Kamran Malik & Ors v Farida Messalti
[2024] EWHC 2713 (Ch)
Kamran Malik v Farida Messalti
6 February 2023
[2023] EWHC 553 (KB)
High Court
A dad tried to trick his creditors by pretending he didn't own his house anymore. The judge saw through it and said the dad had to give enough of the house to repay a woman he owed money to, but the kids could still mostly keep their home.
Key Facts
- •Ms Farida Messalti sought a final charging order against Mr Kamran Malik's interest in a property.
- •Mr Malik contested the order, citing a declaration of trust transferring his share to his wife for their children.
- •Ms Messalti challenged the trust deed's genuineness and validity against her as a creditor.
- •The children were eventually joined as parties to the proceedings.
- •Mr Malik had previous convictions for unlawfully providing immigration advice.
- •Mr Malik had been involved in various unsuccessful litigations resulting in substantial costs orders against him.
- •Ms Messalti's claim stemmed from a libel case Mr Malik brought against her, which was struck out with a costs order of £21,000.
- •Two nearly identical trust deeds were presented, one for the property in dispute and one for another property owned by Mr Malik.
- •The trust deeds were not registered until 2018.
Legal Principles
Transactions defrauding creditors (Insolvency Act 1986, sections 423-425)
Insolvency Act 1986
Charging Orders (Charging Orders Act 1979, sections 1 and 2)
Charging Orders Act 1979
Court's overriding objective (Civil Procedure Rules)
Civil Procedure Rules
Sham transactions
Case law (Snook v London and West Riding Investments Ltd)
Illusory trusts
Case law (Snell's Principles of Equity)
Limitation Act 1980
Limitation Act 1980
Outcomes
The trust deed was deemed genuine and not a sham.
The judge found it more likely than not that the trust deed was executed on 10 November 2008, based on the dates on the documents, signatures, witness testimony, and the lack of evidence suggesting fraud.
The trust deed was found to be effective in divesting Mr Malik's beneficial interest.
The judge interpreted the trust deed as valid, relying on a previous court order clarifying its application to the property and concluding that Mr Malik had no remaining beneficial interest.
Mr Malik's intention to protect assets from future creditors was deemed a prohibited purpose under section 423 of the Insolvency Act 1986.
The judge ruled that a general intention to protect against future creditors, even without specific creditors in mind, is sufficient to constitute a prohibited purpose.
Ms Messalti was deemed a victim under section 423, entitled to relief.
The judge found that Ms Messalti was prejudiced by the trust deed as it prevented her from enforcing her judgment debt against the property.
A final charging order was granted over a sufficient portion of Mr Malik's beneficial interest to satisfy Ms Messalti's debt and costs.
Balancing the interests of Ms Messalti, the children, and other potential creditors, the judge opted for a partial reversal of the trust deed to satisfy Ms Messalti's claim while leaving the family home largely intact.
Permission to raise a limitation defense was refused.
The defense was raised too late, after the conclusion of oral evidence, and would have caused significant prejudice to Ms Messalti.