High Court Rules Validity of Property Transfer in Asturion Foundation v Aljawharah Bint Ibrahim Abdulaziz Alibrahim Alibrahim Case

Citation: [2023] EWHC 3305 (Ch)
Judgment on

Introduction

The High Court of Justice case Asturion Foundation v Aljawharah Bint Ibrahim Abdulaziz Alibrahim delves into complex legal disputes over the validity of a property transfer, examining various legal principles under both English law and the law of Liechtenstein, where the Foundation is established. The case turns on whether the transfer of Kenstead Hall to the Princess was valid or void due to an alleged contravention of the Foundation’s purpose and the alleged excess of internal competencies by the Foundation’s trustee.

Key Facts

Asturion Foundation, established in Liechtenstein by the late King Fahd of Saudi Arabia, intended to manage a pool of assets including Kenstead Hall in London. The case concerns the validity of Kenstead Hall’s transfer to King Fahd’s widow, the Princess, initiated by the trustee Me Assaly based on purported instructions. Post-King Fahd’s death, questions arose whether the transfer respected the Foundation’s purpose and whether Me Assaly possessed the requisite authority to enact the transfer unilaterally.

Several legal principles were contemplated in this case:

Foundation’s Purpose and Internal Competency

The Foundation’s purpose and the trustee’s competencies are governed by Liechtenstein law. The Court examined whether the late King Fahd’s instructions to transfer properties formed part of the Foundation’s immutable purpose and whether Me Assaly exceeded his internal powers by acting alone.

Ostensible Authority

Under English law, an agent may bind a principal not only by their actual authority but also by apparent or ostensible authority, based on representations made by the principal to a third party. The Court rejected the application of this principle, focusing instead on the transaction’s voluntary and unremunerative nature, which did not entail the necessary give-and-take present in most ostensible authority scenarios.

Section 26 of the Land Registration Act 2002

S.26 protects a disponee from limitations on the disponor’s power to dispose of the registered estate if not reflected as a restriction on the register. The Court determined that this provision validated dispositions such as the one at issue absent any registered limitation.

Equitable Interests and Priorities

This concerns whether an equitable interest stands in priority to legal title after transfer. If so, remedies like rescission or damages for knowing receipt may be applicable. Nevertheless, if the transfer is without value, as per ss.28-29 LRA 2002, the original equity will not be defeated despite transfer.

Choice of Law

The applicable law for assessing the validity of the transfer is primarily English law since the property lies within England. Concerning breach of fiduciary duty and unjust enrichment, the Court navigated the choice of law rules, concluding that English law governed these issues.

Outcomes

The Court held:

  1. The transfer of Kenstead Hall was not void due to contravention of the Foundation’s purpose or Me Assaly’s lack of internal competency.
  2. The secondary claims for rescission predicated on breach of fiduciary duty or mistake were dismissed.
  3. The tertiary claim of unjust enrichment was denied as the enrichment was not unjust.
  4. The claim for damages for knowing receipt was rejected as no breach of fiduciary duty had been established.

Conclusion

In summary, the High Court rejected all claims by the Foundation, finding that the legal transfer of Kenstead Hall to the Princess was valid and unimpeachable under the s.26 LRA 2002, irrespective of the alleged breaches of duty or authority under Liechtenstein law. The principles of ostensible authority and the preservation of equitable interests were also considered but found inapplicable in voiding the transfer. The decision exemplifies the careful interplay of domestic and foreign laws in validating property transactions, especially involving international entities.

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