Rothschild v Charmaine De Souza

Factual and Procedural Background

The court was tasked with determining the real ownership of three categories of assets: (i) Company A and its subsidiaries, (ii) three properties located at Greystoke House, 150 Brunswick Road, London E5, and (iii) a property known as The Akoya in Miami Beach, Florida. The dispute arose between the Second Respondent (Wanda), supported by the Applicant (her son, the Appellant), who claimed ownership of these assets, and the First Respondent (the Appellee), who asserted that she and the Appellant owned the assets equally.

The ownership of the properties was said to follow the ownership of Company A, as they were purchased using profits from the business. The court heard oral evidence focused exclusively on the ownership of the business.

It was undisputed that Wanda exclusively owned her home at 45 Addison Gardens, London W14.

The case involved examining the concept of "real ownership," distinct from formal or nominal ownership, and sought to ascertain the intentions of the parties involved at the time of acquisition. The court noted the importance of contemporaneous evidence and agreements, whether express, oral, tacit, or imputed, in determining ownership.

The background of the business included the incorporation of Fast Fones Direct Ltd in 1999, initially with shares held by a nominee and Charmaine, before being absorbed into Company A in 2000 with shares held 50:50 by the Appellant and the Appellee. Wanda claimed to be the real owner but lacked any contemporaneous documentary evidence to support this. The Appellant and Appellee consistently represented themselves as the owners in dealings with third parties, tax authorities, and lenders.

The court also reviewed the history of related companies, mortgage arrangements on Wanda’s property, and various communications and documents demonstrating the business and assets were treated as owned equally by the Appellant and the Appellee. Wanda’s case evolved during proceedings, initially claiming an agreement to retain capital interest while ceding control, then asserting the Appellant had "gone rogue" in dealing with the assets without her authority.

Ultimately, the court found Wanda’s claims to be unsupported by evidence and concluded the common intention of the Appellant and Appellee was to own the business and related properties equally.

Legal Issues Presented

1. Who is the real owner of Company A and its subsidiaries?
2. Who is the real owner of the properties at Greystoke House, London?
3. Who is the real owner of The Akoya property in Miami Beach, Florida?
4. What is the legal significance of real ownership versus formal or nominal ownership in this context?
5. How should the court determine real ownership where there is no contemporaneous written agreement?

Arguments of the Parties

Second Respondent and Applicant's Arguments

• Wanda and her son claim they are the real owners of the business and the properties, asserting ownership follows from Wanda’s alleged ownership of the business.
• Wanda contended there was an agreement allowing the Appellant and Appellee to control the business and pay themselves salaries, while she retained the capital interest.
• Later, Wanda argued that the Appellant had acted without her authority ("gone rogue") in dealing with the assets and business.

First Respondent's Arguments

• The Appellee asserts that she and the Appellant are the real owners of the business and related properties, each holding a 50% interest.
• Ownership of the properties follows the ownership of Company A, which they claim is jointly owned by them.
• They deny Wanda’s claims of ownership and submit that Wanda had no involvement in the business beyond providing premises and acting as company secretary.
• The Appellee challenges the credibility of Wanda’s evidence and that of her supporters, describing it as loyalty-driven and unsupported by contemporaneous documentation.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by clarifying the concept of "real ownership," distinguishing it from formal or nominal ownership and emphasizing that presumptions are starting points rather than conclusive. The court explained that determining real ownership requires uncovering the parties' intentions at the time of acquisition, preferably through contemporaneous evidence such as documents, correspondence, and records.

The court found no contemporaneous documentation supporting Wanda’s claim of ownership of the business or related companies, despite Wanda’s prior experience in a similar ownership dispute. The initial company accounts recorded the Appellant as the beneficial owner of the shares, signed by both Wanda and the Appellant, which the court considered binding evidence against Wanda’s claim.

The court observed that the business was consistently represented to third parties, tax authorities, and lenders as being owned equally by the Appellant and the Appellee. Numerous documents and communications supported this representation, including tax returns, letters from solicitors, due diligence documents, and internal business records.

The court rejected the testimony of witnesses showing bias or lacking evidential basis, including those loyal to Wanda and the Appellant. It found Wanda’s oral evidence incoherent and inconsistent with the documentary record.

Regarding Wanda’s change of case to assert that the Appellant had acted without authority, the court found this to be a false narrative, concluding that the Appellant had not "gone rogue" but had truthfully represented ownership.

The court concluded that from the time of the phoenix company’s creation, the common intention of the Appellant and Appellee was to own the business and associated properties equally, with Wanda aware and acquiescent to this arrangement. The court specifically rejected any presumption of a resulting trust in Wanda’s favour based on her contributions or the use of her property as security.

The court also declared Wanda’s sole beneficial ownership of her home at 45 Addison Gardens and her entitlement to an indemnity from the Appellant and Appellee in respect of the mortgage on that property.

Holding and Implications

The court held that the real ownership of Company A, its subsidiaries, and the related properties at Greystoke House and The Akoya is jointly held 50:50 by the Appellant and the Appellee.

Wanda is confirmed as the sole beneficial owner of her home at 45 Addison Gardens and is entitled to an indemnity from the Appellant and Appellee for the mortgage debt on that property.

The decision directly resolves the ownership dispute between the parties without setting new precedent, reaffirming established legal principles regarding real ownership, the importance of contemporaneous evidence, and the determination of parties' intentions in the absence of written agreements.