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S v J and Others [2016] EWHC 559 (Fam)

Application for declaratory relief under s17 Married Women’s Property Act 1882 in relation to the beneficial ownership of four residential properties.

Background facts
The court was concerned with the applicant's application for declaratory relief under s17 Married Women's Property Act 1882 ("MWPA"). The facts of the case are set out in detail at [1]-[39] of the judgment. In brief, the applicant and respondent were in a settled relationship for five years. They met in Paris in 2008 and lived together in London throughout their relationship, which ended, 'in difficult circumstances' in 2013 [1]. Although they became engaged in 2009, they never married because the respondent had difficulties in securing a divorce from his wife at the time.

At the centre of the application was a dispute about beneficial ownership of four properties:

  1. Rutland Gate – a three-bedroom apartment, purchased by the applicant in 2001, using a deposit provided by her parents, and a mortgage, which she later repaid using an 'early inheritance'. The property was held in the sole name of the applicant.
  2. Falcon House – a three-bedroom apartment, purchased by the applicant in November 2008, using funds from the re-mortgage of Rutland Gate, and held in her sole name.
  3. Queen's Gate – a one-bedroom apartment, purchased by the respondent, with the aid of a sizeable mortgage, before he met the applicant, and held in his sole name. 
  4. Westbourne Terrace – a 'substantial apartment' in Bayswater, which was purchased in 2011 as a home for the family and which was held in the name of a company based in Jersey.

Westbourne Terrace was purchased using funds from a 'financial restructuring' of the parties' assets, the mechanics of which are summarised at [19] of the judgment. One significant feature of the financial restructuring was that Rutland Gate, Falcon House, and Queen's Gate were used as collateral security for a primary loan of some £2.475 million towards the purchase price of Westbourne Terrace.

The applicant sought a declaration that she was the sole beneficial owner of Rutland Gate and Falcon House, that the respondent was the sole beneficial owner of Queen's Gate. She contended that overall, she owned 82% of the equity across the three properties and that the respondent owned 18%. In reliance on this, and the fact that the properties were used as security for the primary loan (see above), the applicant sought a further declaration that she and the respondent were the joint beneficial owners of Westbourne Terrace, as to 82% for her, and 18% for the respondent. 

The respondent's case was that all four properties were the subject of a joint 'pooling agreement' and that consequently, the equity in all four properties was to be shared equally. He submitted that this was evidenced in part by the applicant's signature on a document, dated 21 December 2008, confirming that Falcon House was held on trust for them in equal shares, and submitted that the 2011 financial restructuring was 'part and parcel' of the 'pooling arrangement'.

Issues to be determined
Although the applicant sought declarations in relation to all four properties, Roberts J identified two 'fundamental issues', which, in her view, fell to be determined. First, the nature and extent of the respondent's interest, if any, in Falcon House. Second, what legal consequences flowed from the purchase of Westbourne Terrace, and the fact that Rutland Gate and Falcon House were used as collateral security for the primary loan [41].

Legal principles
This case does not significantly develop the law in this area. The relevant principles, as identified by Roberts J, are set out at [47] to [53] of the judgment. As both Falcon House and Westbourne Terrace had been purchased and/or used as family homes, the Learned Judge followed the principles set out in Oxley v Hiscock [2004] EWCA Civ 546, [2004] 3 All ER 703; Stack v Dowden [2007] UKHL 17, [2007] 2 All ER 929; and Jones v Kernott [2011] 1 FLR 45.

Roberts J said that Jones v Kernott now 'provides the starting point for the road map through this area of law', and at [58], she quoted the Court's conclusions in that case. Roberts J followed the five guiding principles set out there: (1) The starting point is that equity follows the law. (2) That presumption can be displaced by showing that the parties either had a different common intention when they purchased the home or later formed a common intention that their respective shares should change. Such common intention should be accompanied by detrimental reliance (see, e.g. [103]). (3) Common intention is to be deduced objectively from the parties' conduct. (4) Where it is clear that the parties did not intend joint tenancy but it is not possible to ascertain their intention as to the shares in which they held beneficial ownership, 'the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property'. (5) Each case will turn on its own facts. Financial contributions are relevant, but there are many other factors which may enable the court to decide what shares were intended.

