment of service charge arrears, and refurbishment of the Property after damage was caused by a water leak.

7. Mr Qayyum was, at the time, under the impression that the Freezing Order prohibited him from making payments towards his legal costs unless the total unincumbered value of his and Mr Malik’s assets was above US $1,025,000.    In fact, the Freezing Order allowed him to pay a reasonable sum on legal advice and representation provided that, before spending any money, Mr Hameed’s legal advisors were told where the money was coming from.  Mr Qayyum communicated his misunderstanding to Mrs Qayyum.  In view of various disbursements that Mr Qayyum had previously made, and the legal costs that Mr Qayyum intended to pay in the future, Mrs Qayyum, induced by Mr Qayyum’s misrepresentation and in order to avoid Mr. Qayyum breaching the Freezing Order, orally agreed with Mr Qayyum in about July or August 2004 to restore the position under which they were equal beneficial owners of the Property (“the 2004 Agreement”). 

8. A charge on the Property in favour of Nationwide was executed by Mr and Mrs Qayyum in September 2004 (“the Nationwide Mortgage”), when the mortgage loan of £200,000.00 was advanced.  It was an interest only mortgage.  Mr and Mrs Qayyum were both covenantors.  By that time the charge securing the BCCI loan for the purchase of the Property had been discharged following release of the debt in favour of BCCI as part of the resolution of employee claims in BCCI’s liquidation.

9. On 14 April 2005, following a seven day trial, Mitting J gave judgment  against Mr Qayyum and his co-defendants in Mr Hameed’s Contract Proceedings in the net sum of US $1,105,851.00.

10. On 14 June 2005 Mr Hameed obtained an interim charging order against Mr Qayyum’s beneficial interest in the Property (“Mr Qayyum’s Charging Order”) securing the amount due to Mr Hameed under the order of Mitting J.

11. In about June 2005 committal proceedings were commenced by Mr Hameed against Mr Qayyum for breach of the Freezing Order by virtue of disposals made by Mr Qayyum and Mr Malik when they had assets worth less than US$1,025,000 within the jurisdiction (“the Committal Application”).  In affidavits sworn in defence of the Committal Application Mr Qayyum relied upon the 2004 Agreement  in support of his assertion that his assets then included half the beneficial interest in the Property.  

12. Mrs Qayyum wrote to Mr Hameed’s solicitors in July 2005 saying that she no longer relied on the 1991 Deed.  By that time, Mr and Mrs Qayyam had agreed that, as between themselves, the Nationwide Mortgage would be treated as a borrowing against her share of the Property.

13. On a date between July 2005 and January 2006 Mr  Hameed applied for Mr Qayyam’s Charging Order to be made final at a hearing on 1 February 2006.    

14. In letters to Mr Hameed’s solicitors dated 25 January 2006 and 29 January 2006 Mrs Qayyum stated that Mr Qayyum no longer owned 50 per cent of the beneficial interest in the Property.  In the letter dated 25 January 2006 she said that she intended to contest Mr Qayyum’s alleged interest in the Property on the ground of the money she had spent on home improvements and other matters.  In the letter dated 29 January 2006 she stated that she no longer agreed that Mr Qayyum had a 50 per cent beneficial interest in the Property since her agreement that he should have such an interest was based on a mistaken belief induced by his representation that the Freezing Order required him to have such an interest in order to be able to withdraw money for payment of his legal expenses.

15. On 1 February 2006 Mr Qayyum’s Charging Order was made final in the sum of US $1,115,396.00 owing under Mitting J’s order of 14 April 2005 together with any further interest becoming due, and £210 in respect of costs.

16. On 31 October 2006 a bankruptcy order was made against Mr Qayyum on his own petition.  The official receiver took the view that Mr Qayyum was entitled to a 50 per cent beneficial interest in the Property, but that interest was security for Mr Qayyum’s Charging Order and had no realisable value for creditors.  On 31 October 2007 Mr Qayyum was discharged from bankruptcy.

17. On 23 August 2007 a final Charging Order in favour of Mr Hameed was made against the interest of Mrs Qayyum in the Property (“Mrs Qayyum’s Charging Order”), securing the sum of £19,926.92.

