The one key message of property law is never trust your family. Mirza v Mirza [2009] EWHC 3 (Ch) is a further example of this truism and I can only marvel at the way Stephen Smith QC, sitting as a Deputy Chancery Judge, dealt with the case. The Claimants, Nasir and Naim, were brothers who sought possession of a property in Birmingham against another brother, Jahangir, who was the tenant and who lived in the property with his (ex-)wife, and their six children. This simple possession claim was based on the fact that Jahangir – who seems to be an unpleasant individual, against whom exclusion orders had been made on the grounds of violence, and “not an honest witness” (at [79]) – had split from his wife, Tahira, and the family no longer wanted to provide for her and the children. This simple claim “transmogrified” (at [2] – love that word) into a claim by Tahira for a beneficial interest in the property, and a claim by two of the children, Shakeel and Haleema, to beneficial interests in the property as well as a further property. There was a further claim by Naim (and this is the most interesting legal aspect of the case) to an interest in that further property which was now registered in the names of Shakeel and Halima. Another brother, Saleem, generally took the side of Tahira and the children but his evidence was generally discounted where it conflicted with that of Naim.  All I can really do is summarise the main facts and points here, but anybody wanting further information about how families can really screw you up should read the 145 paragraphs in full.

Naim was described as “the most reliable witness” (at [76]) which, frankly, does not seem to be  saying much. He is an airline pilot who has amassed considerable wealth and seems to have bankrolled the family. Tahira

… remained dignified and restrained notwithstanding her plight. … [She] gave an impassioned plea for justice before she left the witness box, pointing out that after suffering what she portrayed as almost 30 years of misery with Jahangir, it is unfair that he and two of his brothers should now conspire to evict her from what she thought was her family home. (at [77])

Her claim to a beneficial interest in the property was on the basis of being Jahangir’s spouse, a claim which was “misconceived and was rightly abandoned before trial” (at [113]), demonstrating yet again the iniquity of traditional property law determinations in these situations. Worse still, it was held that Jahangir was a tenant of the property, and that, as he had moved out, Tahira was liable for the mesne profits + interest from the end of the tenancy (April 2005) on the basis that she could not reasonably have expected to remain in the property rent free in the meantime if her and her children’s claims failed.

Shakeel and Halima’s case was essentially that all the money used to buy the properties was Jahangir’s. Although it came from Naim’s bank accounts, it had been put there essentially as a deception to enable Jahangir to claim benefits. Although Jahangir had been formally unemployed since 1981, it was asserted that he had amassed the necessary wealth through informal employment in the business enterprises run by his brothers. Although the evidence suggested that he did enjoy some form of employment in those enterprises, the financial evidence of the profit of those companies was “sadly very limited and unimpressive” (at [97]). Essentially, Shakeel and Halima’s claim was found to have no evidential foundation and to be unbelievable (at [106]).

Shakeel and Halima had purchased the further property with the assistance of what was found to be a loan from Naim to pay the deposit of c £25k on a c £95k property, the remainder being provided by a mortgage lender. The loan was to be repaid when Shakeel and Halima were “financially more stable” (at [128]) and Naim claimed that the agreement was that he would be paid £50k when the property was sold (although the Judge found that Naim was “mistaken” in this recollection: at [131]). Shakeel and Halima argued that the loan was void because it was not in writing and therefore did not comply with s 2, Law of Property (Miscellaneous Provisions) Act 1989 (or, as was heard around the Law Commission in the 1990s, the mysterious provisions Act). Now, this was an interesting argument in favour of which they might have cited the CA decision in Sahib. Instead, the court went down the executory contract route in Tootal Clothing v Guinea Properties (1992) 64 P&CR 452, in which, in essence, the CA held that section 2 has no application to completed contracts, only to executory contracts. The Judge held that this was a completed contract because the legal and beneficial title to the property had been passed to Shakeel and Halima, all that remained was for the money to be repaid, and it made no difference that the agreement was not set out in writing. Personally, I don’t buy into that finding on the law, which seems to go against the grain of the LPMPA, but you can’t blame Stephen Smith QC for trying to find a neat solution here. In any event, the loan couldn’t be repaid because Shakeel and Halima weren’t financially more stable – whatever that might mean – and Naim’s claim for repayment was rejected (at [145]). But, no claim seems to have been made by Naim under s. 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale – next steps, no doubt.