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Mehra v Shah [2004] EWCA Civ 632

Constructive Trust – Common Intention – Beneficial Interest - Property – Partnership

Facts

Mr Shah and his wife had 12 children together. He ran a successful drapery business in Nairobi, which soon expanded to two shops. Some of the children helped out with the business and when they were older, they worked for the shops without receiving pay. The brothers eventually came to the UK with their families and they set up a partnership and formed a drapery business. This company was called Fine Fabrics. Later, more members of the family moved over to the UK, including Mr Shah and his wife, after selling the house and business in Nairobi. The family bought several properties for personal and commercial use.

Issues

In the appeal, the complainant’s argument was that two properties were not the assets of the partnership, but they were acquired with the common intention that the property would benefit all 12 children after Mr Shah’s death. In addition, the complainants contended that the contribution to the business by the sisters created a constructive trust for a share of the partnership assets.

Held

The judge dismissed the claims for constructive trust. The sisters were not partners in the Fine Fabrics business; thus, they cannot have a beneficial interest in the shares of the partnership assets. This included the two properties that belonged to the partnership. In addition, the judge stated that non-financial contributions that looked after the home could not amount to a beneficial interest and were not sufficient to form common intention.


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