Huseyin Ali v Ismet Dinc
| Jurisdiction | England & Wales |
| Judge | Sarah Worthington |
| Judgment Date | 16 November 2020 |
| Neutral Citation | [2020] EWHC 3055 (Ch) |
| Date | 16 November 2020 |
| Docket Number | Claim No: BL-2018-001726 |
| Court | Chancery Division |
[2020] EWHC 3055 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Sarah Worthington QC (Hon) sitting as a Deputy High Court Judge
Claim No: BL-2018-001726
Nicholas Trompeter (instructed by Ince Gordon Dadds LLP) for the Claimant
Nigel Woodhouse (instructed by Simons Rodkin Solicitors LLP) for the First and Second Defendant
James Pearce-Smith (instructed by Eversheds Sutherland (International) LLP) for the Third Defendant
Hearing dates: 27–31 July 2020
FINAL JUDGMENT
This judgment is to be handed down by the judge remotely by circulation to the parties' representatives by email and release to Bailii. The date for hand-down is deemed to be 16 November, 2020.
Sarah Worthington QC (Hon):
Introduction
This case concerns claims to equitable proprietary interests in real property. The claims are made by Mr Huseyin Ali (“ C”), the previous registered owner of two freehold properties, against Mr Ismet Dinc (“ D1”), the current registered freeholder, and against Mr Selahi Dinc (“ D2”), a subsequently registered lessee, and against Charter Court Financial Services Limited (“ D3”), a subsequently registered chargee, both of whom derived their registered interests from D1, the currently registered freeholder. There are also subsidiary claims by C to alternative personal monetary remedies.
The two freehold properties (the “ Properties”) are 19 Trent Gardens, Southgate, N14 4QA (“ No.19”), and 67 Geldeston Road, London, E5 8SD (“ No.67”). Until the events with which this hearing is concerned, C was the sole registered proprietor of the Properties.
On 27 April 2016, the Properties were transferred by C to D1 via signed transfer forms indicating the transfers were for nil consideration. D1 then became the registered proprietor in place of C: No.67 was registered in D1's name on 6 May 2016, and No.19 on 17 June 2016. The solicitor dealing with the transfers and applications for registration was Mr Asif Choudhury (“ Mr Choudhury”), of Blakewells Solicitors Ltd (“ Blakewells”), who acted for C in this transaction.
To enable the transfers to be registered, it was necessary to redeem an existing charge over No.19 in favour of Santander UK Plc securing a debt of c.£67,500 (the “ Santander Charge”). Both C and D1 accept that D1 provided the funds for this. It may also have been necessary to redeem an existing charge over No.67 in favour of Datatyear Limited (see below). If so, it is unclear who provided the necessary funds. The issue was not said to be material to the current proceedings.
Later that year, on 6 December 2016, D1 gifted to D2 (his brother) a 999-year lease of the first floor of No.67 (the “ Lease”). Later still, on 2 March 2017, D1 granted a charge to D3 over No.19 (the “ Charge”) as security for a loan in the sum of c.£460,000 (the “ Loan”). Both the Lease and the Charge are registered. On the evidence before the court, the Loan was used exclusively for D1's and/or D2's own purposes and benefit.
No.19 was C's home, and C has continued in occupation rent-free notwithstanding the transfer to D1 and the dispute now before the court. No.67 is a rental property, split into two flats on the ground and first floors. In 2007, C granted a 999-year lease of the ground floor flat to a Mr Thompson for a premium of £295,000. C is still named as the landlord of the first floor flat, which is let to an assured shorthold tenant. C continues to receive the rent of c.£1,500pcm for himself notwithstanding the transfer to D1, the Lease to D2, and the dispute before the court. Further, C continues to pay the relevant utilities bills, insurance premiums and Council tax for the Properties.
There is a significant factual dispute over the circumstances which led to C transferring the Properties to D1.
It is C's pleaded case that the transfer of the Properties was subject to an oral agreement for sale at a price of £1.35 million (£750,000 for No.19 and £600,000 for No.67), made on 26 April 2016 (the day before the Properties were transferred to D1), and that, in addition, D1 would discharge the Santander Charge.
The Santander Charge was discharged, thus enabling the registration of No.19 in D1's name, but C has received no part of the £1.35 million.
