Lenkor Energy Trading DMCC v Irfan Iqbal Puri

The court determined whether two London properties registered in the name of Energy Plus Limited were beneficially owned by the judgment debtor, Irfan Iqbal Puri, such that final charging orders could be made to satisfy a judgment debt owed to Lenkor. The master applied orthodox equitable principles on resulting trusts and the statutory rule in section 53 of the Law of Property Act 1925, and analysed the modern authorities (including Prest v Petrodel and subsequent High Court decisions) on acquisitions in the name of nominee companies. Findings: the properties had been funded by the family patriarch, Mazhar Iqbal Puri, and held on resulting trust for him; on his death the default succession position (and supporting contemporaneous evidence) established that Irfan acquired a 25% beneficial interest; alleged later family agreements and undocumented payments said to transfer Irfan's interest to his son Mohammad were not proved. Because Irfan has a proprietary interest, the claimant's application for final charging orders succeeded but only to the extent of Irfan's 25% beneficial interest in each property.

This was a first-instance contested application for final charging orders over two London houses registered in the name of Energy Plus Limited. Lenkor, the judgment creditor, sought FCOs to enforce a summary judgment debt against Irfan (the judgment debtor). Energy, the registered proprietor, asserted that it was the beneficial owner and sought to set aside interim charging orders. The court was required to determine whether Irfan had any beneficial interest in the properties.

Background and procedural posture:

• The properties were acquired in 1996 and 1997 and registered in Energy's name. There existed a 1996 document signed by Mazhar Iqbal Puri recording that Energy had been registered for his and the family's investments.
• Lenkor had previously obtained summary judgment against Irfan in related proceedings; worldwide freezing orders had required Irfan to disclose assets and he filed a sworn affidavit in 2017 quantifying an interest in the properties.
• Master Davison directed the decisive issue be tried: whether the defendant (Irfan) had an interest in the properties subject to ICOs.

Issues for decision:

1. Who provided the purchase monies for the properties?
2. Whether the legal title held by Energy carried the beneficial ownership, or whether a resulting or other trust arose in favour of Mazhar or Irfan.
3. Whether later family arrangements (the asserted 2014 agreement and alleged 2015 cash payments) transferred any beneficial interest from Irfan to his son Mohammad.
4. Whether charging orders should be made and, if so, over what share of the properties.

Court’s reasoning and conclusions:

• The 1996 document was accepted as authentic on the balance of probabilities and, together with family evidence and the factual matrix, supported a finding that Mazhar funded the acquisitions.
• Applying the presumption of resulting trust and the approach in the modern authorities (notably Prest v Petrodel and subsequent High Court decisions), the master concluded that the properties were held on resulting trust for Mazhar and did not establish that Energy was intended to be the beneficial owner.
• On Mazhar’s death and on balance of the evidence (including the specificity of figures in Irfan’s 2017 affidavit), Irfan was found to have acquired a 25% beneficial interest; there was insufficient evidence to show any greater proprietary share.
• The alleged 2014 family buy-out agreement and the purported 2015 cash payments by Mohammad to Pakistani lawyers were not proved on the balance of probabilities; in particular there was no contemporaneous documentary support and the account given was inherently improbable.
• On that basis the court made final charging orders over Irfan’s beneficial interest, limited to 25% of each property, while allowing a limited procedural opportunity for Irfan to apply to contend for a larger share within a defined period.

The judgment emphasised the centrality of factual inquiry as to funding and intention in cases where property is held in the name of a nominee company and that section 53(2) preserves resulting and constructive trusts from the formality rule in section 53(1).

Final charging orders were made in favour of Lenkor in respect of a 25% beneficial interest in each property. The court held on the balance of probabilities that the acquisition monies derived from Mazhar Iqbal Puri, that the properties were held on a resulting trust for him, and that on his death Irfan acquired a 25% beneficial interest. Alleged 2014 agreements and 2015 cash payments said to transfer Irfan's interest to Mohammad were not proved, so the claimant's enforcement application succeeded only to the extent of a 25% proprietary charge.