Findings in relation to Falcon House
Roberts J's findings in relation to Falcon House are set out at [59]-[105].  The Learned Judge found that the applicant was the sole legal and beneficial owner of Falcon House [105] and that she had never signed a document agreeing to hold the property on trust for her and the respondent in equal shares. Instead, the respondent had forged the applicant's signature [98]. Roberts J further found that there was no express agreement whatsoever that the beneficial ownership of Falcon House would be shared [101] and that there was no basis for drawing any inference in relation to the necessary common intention from their conduct at the time [101]. The respondent had not made any direct financial contribution towards the property and the applicant had paid the mortgages. The parties had kept separate bank accounts throughout their relationship. Further, even if there had been a common intention, the respondent had not pleaded or relied upon any evidence of his having acted in reliance on such an intention to his detriment [103].

Findings in relation to Westbourne Terrace
Roberts J's findings in relation to Westbourne Terrace are set out at [106]-[139]. The Learned Judge found that the applicant and respondent were the joint beneficial owners of Westbourne Terrace, as to 82% the applicant and as to 18% the respondent. She found that there was never an express agreement between them to share Westbourne Terrace on the basis of an equal division of the beneficial interest [132(i)] and accepted the applicant's evidence that there were discussions between them 'which revolved specifically around the applicant's concern to protect the equity in her two properties at Rutland Gate and Falcon House' [132(ii)]. Roberts J found that the respondent had offered the applicant assurances in that regard [132(ii)]. In that context, the Judge found that the evidence supported the clear inference that 'had the parties addressed their minds to the question of the extent of their respective interests in Westbourne Terrace, they would have agreed that such interests should reflect the percentage contribution which each was making towards the equity which was being injected into the scheme' [133]. In those circumstances, she did not need to consider what outcome a court may consider fair having regard to the whole course of dealing between them in relation to the property [134]. Even if she had had to do so, it would not have been open to her to 'attempt to navigate some middle way' between the parties, and/or to achieve equality of outcome. Instead, she 'would still have been obliged to follow a route to an outcome based upon the whole course of their dealings in relation to the acquisition of the property at Westbourne Terrace and that route, based upon my findings, would have led me to apportion their interests as to 82% to the applicant and 18% to the respondent' [136].

Summary by Eleanor Sibley, barrister, Field Court Chambers

Neutral Citation Number: [2016] EWHC 586 (Fam)
Case No: FD14F00295


Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14/03/2016

Before :


- - - - - - - - - - - - - - - - - - - - -

Between :

S Applicant
- and - 
J and others Respondents
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- - - - - - - - - - - - - - - - - - - - -

Mr Martin Pointer QC and Mrs Rebecca Carew Pole (instructed by Schillings) for the Applicant
The First Respondent
in person
Mr Mark Goward, an insolvency practitioner, was given leave to address the court on behalf of the Third Respondent on 29th February 2016 only
No appearance by the Second Respondent

Hearing dates: 29th February to 4th March 2016
- - - - - - - - - - - - - - - - - - - - -


This judgment was delivered in private.   The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the children and members of their family must be strictly preserved.   All persons, including representatives of the media, must ensure that this condition is strictly complied with.   Failure to do so will be a contempt of court.

Mrs Justice Roberts :
1. This is an application made by MS for declaratory relief pursuant to s 17 of the Married Women's Property Act 1882 ("MWPA"). Her claim arises in the context of a settled relationship with the first respondent, AJ, of just under five years.  He is the father of her two children, now aged 5 and nearly 4 years old.  The parties met in Paris in 2008 and lived together in London throughout their relationship which ended in difficult circumstances in 2013.  Although they became engaged in February 2009 and, five months later, had a ceremony of blessing in respect of their intended marriage, it was never formally celebrated because the respondent was unable to secure a divorce from his wife at the time.  In March 2015, the English court made a declaration of non-marriage in respect of this relationship.  The present application is now made by MS in order to disentangle the financial consequences of her former relationship with AJ in circumstances where the more wide-ranging discretionary provisions of the Matrimonial Causes Act 1973 are not available to the court.  I propose to refer in this judgment to MS as "the applicant" and to AJ as "the respondent".  I do so in order to preserve their anonymity and intend no disrespect to either in adopting this otherwise somewhat impersonal style .