By contrast, D1 and D2 maintain that C suggested a plan (“ the Claimant's Plan”) by which C would gift the Properties to D1, and D1 would then use the Properties to raise finance to give back to C. In particular, according to §10 of D1 and D2's Re-Amended Defence:
“(3) In about 2015/2016 the Claimant wished to raise finance to fund, amongst other things, litigation in which the Claimant was involved in Cyprus.
(4) On dates and places at which the 1 st Defendant cannot now precisely recollect, the Claimant orally requested the 1st Defendant to assist him in raising such finance but, when it became apparent that the Claimant would not be able to raise funds in his own name, the Claimant suggested a plan (‘ the Claimant's Plan”) whereby he would transfer No 19 and No 67 by way of gift into the name of the 1 st Defendant in order for the 1st Defendant to raise finance on No 19 and No 67 to give to the Claimant.
(5) It is admitted that the Claimant requested the 1 st Defendant to redeem the existing mortgage on No 19 as part of and pursuant to the Claimant's Plan.
(6) In order to induce the 1 st Defendant to assist the claimant, the claimant assured the 1 st Defendant that if anything went wrong with the Claimant's Plan the 1 st Defendant would not be adversely affected as he would own No 19 and No 67.”
D1's assertions concerning the precise nature of the Claimant's Plan changed in various significant ways in D1's subsequent witness statements and during cross-examination in these proceedings, as noted below. The most significant variation, suggested in D1's first and second witness statements, was that the funds were not to be used to finance the Cyprus litigation (which concerned C's minor interest in a failed Cyprus property development venture), but were instead to enable the takeover of the entire Cyprus property development venture, with D1 to assist in the redevelopment plans and then share in the profits.
D2 in his witness statements and in cross-examination denied any knowledge of the detail of the Claimant's Plan.
C claims that whichever version of events the court ultimately accepts, C remains entitled to the relief he seeks. His primary claim is to recover the Properties, or the £1.35 million sale price secured against the Properties, on the basis that he is entitled to various declarations and injunctions in support of equitable proprietary interests he alleges he has in the Properties. Further, or in the alternative, he claims to be entitled to various personal remedies by way of restitution or equitable compensation.
D1 and D2 deny C's version of events, and all the legal consequences that are said to follow, but advance no counterclaims.
D3 claims that even if C does have an equitable proprietary interest of any sort in No.19, it is postponed to D3's subsequent registered Charge.
Preliminary procedural issues
This was a hybrid hearing: all the parties and witnesses appeared in court other than counsel for D3 and Mr Matt McAvoy, a witness for D3, both of whom participated remotely.
D1's disclosure application and associated application to adjourn proceedings
As already noted, one element of the alleged Claimant's Plan is the existence of litigation in Cyprus to which C was party.
In C's first witness statement (“ C's WS1”), C said that he did not and had never owned land in Cyprus, and was not and had never been involved in litigation in Cyprus. D1 discovered in mid-July 2020 that these assertions were untrue. C provided a second witness statement (“ C's WS2”), correcting these assertions and endeavouring to explain his initial errors. In C's WS2 he indicated that he had a shared interest in land in Cyprus inherited from his father (not material to this hearing), and that he also had a 5/152 nd interest in some development land in Cyprus. In about 2003 he had contributed a “small minimal” sum (not particularised) to purchase vacant land in North Cyprus with his brother in law, his brother in law's business partner, and his brother in law's son (C's nephew, Ali (Tony) Ali, “ Tony”). That land was subsequently sold to a developer on the basis that these four original purchasers would have the right to acquire a villa each, and a joint interest in a fifth villa, with each original purchaser's interest secured by a 5/152 nd interest in the land. The villas have not been built. It appears the developers borrowed against the land and sold villas off plan to English tourists. It seems that litigation against the developers was commenced in 2009 (“ the 2009 Cyprus litigation”) to enforce the development arrangement, and in 2011 a Cyprus court ordered delivery of the promised villas by a certain date, and significant monthly penalty payments for late delivery. C says that the villas have not been built and none of the four original purchasers have received any money. He also says that Tony advised him that the land is now subject to so many charges in favour of interested parties that it would cost millions of pounds to retake control and do anything with the land, and so C says he and Tony decided years ago that the court order was worthless. C says he has not taken, and has no wish to take, further steps to pursue matters. C also says that he never discussed this land with D1, and can only assume that Tony, who is a good friend of D1's, did so.
Given the late discovery that C had been involved in the...
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