The proceedings
18. On 16 November 2007 Mr Hameed commenced these CPR Part 8 proceedings pursuant to section 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale of the Property pursuant to Mr Qayyum’s Charging Order and Mrs Qayyum’s Charging Order, and for a declaration as to Mr and Mrs Qayyum’s respective beneficial interests in the Property, subject to those Charging Orders.  

19. At the trial before Judge Purle, Mr Hameed contended that the Property was acquired by Mr and Mrs Qayyum jointly beneficially, and that the 1991 Deed, of which only a copy could be found by Mrs Qayyum, was not genuine, and was not, in any event, admissible because the copy had not been stamped and it could not be presumed the original had been stamped.  He further contended that, if the 1991 Deed was valid and effective, Mr and Mrs Qayyum are nonetheless equal beneficial owners of the Property by virtue of the 2004 Agreement. 

20. Mrs Qayyum contended that the 1991 Deed was valid and effective according to its terms, and the copy of it was admissible against an undertaking of her solicitors to have it stamped.  She further contended that the 2004 Agreement was of no legal effect since it failed to comply with the requirement of the Law of Property Act 1925 (“LPA”) s. 53(1) that a disposition of an interest in land or of an equitable interest must be in writing.  She submitted that, even if the 2004 Agreement was valid and effective, it was revoked by a further agreement between herself and Mr Qayyum in late summer 2005 by which it was agreed that she would become the sole beneficial owner of the Property once again.  She further claimed that, as a result of substantial improvements carried out by her to the Property, she had, in any event, more than 50 per cent of the beneficial interest in the Property by virtue of s.37 of the Matrimonial Proceedings and Property Act 1970 (“MPPA”).  She asked the court to make a declaration that she was the sole beneficial owner. 

21. In relation to LPA s. 53(1), Mr Hameed countered that its provisions had no application to the 2004 Agreement because that Agreement did not take effect as a partial disposition of Mrs Qayyam’s beneficial interest, but as a disclaimer or, alternatively, as a constructive trust, which, together with resulting and implied trusts, is excluded by s. 53(2) from the operation of s. 53(1).   

22. At the date of the trial, the sum secured by Mr Qayyum’s Charging Order was approximately £260,000.00, the amount secured by Mrs Qayyum’s Charging Order was approximately £20,000, the amount due under the Nationwide Mortgage was slightly in excess of £200,000.00, and the value of the Property was between approximately £450,000.00 and £500,000.00.

23. Mr Qayyum has given no evidence in the Proceedings, and neither he nor his trustee in bankruptcy played any part in the trial.

24. Following the trial, at which both Mr Hameed and Mrs Qayyum were represented by counsel and solicitors, Judge Purle held in a lucid judgment that:   Mr and Mrs Qayyum purchased the Property as joint beneficial owners; the 1991 Deed was genuine, and the copy of it was admissible against the undertaking of Mrs. Qayyum’s solicitors to have it stamped; the effect of the 1991 Deed was to make Mrs Qayyum the sole beneficial owner of the Property; the 2004 Agreement did not operate as a disclaimer; however, when the 2004 Agreement was acted upon by Mr Qayyum entering into the Nationwide Mortgage, thereby charging his share and giving his own personal covenant, it gave rise to a constructive trust under which Mr. and Mrs Qayyum were equal beneficial owners of the Property;  that constructive trust arose despite Mr Qayyum’s misrepresentation about the effect of the Freezing Order;  the constructive trust was excluded by LPA s. 53(2) from the writing requirements of s.53(1);  there was no subsequent agreement reverting to the position under the 1991 Deed; but, had there been, it would not have satisfied the requirements for a constructive trust because it had not been acted on, and it would therefore have been ineffective since it would not have satisfied the writing requirements of LPA s. 53(1); the expenditure on improvements to the Property relied upon by Mrs Qayyum under MPPA s. 37 was not substantial and therefore her claim under s. 37 failed.

25. For all those reasons, Judge Purle made the order, which I have mentioned at the outset of this judgment, declaring that the Property is held by Mr and Mrs Qayyum in equal shares, and that, as between them, the Nationwide Mortgage is to be borne primarily by Mrs Qayyum’s beneficial half share. 

