Constructive, resulting trusts and proprietary estoppel

14 March 2024

Daniel Greatrix, a principal associate solicitor in our property disputes team, successfully secured an order of the court for possession and that no charitable, resulting, or constructive trust, or proprietary estoppel, arose from a private acquisition of land and its development into a mosque and associated car parking.

The claimants sought an order for possession of a mosque (and for mesne profits), having been dispossessed of the property by the defendants, who were members of the community and mosque's congregation.

The claimants were sons of a deceased individual who had purchased a plot of land (including an old disused factory building) with the intention that the property should be used as a mosque, or for other Islamic religious and educational purposes. The deceased had looked for contributions from the community towards the purchase of the first plot but, not achieving that, the purchase was funded by the deceased, the claimants and their family and friends.  The plot was then developed into a mosque. Two other smaller and adjacent plots were subsequently acquired as car parking for the mosque.

The congregation of the mosque and the wider Muslim community contributed financially and by physical efforts to the renovation of the building, to the discharge of purchase debts and, in the case of the second and third plots, made substantial financial contributions to their acquisition and development. The claimants were the legal owners of the plots and their intention was that the plots would be beneficially owned by themselves and their brothers. The mosque's later accounts referred to the mosque as a charity, indicating that a charity registration number was to be applied for.

The defendants argued (amongst other things) that there was a charitable constructive or resulting trust, or proprietary estoppel arising from;

  • the first plot having been acquired with the intention of benefiting the community as a mosque; and /or
  • the loans and donations from the community towards the upkeep and development of the land and the acquisition of the second and third plots.

While the intention behind the purchase was to benefit the community, that was not itself enough to create a charitable trust where there was no intention to create one. Nor was money loaned or donated by the community to fund the purchase of the land, or for its upkeep, enough to create a trust in the absence of properly formulated representations, promises or assurances.

The court held in granting judgment for the claimants;

  • While the intention in purchasing the plot had been to benefit the community, that was not itself enough to create a charitable or any other form of trust. Benefiting the community was not part of the legal obligation which the claimants had assumed.  Intending to act, and then acting, in a way which was beneficial for the community did not result in the creation of a charitable trust, unless the property could only be used lawfully for a charitable purpose, with a legal restraint preventing the owner from treating it as his or her own. Not every benefactor was creating a charity simply by acting benevolently.
  • None of the loans advanced for the purchases were, without more, sufficient to create a charitable trust when there was no intention to create one. The acquisition of the second and third plots was undoubtedly for the benefit of the community. However, putting the plots to use for the benefit of the community was not the same as acquiring the plots for the benefit of the community under a charitable trust. Money donated to an institution was expected to be disbursed for the benefit of that institution, whatever its legal status and whoever might own it. As it happened, the mosque was privately owned. Privately owned mosques, though not common, were not unique. Individuals who donated their money unconditionally to a religious institution did so intending to part with ownership of their money and could therefore have no claim under a resulting trust nor, in the absence of a properly formulated and coherent representation, promise or assurance, under a constructive trust or an estoppel. It was well known that the claimants were the owners of the three plots and the claimants had not made representations otherwise.
  • Open market rental value was not an appropriate measure of mesne profit damages. The claimants had not lost the open market rent and the defendants had not received it as a benefit. An arbitrary figure of £500 nominal damages was ordered to be paid by the defendants.

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