The Law Society v Mrs Ashoo Dua

Hearing dates: 18, 19, 20, and 24 November 2020

APPROVED JUDGMENT

Mr Hugh SimsQC:

Introduction

Fulmer is a village about one mile from Gerrards Cross, in Buckinghamshire. In 2004 the Defendants, Mrs and Mr Dua, purchased Fulmer House, in Fulmer, as a family home. The Claimant, The Law Society, is a judgment creditor of Mrs Dua, and seeks an order for possession and sale of Fulmer House, and another property also registered in the joint names of Mr and Mrs Dua, called 49 Sudbury Avenue, Wembley. They do so pursuant to charging orders the Law Society obtained over those properties between 2011 and 2013. As at 16 November 2020, according to the updated calculations performed by Ms Petrenko, counsel for The Law Society, the sum of £354,404.29 (inclusive of interest) remains due and owing.

At the trial, conducted by Skype for Business during the second Covid-19 “lockdown”, I heard evidence from Mr and Mrs Dua, as well as receiving written evidence from other witnesses. The parties are to be commended for co-operating to enable an effective hearing to take place. I have been assisted, in particular, by the clear written and oral submissions made by Ms Petrenko, which travelled further than they might otherwise have done due to the Duas acting in person.

Whilst the ultimate issue in these proceedings is whether or not orders for possession and sale should be made in relation to the two properties, under CPR 73.10C, the following issues arise for determination in order to adjudicate on the ultimate dispute between the parties:

(1) First, whether one of Mr and Mrs Dua are entitled to contend that Mrs Dua does not have any beneficial interest in the properties, or does not have any interest with realisable value (the “Res Judicata and Abuse of Process Issue”)?

(2) Secondly, if so, what is the interest Mrs Dua has in the properties, having regard in particular to the Fulmer Settlement Trust (the “Beneficial Interest Issue”)?

(3) Third, having regard to the determination of those issues, and the matters set out in section 15 of the Trust of Land and Appointment of Trustees Act 1996, should an order for sale, and possession, be made (the “Order for Possession and Sale Issue”)?

I will consider first the factual background relevant to the Res Judicata and Abuse of Process issue, and determine it, before moving onto further facts relevant to the Beneficial Interest and Order for Possession and Sale Issues, and my judgment on those issues.

Res Judicata and Abuse of Process Issue

Background

The Law Society, a body incorporated by Royal Charter, is acting through its independently operated regulatory arm, the Solicitors Regulation Authority (“SRA”). Mrs Dua qualified as a solicitor and was admitted to the roll in 1990. An intervention was made by the SRA into the practice of Mrs Dua, in 2009, which intervention was unsuccessfully challenged by her. The costs of that intervention, and the unsuccessful challenge to it, led to judgment debts being established against Mrs Dua, including as to costs. Those judgment debts were not satisfied, and enforcement action was taken by the Law Society, which included obtaining charging orders over certain properties registered in the joint names of Mr and Mrs Dua.

So far as the properties are concerned, Mr and Mrs Dua are the joint freehold owners of five registered titles: (i) Fulmer House, Fulmer Road, Fulmer SL3 6HN, which is registered under title number BM61904; (ii) Land on the North Side of Fulmer House, which is registered under title number BM242835; (iii) Ferndown Cottage, Fulmer Road, which is registered under title number BM63634; (iv) Knoll Cottage, Fulmer Road, which is registered under title number BM61442; and (v) 49 Sudbury Avenue, Wembley, HA0 3AN, which is registered under title number NGL239371.

The first four properties were registered in the joint names of Mr and Mrs Dua on 1 June 2005, and the price recorded as having been paid for them collectively on their titles is the sum of £1,887,547 on 22 October 2004 (the transfer document dated 22 October 2004 also refers to another title, which may either have merged with one of those four titles, or not been registered in the names of Mr and Mrs Dua due to a defect in title, but nothing turns on that). The four titles are occupied by Mr and Mrs Dua, together with their two adult children, as a single residence, and may be conveniently referred to, for short, as Fulmer House. The 49 Sudbury Avenue property is a separate property, which was registered in the joint names of Mr and Mrs Dua on 10 September 1987. The transfer records the purchase price as being £93,000, and completing on 10 July 1987. Mr and Mrs Dua lived in this property for some time, as a married couple, before moving into Fulmer House, after the birth of their two children, in 2005, and after certain renovations were made to it.