The Appeal
26. Judge Purle gave permission to appeal limited to the issue whether a constructive trust between Mr and Mrs Qayyum arose in 2004 so as to change the beneficial ownership of the Property declared by the 1991 Deed.  The original grounds of appeal were that the Judge should have held that Mr and Mrs Qayyum held the Property at all times after the execution of the 191 Deed on trust for Mrs Qayyum alone, because: (1) as a matter of law the court would not give effect to the 2004 Agreement since it was procured by Mr Qayyum’s misrepresentation; (2) further or alternatively, there was no evidence that Mr Qayyum acted to his detriment in reliance on the 2004 Agreement since the application for the Nationwide Mortgage was executed by Mr and Mrs Qayyum in June 2004, before the 2004 Agreement was made; (3) further or alternatively, there was no detriment to Mr Qayyum in entering into the Nationwide Mortgage, or alternatively the detriment was negligible and not such as should entitle Mr Qayyum to enforcement of the 2004 Agreement by way of a constructive trust.

27. At the hearing of the appeal, Mr Christopher Semken, counsel for Mrs Qayyum, applied for permission to appeal on the additional ground that, if a constructive trust arose pursuant to the 2004 Agreement, the Judge ought to have held that there was a subsequent oral agreement in late 2005 whereby the beneficial interest in the Property was again held on constructive trust for Mrs Qayyum alone.

28. A Respondent’s Notice was served by Mr Hameed claiming that Judge Purle’s order should be upheld on the following additional grounds.  First, the Judge was wrong not to hold that the 2004 Agreement amounted to a disclaimer of the benefit of the 1991 Deed and a release of Mr Qayyum’s trusteeship and, accordingly, fell outside LPA s. 53(1).  Second, the Judge ought to have held that it was not inequitable to find that there was a constructive trust in 2004 in view of the fact that Mr Qayyum’s mistake as to the effect of the Freezing Order was based on his genuine belief, and that there was no satisfactory evidence that the 2004 Agreement was agreed because, or largely because, of that mistaken belief, and that Mr and Mrs Qayyum affirmed the 1991 Deed had been, and remained, cancelled after their discovery of the mistake.  Third, for the same reasons as support the existence of a constructive trust in 2004, Mr Qayyum is entitled to a half share of the Property under the doctrine of proprietary estoppel.   

29. Mr Hameed, who is not a lawyer, represented himself on the appeal, with the assistance of a McKenzie Friend. 

The Judge’s finding of a constructive trust in 2004
30. Mr Semken’s starting point was that the court will not find a common intention constructive trust or proprietary estoppel unless, among other things, two requirements are satisfied.  The claimant must have relied to his or her substantial detriment on the agreement or arrangement between the parties, and the defendant’s conduct must have been such as to make it unconscionable in all the circumstances to deny the claimant a property interest conforming to the agreement or arrangement.  In support of those propositions Mr Semken referred to various passages in Yeoman’s Row Management Ltd v Cobbe  [2006] EWCA Civ 1139 and Gillett v Holt [2001] Ch 210.

Detriment
31. Judge Purle held that Mr Qayyum acted upon the 2004 Agreement by entering into the Nationwide Mortgage, thereby charging his share in the Property and giving his personal covenant.  Mrs Qayyum’s case is that, on the contrary, the Nationwide Mortgage and the 2004 Agreement were unrelated since Mr and Mrs Qayyum applied to Nationwide for a mortgage, and Nationwide made its mortgage offer in June 2004, well before Mr and Mrs Qayyum made the 2004 Agreement. Mr Semken submitted that, accordingly, Mr Qayyum incurred no relevant detriment in the present case.  

32. The short answer to that submission is that there was no obligation on Mr Qayyum to enter into the Nationwide Mortgage prior to its execution in September 2004.  The Judge was entitled to conclude that, by that date, there was an agreement between Mr and Mrs Qayyum which included, not only the taking up of the Nationwide Mortgage offer, but also the transfer to Mr Qayyum of half the beneficial interest in the Property, as well as the loan of money by Mrs Qayyum to Mr Qayyum to meet his legal and other expenses.  Mr Qayyum believed that he required the transfer and the loan or loans in order to avoid being in breach of the Freezing Order.  Mrs Qayyum, for her part, was aware of that and wished to help him, and she also wished to raise money by means of the Nationwide Mortgage for her own purposes, including paying arrears of service charges and carrying out repairs to the Property.  The Judge was entitled to conclude that Mr Qayyum entered into the Nationwide Mortgage pursuant to, and in reliance on, that composite agreement.   

