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Arif v Anwar and Rehan [2015] EWHC 124 (Fam)

Date:12 FEB 2015
Law Reporter
(Family Division, Norris J, 26 January 2015)

[The judicially approved judgment and accompanying headnote has now published in Family Law Reports [2016] 1 FLR 359]

Property – Beneficial interest – Divorce – Wife held property on trust for the husband – Son claimed an interest – Promissory estoppel – Preliminary issue of whether the son had an interest and if so the extent of the interest

Please see attached file below for the full judgment.

The son was found to have a 25% interest in the property on the basis of promissory estoppel.

The husband and wife lived together with their child and the husband’s son in a house worth £1.75m of which the wife was the legal owner following a transfer in 2001. In 2003 the wife executed a declaration of trust stating that she held the property on trust for the husband and agreed to transfer the property to him should he so direct.

In 2011 the husband requested that the wife transfer the property to him and his son. She refused and issued a petition for divorce. She moved with the child to rented accommodation. The husband was made bankrupt.

In divorce proceedings the issue arose of whether there were sufficient funds in the bankruptcy estate for a modest financial provision to be made for the wife and the child. The husband’s son had claimed a 50% share of the property which he and the husband had allegedly agreed upon in return for an investment held by the husband in the son’s name which was used to finance improvements to the property. The son further claimed he was owed money from the estate in respect of a property, Rifsons House, which was vested in the husband and wife as trustees for the son.

Rifsons House was the subject of a charge of £245,000 which the husband subsequently discharged. The husband took an equity release loan secured on the property. The lender required a charge over a cash deposit of £245,000 to be made by the husband. He used £245,000 of the advance to meet the obligation.

It fell to be determined whether the son had been at the commencement of the divorce proceedings the beneficial owner of a 50% share in the property or whether he was entitled to some other interest and whether the borrowings had represented money from which the husband had benefited, whether the son could demonstrate that the borrowings had been paid off by him and whether the remaining borrowings represented money taken for the husband’s personal benefit.

On the evidence the declaration made by the wife in 2003 had been correct. She had undertaken to transfer the property at his direction. The court would give legal effect to that express trust. In 2006 it was agreed that the son could share the property and that the husband could use money held in accounts in his name but designated as the son’s accounts to fund work on the property. They agreed that the position as to the son’s money and ownership of the property would be clarified at a later date.

Although there was no constructive trust in relation to 50% of the property by virtue of an agreement there was an entitlement by promissory estoppel in the son’s favour. Money which the son was entitled to had been used to pay for improvement works and he had not objected because he expected to receive an interest at a later date. The judge held that he had a 25% interest in the property.

The husband was entitled to recoup the £245,000 spent on redeeming the charge on Rifsons House. He had not intended his discharge of the charge over Rifsons House to have been a gift and he expected to be repaid. He right to recoup had neither been abandoned nor released.

Case No: FD11F00482
Neutral Citation Number: [2015] EWHC 124 (Fam)


Royal Courts of Justice
The Rolls Building
Fetter Lane

Date: 26/01/2015

Before :


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Between :

Sofia Arif

- and -

Arif Anwar
1st Respondent
Raziz Rehan
2nd Respondent

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Duncan Brooks and Marlene Cayoun (instructed by Hughes Fowler Carruthers Ltd) for Sofia Arif
Valentine Le Grice QC (instructed by Zaks Solicitors) for Arif Anwar
ZarPenelope Reed QC and Nicholas Fairbank (instructed by Saints Solicitors) for the Raziz Rehan
Messrs Charles Russell Speechlys attended on behalf of the Trustees in bankruptcy of Arif Anwar

Hearing dates: 4-7 November and 18 December 2013, 14 March and 19-20 June 2014

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Arif v Anwar and Rehan [2015] EWHC 124 (Fam)