Legal title to many valuable UK properties is held by overseas companies and it can be a tricky task to identify their beneficial owners. However, as one case concerning an alleged $5 million fraud revealed, English judges are well up to the challenge.
A company based in Cyprus claimed that a former shareholder and senior manager had misappropriated large amounts of its money by procuring payments to entities that he controlled without any commercial justification. After launching proceedings against him in London, the company obtained a default judgment for the full amount that he was alleged to have defrauded, plus interest and costs.
In seeking to enforce that debt, the company obtained a temporary charging order against a London house on the basis that the man was its beneficial owner. Title to the property was, however, registered in the name of a British Virgin Islands (BVI) company. The latter argued that it was the beneficial owner of the house and that it, in turn, was beneficially owned by the man’s eldest daughter.
In ruling on the issue, the High Court noted that the man was the source of the £3.17 million that had been used to purchase the house. Neither the transfer of the shares in the BVI company to his daughter, nor any other events that had occurred since the purchase, indicated that he had intended to divest himself of the beneficial interest in the property. The charging order was therefore made final.