David Mumford KC and James Kinman acted, with assistance from Emily Gailey, for the claimant in Asturion, one of The Lawyer’s Top 20 Cases of 2023. David and James were successful on a number of important and difficult issues relating to the nature and effect of ostensible authority, how English conflict of laws principles deal with issues of authority and knowing receipt in relation to foreign entities, and the effect of section 26 of the Land Registration Act 2002. The claim failed on the Judge’s findings as to the effect of Liechtenstein law.

The case involved the transfer of a valuable property in Hampstead from Asturion, a Liechtenstein foundation established by King Fahd of Saudi Arabia for the benefit of himself and his heirs, to the defendant princess, King Fahd’s widow. Asturion asserted that the officer who had effected the transfer did so without authority and in breach of the foundation’s purpose. It sued to recover the property or compensation for the same.

The case gave rise to a number of important and difficult issues, including the following:

1. The characterisation of foreign powers of representation for the purposes of English conflict of laws analysis. David and James successfully argued that, notwithstanding the fact that Liechtenstein law has a unitary concept of “representative power” which does not distinguish between actual and ostensible authority, it is appropriate for the English Court to distinguish between acts which English law would regard as actually authorised and acts which English law would only regard as ostensibly authorised for the purposes of an English conflict of laws analysis.

2. Whether ostensible authority has any application to gifts. David and James successfully argued that the operation of ostensible authority is limited to transactional relationships. The recipient of a gift from a legal entity cannot rely upon the ostensible authority of an unauthorised officer of the entity to validate the gift.

3. The availability of knowing receipt claims arising out of foreign law relationships where the foreign law in question does not recognise fiduciary relations. David and James successfully argued that a claim in knowing receipt can arise out of a foreign law relationship where the foreign law in question does not recognise fiduciary relations. Provided English law is the lex causae, the English court will consider whether a relationship is sufficiently analogous to what English law would recognise as fiduciary. If it is, a claim in knowing receipt can arise.

4. The nature of an “overseas company”. While this issue did not have to be determined, the Judge indicated that he was inclined to accept David’s and James’s submissions that the defining feature of a company is that it has a membership (and so a Liechtenstein foundation, which does not have a membership, is not an “overseas company” within the meaning of the Companies Act 2006).

5. The effect of section 26 of the Land Registration Act 2002. David and James successfully argued that the controversial decision in Ghai v Maymask (228) Limited [2020] UKUT 298 (LC) overstated the effect of section 26 of the Land Registration Act 2002. The Judge held that, contrary to the decision in Ghai, if an unauthorised agent purported to dispose of property on behalf of a legal entity, the legal entity could rely upon the agent’s lack of authority to have the disposition declared void (provided that the lack of authority did not flow from a constraint upon the entity’s capacity).

In the event, the Judge held that, as a matter of Liechtenstein law, the transfer was validated by a combination of Asturion’s statutes, a power of attorney granted to the officer in question, and a letter written by King Fahd four years prior to his death (and ten years prior to the transfer). As a consequence, Asturion’s claims failed.

The successful defendant princess was represented by Rupert Reed KC and Simon Atkinson.

David and James were instructed by Graham Shear of Bryan Cave Leighton Paisner LLP.

Judgment can be viewed here.