2. The applicant has been represented by Mr Martin Pointer QC and Mrs Rebecca Carew Pole instructed by Schillings.  Whilst the respondent formerly instructed lawyers, he represented himself for the purposes of the final hearing.  He did so, if I may say so, with a comprehensive grasp of the facts and the law and put his case before the court with courtesy.  Notwithstanding the combined expertise of the applicant's legal representation, I am satisfied he has not been disadvantaged as a result of not having lawyers on this occasion.  Every point which could and should have been taken in respect of his case has been put before the court.

3. At the heart of this application is a dispute about the beneficial ownership of four central London properties which these parties own, or in which either or both have had an interest during their former relationship.  The portfolio is encumbered by a significant raft of secured bank borrowings and the third respondent in these proceedings is X Bank, the mortgagee ("the Bank").  The second respondent is an offshore company, WC Limited, which holds the legal title to one of the properties.  The second and third respondents were joined as parties to these proceedings in May 2014.  Their party status reflects their interests in protecting the property and the two mortgages in which they have an interest.  Whilst I heard from Mr Goward on behalf of the Bank on the first day of the hearing, the company has played no part in the proceedings albeit that I have been shown correspondence from Mr W who is an officer of WC Limited.

4. The four properties with which I am concerned are these:-

(i)       'Falcon House' which is a three bedroom apartment in a building on the Old Brompton Road, Earls Court, London SW5.  This property is held in the sole name of the applicant.

(ii) 'Queen's Gate' is a one bedroom apartment in South Kensington.  It is held in the sole name of the respondent.

(iii) 'Rutland Gate' is a second (three bedroom) apartment in South Kensington which is held in the sole name of the applicant.

(iv) 'Westbourne Terrace' was the last addition to the property portfolio.  It is a substantial apartment in Bayswater which was purchased as a home for the family albeit that it is held in the name of the Jersey company (WC Limited) to which I have referred above.

5. There is also a dispute between the applicant and the respondent about the ownership of some chattels.  As the case concluded, it became apparent that there was a significant measure of consensus in relation to the destination of the items in dispute and I propose to say no more in this judgment about that issue since I hope and expect that it will have been resolved by agreement.  If it is not, I shall give further directions in the manner I have already advertised to the parties.

6. Prior to the issue of the present proceedings in April 2014, the applicant and the respondent were involved in litigation concerning their children.  Those proceedings have now concluded on the basis that the children live with their mother in an apartment which is currently provided by her parents.  The respondent sees the children on a regular basis at Westbourne Terrace where, for the time being, he continues to live.  At the start of the hearing, and with the consent of all parties, I made an interim order for the sale of that property and a marketing exercise is now underway.  The respondent has agreed to vacate the property albeit that the date upon which that should happen has yet to be decided.

7. There has also been litigation between this couple pursuant to the Family Law Act 1986.  This flowed from the very unfortunate circumstances of the breakdown of their relationship.  It was the applicant's case in those proceedings (accepted by the judge in a fact-finding hearing) that from 2010, at a time when she was pregnant with her first child, the respondent had subjected her to verbal and emotional abuse.  By the time she was expecting their second child, his controlling behaviour (as found by the judge) had escalated to physical abuse.  His subsequent acceptance of his mistreatment of the applicant is buttressed by a significant raft of findings made by District Judge Gibson at the conclusion of a contested fact-finding hearing in April 2014.  I have been provided with a copy of her judgment which records those findings and her detailed reasons for accepting the evidence of the applicant and rejecting that of the respondent.  

