Lenkor Energy Trading DMCC v Irfan Iqbal Puri

Where property is acquired in the name of a nominee company, legal title ordinarily carries the beneficial interest, but a resulting trust arises in favour of the funder where there is no material evidence of a loan, capital subscription, declaration of trust or other inconsistent transaction. The court must determine the parties’ actual intention from all the evidence before resorting to presumptions. The earlier approach that a deliberate decision to use a company ordinarily indicates that the company was intended to own beneficially has been displaced by later authority. An undocumented disposition of a beneficial interest does not satisfy Law of Property Act 1925, section 53(1), although equitable remedies may arise from part-performance or related conduct. An unpaid vendor’s lien ordinarily remains unless excluded by agreement or an inconsistent transaction.

Lenkor sought final charging orders over two properties registered in the name of Energy Plus Limited, contending that the judgment debtor, Irfan Iqbal Puri, held beneficial interests in them. Energy argued that it owned the properties beneficially or, alternatively, that Irfan’s interest had been transferred to his son, Mohammad Puri.

The applications followed a substantial judgment debt owed by Irfan to Lenkor. The court was directed to determine whether Irfan had an interest in the properties over which charging orders could be made, and whether the interim charging orders should continue.

1. Resulting trust and corporate ownership. The court held that the registered ownership of Energy did not determine the beneficial ownership. A written or contemporaneous oral declaration of trust may exclude a resulting trust. In the absence of evidence that purchase monies were advanced as a loan, capital subscription or other inconsistent transaction, equity presumes a resulting trust in favour of the person who funded a purchase made through a nominee company.
2. The earlier approach in Arab Investment Syndicate Limited v Hiseman, Stockholm Finance Limited v Garden Holdings Inc and Nightingale Mayfair Limited v Prakash Mehta, treating the deliberate use of a company as ordinarily indicating beneficial ownership by the company, had been overruled by the modern authorities, including Prest v Petrodel Resources Ltd, NRC v Danilitskiy and Re: Smith: SFO v Litigation Capital.
3. On the facts, Mazhar Puri funded the acquisitions. Construing the 1996 document and considering the surrounding evidence, the court held that Mazhar intended to retain the beneficial ownership of the properties, with Energy acting as a holding entity or bare trustee. Alternatively, the resulting-trust presumption had not been displaced.
4. After Mazhar’s death, the court found that Irfan became beneficially entitled to 25% of each property. The evidence did not establish a higher or different entitlement. Irfan was given limited permission to apply for a higher percentage within the period specified in the consequential order.
5. The alleged 2014 agreement transferring Irfan’s interest to Mohammad was not proved. The alleged 2015 payments to Pakistani lawyers were also not proved and, in any event, were not shown to relate to such an acquisition. An oral disposition would not satisfy section 53(1) of the Law of Property Act 1925; any possible constructive trust or proprietary remedy would depend on proof of the relevant payment or reliance. Even if a transfer had occurred, an unpaid vendor’s lien would ordinarily remain unless excluded.
6. It was declared that Irfan held a 25% beneficial interest in each property. Final charging orders were made over those interests.