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Cash Transaction Defeats Trustee Application

The case of Cash Transaction Defeats Trustee Application flows from the reported decision in Jesseman & Anor v Ali & Anor [2022] EWHC 1080 (Ch).

The Trustee’s Ambitious Application

The judge, Insolvency and Companies Court Judge Barber described the application as somewhat ambitious because the Trustee in Bankruptcy had no first-hand knowledge of the events at the heart of the case and had not questioned the Bankrupt, Mr Majeed about the same.

The ambitious application was to obtain an order that the matrimonial home of Mr and Mrs Ali (friends of Mr Majeed) was 50% owned by the Bankruptcy estate as a result of Mr Majeed lending £125,000 to save the matrimonial home that was in effect caught within a confiscation order (“the Ambitious Application”):

The Applicants maintain that Mr Majeed owned 50% of the equitable interest in the Property at the time of his bankruptcy and that this 50% share in the equity now vests in the Applicants as his Trustees. They seek declaratory relief and orders for possession and sale on that basis.

In the alternative the Applicants maintain that in 2015, Mr Majeed loaned Mr Ali the sum of £125,000, that the loan was repayable on demand, that repayment was demanded in 2020 (or thereafter) and that the loan remains outstanding. Under this alternative head of their claim, the Applicants seek an order that Mr Ali pay the sum of £125,000 together with interest.

Notable Circumstances

Mr Majeed in November 2019 was convicted of VAT and Excise fraud. He is currently serving a 10-year custodial sentence and has been the subject of confiscation proceedings.

Mr Ali was convicted of harbouring concealing or dealing with controlled drugs contrary to section 170(1)(b) of the Customs and Excise Management Act 1979.

The Cash Transaction That Defeated The Trustee

The cash transaction that in effect defeated the Trustee in Bankruptcy involved the repayment of £125,000 in cash by Mr Ali to Mr Majeed (“the Cash Transaction”) as set out in Mr Ali’s witness statement as follows:

9. From further discussions with him it was agreed that my wife would purchase the interest that Mr Majeed had in the property by paying him the sum that was due to him and subject to the earlier agreement that I had with him. After receiving confirmation of this I can confirm that Easy Access Documents LLC agreed to loan the monies to my Wife so that the interest could then be transferred to her as to 100% as I had no want to own property in the United Kingdom as I had made a new life in Dubai. Again, there was no contract or written correspondence in relation to this agreement. It was a gentlemen’s agreement.

10. I note that there has been some criticism of the amount that was loaned. I can confirm that the sums of money equate to the sum of £125,000 in Sterling which was then converted into Dirhams and paid in the UAE in the manner stipulated by Mr Majeed. There is also criticism that the loan agreement was not accompanied or supported by any evidence demonstrating that the monies had been paid. I can confirm that the monies were paid on the instruction of Mr Majeed to a company that I believe he had a trading account with called DJD International which is also based in Dubai and deals in wholesale FMCG items. As is common practice in the UAE the money was handed to my Wife in Dubai and then it was dropped to the Offices of DJD International for the benefit of Mr Majeed. I have never met the people he asked me to drop the money off to before or after the transaction, but they were aware I was going to drop off the money for Mr Majeed. At that stage Mr Majeed confirmed to me that he relinquished his interest in the property and that he agreed that my Wife was now the owner of 100% of the beneficial and legal interest in the property.

11. In the circumstances as Mr Majeed no longer held any interest in the property I cannot see how the Trustee would be entitled to the claim that they have made.’

The Court’s Decision On The Ambitious Application

The Court was persuaded that the Cash Transaction took place so that Mrs Ali would acquire the Bankrupt’s 50% interest in her property:

Both Mr and Mrs Ali were unshakeable in their testimony when describing their ten minute drive from Easy Access’s offices to DJD International’s premises on 20 December 2017 and their drop-off of the monies at DJD’s premises. I accept their evidence of that journey and of the drop off. I accept their evidence, which was supported by that of Mr Majeed, that they were in telephone contact with Mr Majeed throughout the journey and at the time of the drop off. I further accept their evidence that the drop off was by prior arrangement with Mr Majeed.

For all these reasons, I am satisfied that on 20 December 2015, Mr Majeed was repaid the sum of £125,000 which he had advanced in 2015. I so find.

As a result, the judge dismissed the Ambitious Application.

What Next?

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Disclaimer: Cash Transaction Defeats Trustee Application

This page Cash Transaction Defeats Trustee Application is not legal advice and should not be relied upon as such. This article Cash Transaction Defeats Trustee Application is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.

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