8. I should make it clear from the outset that, whilst those findings of fact stand as binding conclusions reached by the court on that occasion, I approach the evidence I have heard and read in this case with a completely open mind.  In the course of my analysis of that evidence, I shall have to make my own findings as to who is telling the truth about a number of issues.  I approach that task by reminding myself that the fact that the respondent has been disbelieved in previous litigation and has been found to have lied does not necessarily lead me to conclusion that his evidence in these proceedings is unreliable and not worthy of belief.  A witness may lie for a variety of reasons including humiliation, misplaced loyalty, panic, fear, distress, confusion or emotional pressure 1.  When he gave his evidence to me, the respondent accepted quite openly that he had been violent towards the applicant in the past.  He also accepted that his behaviour had been controlling.  I have within the papers before me a copy of a document which he produced which is entitled "Protocol of Family Life".  Whilst I do not need to rehearse its contents for the purposes of this judgment, its contents are revealing of the expectations which he had in terms of the dynamics of his future relationship with the applicant. 

The history of the property acquisitions and the interlocking debt structure
9. Rutland Gate had been purchased by the applicant in 2001 some seven years before she met the respondent.  She was then 31 years old and was living and working in London.  Her parents provided the deposit of £350,000 and the balance of the purchase price was raised by means of a £400,000 mortgage. (This mortgage was paid off in 2006 or 2007.) Over the intervening years, its value has increased from £750,000 to somewhere in the region of £2.65 million.  The flat has been generating a rental income which is paid into the sole account of the applicant.

10. The respondent also owned property when he met the applicant.  The apartment at Queen's Gate in South Kensington was acquired by him in 2004 with a substantial mortgage.  It is currently worth about £1.35 million and is presently empty, although it has in the past been let.

11. The legal title to the apartment at Falcon House is held in the sole name of the applicant.  This property was purchased in November 2008 some eight months after the parties met.  The purchase price of £1,425,000 was financed by a deposit of £507,205 (cf. £501,299 in written agreement at [F:8]) which was raised by a new mortgage secured on the applicant's Rutland Gate property and a further mortgage of £1,047,000 (cf. £1,022,500 at [F:8]) which was secured on Falcon House itself.  The mortgage payments were serviced by the rental income generated from Rutland Gate.  In this way, the property "washed its face" without additional cost until 2011 when the mortgage fell into arrears in circumstances to which I shall come.

12. It is the respondent's case that the parties signed a written agreement which provided that the underlying beneficial interest in Falcon House would be held by them jointly notwithstanding the absence of any direct financial contribution by him to its purchase.  The applicant accepts that she was asked to sign a document to this effect which had been prepared by the respondent but she contends that she never agreed to share with him the beneficial ownership in Falcon House and the document was never signed by her.  Notwithstanding the fact that the apartment was purchased with the intention they would live there, it is her case that the clear understanding between them was that the property would be hers absolutely.  She says that the relationship was then its very early stages.  Not only had she put up 100% of the purchase monies, she had also taken on additional borrowings which were funded by further charging the equity of her property in Rutland Gate.  Those borrowings were to be (and were in fact) serviced by her separate income from the tenants in Rutland Gate.

13. In 2011, some three years into their relationship, the respondent opened a dialogue with the Bank which was designed to enable them to purchase a fourth property which he intended should be their family home.  There is a dispute between the parties as to whether or not the applicant shared his enthusiasm for such a purchase.  She was by then pregnant with their second child and she told me that she had no appetite for another move at that stage.  She was also concerned about additional financial exposure in circumstances where the respondent was not generating an income and they were reliant on the rent from her two properties.

14. In terms, the respondent's case is that his discussions with the Bank (led by him but supported by the applicant) were focused upon a tax efficient scheme which would both enable them to take advantage of their non-domiciled status as French Lebanese nationals and increase their foothold in a rising central London property market.  By that stage, their three London properties were worth a total of £5.3 million gross.  The aggregate mortgage debt secured on those properties was £2.072 million.  The underlying equity of £3.228 million would have exposed the survivor of them to a very significant UK inheritance tax liability.  Within the material before the court was a copy of the written tax advice prepared by solicitors, Child & Child, who, at that stage, appear to have been advising both the parties and the Bank.  That advice appears to be predicated on the basis that the applicant and respondent were legally married to one another which, of course, they were not.  The document which I have seen speaks of the estate passing from "the deceased spouse" to "the surviving spouse".   That, of itself, has no significance for the purposes of my judgment save perhaps that it indicates in terms that this couple still regarded their relationship as one of commitment notwithstanding the difficulties which had by then surfaced.