33. Mr Semken further submitted that, by entering into the Nationwide Mortgage, Mr Qayyum did not suffer any actual detriment or, at any event, any sufficiently substantial detriment to satisfy the requirements for a constructive trust or proprietary estoppel.  Mr Semken emphasised that it was agreed between Mr and Mrs Qayyum that the entire liability for servicing and repaying the Nationwide Mortgage fell on Mrs Qayyum and her interest in the Property, and, furthermore, the Mortgage loan did not exceed half the value of the Property at that time.  Accordingly, Mr Semken submitted, the actual risk to Mr Qayyum arising from his personal covenant under the Nationwide Mortgage was non-existent or negligible.

34. Again, the answer to that submission is, in my judgment, a short one.  Mr Semken accepted that the matter must be judged as at September 2004.  By entering into the Nationwide Mortgage, and giving his personal covenant, Mr Qayyum was making himself personally liable to the Nationwide for all the obligations and liabilities under the Nationwide Mortgage during its entire duration.  Whether or not Mrs Qayyum would be able to meet all those obligations and what would happen to property prices during that entire period could not be predicted with certainty.  It seems to me clear that, by accepting that potentially significant liability, pursuant to an agreement under which he was to be transferred half the beneficial interest in the Property, Mr Qayyum was accepting a substantial detriment such that, subject to the issue of mistake and misrepresentation, it would have been unconscionable to leave him saddled with that liability but without the benefit of the promised property interest.

Misrepresentation and mistake
35. It is not in dispute that both Mr and Mrs Qayyum made the 2004 Agreement under a mistake that it was necessary or desirable for Mr Qayyum to own half of the Property in order to avoid breaching the Freezing Order, and that Mrs Qayyum made the 2004 Agreement as a result of a misrepresentation of Mr Qayyum to that effect.  Mrs Qayyum would not have made the 2004 Agreement in the absence of that misrepresentation.  It is also not in dispute that Mr Qayyum’s misrepresentation was innocent, and he honestly and genuinely believed what he represented to Mrs Qayyum.

36. Judge Purle said the following on this aspect of the case:

“71. It is said by Mr Semken that it is inequitable for Mr Qayyum, or anyone claiming through him, to rely upon the 2004 Agreement because it was procured by a false statement made by Mr Qayyum to Mrs Qayyum, namely, as to the effect of the freezing order.  I doubt very much whether Mr Qayyum could ever have said anything other than what he believed the effect of the freezing order to be, because he was not a lawyer.  It is readily accepted by Mrs Qayyum that Mr Qayyum was in fact acting under a misapprehension and did genuinely believe that the effect of the freezing order was as he stated it to be, as did she.  It seems to me, in those circumstances, that it is not inequitable for anyone claiming through Mr Qayyum to rely upon the 2004 Agreement; the more so as it has been acted upon and there is no proposal to unscramble it.  Mr Qayyum gave a personal covenant which continues to bind his bankrupt estate and borrowed money from his wife which he expended on legal costs.”

37. Mr Semken has been unable to discover any authority on whether an agreement or arrangement can give rise to a common intention constructive trust notwithstanding that it was induced by an innocent misrepresentation. For the purpose of analysis, I shall assume in Mrs Qayyum’s favour (without deciding the point) that Mr Qayyum’s representation was the type of expression of opinion which could amount to an actionable misrepresentation:  see the discussion in Chitty on Contracts (30th ed) Vol 1 paras 6.12 – 6.13.  Mr Semken accepted nevertheless that, if the 2004 Agreement had been a concluded and binding contract at law, it could not have been rescinded in equity immediately after the Nationwide Mortgage had been executed on the ground of innocent misrepresentation.  That relief would have been precluded by the inability to restore the parties substantially to their former positions, in view of Mr Qayyum’s liability under the Nationwide Mortgage.  Nor could the agreement have been set aside in equity on the ground of mutual mistake:  Great Peace Shipping Ltd v Tsavliris Salvage Ltd [2003] QB 679.  Similarly, if an express trust had been created in 2004 of a half share of the beneficial interest in the Property for Mr. Qayyum, the trust could not have been set aside for mistake.

