Centreprise Trust Ltd v Hackney London Borough Council

Constructive trust — Beneficial Interest — Adverse possession — Claimant occupying held property on lease — Defendant council purchasing freehold but claimant remaining in occupation — Whether defendant holding property in trust for claimant — Whether claimant owning property by adverse possession — Claim dismissed. From 1974, the claimant company took the lease of a property in Hackney from which it provided services for local people, with assistance from the defendant council. The claimant’s continued existence depended mainly on the provision of grants from a number of sources. When the claimant received a grant of £65,000, it proposed to purchase the freehold of the property for the sum of £50,000. In the event, in March 1984, the defendant purchased the property in its own name for £100,000. The claimant continued to occupy the property but no demand for payment of rent was made until June 1999, after which time the claimant paid rent until September 2001. The defendant subsequently planned to sell the property but the claimant argued that it was not entitled to do so since the property had been purchased by the defendant for the claimant mainly with its grant money. The defendant thus held the property on trust for the claimant. The rent had been paid in error. In the alternative, the claimant argued that it was the owner of the property by adverse possession. The claimant applied to the court for a declaration that it was the beneficial owner of the property, and for an order vesting the property in the claimant. The defendant contended, inter alia, that the claimant’s case could not succeed since a declaration of trust had to be in writing, by virtue of section 53(1)(b) of the Law of Property Act 1925, and there was no evidence of a written declaration in the present case. Held: Claim dismissed. It was well-established that the absence of written evidence pursuant to section 53(1)(b) did not preclude a finding of a resulting, implied or constructive trust. However, while it was clear on the evidence that, at the relevant time, the defendant had supported the claimant’s activities, there was nothing to indicate that the defendant had purchased the property for the claimant as bare trustee. Accordingly, the court was not entitled to interpret the defendant’s support as a finding that there was a constructive trust in favour of the claimant. Furthermore, the doctrine of adverse possession was not applicable to the facts of the present case. When the claimant’s lease expired, its tenancy had continued for several years and there was no evidence that the claimant was in possession other than with the consent of the defendant. In any event, the relevant period for adverse possession had not expired until March 2000 and, as rent had been demanded and paid up to the end of that period, it followed that possession of the property could not have been adverse, at least until June 1999: JA Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2002] 3 WLR 221 considered. The claimant appeared by its representative; Simon Butler (instructed by Mike Sullivan-Gould) appeared for the defendant. Eileen O’Grady, barrister