15. As to their financial circumstances at the time, the applicant's sole source of income was the rent she received from Rutland Gate which she was using to defray the existing borrowings on the Falcon House apartment which was then their home.  The respondent had a professional background in banking but, since the start of his relationship with the applicant, he had been a self-styled entrepreneur.  He was then in the process of setting up a new private equity business (T Partners) which appears never really to have 'got off the ground'.  The applicant was responsible for the majority of the family's living expenses which she met from her rental income.  It is also her case that she lent the respondent a substantial sum of money to assist him with the start-up costs of his business which included legal and other professional fees.  In addition her father injected capital of some £200,000 into his fund. 

16. It is common ground that the respondent earned no income during the time they lived together 2 although it is his case that he introduced some capital from the sale of a flat which he previously owned in Notting Hill Gate and from the sale of some properties in France.  The completion statement in relation to the sale of Monmouth Road (the London property) shows that a sum of just over £137,000 was paid to the respondent in March 2010.  Of this, some £20,000 (or £50,000, on the respondent's case) was repaid to the applicant.  It appears that the sales of the French properties were distressed sales which took place at the instigation of the banks which had lent money to the respondent.  Whilst there was insufficient evidence for me to be able to make findings as to what, if any, capital was returned to the respondent as a result of these sales, it appears that whatever came back to him (which was not significant) was ploughed into the start-up costs of his new business venture.

17. The applicant's case is that these ongoing discussions with the Bank were very much driven by the respondent who had engaged the bank's interest in taking him on as a business client.  She says that throughout their course (from February to September 2011) she was marginalised from what was going on despite her repeated requests of the respondent to include her in the discussions.  Eventually she left him alone to continue negotiations and preoccupied herself with the impending birth of their second son.  She contends that she was put under undue pressure by the respondent and, as a result, she was persuaded to engage in the scheme to "keep the peace".  (In this context, she does not rely upon that undue pressure as affecting her contractual obligations vis à vis the Bank; it is no part of her case that the Bank's mortgages should be set aside.)  Again, her case is challenged by the respondent who says that she was throughout kept informed and that she positively embraced the opportunity to put in place the scheme which he had devised with the Bank.

18. In terms of structure, what was envisaged was that a new central London property would be purchased as a family home.  That property was to be held in the name of an offshore company which would be formed by the Bank to serve as the acquisition vehicle.  Provided that the control and management of that company was not exercised or exercisable by either of the applicant or the respondent, it was envisaged that their occupation of the new property would not give rise to any benefit in kind income tax charge on them as directors or shadow directors.  The shares in the company were to be owned by a new non-resident trust formed and managed by the Bank in Jersey which would thereafter act as trustee.  The beneficiaries of the trust would be the applicant, the respondent and their two children.  The respondent had made it clear to the Bank that he wished to retain power to revoke the intended trust and to amend its provisions as well as to retain control over distribution policy.  In order to avoid any argument that such control would render the trust vulnerable to an argument that it was UK resident with the loss of capital tax protection, the solution settled upon was the use of a settlor who was resident in, and a national of, Lebanon.  It appears that in the early stages of the negotiations the respondent had volunteered the name of a Lebanese woman whom he trusted to act in accordance with his wishes.

19. In order to provide maximum tax protection, what was being proposed was the extraction of maximum liquid equity from the existing London property portfolio.  The Bank would thereafter lend 80% of the value of the three existing properties ('the primary loan') which would replace the existing borrowing, leave sufficient cash for the deposit on a new property and a residual fund of £1.15 million which was to be invested offshore.  That investment (in a bond or wrapper) was intended to produce sufficient income (with the rental income from the three other properties) to service the Bank debt.  The bond was to be owned by a second (and separate) offshore company, WH Limited, thereby ring-fencing the security of the underlying value for the protection of the Bank in the event of default.  The balance of the purchase price of the new property would be funded by a separate mortgage loan ('the second loan').  The investment 'churn' generated by the bond (anticipated to be some £250,000 per annum) would be an essential element of the borrowers' ability to discharge the interest payments on the two loans.  Because of their non-domiciled status, this income would be payable offshore without any corresponding tax liability on the basis that they would be permitted to draw down up to 5% of the funds which remained offshore.

