Beneficial owner succeeds in obtaining transfer of land

Funding the acquisition of land in the name of another for an illegal purpose – avoidance of stamp duty – does not prevent the funder from recovering the land under a resulting trust. In Mr Vytas Karpavicius and Mrs Zivile Karpaviciene v Mr John Waites [2023] EWHC 2051 (Ch), the Chancery Division dismissed an appeal from the Central London County Court decision. The case concerned the development of land to the rear of the Grove, Ramsgate Road, Louth, which had planning permission for two houses. Karpavicius was a builder and Waites and his wife renovated properties. The parties had known each other for some 10 years and agreed to develop the land. The oral agreement was that Waites would provide the purchase price and Karpavicius the labour to develop the houses with the profit being split equally between them. The land was acquired in the name of Karpaviciene for £230,000 in February 2020. The parties soon fell out and by July 2020 it was clear that the development would not proceed. They disputed in particular why the land was acquired in the name of Karpaviciene. Waites argued that it was for stamp duty saving purposes; Karpavicius and Karpaviciene contended that it was a loan to them by Waites to enable Karpaviciene to buy the land. The judge decided that although the money provided by Waites was described as a loan, in reality it was not a loan and they all knew it was not. It was in order to try and get a stamp duty saving, which explained why there was no declaration of trust in favour of Waites. Stamp duty was in fact paid. Waites was the beneficial owner of the land and Karpaviciene was ordered to transfer the property to him. Karpavicius and Karpaviciene appealed, arguing that having called the provision of the purchase funds a loan and having relied upon it as such, Waites could not now deny this and argue that the land was his purchase. They relied on authorities where husbands having put assets into their wife’s name intending to retain beneficial ownership had to rely on their own illegality to rebut the presumption of advancement between husband and wife, which failed Tinker v Tinker [1970] 1 All ER 540. The appeal court, like the judge, rejected this argument. There was no relationship between the parties which gave rise to a presumption of advancement. It would be overkill for the court to upend Waites’s purchase of the land by imposing on the parties a transaction which, on the judge’s finding, was a fiction. Louise Clark is a property law consultant and mediator