NRC Holding Ltd v Danilitskiy and others [2017] : Property in the name of a company beneficially owned by an individual

Polly Hill Associate in our Commercial Dispute Resolution department provides a brief overview of this decision.

The Court held that Mr Danilitskiy who was a judgment debtor, acquired a beneficial interest when he purchased a property in the name of a company. Consequently he retained a beneficial interest and the judgment creditor was entitled to a final charging order over the property.

Mr Danilitskiy had arranged the purchase, provided the funds and there was no evidence of a loan to the company. His family also used the property, they did not pay any rent to the company and the company had no other assets. The Court attached no relevance to the facts that after the purchase, Mr Danilitskiy’s daughter acquired the shares of the company and had all dealings with the property.

Previously it has been difficult to assert that assets are beneficially owned by someone other than a judgment debtor to then enforce against a trust or a company. However evidence is critical and cases such as these are fact specific. Furthermore, a Court will invariably draw adverse inferences when a key witness does not give evidence and their failure to do so is not explained. In this case Mr Danilitskiy failed to attend the hearing.

Meaning of a beneficial interest

The ownership of land in England and Wales is dealt with in two ways: the legal ownership and the economic benefit, which is referred to as the beneficial ownership.

The legal ownership is separate from the beneficial ownership and the legal owner may not necessarily be the same as the beneficial owner.

The legal owner is said to hold the beneficial interest in the property on trust for the beneficial owner.

The beneficial owner of the land will have a right to the income from the property or a share in it, and a right to the proceeds of sale of the property or part of the proceeds.

A beneficial interest in property is an equitable interest.

This blog was written by:  Polly Hill

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