United Overseas Bank Ltd v Iwuanyanwu & Anor

A company controlled by an individual is not ordinarily treated as that individual’s nominee or agent. However, a company may hold property as a nominee where the facts establish that the beneficial ownership was never transferred to it. The issue is factual and requires caution, but corporate status does not prevent a finding of nominee ownership. Where an intervener is directed to claim an interest in property already subject to a charging order, the procedural order and pleadings may place on it the burden of adducing evidence establishing its beneficial ownership. An appellate court will not interfere merely because the trial judge stated the facts before explaining the legal consequences, provided the judge applied the correct principles.

United Overseas Bank Ltd obtained a charging order over property registered in the name of Continental Petroleum Corporation, in proceedings to enforce a judgment debt owed by Chief Emmanuel Iwuanyanwu. The Corporation intervened and was directed to pursue an issue concerning the property’s beneficial ownership. The deputy High Court judge held that the Chief had remained the beneficial owner, and that the Corporation and its predecessor were nominee companies holding the legal title.

The Corporation sought permission to appeal on grounds concerning corporate personality, the burden of proof, the judge’s approach to the facts and evidence, and the effect of an alleged payment for the property. The renewed application concerned whether those grounds disclosed any realistic prospect of success.

1. Application dismissed. The proposed appeal had no prospect of success.
2. A company, including a closely controlled offshore company, is ordinarily separate from its controller. The court must approach any finding that it is a nominee or agent with great caution. Nevertheless, such a finding is legally possible where the facts establish that the company holds only the bare legal title. Whether the beneficial ownership passed to the company is a question of fact.
3. The deputy judge was entitled to find that the 1981 transfer to Lamsol was a paper transaction. Lamsol had no demonstrated funds, no disclosed corporate records showing an agreement to purchase, and no apparent use or benefit from the property. Evidence that stamp duty may have been paid did not establish a genuine corporate purchase.
4. The 1991 transfer to Continental Petroleum Corporation did not transfer the beneficial interest. It formed part of a refinancing arrangement and the judge was entitled to find that the apparent sale was a charade and that the Corporation was a convenient nominee.
5. The Corporation had been made claimant in the beneficial-ownership issue. In the circumstances, and particularly given the earlier procedural order and the pleadings, it had to do more than rely on its registered title and bore the burden of adducing evidence establishing its asserted ownership. The court saw no substance in the challenge based on the judge’s ordering of his reasoning.
6. If the Corporation had genuinely purchased the property from Lamsol, no resulting trust for the Chief would have arisen. The same conclusion would follow if the purchase price had been provided by the Chief as a loan.

Order: application refused.

• Court of Appeal (Civil Division): on 25 April 2001, Lord Justice Chadwick dismissed the renewed application for permission to appeal against the order of the deputy High Court judge.
• Chancery Division: Mr Robert Englehart QC, sitting as a Deputy High Court Judge, declared that the Chief was beneficially entitled to the property and ordered that his beneficial interest be charged in favour of the Bank.
• Chancery Division: Master Trench directed that the beneficial-ownership issue be tried between the Bank and the Corporation, with the Corporation as claimant. Hallett J dismissed an appeal against that direction.