Panminder Singh Bhabra v Makinder Suri & Anor

A claimant relying on an assignment must prove its authenticity before relying on rights transferred by it. Where a transaction is made within a relationship of trust and confidence and calls for an explanation, undue influence is presumed unless satisfactorily rebutted.

In determining beneficial ownership of shares, the court must examine the whole course of dealing and all relevant circumstances. Legal ownership is the starting point, but it may be displaced by evidence of a contrary common intention. A resulting-trust presumption is evidential and may be rebutted by the parties’ actual intention and commercial purpose.

The claimant sought declarations that the defendants held shares in Pinegrove Management Limited on trust for him. He relied on a 2016 deed of assignment said to have transferred to him his father’s interest in the shares and related rights of action.

The defendants challenged the deed’s authenticity and alleged presumed undue influence. On the merits, the claimant relied on express, constructive and resulting trusts, while the defendants relied on estoppel and illegality. The court therefore had to determine the claimant’s standing and, alternatively, the beneficial ownership of the shares.

1. Standing and authenticity. The claimant bore the burden of proving that the 2016 deed of assignment was genuine. His failure to produce the original, the late emergence of the deed, his earlier reliance on a power of attorney, and inconsistencies in his account meant that he had not discharged that burden. He therefore lacked standing and the claim was dismissed.
2. Presumed undue influence. Alternatively, the deed was set aside. There was a relationship of trust and confidence between father and son, and the transaction called for an explanation because it gave the claimant 90% of recoveries despite the father’s established intention to divide his assets equally between his sons. The explanation offered was inadequate, particularly in the absence of independent legal advice and because the deed differed materially from an earlier 50:50 assignment.
3. Beneficial ownership. The court rejected the alleged undocumented express trust and common-intention constructive trust. The inquiry required an assessment of the whole course of dealing and all relevant circumstances. The documentary arrangements showed that HDSSL beneficially owned the shares while HSBC financing was in place, and that the shares were intended to return to the defendants after refinancing so that the investment properties remained separate from liabilities of the trading businesses.
4. The defendants were intended to hold the shares as both legal and beneficial owners after the transfers. Any resulting-trust presumption was rebutted by the commercial purpose of creditor protection and separation of the investment properties. The evidence of representations to the Inland Revenue, the company’s operation, family benefits and correspondence did not establish a trust for the claimant’s parents.
5. The comments on estoppel and illegality were unnecessary to the result. The alleged representations to the Inland Revenue were unlikely to have induced detrimental reliance by the defendants. On the assumed facts, denying recovery for illegality would also have been disproportionate because there was no evidence that the arrangements were designed to defraud creditors or the Revenue.

The claim was dismissed.