20. It was, on any view, an ambitious scheme as the respondent himself accepts.  It was always going to be dependent on the production of sufficient income from the offshore bond to enable the parties to service the debt.  Aside from the rental income, neither had any income or potential income stream to defray their day to day living expenses.  Judging from the evidence I have heard and read, their standard of living, whilst not unduly extravagant, was comfortable.  Certainly there is no evidence of any consequential 'reining in' of discretionary spending in the aftermath of the increased burden of debt.  There is some issue as to what the Bank was told during these discussions about the respondent's income from his business and/or the existence of other offshore assets.  At a late stage in the negotiations, the individual leading discussions on behalf of the Bank (Mr H) had circulated an email which referred to the need for a further £220,000 of additional equity to be invested in the structure because of unexpectedly low property valuations in respect of the existing property portfolio.  That email went on to refer to the potential need for the respondent to liquidate 'other offshore investments in a depressed market and thereby incur remittance fees if he were to use personal resources to meet the shortfall' (which, of course, he did not have).  There is a further reference in a later email from the Bank to the potential existence of other funds or assets owned by the respondent. On 22 August 2011, Mr H wrote in these terms:-

"My point was more that whether it is funds [which] are brought onshore to invest directly, or transferred through the trust/lending structure, is not an issue to us from a credit perspective, but would be determined by client's choice and tax advice."

21. The Bank's solution was to avoid that possibility by reducing the overall amount of the loan even if this was at the expense of a small remaining liability for inheritance tax which could be mitigated at a later stage.  Mr Pointer submits that the Bank could not have written this email unless the individual concerned had been informed about the existence of other offshore funds which were then available to the respondent.

22. In my judgment, the most persuasive piece of evidence showing that the Bank is likely to have been misled about the existence of other offshore funds is an email which the Bank sent to the respondent on 11 August 2011 shortly before the conclusion of the negotiations.  This is but one of a whole series of emails which went back and forth during the summer of 2011. Having read them, there is no doubt in my mind, and I find as a fact, that the respondent was driving these negotiations forward with the Bank with little, if any, active involvement of, or participation by, the applicant.  This particular email is a lengthy document which discusses various points arising out of the discussions flowing from the tax advice which had been given by Child & Child.  In the context of preparing the loan documentation, there is this reference in one of the Bank's e mails to the respondent:

"In order to release 100% of the equity in your three existing properties, your offshore portfolio is also needed as security.  The lending will therefore be secured on both equally (as per the term sheet sent across to you on 26 July).  As I mentioned in my email on Monday, to ensure that the lending is primarily deductible against the properties to get the net asset value to zero for IHT purposes (as your advice envisages) will require specifically drafted loan agreements and this will take a little time to agree and finalise." (my emphasis)

23. The officer of the Bank who wrote that email had clearly been informed by someone that the respondent (or the respondent and/or the applicant) owned, or had access to, an offshore portfolio which had a sufficient underlying value to provide additional security for lending purposes.  I am satisfied that the applicant had no such assets.  On the balance of probabilities I am persuaded that representations to this effect were made to the Bank by the respondent and probably in order to bolster his credibility or standing with the Bank both as borrower and potential client.  Certainly there is nothing in his email sent in reply the following day to correct any assumptions it was making in this respect.
24. Negotiations eventually culminated in two formal written offers of funding from the Bank.  The first facility letter is dated 6 September 2011 and relates to the primary loan.  The second is dated 7 September 2011 and relates to the second loan.  In respect of both, the 'client' (i.e. the borrower) was identified as the respondent.  Substantial arrangement fees were payable in respect of each transaction.

