“[15.] Equity is presumed to follow the law. Accordingly, it is for C/D3/D4 to prove that the position on the beneficial ownership of the Company’s shareholding is different to that shown by its Companies House documents…… …….. [17.] A resulting trust arises if the Court accepts that D3/D4 made their respective payments to the Company (or D1) as contributions to the purchase price of the….. Centre …………….; it follows, as a rebuttable presumption, that those payments were made on the basis that they would acquire an equivalent beneficial interest in the Company The Law of Trusts, Thomas and Hudson. 2nd ed. at 26.73; White v Vandervell Trustees Ltd[1974] Ch 269 at 288 . [18.] A constructive trust can arise, retrospectively, from the date of the circumstances giving rise to it, and can arise in several different ways: a. Where there is a binding agreement in place between the parties, the Court will take the view that “equity looks upon as done that which ought to have been done”
“the arrangement or understanding on which it is based precedes the acquisition of the relevant property by one of the parties to the arrangement: it is the pre-acquisition arrangement which colours the subsequent acquisition by the defendant and leads to their being treated as a trustee if they seek to act inconsistently with it. It is unnecessary that the arrangement or understanding should be contractually enforceable. Indeed, if it is, there is unlikely to be any need to invoke the Pallant v Morgan equity, since equity can act through the remedy of specific performance and will recognise the existence of a corresponding trust. It is necessary that the pre-acquisition arrangement or understanding should contemplate that one party (the 'acquiring party') will take steps to acquire the relevant property, and that, if they do so, the other party (the 'non-acquiring party') will obtain some interest in that property. Further it is necessary that (whatever private reservations the acquiring party may have) they have not informed the non-acquiring party before the acquisition (or, more accurately, before it is too late for the parties to be restored to a position of no advantage or detriment) that they no longer intend to honour the arrangement or understanding. It is necessary that, in reliance on the arrangement or understanding the non-acquiring party should do (or omit to do) something which confers an advantage on the acquiring party in relation to the acquisition of the property or which is detrimental to the ability of the non-acquiring party to acquire the property on equal terms. It is the existence of the advantage to the one, or detriment to the other, gained or suffered as a consequence of the arrangement or understanding, which leads to the conclusion that it would be inequitable or unconscionable to allow the acquiring party to retain the property for themselves, in a manner inconsistent with the arrangement or understanding which enabled them to acquire it.”
“the arrangement or understanding on which it is based precedes the acquisition of the relevant property by one of the parties to the arrangement: it is the pre-acquisition arrangement which colours the subsequent acquisition by the defendant and leads to their being treated as a trustee if they seek to act inconsistently with it. It is unnecessary that the arrangement or understanding should be contractually enforceable. Indeed, if it is, there is unlikely to be any need to invoke the Pallant v Morgan equity, since equity can act through the remedy of specific performance and will recognise the existence of a corresponding trust. It is necessary that the pre-acquisition arrangement or understanding should contemplate that one party (the 'acquiring party') will take steps to acquire the relevant property, and that, if they do so, the other party (the 'non-acquiring party') will obtain some interest in that property. Further it is necessary that (whatever private reservations the acquiring party may have) they have not informed the non-acquiring party before the acquisition (or, more accurately, before it is too late for the parties to be restored to a position of no advantage or detriment) that they no longer intend to honour the arrangement or understanding. It is necessary that, in reliance on the arrangement or understanding the non-acquiring party should do (or omit to do) something which confers an advantage on the acquiring party in relation to the acquisition of the property or which is detrimental to the ability of the non-acquiring party to acquire the property on equal terms. It is the existence of the advantage to the one, or detriment to the other, gained or suffered as a consequence of the arrangement or understanding, which leads to the conclusion that it would be inequitable or unconscionable to allow the acquiring party to retain the property for themselves, in a manner inconsistent with the arrangement or understanding which enabled them to acquire it.”
“[24-040] ……. The basis of the [Pallant v Morgan] equity is distinct from proprietary estoppel. It does, however, share the limitation of estoppel that it cannot arise where [the claimant] knows that the agreement between himself and [the defendant] is not legally binding. Generator Developments v Lidl UK Gmbh[2018] EWCA Civ 396 The practical effect of this limitation is that it is unlikely to apply between commercial parties dealing with each other at arms’ length.”
"[19.] The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces. [20.] Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events."
“…….In the case of a contract which is based partly upon oral exchanges and conduct, a party may have a clear understanding of what was agreed without necessarily being able to remember the precise conversation or action which gave rise to that belief. As the Court of Appeal pointed out, the tribunal did not make any specific findings about what was said at the interviews or on any other occasion. But the terms of the engagement must have been discussed and these conversations must have played a part in forming the views of the parties about what their respective obligations were. The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done. But when both parties are agreed about what they understood their mutual obligations (or lack of them) to be, it is a strong thing to exclude their evidence from consideration. Evidence of subsequent conduct, which would be inadmissible to construe a purely written contract (see Whitworth Street Estates (Manchester) Ltd. v. James Miller and Partners Ltd. [1970] A.C. 583) may be relevant on similar grounds, namely that it shows what the parties thought they had agreed. It may of course also be admissible for the same purposes as it would be if the contract had been in writing, namely, to support an argument that the terms have been varied or enlarged or to found an estoppel.”
“[22.] In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“[29.] At the [Meet-Up], [D1] also told us what shares everyone held… I can’t recall the precise percentages [D1] said, but I understand them to be the same as those on the “shareholders contribution” document. Namely, that I have 59%, [D3] has 15%, [D4] has 17% and [D1] has 9%.”
“I should have paid more attention at the meeting. It was a relaxed meeting.”
“English law provides no clear and all-embracing definition of a constructive trust. Its boundaries have been left perhaps deliberately vague so as not to restrict the court in technicalities in deciding what the justice of a particular case might demand.”
“[30.] It is impossible to prescribe exhaustively the circumstances sufficient to create a constructive trust but it is possible to recognise particular factual circumstances that will do so and also to recognise other factual circumstances that will not. A particular factual situation where a constructive trust has been held to have been created arises out of joint ventures relating to property, typically land. If two or more persons agree to embark on a joint venture which involves the acquisition of an identified piece of land and a subsequent exploitation of, or dealing with, the land for the purposes of the joint venture, and one of the joint venturers, with the agreement of the others who believe him to be acting for their joint purposes, makes the acquisition in his own name but subsequently seeks to retain the land for his own benefit, the court will regard him as holding the land on trust for the joint venturers. This would be either an implied trust or a constructive trust arising from the circumstances and if, as would be likely from the facts as described, the joint venturers have not agreed and cannot agree about what is to be done with the land, the land would have to be re-sold and, after discharging the expenses of its purchase and any other necessary expenses of the abortive joint venture, the net proceeds of sale divided equally between the joint venturers. A number of cases exemplify the operation of a constructive trust in such a situation. Pallant v Morgan[1952] Ch.43 was one such case.”
“It is unnecessary that the arrangement or understanding should be contractually enforceable. Indeed, if it is, there is unlikely to be any need to invoke the Pallant v Morgan equity, since equity can act through the remedy of specific performance and will recognise the existence of a corresponding trust.”