The Law Society v Dua & Anor

Abuse of process is determined by a broad, merits-based assessment of all the circumstances. A person who was not a party to earlier proceedings is not ordinarily bound by them, even where that person closely assisted a party. Particular caution is required where a defendant seeks to raise a defence in later enforcement proceedings, especially where the claimant could have joined or bound the person earlier.

A trust is effective unless the settlor has retained powers so extensive that the rights retained are indistinguishable from ownership. Joint legal ownership ordinarily carries a presumption of equal beneficial ownership. A charging order does not require final determination of the debtor’s precise beneficial interest, but enforcement does.

The Law Society sought possession and sale of Fulmer House and 49 Sudbury Avenue under charging orders securing judgment debts owed by Mrs Dua. Both properties were registered in the joint names of Mr and Mrs Dua. The defendants relied on the Fulmer Settlement Trust and contended that Mrs Dua had no beneficial interest, or no realisable interest of value.

The Law Society argued that the defence was barred by issue estoppel or constituted an abuse of process because substantially the same arguments had been rejected by Chief Master Marsh when earlier charging orders were made final. Mr Dua had assisted Mrs Dua in those proceedings but had not been joined. The court also had to determine the validity and effect of the trust and whether possession and sale should be ordered.

1. Abuse of process. Mr Dua was not barred from defending the possession and sale proceedings. Abuse of process is distinct from res judicata, although both serve finality and protection against oppressive relitigation. The question is whether, in all the circumstances, the later conduct misuses the court’s process. The fact that the person was closely involved in earlier litigation was relevant but not decisive.
2. Particular caution was required because Mr Dua had not been a party to the earlier charging-order proceedings. He had no unassailable right there to give evidence, be heard or appeal. The Law Society could have joined him, used procedures for binding non-parties, or sought earlier strike-out relief. The proceedings had reached trial, and the evidential bases for the earlier decision were no longer supported. It would not be oppressive or unjust to allow him to rely on the defence for his own benefit.
3. The court therefore rejected the abuse argument. It was unnecessary to decide whether Mrs Dua herself was barred by res judicata or issue estoppel.
4. The Fulmer Trust was proved and applied to all four titles comprising Fulmer House. The trust deed initially referred to future property, but the later minute, made after completion, confirmed the trust and was effective: Re Northcliffe. The 2005 minute was sufficient in writing to transfer the equitable interest in 49 Sudbury Avenue.
5. The trust was not illusory. The retained powers were not equivalent to an uncontrolled power to secure the trust property for the settlors regardless of the beneficiaries’ interests. The settlors’ exclusion from the beneficial class was construed as applying prospectively. Rectification would have been granted if necessary.
6. Alternatively, absent the trust, the properties would have been held beneficially in equal shares. The presumption arising from joint legal ownership was not displaced by Mr Dua’s financial contributions. The family-home purpose, the parties’ marriage, joint dealings and their acknowledged shared equity supported equal ownership.
7. Equity of exoneration did not apply because the mortgage secured a joint liability. Equitable accounting was also unavailable while the parties continued to live together as a family and there was no sufficient evidence of an intention to adjust their beneficial shares.
8. No order for possession and sale was made. The Law Society’s claim failed because the defendants had no realisable beneficial interest of substantial value. Any alternative order would in any event have required better valuation evidence and consideration of the interests of other secured creditors, the Official Receiver and the children as potential beneficiaries.

First-instance decision. No earlier appellate decision was stated in the judgment.