M v M
| Jurisdiction | England & Wales |
| Judgment Date | 2013 |
| Neutral Citation | [2013] EWHC 2534 (Fam) |
| Year | 2013 |
| Date | 2013 |
| Court | Family Division |
Divorce – Financial provision – Ancillary relief – Trusts – Assets including properties held by company structures owned by husband – Wife seeking transfer of properties to her as part of financial relief – Whether husband retaining beneficial interest in properties – Whether properties held on resulting or constructive trusts for husband – Law of Property Act 1925, s 60(3) – Matrimonial and Family Proceedings Act 1984, Pt III.
Trust and trustee – Resulting trust – Constructive trust – Presumption – Parties divorcing – Assets including properties held by company structures owned by husband – Wife seeking transfer of properties to her as part of financial relief – Whether husband retaining beneficial interest in properties – Whether presumption of resulting trust applying – Law of Property Act 1925, s 60(3) – Matrimonial and Family Proceedings Act 1984, Pt III.
The parties were Russian citizens resident in the UK. There were two children of the marriage, aged 19 and 15. The marriage subsisted for 17 years until divorce was granted upon the wife’s petition in Russia. She then sought an order in this jurisdiction for financial relief under Pt III of the Matrimonial and Family Proceedings Act 1984. The assets in the case included eight UK properties that included four properties and a garage held by three companies owned by the husband. In seeking, inter alia, the transfer of all properties in this jurisdiction into her name, the wife claimed that certain of the UK properties were being held by the companies on resulting trust for the husband who therefore at all times retained the beneficial interest in the four properties and the garage. The husband argued that the presumption of a resulting trust did not apply as a result of s 60(3)a of the Law of Property Act 1925 (the 1925 Act), which provided that in a ‘voluntary conveyance a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee’. The husband failed to disclose material ordered or to take part in the proceedings. He also sought to have an affidavit and other evidence of his intentions excluded on the ground that they were evidence of matters subsequent to the agreement.
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a Section 60, so far as material, is set out at [171], below.
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Held: (1) Section 60(3) of the 1925 Act did not preclude a party from relying on evidence from which a resulting trust could be inferred and there was a myriad of such evidence in the instant case. There had been no voluntary conveyance. This was classic example of a purchaser buying a property in another’s name. Each of the relevant purchases were purchases at arm’s length from third-party vendors for valuable and full consideration; at no time were any of the properties held in the husband’s name (see [171], [173], below).
(2) Whether assets legally vested in a company were beneficially owned by its controller was a highly fact-specific issue. The court had to search for evidence of the actual intention of the transferor or evidence of actual intention. In doing so, the courts might, where appropriate, draw adverse inferences against the parties, either in respect of their failure to give or call evidence to rebut the presumption, or by their failure to make proper disclosure within the proceedings. Only in the absence of evidence of intention would the law of presumption apply, which presumption would be easily rebutted by evidence of the transferor’s intention to make an outright transfer. Where the company in whose name the property in question was held was owned by the same party that asserted that it has retained the beneficial interest by virtue of a resulting trust, there was less room for such a resulting trust to be established by a presumption in the absence of evidence of intention but: the burden remained on the transferee to rebut the presumption; and positive evidence of the source from which the purchases had been funded might establish the ordinary inference that the provider of the funds was the beneficial owner of the property absent any evidence to rebut that ordinary presumption of equity. In the case of the matrimonial home the facts were quite likely to justify the inference that the property was held on trust for a spouse who owned and controlled the company (see [170], [181], [210], below); Lavelle v Lavelle[2004] 2 FCR 418 and Prest v Petrodel Resources Ltd[2013] 3 FCR 210 applied.
(3) Relevant evidence subsequent to the transfer was admissible and the issue for the court was what weight such evidence should carry. Self-serving statements or conduct by the transferor long after the transfer might carry little or no weight. In the instant case, the evidence was matter that the husband had been ordered to file and he had declined to come into court to explain it. In view of the court’s statutory duty to consider all the circumstances of the case and come to a fair result and of the inquisitorial element in claims for financial relief, it would be absurd to exclude the evidence (see [188], [190], [191], below); Shephard v Cartwright [1954] 3 All ER 649 not applied.
(4) In the instant case, the circumstances in which the properties were bought gave rise to a presumption in favour of there being a resulting trust which failed to be rebutted. On the evidence, and drawing adverse inferences against the husband in view of his failure to discover information and to participate in the proceedings, the husband intended in transferring the
properties to companies, that he would retain the beneficial interest. Accordingly, it would be ordered, inter alia, that the UK properties would be transferred to the wife (see [174, [248], [263], below).
Cases referred toAli v Khan[2002] EWCA Civ 974, 5 ITELR 232.
Ben Hashem v Al Shayif[2008] EWHC 2380 (Fam), [2009] 1 FLR 115.
