HRH Princess Deema Bint Sultan Bin Abdulaziz Al Saud v Ronald William Gibbs & Ors

An order for sale to enforce a charging order is an exceptional and potentially draconian remedy, but the court must weigh all relevant circumstances. Different considerations apply where the property is an investment rather than the debtor’s home. Relevant matters include the debt, the debtor’s conduct, alternative means of payment, third-party interests, occupation, proportionality and the statutory factors governing trusts of land.

A commercial creditor will usually receive priority over family occupation. Adequate and cogent evidence is required to show why sale should be refused or postponed. An equitable charge and a mortgage are assessed by the same principles for this purpose. A procedural application under section 17 of the Married Women's Property Act 1882 cannot alter beneficial ownership.

The claimant sought an order for sale of 36 Kings Road, Richmond, to enforce a final charging order arising from unpaid interim payments and costs. The defendants contended that Mr Gibbs did not own the property beneficially because a 2012 declaration of trust gave interests to Mrs Gibbs and their children. They also relied on constructive trust principles and section 17 of the Married Women's Property Act 1882.

The court determined the authenticity and effect of the alleged declaration, whether Mrs Gibbs had any beneficial interest, and whether sale should be ordered under Civil Procedure Rules 1998 and the Trusts of Land and Appointment of Trustees Act 1996.

1. The declaration of trust dated 12 July 2012 was not authentic. Mr Gibbs owned the property both legally and beneficially. The presumption that beneficial ownership follows legal ownership was not displaced. The court relied on the defendants’ unreliable evidence, the absence of contemporaneous documents, repeated representations that Mr Gibbs owned the property absolutely, the handling of rent and outgoings, and the unexplained destruction or non-production of the original document.

2. No constructive trust arose in favour of Mrs Gibbs. The circumstances differed materially from Cooke v Head. There was no joint enterprise, no sufficient evidence of common intention, and no conduct establishing detrimental reliance. The whole course of the parties’ conduct had to be considered, including the purpose of acquisition, the relationship, the parties’ contributions and the payment of outgoings.

3. Section 17 of the Married Women's Property Act 1882 was procedural only. It did not confer a discretion to vary beneficial interests.

4. In exercising the discretion under CPR 73.10C, the court undertook a weighing exercise. The substantial unpaid debt, serious and contumacious default, lack of a realistically enforceable alternative source of payment, and the investment character of the property strongly favoured sale. The tenants’ position did not justify refusing sale, particularly as they had not provided direct evidence and comparable accommodation was available.

5. The position was the same whether the claimant held an equitable charge or a mortgage. The claimant’s status as a non-commercial creditor did not materially alter the discretion. Any interference with Article 8 rights would in any event have been lawful and proportionate.

6. An order for sale was made. The parties were directed to address the form of the order and costs.