Court Rules in Favor of Claimant in Dispute Over Beneficial Ownership of Property: Key Legal Principles Explored

Citation: [2024] EWHC 167 (Ch)
Judgment on


In the case of Mustafa Erdem Baldudak v Mark Matteo ([2024] EWHC 167 (Ch)), the court was presented with a dispute regarding the beneficial ownership of a freehold commercial property. This case touched upon several significant legal principles, including resulting trust, Quistclose trust, novation, approbation and reprobation (election), and issue estoppel. The judgement provides detailed insight into how these principles are applied and interpreted in the context of property and commercial law. This article intends to dissect these key legal topics as explored in the case, linking them to the precise parts of the court’s analysis.

Key Facts

The key facts that led to the legal debate were twofold: the financial transactions made for the purchase of the property and the breakdown of the business relationship between Mr. Baldudak and Mr. Matteo. Key to the issue was whether the money transferred by Mr. Baldudak for the purchase of the property was a loan or an investment and if Mr. Baldudak was entitled to sole beneficial ownership of the property on a resulting trust basis.

Resulting Trust

The court reiterated the principle that when a person financially contributes to the purchase of a property but does not appear on the legal title, there is a presumption of a resulting trust in favour of that contributor. The presumption is that the contributor did not intend to make a gift to the legal titleholder and that the property is held on trust in proportion to their contribution (Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669).

Quistclose Trust

A Quistclose trust arises when funds are advanced for a specific purpose, and if for some reason, that purpose fails, the funds are held in trust for the lender (Barclays Bank v. Quistclose Investments Ltd [1970] AC 567). The court concluded that such a trust did not apply in this case as the Claimant’s funds were not advanced for the exclusive and specific purpose of acquiring OEM.


The Defendant instructed an accountant to treat the Claimant’s original loan to PCB as though it had been transferred to HTS and then debited against the purchase of the property from the Claimant’s director’s loan account. This effectively novated the loan, a principle which removes one contracting party and replaces it with another while maintaining the conditions of the original contract.

Approbation and Reprobation (Election)

The principle does not permit a party to take inconsistent positions. It was found that the Claimant elected to treat the entire purchase cost of the property as his contribution, which was agreed upon and relied upon in the previous proceedings, disallowing the Defendant from taking an inconsistent position in subsequent ones (Express Newspapers Plc v News (UK) Ltd [1990] 1 WLR 1320).

Issue Estoppel

This doctrine prevents a party from contesting an issue that has been previously litigated and adjudged in earlier proceedings between the same parties (Arnold v National Westminster Bank Plc [1991] AC 93). The Defendant was estopped from asserting that he contributed to the purchase price of the property as it was determined in previous proceedings that the Claimant had advanced the money as a loan, and the Defendant had agreed to deduct the entire purchase price from the Claimant’s director’s loan account.


The court found in favor of the Claimant, ruling that he is the sole owner of the commercial property on a resulting trust basis. It was determined that the Claimant’s loan to PCB was transferred to HTS and the purchase cost of the property was debited from the Claimant’s director’s loan account. Furthermore, any assertion to the contrary by the Defendant was rejected, primarily due to his election in the previous proceedings and the application of issue estoppel.


In Mustafa Erdem Baldudak v Mark Matteo, the High Court adeptly navigated a complex web of legal principles finding their application to commercial property transactions. This case underscores the court’s unwavering commitment to upholding and applying established legal frameworks such as resulting trust, Quistclose trust, novation, and doctrines that prevent inconsistent positions such as election and issue estoppel. The judgment serves as a critical reminder to parties engaged in joint ventures and property transactions of the importance of clarity of intentions and the potential implications of their agreements and positions in subsequent legal disputes.

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