UK High Court Upholds Gifts Made Before Man’s Death in Property Dispute
The High Court of England and Wales has ruled in favour of Masudur Rahman in a legal dispute concerning assets belonging to the late Al-Hasib Mian Muhammad Abdullah Al Mahmood. The court found that certain transactions carried out shortly before the deceased’s death qualified as gifts made in contemplation of death under a legal principle known as donationes mortis causa.
In a further judgment delivered on 1 August 2024, the court addressed disputes over the assets covered by its earlier ruling, the claimant’s legal costs and the defendants’ applications for permission to appeal. Judge Paul Matthews ordered the four defendants to pay GBP 259,725.29, plus applicable value-added tax, as a payment on account of the claimant’s legal costs.
Background of the Property Dispute
The case involved Masudur Rahman and four defendants who disputed the ownership of assets belonging to Al-Hasib Mian Muhammad Abdullah Al Mahmood. The defendants included the deceased’s executors and beneficiaries under his will.
Rahman claimed that the deceased had intended to transfer certain assets to him before his death. The dispute centred on transactions that allegedly took place in October 2020, when Al Mahmood was seriously ill and believed that his death was approaching.
According to the court’s judgment, the deceased had been making arrangements for a new will. However, concerns about the delay in completing the document led him to take steps that he intended to operate as gifts in the event of his death.
The claimant argued that the deceased had transferred control of certain financial and property-related assets to him. The defendants disputed the claim, leading to a trial before the High Court.
Court Recognises Gifts Made in Contemplation of Death
On 30 May 2024, the High Court delivered its main judgment and concluded that certain transactions amounted to donationes mortis causa. This Latin legal term refers to a gift made by a person in contemplation of impending death, on the condition that the gift takes effect if the donor dies.
The legal principle requires more than a statement that someone intends to leave property to another person. The court must consider whether the donor anticipated death, whether the gift was conditional on death and whether the donor handed over the property or an appropriate means of control.
In this case, the judge examined the circumstances surrounding the transactions and the steps taken by Al Mahmood. The judgment stated that, on 20 October 2020, the deceased gave Rahman the security devices, login details and passwords required to access certain bank and financial accounts.
The deceased also handed over the land certificate relating to his house and documents connected with properties in Sutton. The judge concluded that these actions demonstrated an intention to make gifts that would take effect upon his death.
The court also considered whether Al Mahmood had the mental capacity to make the gifts. It found evidence supporting his capacity and no evidence establishing that he lacked the ability to make the decisions.
Certain Assets Were Excluded
Although the court accepted the claimant’s case in relation to several assets, it did not rule that every item claimed by Rahman had been validly gifted.
The judgment distinguished between property and the furniture or other contents inside the house and flats. The judge found that the deceased had expressed an intention for those contents to belong to Rahman after his death. However, the required delivery of possession had not taken place.
As a result, the furniture and other contents were not covered by a valid gift under the legal principle applied in the case. The court therefore allowed the claim in part rather than accepting every element of the claimant’s demand.
The issue of certain bank accounts also required clarification after the first judgment. In the follow-up decision, the judge ruled that 11 bank accounts listed in Schedule 3 of the claimant’s proposed order were not included among the assets covered by the earlier decision.
This clarification established the limits of the ruling and addressed the disagreement between the claimant and the defendants over which financial assets had been transferred.
Court Orders Payment Towards Legal Costs
The follow-up judgment delivered on 1 August 2024 also dealt with the legal costs arising from the proceedings. Rahman asked the court to order the defendants to pay his costs, including additional amounts available under the applicable civil procedure rules.
Judge Paul Matthews ruled that the claimant was entitled to recover his legal costs from the defendants. The court applied different costs bases to different periods of the proceedings. It also addressed interest on those costs and an additional amount under the relevant procedural rules.
The judge ordered the four defendants to pay GBP 259,725.29, plus applicable VAT, within 14 days. This amount was ordered as a payment on account of costs, meaning it was an interim payment towards the legal costs rather than a declaration that the figure represented the final total of all costs.
The court also rejected the claimant’s application to vary his costs budget. In addition, it limited the claimant’s entitlement to an inquiry into the assets to those that had been found to be validly gifted. The judge dismissed a separate claim for interest on a sum of GBP 650,000, while directing that interest earned on the relevant accounts should be accounted for to the claimant.
Permission to Appeal Granted on Certain Grounds
The defendants also applied for permission to appeal against the court’s decisions. The judge granted permission on grounds 2, 3, 4, 5 and 8, subject to specified conditions.
One of those conditions required the defendants to make the ordered payment towards the claimant’s legal costs within the prescribed period. For ground 8 alone, the defendants were also required to pay 50 per cent of the claimant’s appeal costs in any event.
The permission to appeal means that the defendants were allowed to seek a further review of the specified issues, subject to the conditions imposed by the court. It does not mean that the original judgment was automatically overturned.
Significance of the Judgment
The case provides an example of how the English legal system may recognise gifts made in anticipation of death, even when the transfer does not take the form of a conventional completed will.
It also demonstrates that the court examines the donor’s intention, the circumstances surrounding the expected death and whether control of the relevant assets was handed over. The judgment considered both traditional property documents and modern methods of accessing financial accounts, including passwords and security devices.
The court’s decisions also underline the importance of distinguishing between assets that meet the legal requirements for such gifts and items that were merely intended to be transferred. In Rahman’s case, the court recognised certain property and financial gifts but excluded furniture and other contents where delivery had not been established.
The two judgments, delivered on 30 May and 1 August 2024, addressed the main ownership dispute and the consequential questions arising from it. The later order required the defendants to make a substantial interim payment towards the claimant’s legal costs while allowing an appeal on specified grounds under stated conditions.
