In McLinden v Lu and others [2022] EWHC 2807 (Ch) the High Court has provided guidance on the approach the court should adopt when asked to admit into evidence a document that is required to be stamped under the Stamp Act 1891, but is not so stamped.
The claim concerned the validity of a charging order made in November 2011 against the purported beneficial interest of the late Mohamed Munaver Khan in a property situated in Tooting, SW17, in favour of Shiao-Chen Lu. In 2010, Lu obtained judgment against Munaver. She sought to enforce the judgment by way of a charging order, possession and sale when he failed to satisfy the same.
Lu petitioned for Munaver’s bankruptcy in 2013. Part of Munaver’s debt comprised Lu’s legal costs incurred in the 2011 proceedings. Lu had failed to pay her legal representative’s fees and judgment was subsequently obtained by Lu’s legal representatives in respect of the same. In 2019, Lu’s legal representatives obtained an interim charging order over Lu’s equitable mortgage over the property. At the hearing of the interim charging order to be made final, it was opposed by Shabnam Khan, acting on behalf of the estate of Fazal Khair Khan. It was argued on behalf of the estate that Munaver held the entirety of the beneficial interest in the property for Fazal.
When the property was first purchased, the legal and beneficial interest in the property was held in the joint names of both Munaver and Fazal. In September 1995, Fazal transferred the entirety of the legal and beneficial interest in the property to Munaver. The effect of that transfer was that any beneficial interest then vested in Fazal was overreached into the proceeds of sale arising from that transfer.
It was argued on behalf of Fazal’s estate that two declarations of trust executed in February 1996 and November 2010 changed matters. The 1996 declaration provided Fazal was to retain a 50% beneficial interest in the property. The 2010 declaration provided that the entirety of the beneficial interest in the property was held on trust by Munaver for Fazal. The challenges to the validity of both declarations were dismissed by the High Court. In particular, arguments that both declaration were shams designed by Munaver to hide his interest in the property from potential creditors were rejected.
Of particular interest to practitioners from an evidential perspective was Lu’s challenge to the admissibility of the 1996 declaration into evidence. At the material time the 1996 declaration was executed, it was an instrument which, under the 1891 Act, was required to be stamped. In the absence of the same, section 14(4) provided that it could “not be given in evidence, or be available for any purpose whatever”. At the date of trial the 1996 declaration remained unstamped. Lu argued the court could not have regard to it at all.
Relying on In re Coolgardie Goldfields Ltd [1900] 1 Ch 475; and Haymeed v Qayyum [2008] EWHC 2274 (Ch) the High Court found that the estate’s copy of the 1996 declaration, which was tendered as evidence of the original, could be relied on in the present proceedings on condition that an appropriate solicitor, acting in their capacity as an officer of the court, gave an undertaking that the instrument would be stamped and the necessary fees paid. Once the undertaking was given there was no requirement to wait for the stamping to occur before the order, arising out of the use of the unstamped instrument, could be perfected.
In light of the court’s findings as to the validity of the declarations, the November 2011 charging order and the 2019 interim charging orders were discharged.
Elizabeth Dwomoh is a barrister at Lamb Chambers
