Usman Hussain Malik v Mahboob Hussain
[2023] EWHC 1433 (Ch)
Usman Hussain Malik v Nusrat Malik & Ors (Re RN Restaurant (Stockport) Limited)
22 January 2024
[2024] EWHC 69 (Ch)
High Court
A mom gave her son some shares in the family restaurant to help oust her troublesome husband. Later, they fought over the shares. The judge decided the mom gave the shares as a gift, not on any conditions, so the son got to keep them.
Key Facts
- •In 2016, Nusrat Malik transferred 2 shares in R N Restaurant (Stockport) Ltd to her son, Usman Malik.
- •The transfer was intended to help remove Nusrat's estranged husband, Tariq Malik, as a director.
- •Subsequently, Usman aligned himself with Tariq, leading to a dispute over the beneficial ownership of the shares.
- •Nusrat claimed Usman held the shares on resulting trust, or that the transfer was due to misrepresentation, mistake, or undue influence.
Legal Principles
In a gratuitous transfer, the question of beneficial ownership depends on the transferor's intention.
Lewin on Trusts (20th ed.) chapter 10
A rebuttable presumption of resulting trust arises in gratuitous transfers where there are no provisions determining beneficial ownership.
Lewin on Trusts (20th ed.) paragraph 10-003
The presumption of advancement applies where a parent transfers property to a child.
Lewin on Trusts (20th ed.) paragraph 10-003
Undue influence is a unitary doctrine, encompassing actual undue influence and presumed undue influence.
Royal Bank of Scotland v Etridge (No.2) [2002] 2 A.C. 773
To set aside a transaction due to undue influence, it only needs to be shown that the undue influence was a reason for entering into the transaction.
UCB Corporate Services Ltd v Williams [2002] EWCA Civ 555
Outcomes
Nusrat's counterclaim failed.
The judge found that Nusrat effectively and unconditionally disposed of the shares to Usman, and there was no basis to reverse the transfer.
Claims based on resulting trust, misrepresentation, mistake, and undue influence were dismissed.
The judge found the evidence did not support Nusrat's claims. The transfer was deemed an unconditional gift made with Nusrat's understanding and consent, driven by a desire to protect the family business from her estranged husband.