Saeed & Anor v Ibrahim & Ors

An illegal purpose does not automatically bar recovery of property or money held by a participant in the wrongdoing. The court must consider whether refusing relief would protect the purpose of the prohibition, undermine other public policies, and amount to a proportionate response, having regard to the seriousness, centrality and intentional nature of the conduct and the parties’ relative culpability. Restitution may therefore be ordered where denial would leave the fruits of the wrongdoing with the defendant and produce an unjust result. Deliberate concealment postpones limitation where the claimant could not, with reasonable diligence, discover the relevant facts. A person who acts as a de facto trustee or nominee may be liable to account for trust property and its proceeds.

The claimants, a husband and wife, alleged that the first defendant assisted the husband in transferring money and jointly owned property beyond the wife’s reach. The arrangements involved nominee owners, sham transactions, forged or improperly procured signatures, and property sales and mortgages. Claims were brought for declarations, accounts, restitution and related relief against the first defendant and members of his family. The second defendant was discontinued before trial.

The principal issues concerned the existence and effect of the parties’ agreements, the resulting trusts and accounting obligations, illegality, and limitation. The court also considered whether the defendants’ deliberate concealment postponed the limitation period.

1. Findings on the arrangements. The court found that the 2005 agreement existed in substance. The first defendant agreed to receive the husband’s money, hold it to his order, and assist in placing the wife’s interests in jointly owned assets beyond her reach. The later 2007 agreement also existed and related to the acquisition and management of 3 Victoria Road.
2. Trusts and accounts. The transfers of 37 Lansdown Road and 3 Victoria Road were sham arrangements. The apparent transferees were nominees or bare trustees. The first defendant was accountable for the transferred money, relevant sale proceeds and rents. The third and fourth defendants were accountable in respect of 37 Lansdown Road, and the first defendant was accountable for 27% of the net proceeds of 3 Victoria Road and 50% of its net rental income.
3. Illegality. Applying the policy-based approach in Patel v Mirza [2016] UKSC 42, the court considered the purpose of the prohibition, other public policies and proportionality. Both claimants and the first defendant had acted intentionally and seriously, but the first defendant was no less complicit than the husband. Refusing relief would leave the fruits of the illegal arrangements with the first defendant, condone the fraud against the wife and produce an unjust result. Illegality therefore did not bar recovery.
4. Limitation. The claims arose when demand was made for the money and property. The first defendant’s deliberate concealment of the transactions and his receipt of sale proceeds engaged Limitation Act 1980, sections 21 and 32. The claimants could not, with reasonable diligence, have discovered the relevant involvement and breaches before the applicable date. There was consequently no operative limitation defence.
5. Disposition. The claimants succeeded on the principal liability issues. The precise interest and accounting consequences were left for a consequential hearing.

Not stated in the judgment.