Asturion Foundation v Aljawharah Bint Ibrahim Abdulaziz Alibrahim

The Claimant, a Liechtenstein foundation, sought to impugn a transfer (TR1) of registered English land (Kenstead Hall) to the Defendant (the Princess) on the grounds that the transfer was contrary to the Foundation’s purpose and/or was effected by its agent, Maitre Faisal Assaly, in excess of his internal powers. The court held that the Foundation’s primary arguments failed.

Key legal principles and grounds:

• Section 26 Land Registration Act 2002 protects a disponee from unregistered limitations on a registered proprietor’s power to dispose: an internal constitutional limitation on the Foundation’s purpose not entered on the register did not defeat the Princess’s legal title.
• On construction of the Articles and surrounding facts (including the 1977 Regulation, the 2001 Instruction and the 1988 Power of Attorney), the 2001 Instruction amounted to a regulation of the founder under Article 7 and did not infringe the Foundation’s purpose. In any event the Articles and the 1988 Power of Attorney (and the 1993 sole-signature amendment) authorised Assaly to act alone in effecting disposals.
• The doctrine of ostensible or apparent authority does not rescue a voluntary gift-like transfer where there was no contractual, value-exchanging transaction; the court also applied English choice-of-law rules to the effectiveness of the transfer of English land.
• Secondary equitable claims (rescission for breach of fiduciary duty, mistake; restitution/unjust enrichment; knowing receipt) failed because no fiduciary breach or serious mistake was established and, on the facts, the transfers were authorised or effective.

The claim is dismissed.

Background and parties. The foundation (Asturion Fondation) was established in Liechtenstein in 1974 by the late King Fahd. The Defendant is the King’s widow. The dispute concerned four properties, principally Kenstead Hall in London. The Princess relied on a 2001 instruction by the King (the 2001 Instruction) instructing M e Assaly to transfer those properties to her; the transfers were executed many years later (Kenstead Hall transferred by TR1 dated 14 October 2011).

Nature of the claim and procedural posture. This was a first instance claim in the Chancery Division (Property, Trusts and Probate list). The Foundation alleged (i) the TR1 was void because the transfer was outside the Foundation’s purpose and/or Assaly exceeded his authority; (ii) if title passed it should be set aside in equity for breach of fiduciary duty or mistake (Pitt v Holt principle); and (iii) alternatively monies/damages for unjust enrichment or knowing receipt.

Evidence and issues. Extensive factual and expert evidence was heard, including on Liechtenstein, Swiss and Saudi/Shari’a law. Key disputed issues were: (a) the meaning and effect of the Foundation’s Articles and the 1977 Regulation; (b) whether the 2001 Instruction was a binding regulation under Article 7; (c) the effect and validity of the 1988 Power of Attorney and the 1993 sole-signature change; (d) whether Assaly had internal competence to act alone; (e) the effect of s.26 Land Registration Act 2002 on the transfer; and (f) whether English or Liechtenstein law governs relevant questions (and whether Art 187a PGR or English doctrines of ostensible authority apply).

Court’s reasoning.

• The court applied English law to the validity of the transfer of English land. It held s.26 LRA 2002 protects a disponee from unregistered constitutional limitations on the registered owner’s power. A limitation said to derive from the Foundation’s purpose (as crystallised in the 1977 Regulation) was not entered on the register and therefore did not defeat the Princess’s legal title.
• On construction of the Articles, and having preferred the evidence of the Princess’s Liechtenstein expert where in conflict, the court concluded the Articles and the 1988 Power of Attorney (and the 1993 sole-signature amendment as reflected in the public register) either individually or together authorised Assaly to act alone to administer and, when required, to dispose of assets. The 2001 Instruction was sufficiently precise to amount to a regulation under Article 7; the board (or its delegate) was bound to implement it.
• Even if Assaly had acted beyond internal competence, English choice of law required English law to govern the effectiveness of the transfer of Kenstead Hall. The doctrine of ostensible/apparent authority does not ordinarily validate a gratuitous disposition: apparent authority protects third parties in transactional, value-based deals but does not save gifts from the need to show actual authority or other equitable remedies. The court therefore rejected a rescue of the transfer by ostensible authority or by reliance on Article 187a PGR as displacing English law on title to land.
• The secondary equitable claims (rescission for breach of fiduciary duty or for mistake, unjust enrichment, knowing receipt) failed on the facts because Assaly was found not to have breached duties that English law would characterise as fiduciary in these circumstances, there was no serious operative mistake, and any enrichment was not unjust. The court noted that if a proprietary equity had survived the transfer it could have priority unless the transfer was for value, but on the facts that did not change the outcome.

Wider context. The judgment explains interplay between overseas constitutional limits, the English land registration code (notably s.26), and equitable remedies. The court commented on policy reasons for protecting disponees under s.26 and on practical problems that would follow from adopting the Foundation’s narrower construction of founder powers.

The claim is dismissed. The court held (i) s.26 Land Registration Act 2002 prevents a challenge to the validity of the TR1 based on unregistered constitutional limitations on the Foundation’s power; (ii) on construction of the Foundation’s Articles, the 2001 Instruction was a regulation and Assaly was authorised (by the Articles, the 1988 Power of Attorney and the 1993 sole-signature provision as reflected in the public register) to effect the transfer; (iii) even if Assaly had exceeded internal powers, English law governs the effectiveness of the transfer of English land and ostensible authority does not validate a gratuitous transfer in these circumstances; and (iv) the Foundation’s secondary equitable and restitutionary claims therefore fail.