The National Crime Agency v Dong & Anor

A resulting trust may arise on a gratuitous transfer of land. The presumption remains a starting point and may be displaced by evidence of the parties’ objective intentions. Extrinsic evidence, including subsequent conduct, may be considered, although subjective and self-serving intention is inadmissible.

Where legal title and beneficial ownership are alleged to differ, the alleged mismatch must be strictly proved. A transfer agreement will not establish beneficial ownership if it was ineffective or was not implemented. On an application to make a charging order final, the court must consider all the circumstances, including the debtor’s personal circumstances and possible undue prejudice to other creditors.

The National Crime Agency, as successor to the Serious and Organised Crime Agency, sought to enforce a judgment debt for unpaid tax by charging the beneficial interest allegedly retained by Mr Gui Hui Dong in a property transferred into the name of Mr Feng Xing.

Mr Dong and Mr Feng applied to set aside or discharge an interim charging order. The central issues were whether Mr Dong had remained beneficially interested in the property after its transfer, and, if so, whether the interim charging order should be made final.

1. Beneficial ownership. The NCA bore the burden of proving that Mr Dong retained a beneficial interest. Registration of legal title did not create a presumption that legal and beneficial ownership necessarily coincided. The alleged separation of the two interests therefore required strict proof (paras [19]–[21]).
2. Resulting trust on gratuitous transfer. The court proceeded on the basis that a presumption of resulting trust survives section 60(3) of the Law of Property Act 1925. The presumption is only a starting point and is readily rebutted by evidence of intention. The court may consider all relevant facts and circumstances, including subsequent conduct, while excluding evidence of purely subjective intention (paras [23]–[38]).
3. The court rejected the evidence that third parties had funded the original purchase for their own beneficial ownership. The cooperation agreement was a contractual funding arrangement, not a declaration or creation of a trust satisfying section 53(1) of the Law of Property Act 1925. Mr Dong was therefore both legal and beneficial owner when the property was acquired (paras [49]–[67]).
4. The solicitor’s attendance note, the gratuitous nature of the transfer, Mr Dong’s continued occupation and the surrounding conduct established that he intended to retain the beneficial interest. The estate transfer agreement was ineffective because the alleged transferors had no beneficial interest to transfer and, alternatively, because the executory agreement had not been implemented (paras [68]–[75]).
5. Charging order. Under section 1(5) of the Charging Orders Act 1979, the court had a broad discretion to consider all the circumstances, particularly the debtor’s personal circumstances and whether other creditors were likely to suffer undue prejudice. The interim charging order was made final because the NCA had a final judgment and no creditor had established likely undue prejudice (paras [76]–[81]).

First-instance determination. The judgment records that Mr Dong’s challenge to the tax assessments had been dismissed by the First-tier Tribunal and that summary judgment had been entered against him, but this court determined the beneficial ownership and charging-order issues.