NRC Holding Ltd v Danilitskiy & Anor

Whether property held in a company’s name is beneficially owned by its controller is a fact-specific question. The court must apply ordinary equitable principles, including the presumptions relating to resulting trusts, while examining the transaction and surrounding circumstances as a whole. Relevant considerations may include who provided the purchase price, the company’s purpose and assets, the intended use of the property, and whether the controller paid rent. Where a party has relevant evidence and could reasonably be expected to give it, unexplained silence may strengthen the opposing party’s prima facie case. Transfer of a company’s shares does not, without more, transfer or divest a separate beneficial interest in property held by the company.

NRC Holding Ltd obtained a default judgment against Anatoly Danilitskiy and sought to make final an interim charging order over a London property legally owned by Opal Stem Ltd. Opal Stem opposed the application, asserting that it was the property’s beneficial owner and was controlled by Mr Danilitskiy’s daughter after a transfer of Opal Stem’s shares.

The property had been acquired in Opal Stem’s name, but the purchase price had been provided by Mr Danilitskiy. The central issues were whether a resulting trust arose on acquisition, whether subsequent events divested Mr Danilitskiy of any beneficial interest, and what inference should be drawn from his failure to give evidence.

1. Result. The court concluded that Mr Danilitskiy acquired the beneficial interest in the property under a resulting trust and retained it. NRC was therefore entitled to have the interim charging order made final.
2. Acquisition. The question was highly fact-specific. The court applied ordinary equitable principles and considered the circumstances cumulatively. Significant factors were that Opal Stem had recently been incorporated to hold title, had no operations or bank account, the acquisition was arranged on Mr Danilitskiy’s instructions, he provided the purchase price, there was no evidence of a loan or capital subscription, the property was acquired as a family home, and rent was apparently never paid.
3. Absence of evidence. Applying the approach discussed in Prest v Petrodel Resources Ltd [2013] UKSC 34, unexplained silence may strengthen a prima facie case where the silent party has relevant knowledge and could reasonably be expected to give evidence. The court inferred that Mr Danilitskiy’s evidence would not support Opal Stem’s case. It nevertheless stated that it would have reached the same conclusion without that adverse inference.
4. Subsequent events. The transfer of Opal Stem’s share from the trust to Ms Maltseva, and the dissolution of the trust, did not itself transfer or divest Mr Danilitskiy’s beneficial interest. Opal Stem retained separate legal personality and could hold the property on trust for him. Later management and letting arrangements were of little assistance because they were equally consistent with an attempt to make the property appear unconnected with him.
5. The parties were invited to agree a minute of order dealing with the final charging order and consequential matters.