Huseyin Ali v Ismet Dinc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Birss,Lady Justice Whipple,Lord Justice Green |
| Judgment Date | 21 January 2022 |
| Neutral Citation | [2022] EWCA Civ 34 |
| Docket Number | Case No: A3/2020/7771 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 34
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND
WALES, BUSINESS LIST (ChD)
Sarah Worthington QC (Hon) sitting as a Deputy High Court Judge
BL-2019-001726
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Green
Lord Justice Birss
and
Lady Justice Whipple
Case No: A3/2020/7771
Nigel Woodhouse (instructed by Simons Rodkin Solicitors LLP) for the Appellants
Nicholas Trompeter QC (instructed by Ince Gordon Dadds LLP) for the Respondent
Hearing date: 15 December 2021
Approved Judgment
This is an appeal from the decision of Sarah Worthington QC (Hon) sitting as a Deputy Judge of the High Court. By her order dated 16 th November 2020 the judge declared that the first appellant Mr Ismet Dinc holds two properties on trust for the respondent Mr Huseyin Ali, and that the second appellant Mr Selahi Dinc holds a lease relating to one of the properties on trust for the respondent Mr Ali as well. The order also makes a number of consequential orders requiring transfer of the properties to Mr Ali, surrender of the lease and various financial remedies. The order was made following a trial before the judge in July 2020. The judge's judgment was given on 16 November 2020 ( [2020] EWHC 3055 (Ch)).
Permission to appeal was given by Nugee LJ at an oral hearing (having been refused on paper). He gave permission on a single ground, and that was with considerable misgivings (judgment of 26 February 2021 at paragraph 1). The single ground is the contention that the judge decided the case on the basis of an arrangement that the claimant had not pleaded and had expressly disavowed in cross-examination. Therefore the appellants submit it was not open to the judge to decide the case that way and in doing so the judge crossed the line which separates adversarial and inquisitorial systems, citing Al-Medenni v Mars UK [2005] EWCA Civ 1041. The judge's conclusion was said to be impermissible in our adversarial system.
The respondent submits to the contrary, supporting the judge's approach. The respondent contends that the proceedings before the judge cannot be characterised as inquisitorial. The judge made findings of fact based on the pleadings and the evidence given at trial, did not misunderstand the legal principles or misapply the law to the facts as she found them and therefore justice was done fairly between the parties. The respondent contends that the appeal should be dismissed.
The facts and allegations
Mr Ali is about 70 years old. He was the sole registered proprietor of two properties: 19 Trent Gardens, Southgate, N14 4QA, and 67 Geldeston Road, London, E5 8SB. No.19 was and still is Mr Ali's home. No.67 was and still is a rental property.
On 27 April 2016, Mr Ali transferred both properties to Ismet Dinc for nil consideration. Although Ismet Dinc had been described as Mr Ali's nephew, he is not. They are not related.
Ismet Dinc was registered as proprietor of No.67 on 6 May 2016 and of No.19 on 17 June 2016. As part of this transaction, Ismet Dinc provided the funds to redeem an existing charge over No.19 in favour of Santander UK plc securing the sum of c.£67,500.
In December 2016 Ismet Dinc leased the first floor at No. 67 to his brother Selahi Dinc. Selahi Dinc was then registered as the leasehold proprietor of the first floor.
On 2 March 2017 Ismet Dinc granted a charge in favour of Charter Court Financial Services Ltd and in return c.£460,000 was transferred to Ismet Dinc's bank account. None of that money was paid or provided to Mr Ali. Ismet Dinc dissipated it.
In 2018 Mr Ali commenced these proceedings. His case was that the properties had been transferred pursuant to an oral sale agreement between himself and Ismet Dinc made the day before the transfer (i.e. 26 April 2016) in a restaurant called Kervan. The agreement was that the properties were to be sold to Ismet Dinc for a price of £1.35 million (£750,000 for No. 19 and £600,000 for No. 67) and that in addition Ismet Dinc would discharge the Santander charge. Although the Santander charge had been discharged, allowing Ismet Dinc to be registered as proprietor of No. 19, no money had been paid to Mr Ali.
