Sharifa Begum Malik, deceased (by her Estate's court appointed representative, Iqbal Malik) v Abdul Waheed Shiekh
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 27 April 2018 |
| Neutral Citation | [2018] EWHC 973 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2017-000103 |
| Date | 27 April 2018 |
Neutral Citation Number: [2018] EWHC 973 (Ch)
Mr Justice Fancourt
Case No: CH-2017-000103
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lesley Anderson QC & Lina Mattsson (instructed by Jaffe Porter Crossick LLP) for the Appellant
Mark Warwick QC & James Sandham (instructed by Talat Naveed Solicitors) for the Respondents
Hearing date: 12, 13 April 2018
Introduction to the appeal
On 29 January 2013, Mrs Sharifa Begum Malik signed two Land Registry Forms TR1, by which she transferred for no consideration properties of which she was at the time the sole registered proprietor, 9 and 35 King Street, Southall, Middlesex (“the Properties”). She transferred them into the names of herself and the Respondent, Mr Abdul Waheed Sheikh, to hold on trust for themselves as tenants in common in equal shares.
On 8 February 2013, those TR1s and a Land Registry Form DS1 signed by Mr Sheikh releasing a charge over 18 Cranborne Avenue, Southall, Middlesex were dated and delivered. Mr Sheikh thereby gave up a second charge over 18 Cranborne Avenue and obtained, on the face of it, a half share of the Properties.
Prior to the delivery of the TR1s and the DS1, on 7 February 2013, Mr Sheikh had concluded a commercial agreement with Mrs Malik's two sons (“the February 2013 Agreement”), who were referred to in the trial in the lower court as “the Maliks”. They played no part in that trial, as parties or as witnesses.
Under the February 2013 Agreement, Mr Sheikh gave the Maliks an interest-free loan of £200,000 and agreed to an extended credit facility for the benefit of the Maliks' company, Haji Ismail and Sons Ltd (“HIS”), for trade with Mr Sheikh's own company in Pakistan, Bismillah Fabrics (PVT) Ltd. Mrs Malik was not a party to the February 2013 Agreement nor was it found that she knew of its terms or had a copy of it.
18 Cranborne Avenue was Mrs Malik's and her sons' and their families' home: a large, 8-bedroomed house. It was jointly owned by Mrs Malik and the Maliks. I will refer to it as “the Home”.
Owing to the prior interest of a chargee, there was a problem with registering the TR1s. On 21 June 2013, Mr Sheikh therefore applied to the Land Registry to register a restriction against the titles of the Properties, to protect his beneficial interest. Mrs Malik's grandson objected on her behalf to entry of the restrictions, essentially on the ground that Mrs Malik had not been advised about transferring ownership of the Properties.
The dispute was referred by the Land Registry to the Property Chamber of the First-tier Tribunal (“F-tT”) for resolution. Statements of case were exchanged there. However, in June 2014, when the matter was to be tried, the case was transferred by the F-tT to the Central London County Court because by then Mrs Malik had been diagnosed with dementia and lacked capacity to act in the proceedings.
The county court gave the proceedings a new case reference and proceeded to appoint, first, Mrs Malik's daughter, Razia Mailk, and then, when Razia Malik later became seriously ill, Mrs Malik's grandson, Iqbal Malik, to act as her litigation friend.
No originating process was issued in the county court. Instead, the court directed that the statements of case in the F-tT should stand as the statements of case there and gave further directions for trial. The parties naturally acquiesced in that sensible direction. The trial was eventually heard by HHJ Parfitt in January 2017.
At the trial, Mrs Malik (acting by her litigation friend) took the point that the county court had no jurisdiction, since the Land Registration Act 2002 appeared to require new proceedings to be issued if the dispute was to be sent from the F-tT to be heard in a court. Apart from that jurisdictional challenge, Mrs Malik contended that the TR1s did not bind her on grounds of non est factum, misrepresentation and undue influence.
HHJ Parfitt handed down a reserved judgment on 6 April 2017. He rejected the contention that the county court had no jurisdiction and upheld the validity of the TR1s, holding however that by reason of the February 2013 Agreement the TR1s only took effect to the extent of giving Mr Sheikh security for the repayment of the loan to the Maliks and the extended credit afforded to HIS and no further.
