Rothschild v Charmaine De Souza

Real ownership may differ from formal ownership. The formal owner and the person who paid for an asset provide important starting points, including through the resulting-trust presumption, but those presumptions do not determine the outcome. The court must ascertain the parties’ intentions from the evidence, giving effect to an express agreement and, where necessary, an agreement inferred from conduct. Contemporaneous documents generally carry particular weight. Repeated representations about ownership may materially undermine a later assertion of a different beneficial ownership. Allowing property to be used as security, or allowing a business to operate from property, does not by itself establish a common intention that the property owner is a business partner or beneficial owner of the business.

The proceedings concerned the ownership of a company, its subsidiary businesses and three properties. Wanda Radziszewska claimed that she was the real owner because the business had been financed through her property and the properties had been acquired from business profits. Richard Rothschild supported his mother’s case. Charmaine De Souza contended that she and Richard owned the business and related assets equally.

The oral evidence was directed principally to the ownership of the business. The court had to determine the parties’ intentions and the effect of formal records, accounts, tax returns, correspondence and later representations about ownership.

1. Ownership principles. The formal owner is an obvious starting point, as is the resulting-trust presumption in favour of the person who paid for an asset. Those presumptions operate only as evidential starting points. The decisive question is the actual facts and the intentions of the relevant actors.
2. The court should seek any express agreement concerning ownership. If there is no written agreement, it may determine whether an oral agreement existed or infer a tacit agreement from conduct. In the exceptional case where no agreement or understanding can be inferred, an imputed fair agreement may be considered, as described in Jones v Kernott [2011] UKSC 53. That issue did not arise because the parties’ common understanding could be deduced from their conduct.
3. Contemporaneous documents are generally more reliable than carefully prepared witness statements and elaborate recollections of past events. The evidence included company accounts, tax returns, lending documentation, due-diligence material, professional correspondence and settlement discussions.
4. The evidence showed that Richard and Charmaine had the common intention, at least from the creation of Fast Fones Direct Ltd, that the business and the relevant properties should be owned equally by them. The company records and repeated public representations consistently supported that conclusion. Richard’s case that he had later acted without authority for Wanda was rejected.
5. Wanda’s provision of accommodation and consent to the use of 45 Addison Gardens as security did not establish that she was a quasi-partner or beneficial owner of the business, and did not create a resulting-trust presumption in her favour.
6. Declarations were made giving effect to the equal ownership finding. A separate declaration confirmed that 45 Addison Gardens was beneficially owned solely by Wanda, who was entitled to an indemnity from Richard and Charmaine for the mortgage debt.