There is a linked charge over all five registered titles (i.e. both Fulmer House and 49 Sudbury Avenue) in favour of HSBC Bank Plc, which provided a loan of c. £1.8m to enable the Duas to purchase Fulmer House. As of 2018, a similar indebtedness remained: the sum of £1,791,335.77 was the redemption figure in relation to the charge as of 24 August 2018 together with, as of 8 October 2018, the additional sum of £110,800.23. The figures remain of that order into 2019 and up to the date of trial.

The part of Fulmer House registered under title number BM61904 is also subject to a charging order, entered on 29 October 2007, in favour of Claire Court Schools Limited. Mr Dua described in evidence how he was pursued for a debt in relation to their son's education which he described as ultimately leading to his bankruptcy. Mr Dua was adjudged bankrupt on 12 December 2008, though he remained in occupation of Fulmer House with Mrs Dua, and their children, and remained on the title. The trustee in bankruptcy investigated a possible interest, but never made any realisation, in relation to Fulmer House. As of 24 November 2016 the sum of £14,630.62 was still due under the charging order in favour of Claire Court Schools Limited.

49 Sudbury Avenue is subject to three interim charging orders against Mr Dua's beneficial interest in favour of Edwin Coe (Law Firm), Safeteach Systems Limited and Wembley Business Centres Limited respectively. Mr Dua explained at trial that these all arose in the context of the financial difficulties he was facing in 2007 and 2008 and he disputed these sums.

Turning back to the Law Society, between 2011 and 2013 the Law Society obtained final charging orders against Mrs Dua's interest in the properties, as set out in the four paragraphs which follow.

On 10 November 2011 Deputy Master Hoffman made five final charging orders (each of which related to one of the five registered titles) charging each title with payment of the sum of £76,977.53, together with any further interest becoming due and £264.80 the costs of each application.

On 18 April 2013 Chief Master Marsh made five final charging orders (each of which related to one of the five registered titles) charging each title with payment of the sum of £104,852.96 together with any further interest becoming due and £9,250 the costs of the application. I shall return to the proceedings before the Chief Master below.

On 22 April 2013 Master Leslie made five final charging orders (each of which related to one of the five registered titles) charging each title with payment of the sum of £7,096.12 together with any further interest becoming due and £1,500.00 the costs of the application.

On 29 October 2013 District Judge Evans made four final charging orders (each of which related to one of the five registered titles, but no order was made in relation to title number BM61442) charging each title with payment of the sum of £24,599.05 together with any further interest becoming due and £253 the costs of the application.

The making of the final charging orders by the Chief Master, as referred to in paragraph 13 above, was resisted by Mrs Dua. A hearing was due to take place on 23 January 2013 but was adjourned to 4 February 2013 on the basis that insufficient notice had been given to Mrs Dua. The hearing listed on 4 February 2013 was then also adjourned as Mrs Dua asserted that she had divested herself of any beneficial or equitable interest in the properties, and directions were made to enable Mrs Dua to file and serve evidence.

Mrs Dua filed and served a witness statement dated 4 March 2013 to support her opposition, which was prepared with the assistance of her spouse, Mr Dua. Mrs Dua exhibited and relied upon a number of documents, including: (i) a deed of settlement dated 15 October 2004 establishing the Fulmer Settlement Trust (the “Trust Deed”); (ii) minutes from a meeting of the Duas, as settlors and trustees of the Fulmer Trust on 24 October 2004, which she referred to as adjusting beneficiary clauses in the Trust Deed so precluding her and Mr Dua from being beneficiaries; (iii) further minutes of a meeting of the Duas, on 12 September 2015, which she described as transferring the remaining beneficial interest in 49 Sudbury Avenue to...