In relation to the undue influence allegations, he held that the Maliks acted as Mr Sheikh's agents for the purpose of obtaining her agreement to sign the TR1s but that there was no evidence of a relationship in which Mrs Malik reposed trust and confidence in them, and that the transaction involving the TR1s was not such as to call for an explanation, given a long history of use of family properties to secure borrowing of HIS. He also held that had he been able to decide those two issues differently, so as to give rise to a presumption of undue influence, Mr Sheikh would have failed in seeking to rebut that presumption, given the absence of any satisfactory independent advice for Mrs Malik at the time of the transaction.
Mrs Malik appealed, with permission of Snowden J, against the Judge's decisions on jurisdiction and undue influence. There is no cross-appeal against the decision on whether Mr Sheikh would have rebutted a presumption of undue influence.
Sadly, before the hearing of the appeal, Mrs Malik passed away. It is believed that she might have died intestate, but that is not yet clear. Mr Iqbal Malik obtained an order to represent her estate on the hearing of the appeal and so he is, technically, the Appellant.
The defence of undue influence
I shall deal first with the substantive questions on the undue influence appeal.
Ms Anderson QC, who appeared with Ms Mattsson for the Appellant, accepts that the Judge correctly directed himself on the law, based on the decision of the House of Lords in Royal Bank of Scotland plc v Etridge (No.2) [2001] UKHL 44; [2002] 2 AC 773. Save for certain categories of relationship where undue influence is presumed without more (which is not this case), a presumption of undue influence arises where the person seeking to set the disposition aside (A) proves that he or she was subject to influence by the party seeking to uphold the disposition (B) or by those acting for B (X), and that the disposition itself is of a kind or is on terms that call for explanation by B (that is to say, it is not explained by the ordinary motives that would lead someone in those circumstances to enter into such a transaction). Where the presumption applies, the onus rests on B to show that there was in fact no undue influence on A that led to the disposition. A relationship of influence is often established by proving that A reposes trust and confidence in B (or X), either generally or in relation to the subject-matter of the transaction, but a relationship of influence does not depend on proof that A reposed trust and confidence in B. It may arise where, e.g., there is a position of dependency and vulnerability of A as compared with domination or control of B or X: see Etridge, at [11], per Lord Nicholls of Birkenhead.
Ms Anderson accepts that her appeal is therefore advanced on the basis that the Judge wrongly evaluated the facts on the questions that he was required to decide. She did not shrink from putting her case high in opening the appeal. She submitted that the Judge simply and obviously reached the wrong conclusion on the basis of the evidence that he heard and which he set out in his judgment. She accepted that she could not succeed by arguing simply that the Judge did not give enough weight to certain facts or gave too much to others, but had to establish either that the Judge had wholly failed to consider material facts, or took into account immaterial facts, or alternatively that the decision was unjustified by the evidence, in the sense that it was a decision to which no reasonable judge could have come. This concession was, in my judgment, rightly made, in view of the judgment of the Court of Appeal in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577 at [16], per Clarke LJ, recently affirmed by the Court of Appeal in Estrada v Al-Juffali [2016] EWCA Civ 176; [2017] Fam 35 at 88, per Lord Dyson MR, on which the Respondent relies as raising a “high hurdle” that the Appellant has to surmount.
On the issue of a relationship of influence, the Judge held that, giving the fullest allowance for Mrs Malik's difficulties with written English, her age (nearly 79) and her relative infirmity, there was insufficient evidence for him to conclude that the relationship between her and the Maliks was one in which she reposed trust and confidence in them. In so deciding, it is clear that the Judge had in mind in particular the absence of any evidence on behalf of Mrs Malik about how her financial affairs were managed, including the income from the Properties. He also referred to the position about the beneficial ownership of the Properties being unclear. It is clear that the Judge also had in mind the absence of any medical evidence to support a conclusion that Mrs Malik was losing her mental capacity at the time. No permission for such evidence had been sought before the trial. At trial, the Judge refused permission to rely on the medical report that was used in 2014 to establish that Mrs Malik then had dementia and no contractual capacity. There is no appeal against that case management decision. He also referred to the absence of any other evidence to establish that Mrs Malik was an essentially vulnerable person. Mrs Malik had 6 daughters as well...
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