Haque v Raja & Anor

For an interim proprietary injunction, the claimant need show only a serious question to be tried and that the balance of risk of injustice favours relief. A beneficial interest may raise a triable issue where the property was acquired in a family context but primarily as an investment, although the court must examine the parties’ shared intentions.

A purchaser for value of registered land from a sole trustee generally takes free of an unprotected beneficial interest unless it is protected as an overriding interest through actual occupation. A knowing receipt claim instead depends on knowledge making retention of the property unconscionable. Speculative allegations of dishonesty do not satisfy that threshold.

The claimant sought continuation to trial of a proprietary injunction restraining the second defendant from dealing with a property. He alleged that the first defendant had held the property on trust for him and that the second defendant acquired it subject to his beneficial interest, alternatively having received it with knowledge of a dishonest breach of trust.

The property had been registered in the first defendant’s sole name, later sold to the second defendant for value, and the claimant’s alleged interest had not been protected by a restriction. The issues were whether there was a serious question to be tried on the trust claim, whether the interest bound the registered purchaser, and whether the knowing receipt claim met the same threshold.

1. Interim proprietary injunction. The application was governed by the American Cyanamid test for an interim proprietary injunction. The claimant had to show a real prospect of success, with a claim that was not frivolous or vexatious, and that the balance of risk of injustice favoured preserving the position pending trial. The claim concerning the claimant’s beneficial interest satisfied the serious-question threshold.
2. Beneficial interest. Stack v Dowden provided the starting point where property was acquired in a domestic context, while Laskar v Laskar recognised that resulting-trust principles remained relevant where property was primarily acquired as an investment. This case fell between those categories. The claimant’s evidence could support an agreement or shared intention that he should own the property beneficially, so the extent of any interest required trial.
3. Registered land and overreaching. Even assuming a trust in the claimant’s favour, the direct proprietary claim against the registered purchaser could not succeed. Under the scheme of the Land Registration Act 2002, a purchaser for value from a sole trustee takes free of an unprotected beneficial interest unless it is an overriding interest under Schedule 3, paragraph 2. The claimant was not in actual occupation. The failure to overreach the interest under the Law of Property Act 1925 did not preserve it against the registered purchaser.
4. Knowing receipt. The necessary knowledge was knowledge making it unconscionable for the recipient to retain the benefit. That liability would attach to the property independently of overreaching and registration. However, the pleaded allegations that the second defendant knew of the claimant’s interest, knew the property was undervalued, or participated in a dishonest plan were speculative and inadequately particularised. They disclosed no serious question to be tried.
5. The injunction was discharged.

This was a first-instance application. An interim proprietary injunction was initially granted without notice by Arnold J on 12 April 2016 and continued on 19 April 2016. The present court discharged the injunction.