Vanida Walker v Ekkachai Somboonsarn

Beneficial ownership of company shares or property depends on the parties’ agreement and the circumstances of acquisition, not simply on legal registration or day-to-day involvement in a business. Where no shares have been issued, the named subscriber retains the legal right to call for their issue; the beneficial ownership of that right is determined by the arrangement between the parties. Management activity and contributions may inform that inquiry but are not decisive. A formally executed deed will ordinarily take effect according to its terms unless a recognised vitiating doctrine is established. A plea of non est factum requires a fundamental difference between what the signer believed they were signing and the document’s actual character, a relevant disability, and absence of negligence in failing to ascertain the document’s general effect.

The claimant, a mother, and the defendant, her son, disputed ownership of three companies and four properties acquired over many years. The claimant contended that she beneficially owned the companies and several properties, although some legal titles and Companies House records were in the defendant’s name. The defendant relied on alleged nominee arrangements, family loans, divorce-related asset protection, a 2009 declaration of trust concerning Flat 22 BM, and a 2015 transfer of that property.

The court determined the beneficial ownership of the companies and properties on the civil standard, following a lengthy trial involving conflicting recollections, incomplete records and disputed signatures.

1. Companies. No shares had been issued, no share register existed and no share transfers had been executed. The claimant was therefore the subscriber with the legal right to call for issue of the shares, including where she had adopted signatures forged on incorporation documents. Beneficial ownership depended on what had been agreed and the surrounding circumstances at incorporation. The claimant beneficially owned the subscriber’s rights in all three companies and would own the shares legally and beneficially when issued.
2. Day-to-day work in a family business was not decisive of ownership. The nature of management involvement, oversight of records and financial affairs, and contributions to acquisition and establishment could be relevant, but the evidence had to be assessed in the whole factual context. The claimant’s ownership of the essential restaurant leases, substantial financial contributions and the continuity between the companies supported her beneficial ownership.
3. Properties. The claimant beneficially owned 78 Hermit Road and 38 Charlotte Street. Her payment of the substantial non-mortgage funding for 78 Hermit Road was not repayment of alleged loans to the defendant. The Thai family loan used for 38 Charlotte Street was arranged by and primarily owed by the claimant. The claimant failed to establish beneficial ownership of 3 Chargrove Close, so beneficial title followed the defendant’s legal title.
4. Flat 22 BM. The property was acquired legally and beneficially by the claimant. The 2009 Declaration of Trust expressly transferred the beneficial interest to the defendant. The court rejected the suggestion that it was an informal family arrangement or had been left in escrow. The plea of non est factum failed: the claimant understood, or ought to have ascertained, the general effect of the deed and was not entitled to avoid it merely because she did not recall signing it. The 2015 transfer was also effective and was intended to transfer legal and beneficial ownership.
5. Consequential relief was adjourned. The parties were directed to seek agreement on the form of order and to identify any issues requiring a further hearing.

This was a first-instance decision of the High Court. The judgment records earlier interim proprietary and freezing orders but no prior merits decision.