Ismet Dinc and Selahi Dinc were the first and second defendants below. They denied there was any such agreement. Their case was that there had been a plan whereby Mr Ali would gift the properties to Ismet Dinc and then he (Ismet Dinc) would use them to raise finance to give back to Mr Ali. This was called “the Claimant's Plan”. Part of these allegations involved assertions about the reasons why Mr Ali wished to raised funds (to fund litigation in Cyprus) and an assertion that Mr Ali had assured Ismet Dinc that if anything went wrong with the Claimant's Plan, he, Ismet Dinc, would not be adversely affected because he would be registered as proprietor of No. 19 and No. 67.
The third defendant below was Charter Court Financial Services Ltd.
The judge heard oral evidence from Mr Ali, Ismet and Selahi Dinc as well as Mr Choudhury, the solicitor who drew up the transfer documents executed on 27 th April 2016, and Ms Havva Tacel, Mr Ali's daughter. The only other witness was the mortgage underwriting manager from the third defendant. A notable witness who did not appear was Mr A.S. Mohamed who had been present on many of the occasions mentioned by both Mr Ali and Ismet Dinc.
The judge decided that none of the four key witnesses “emerged unscathed from … attacks on credibility” (judgment paragraph 80). She also noted that there were very few contemporaneous documents (judgment paragraph 81).
The passage in cross-examination relied on by the appellants is described accurately by the judge at paragraph 90 in the course of the judge's summary of Mr Ali's version of events:
“90. At end of cross-examination, C was asked by counsel for D1 and D2 whether there was any arrangement between the parties other than one for a sale at £1.35 million. C said there was not. Counsel pressed him: if he was not believed on this, then was he sure there was nothing else, no other discussions other than for a sale. C confirmed that the only arrangement with D1 was for a sale.”
After a full analysis of all the evidence, the judge rejected key aspects of each party's case. Nevertheless the judge felt able to make certain findings of fact (judgment paragraphs 190–199). They can be summarised as follows:
i) An arrangement or agreement between Mr Ali and Ismet Dinc did exist, and was not an arrangement intended by either party to be by way of gift or binding in honour only.
ii) However the arrangement, whatever it was, was not a sale agreement for a price of £1.35m, which Mr Ali asserted, nor was it the “Claimant's Plan”, which Ismet Dinc asserted.
iii) Nevertheless the arrangement was – on both parties' versions – to involve the transfer of the properties from Mr Ali to Ismet Dinc and the payment of money by Ismet Dinc to Mr Ali. That arrangement, whatever its detail, is not in writing. The judge explained that “ All this is clear from both C's and D1's own pleadings, so I accept it as not in dispute” (paragraph 191).
iv) Ismet Dinc redeemed the mortgage over No.19, paying c.£67,500.
v) Neither Mr Ali nor Ismet Dinc had presented sufficient evidence to establish the truth of their own version of the arrangement between the parties. After explaining her reasons for that conclusion the judge added:
“195. In short, while I suspect that the parties may have had some relatively clear endeavour in mind by 26 April 2016, when they discussed the issues at the Kervan restaurant, it is impossible on the evidence presented to say what that might have been.”
vi) The judge then added:
“196. Fourthly, there is, however, one aspect of the parties' arrangement that I am prepared to find proven on the evidence put before me. I find that both C and D1 had in mind as part of their arrangement that the Properties would be used to provide the security for the funds that needed to be raised by D1 to pay to C, as required by their arrangement. In reaching this conclusion, I give special credence to a party's evidence when it goes against his own interests.”
vii) In the next two paragraphs the judge gives her reasons for that conclusion, which are that it was an explicit element of Ismet Dinc's version of events and was necessarily implicit in how the properties were to be used in Mr Ali's version, in part because the judge found, contrary to Mr Ali's testimony, that he both understood and expected the properties would necessarily be used as security to facilitate delivery of what, according to Mr Ali, was the purchase price of £1.35 million (judgment paragraphs 197–198).
The judge then went on to find that it was the clear intention of Mr Ali and Ismet Dinc, understood by both, that the properties would be transferred by Mr Ali to Ismet Dinc for Ismet Dinc to use exclusively for raising funds which were to be transferred to Mr Ali. On that basis the judge held that the legal consequence of this was to find a Quistclose trust.
On finding a Quistclose trust to exist the judge decided that Mr Ali's rights took priority over the lease granted to Selahi Dinc but not over the mortgage granted to Charter Court. The orders made by the judge all follow from that conclusion.
There is no dispute that if the judge's findings were open to the court, then the conditions necessary for a Quistclose trust to exist were made out. As explained above, the appellants' argument is that in taking the course I have summarised, the judge adopted an inappropriate inquisitorial approach.
The law
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