Shami v Shami & Anor

In land-registration proceedings, a third party who was not a party to foreign matrimonial proceedings is not bound by judgments made in them about beneficial ownership. If the claimant cannot establish a beneficial interest against that third party, the third party’s legal charges are registrable. A charge remains valid and registrable even where the whole secured sum has not been proved outstanding, provided it creates a binding obligation securing an underlying debt. Registration proceedings need not determine the precise amount due where that issue is unnecessary to registration. That question may be resolved when entitlement to sale proceeds is considered. An appellate court will not interfere with primary factual or credibility findings without proper grounds. A trial court may defer sale and account applications where the evidence is incomplete.

The appeal concerned a family dispute over a London flat registered in the husband’s sole name. The wife relied on Israeli judgments declaring that the husband held the flat on trust for himself and her in equal shares. She challenged the registration of legal charges granted by the husband to his brother in 1995 and 2006.

The High Court recognised the Israeli judgments as between the wife and husband, but held that they did not bind the brother, who was not a party to the Israeli proceedings. It also held that the wife had not established a beneficial interest against the brother, upheld the 1995 charge, allowed registration of the 2006 charge, and deferred applications for sale and accounts. The central issue on appeal was whether those rulings were wrong.

1. Disposition. The Court of Appeal, in a judgment delivered by Mummery LJ with which Tomlinson and Davis LJJ agreed, dismissed the wife’s appeal.
2. Foreign judgments and the brother. The wife did not challenge the findings that the Israeli judgments were not binding on the brother and that, as against him, she had not established any beneficial interest in the flat. The court therefore did not revisit the deputy judge’s conclusion under s.8(1) of the Foreign Judgments Act 1933. The brother was not bound by decisions made in proceedings to which he was not a party. The purchaser-in-good-faith issue was consequently beside the point.
3. 1995 charge. The deputy judge was entitled to accept the brother’s evidence that he had contributed to the purchase price. A charge remains valid and properly registrable as security for the underlying debt even if it is not established that the whole sum stated remains outstanding. The charge deed created a binding obligation for £77,000 plus interest.
4. 2006 charge. The focus was registration rather than the precise amount of indebtedness. It was unnecessary, and unsupported by the evidence, to determine the exact sum owed at that stage. The charge was properly registrable, while the amount payable to the brother could be examined when the proceeds of sale were distributed.
5. Further relief and costs. The deputy judge acted within his discretion in deferring the claims for sale and accounts because those matters required further evidence, including valuation evidence. The costs order disclosed no error of principle and was not plainly wrong. The brother’s charges were therefore registrable under the Land Registration Acts 1925 and 2002.

1. Court of Appeal (Civil Division): In [2013] EWCA Civ 227, the wife’s appeal was dismissed.
2. High Court of Justice, Chancery Division: On 22 February 2012, Mr David Donaldson QC sitting as Deputy High Court Judge upheld registration of the 1995 charge, allowed registration of the 2006 charge, and deferred the applications for sale and accounts.