M v M & Ors

In Part III financial-relief proceedings, the Family Division applies ordinary principles of property and trust law. Where a company acquires property with funds provided by its controller, beneficial ownership is a highly fact-specific question. The court must investigate the provider’s subjective intention and may draw adverse inferences from non-disclosure, silence and failure to call relevant witnesses. The presumption of resulting trust remains available, although there is less room for reliance on it where the purchaser controls the transferee company. Positive evidence that the purchaser supplied the whole price ordinarily supports beneficial ownership unless rebutted. The court may order transfer of property only where the husband has a proprietary legal or equitable interest. Corporate personality is respected, but companies cannot use their separate identity to defeat a properly established trust.

The wife sought financial relief under Part III of the Matrimonial and Family Proceedings Act 1984 following a Russian divorce. Most of the identified matrimonial wealth was held through companies controlled by the husband or his nominees. The wife alleged that the companies held English properties and Russian commercial properties on resulting or constructive trusts for the husband. The husband did not participate effectively, failed to provide proper disclosure and did not attend the final hearing. Three companies defended the claim, relying principally on tax planning and separate corporate ownership. The central issues were whether the husband retained beneficial ownership and, if so, what financial relief should be ordered.

1. Applicable principles. A company has a legal personality separate from its shareholders, as established in Salomon v A Salomon and Co Ltd [1897] 2 AC 22. The Family Division applies the same property and trust principles as the other divisions of the High Court: Whig v Whig [2008] 1 FLR 453 and Ben Hashem v Al Shayif [2009] 1 FLR 115.
2. Resulting trusts. The court rejected the submission that control of the purchasing company automatically rebutted any resulting-trust presumption. The proper inquiry is fact-specific and centres on the purchaser’s subjective or actual intention. The burden remains on the transferee to rebut the presumption. Evidence that the husband alone supplied the purchase money supported the ordinary equitable inference that he was beneficially entitled.
3. Evidence and adverse inferences. Relevant evidence, including later statements bearing on the original intention, was admissible. The court assessed its weight rather than excluding it under a rigid application of Shephard v Cartwright. In financial-relief proceedings, the court may draw adverse inferences from persistent non-disclosure, silence and failure to call directors or other witnesses, provided there is a reasonable evidential or inherent-probability basis. The approach in T C Coombs v IRC [1991] 2 AC 283, as applied in Prest v Petrodel Resources Ltd [2013] UKSC 34, was adopted.
4. Application. The husband funded all relevant purchases, controlled the companies as their shadow director and directing mind, used the properties as homes or for family purposes, and produced no credible evidence of a genuine tax-planning intention. The companies’ failure to disclose documents or call directors strengthened the wife’s case. The properties were held on resulting and constructive trusts for the husband. The husband was also found to be the beneficial owner of the eleven Russian commercial properties.
5. Relief. Applying the sharing principle and the statutory factors, the court ordered transfer of the UK properties, release of the husband’s share of the former matrimonial home’s sale proceeds, and payment of a £38 million lump sum. The husband was given an option to retain his homes by paying £10 million. Child maintenance and education-cost orders were also made.