38. Although Mr Semken accepted that not every innocent misrepresentation will preclude the existence of a common intention constructive trust, he submitted that a different and more flexible approach is appropriate in cases where the court is being asked to recognise a right that, but for the court’s recognition, would not exist, in contrast to cases where equity is invoked to set aside a concluded and otherwise enforceable transaction.  He referred in support, by way of analogy, to cases in which the court has refused relief for specific performance in view of the claimant’s innocent misrepresentation or the defendant’s mistake, even if that mistake was unilateral and not induced by the claimant’s misrepresentation,:  Walker v Boyle [1982] 1 WLR 495, Holliday v Lockwood [1917] 2 Ch 47; Stewart v Kennedy (1890) 15 App Cas 75, 102,105.

39. Mr Semken submitted that the correct approach in cases like the present is for the court to evaluate, as at the date on which the constructive trust (if any) would have arisen, the inequity or unconscionability of, on the one hand, upholding the arrangement or agreement by declaring a constructive trust notwithstanding the misrepresentation, and, on the other hand, refusing to recognise a constructive trust in circumstances where the misrepresentor would have been left with a substantial detriment arising from the arrangement or agreement but without the agreed benefits.

40. Mr Semken forcefully submitted that, in the light of Mr. Qayyum’s misrepresentation, far from it being unconscionable to fail to recognise a constructive trust as a result of the 2004 Agreement, it would be inequitable to declare that such a trust arose.  He emphasised the following points.  Mrs Qayyum would not have made the 2004 Agreement but for the misrepresentation.  Giving effect to the 2004 Agreement by way of a constructive trust would benefit Mr Qayyum disproportionately at Mrs Qayyum’s expense.  It would confer on Mr Qayyum half the beneficial interest in the Property while leaving Mrs Qayyum and her half share to bear, as between the two of them, all liability for the Nationwide Mortgage, even though that Mortgage was substantially for Mr Quayyum’s benefit.  It was intended to benefit him by providing the money which Mrs Qayyum was to lend him, and did lend him, for payment of his legal fees and other expenses.  Mr Semken urged again that Mr Qayyum’s realistic personal risk under the Nationwide Mortgage was illusory or negligible.

41. Those are powerful points, and were well articulated, but I am satisfied that the Judge was entitled, and correct, to come to his conclusion that a constructive trust arose notwithstanding Mr Qayyum’s innocent misrepresentation.  Mr Semken proceeded on the conventional basis that the common intention constructive trust is an institutional trust, which creates property rights.  On that footing, the trust will have come into existence before commencement of the proceedings, and the court declares its existence, not (like specific performance) as a matter of discretion in the light of all the circumstances up to the date of the trial, but as a subsisting property right.  This may be said to follow from the approach of Baroness Hale in Stack v Dowden [2007] UKHL 17 at para [61], with whom the majority of the Judicial Committee agreed, that, in deciding whether or not a common intention constructive trust exists, the court is searching for the result which the parties must be taken to have intended, and not for the result which the court itself considers fair.  While it is unwise to be too prescriptive in view of the fact that only one of the parties is legally represented on this appeal, those considerations point to the need for a principled approach, giving some certainty, in a case where the issue is whether an innocent misrepresentation precludes the existence of a common intention constructive trust.  That would be provided by the Court considering, at least as a strong starting point, the approach of equity if there had been a claim for rescission of the agreement, allegedly giving rise to the constructive trust, immediately after the date on which the trust is said to have arisen.  It would be an unusual, rather than a usual case, in which rescission for innocent misrepresentation would have been refused in respect of a concluded and binding agreement, but the same misrepresentation is held to have prevented the creation of a common intention constructive trust.