British Railways Board v Herrington [1972] 1 All ER 749, [1972] AC 877, [1972] 2 WLR 537, HL.
C v C (privilege)[2006] EWHC 336 (Fam), [2008] 1 FLR 115.
El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685, CA; rvsg [1993] 3 All ER 717.
Gissing v Gissing [1970] 2 All ER 780, [1971] AC 886, [1970] 3 WLR 255, HL.
Hildebrand v Hildebrand [1992] 1 FLR 244.
Imerman v Tchenguiz[2010] EWCA Civ 908, [2011] 1 All ER 555, [2011] Fam 116, [2011] 2 WLR 592.
J v J [1955] 2 All ER 617, sub nom J–PC v J–AF [1955] P 215, [1955] 3 WLR 72, CA; varying [1955] 2 All ER 85, [1955] P 215.
Kyriakides v Pippas [2004] EWHC 646 (Ch), [2004] 2 FCR 434.
Lavelle v Lavelle[2004] EWCA Civ 223, [2004] 2 FCR 418.
Lohia v Lohia[2001] EWCA Civ 1691, [2001] All ER (D) 375 (Oct).
Lo-Line Electric Motors Ltd, Re [1988] 2 All ER 692, [1988] Ch 477, [1988] 3 WLR 26.
Mackowik v Kansas City (1906) 94 SW 256, Missouri SC.
Nightingale Mayfair Ltd v Mehta [2000] WTLR 901.
Norwich Pharmacal Co v Customs and Excise Comrs [1973] 2 All ER 943, [1974] AC 133, [1973] 3 WLR 164, HL.
Pettitt v Pettitt [1969] 2 All ER 385, [1970] AC 777, [1969] 3 WLR 966, HL.
Prest v Petrodel Resources Ltd[2013] UKSC 34, [2013] 3 FCR 210, [2013] 4 All ER 673, [2013] 3 WLR 1.
R v IRC, ex p TC Coombs & Co [1991] 3 All ER 623, [1991] 2 AC 283, [1991] 2 WLR 682, HL.
Richardson v Richardson[2011] EWCA Civ 79, [2011] 1 FCR 301, [2011] 2 FLR 244.
Salomon v A Salomon & Co Ltd [1897] AC 22, [1885–89] All ER Rep 33, HL.
Shephard v Cartwright [1954] 3 All ER 649, [1955] AC 431, HL.
Stockholm Finance Ltd v Garden Holdings Inc [1995] NPC 162.
Tribe v Tribe[1996] 1 FCR 338, [1995] 4 All ER 236, [1996] Ch 107, [1995] 3 WLR 913, CA.
Westdeutsche Landesbank Girozentrale v Islington London BC [1996] 2 All ER 961, [1996] AC 669, [1996] 2 WLR 802, HL.
Whig v Whig[2007] EWHC 1856 (Fam), [2008] 1 FLR 453.
Wisniewski v Central Manchester Health Authority [1998] PIQR P324, CA.
ApplicationThe wife applied for an order for financial relief under Pt III of the Matrimonial and Family Proceedings Act 1984 following her divorce in Russia from her husband, the first respondent. She sought the transfer to her of real property in the UK held through company structures owned by the husband in which she claimed the husband retained the beneficial interest. Those companies were joined to the proceedings, namely Snowden Properties Ltd (the third respondent), Pankratrov Trust Ltd (the fourth respondent), Highlands Invest Ltd (the fifth respondent) and Carter Court Ltd (the sixth respondent). The third respondent was held in the name of the husband’s son from a previous marriage, Yuri Barkov, who was joined to the proceedings as the second respondent. The facts are set out in the judgment.
Nigel Dyer QC and Juliet Chapman (instructed by Mishcon de Reya) for the applicant.
Christopher Wagstaffe QC and Laura Heaton (instructed by Withers LLP) for the fourth, fifth and sixth respondents.
The first, second and third respondents did not appear.
14 August 2013. The following judgment was delivered.
ELEANOR KING J. Introduction[1] This is an application by the wife for an order for financial relief under Pt III of the Matrimonial and Family Proceedings Act 1984 following her divorce in Russia from her husband (‘H’).
[2] In addition to the husband and wife there are five other parties to the proceedings:
• Yuri Barkov (Yuri) (second respondent), the husband’s son from his first marriage.
• Snowden Properties Ltd (Snowden) (third respondent) a company held in Yuri’s name.
• Pankratrov Trust Ltd (Pankratrov) (fourth respondent) a company wholly owned by the husband.
• Highlands Invest Ltd (Highlands) (fifth respondent) and Carter Court Ltd (Carter Court) (sixth respondent) two companies wholly owned by Pankratrov.
[3] Mr Dyer QC represents the wife. Doing the best he can he puts the assets in the case (at least those assets his legal team have been able to trace in the absence of any proper disclosure by the husband), at about £107m; of that figure some £91.6m is represented by eleven commercial properties in Russia from which...
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