Mirza v Mirza
7 January 2008, Chancery Division, High Court, England
Background
This complicated and unusual case is well summarised by the judge, Stephen Smith QC, sitting as a Deputy Judge of the Chancery Division:
"The proceedings commenced in 2005 as a landlord's claim in the County Court for possession of residential premises, on the expiry of an assured shorthold tenancy by effluxion of time. They have since transmogrified into a High Court claim by the current occupant of the premises that the tenancy was a sham and the tenant was actually the beneficial owner of the premises, who had disguised himself as a tenant in order to claim housing benefit. Along the way, the claimant landlord has acknowledged that although he is the registered owner of the premises he is not their beneficial owner; the true beneficial owner (according to the landlord) has since been joined to the proceedings as the second claimant. The tenant himself denies that he is or ever was the beneficial owner of the premises; two of the tenant's children, however, do claim a beneficial interest in the premises."
Dramatis Personae
The dramatis personae are all family members: P1 and P2 and the 1st defendant (D1) are brothers and the 2nd defendant (D2) was the wife of the 1st defendant and the 3rd and 4th defendants were the children of D1 and D2. A key witness who was not a party but threw his weight behind D2, D3 and D4 was the fourth brother of P1, P2 and D1. They are descendants of a head of family who migrated from Pakistan in early 1960s.
The Issue
The key questions the judge had to determine were the beneficial ownership of two properties in Birmingham: 133 Springfield Road (owned by D3) and 637 Shirley Road (registered in the name of the 1st claimant (P1)) and the ownership of the money used to fund the purchases and the refurbishment of the properties. The 2nd claimant (P2) sought a declaration that he was the sole beneficial owner of 637 Shirley Road and claimed to possession of 637 Shirley Road.
The Defence
The defendants’case was essentially that D1 was the beneficial owner of both the properties. The judge had little difficulty rejecting the claim. D1 had been claiming state benefits for the last 27 years. The judgment reveals that although D1 was never engaged in remunerative employment after 1981, he managed to support for his immediate family of 8 people (including himself and four other children not part of the proceedings), until the relationship with D2 broke down completely in 2004.
The family (i.e. the brothers other than P2) ran a series of business including a supermarket business which was sold in 1989 or 1990 and two fast food businesses (selling fish and chops, pizzas and kebabs etc) in Birmingham were purchased and run for about 7 years. No annual accounts were prepared for either the supermarket or fast food businesses apparently.
The defendants claimed that D1 was effectively a full-time employee or a partner and saved the money used to fund the properties by, in the words of the judge, "salting away his earnings" i.e. receiving tax-free cash from the supermarket and takeaway businesses. D1 himself appeared to deny this, explaining his presence in the takeaway business as "just popping in to cook himself a pizza because he did not trust the employee", which the judge said was "laughably far fetched".
The judge also disbelieved that D1 was merely getting the "occasional couple of hundred quid" according to P1, who denied D1 worked in the businesses and was paid.
In addition, there was also evidence that D1 "like his cars" and "particularly fond of Audis and VWs" and occasionally purchased a car and that he returned to Pakistan from time to time.
Judgment
In the end, the judge believed that D1 received money from the businesses but ruled that the evidence simply could not support the claim that D1 could have accumulated the fund used to purchase the properties.
The judge made an order inter alia giving possession of 637 Shirley Road to P2, postponing the date for possession for 6 weeks by consent, pursuant to Section 89 of the Housing Act 1980, payment of mesne profits with interest to P2
Witnesses
The judge found the most reliable witness to be P2 who did not appear to have an axe to grind and that D2 remained "dignified and restrained" but "the other witnesses were less helpful". The judge found that D1 made "false and dishonest claims for social security benefits, perhaps for as long as 12 years or longer, and made no payments of tax or national insurance on his secret earnings".