42. As I have said, it is conceded in the present case that rescission would have been refused due to the inability to restore Mr Qayyum to the position he was in before he executed the Nationwide Mortgage.  I do not consider that the facts as a whole warrant a different outcome when considering whether a constructive trust ever came into existence.  I have already rejected Mr. Semken’s submission that the detriment to Mr Qayyum arising from execution of the Nationwide Mortgage was illusory or negligible.  Further, as I have already observed, the Nationwide Mortgage was not solely for Mr Qayyum’s benefit.  Mrs Qayyum wished to use part of the mortgage loan for other purposes, including payment of service charge arrears and repairs to the Property.  Mr Semken countered that Mrs Qayyum could have achieved the objective of raising money by way of mortgage without the assistance or involvement of Mr Qayyum since, as the sole beneficial owner of the Property under the 1991 Deed, she could have insisted on the transfer of the registered title into her sole name and then raised a mortgage loan as the sole legal and beneficial owner.  We were not taken, however, to any evidence which explored that as a realistic possibility within any particular time scale.  Further, the nature of the misrepresentation and of the mistake of the parties is to be borne in mind.  Mr Qayyam represented to Mrs Qayyum his honest opinion of the legal effect of the Freezing Order.  It is not suggested that his belief was unreasonable or carelessly formed. 

43. Taking all those factors into account, I agree with the Judge that Mr Qayyum’s innocent misrepresentation to Mrs Qayyum which induced her to enter into the 2004 Agreement, and their mutual mistake reflecting that misrepresentation, were not such as to preclude a constructive trust arising in 2004 giving effect to the 2004 Agreement.

New Ground of Appeal
44. As I have said, Mr Semken applied, on behalf of Mrs Qayyum, to amend the Appellant’s Notice of Appeal to include a new ground of appeal that the Judge ought to have held that a constructive trust arose in late 2005, under which the beneficial interest in the Property was held for Mrs Qayyum alone.

45. Mr Semken explained that, although he had advised that an application for permission to appeal on that further ground could be included in the original Appellant’s Notice, it had been omitted due to an oversight or misunderstanding, and its omission was only noticed in the week prior to the hearing of the appeal.

46. The Judge held, as a matter of fact, on the balance of probabilities, that there was no agreement in late 2005 for a reversal of the 2004 Agreement so that Mrs Qayyum became again the sole beneficial owner of the Property.  Mrs Qayyum contends that there was no evidence on which the Judge could properly have come to that conclusion.  Mr Semken submitted that Mrs Qayyum’s evidence in her witness statements that she and Mr Qayyum agreed in late summer 2005 to revoke the position under the 2004 arrangements was not shaken in cross-examination, and there was no other material evidence.

47. Quite apart from the question of delay, and whether or not it would be appropriate under CPR 3.9 to give relief from the time limit for applications for permission to appeal, I would refuse the application on the ground that it has no real prospect of success. 

48. In her first witness statement Mrs Qayyum said that she “revoked” her previous release of Mr Qayyum from the position under the 1991 Deed, and that her husband “orally accepted this”.  That is said to have taken place in or after January 2006.  She corrected that date in her second witness statement in which she said that the 1991 Deed “was restored” in late summer 2005.  I have earlier referred to the letters dated 25 January 2006 and 29 January 2006 from Mrs Qayyum to Mr Hameed’s solicitors, which were written after Mr Hameed applied to make final Mr Qayyum’s Charging Order.  She said in them that Mr Qayyum no longer owned 50 per cent of the beneficial interest in the Property, and gave various reasons why that was so, including the money she had spent on making improvements to the Property.  As the Judge observed, however, she said nothing in them about having reached an agreement with Mr Qayyum in the second half of 2005 to restore the position under the 1991 Deed.  In the light of those inconsistencies, the Judge was undoubtedly entitled to reject her evidence that there had been any such agreement.

The Respondent’s Notice
49. In view of my findings on the grounds of appeal relied upon by Mrs Qayyum, it is not necessary to decide the matters raised in the Respondent's Notice.  In the absence of any legal representation of Mr Hameed on the hearing of the appeal, I do not consider it appropriate to do so.

Conclusion
50. For the reasons I have given, I would dismiss this appeal.

Lord Justice Moore-Bick
51. I agree.

Lord Justice Pill
52. I also agree.