The primary loan: the interlocking debt
25. The primary loan was in the sum of £4,240,000.  It was a five year loan repayable by a single payment on the fifth anniversary of the initial drawdown.   Interest was payable during the currency of the loan term.  Security was to be provided by first legal charges over the properties at Falcon House, Queen's Gate and Rutland Gate and by way of a charge or assignment of the investment bond to a value of £1,140,000.  These were treated as separate mortgage transactions in relation to each of the properties.  The manner in which its security was to be enforced in the event of a default was to be a matter for the Bank at its sole election.  In these circumstances, and because she was the legal owner of two of the three properties, it was a separate condition of the mortgage offer that the applicant received independent legal advice.  The Bank also required copies of each tenancy agreement entered into in respect of the rental portfolio of properties and stipulated that the rental income generated by the tenants was paid into a separate bank account in the name of the respondent.  He was to be the sole mortgagor.

26. Inserted as a 'special condition' of the loan was the following:-

'When added together the Net Rental Income, and the Client's salary and income, and any income arising from the Life Policy shall at all times exceed 200% of the Gross Financing Costs."

This is the evidence to which Mr Pointer refers as an indication that the respondent had not made full disclosure to the Bank at the time about his own financial circumstances.  As the respondent accepts, it appears that he was never in a position to draw a salary from his business.

The second loan
27. The second loan was to be a free-standing mortgage advance of £2,437,500.  The new property at Westbourne Terrace was identified as the Bank's security for this loan.  Otherwise, the conditions and term of the loan were identical to those set out in the first facility letter save that (i) since neither the applicant nor the respondent were to be the legal owners, he and the family were to have rights of occupation, and (ii) there was no requirement in respect of this transaction for the applicant to have received independent legal advice.

28. Thus, by the time the parties acquired Westbourne Terrace as their new home in 2011, the respondent was liable for a total mortgage debt of just under £7.5 million.  The purchase price of Westbourne Terrace was £3.25 million.  There was no cross-collateralisation between the two loans.  The applicant's exposure in the event of default in respect of the primary loan had increased from a total mortgage debt on her two properties in the sum of £1,557,670 to the potential loss of the entire equity in both, then some £2.54 million.  Whilst the respondent's Queen's Gate flat was included in the security for the 'interlocking' primary loan, the value of the (2011) equity in that property was just under £570,000 and the Bank had effective carte blanche as to the manner in which it chose to enforce its security.  It seems to me highly likely that the Bank might well have taken the view that, in the event of default, it was a cheaper and more expedient option to move first against the more valuable properties in order to enforce its security in the event of default on the primary loan.  In this event, the applicant's properties were squarely in the line of fire.  I do not, and cannot, make specific findings about the precise degree of her potential exposure save that both properties were, and remained, vulnerable throughout the five year mortgage term subject only to their ability to service the debt and repay the principal at the end of that term.

29. The purchase of the Westbourne Terrace apartment was completed on 5 October 2011.  The mortgage documentation had been signed a matter of days before.  The applicant and the respondent left Falcon House and moved in with their elder son who was due to celebrate his first birthday the following week.  The applicant was then pregnant with their second child.

30. There had been a last minute glitch in relation to the proposed structure of the mortgage refinancing.  The vendor was threatening to pull out of the sale if completion was delayed any further and the purchase went ahead as planned but in circumstances where there was a shortfall in the residual funds which were earmarked for the offshore investment bond.   As a result of an oversight, the solicitors had failed to factor into their completion statement the professional fees which had been incurred in connection with the mortgage refinancing.  That sum, together with a second charge which was secured on the respondent's property at Queen's Gate (just under £95,000), reduced the cash sum remitted to Jersey to less than £1 million.  It was never invested in the proposed bond and still sits in a designated account as a cash reserve.  As at 5 January 2016, the balance in that account was £957,204.  Thus, an essential component element of the scheme was missing.  The revenue of £250,000 per annum which had been earmarked to meet a substantial part of the mortgage interest was simply not available.   With effect from December 2012, the mortgage accounts fell into arrears. After March 2013 the Bank received no further payments whatsoever.  

31. In the face of these financial difficulties, in July 2012 the applicant and the respondent moved out of Westbourne Terrace in order to let the property for £100,000 per annum to a Russian tenant who also paid a deposit of £25,000.  By this stage their personal relationship was under significant strain.  The judgment delivered at the conclusion of the Family Law Act 1986 proceedings records findings of physical and verbal abuse directed towards the applicant by the respondent from January 2012 onwards, including the period during which she was pregnant with their second child who was born in March that year.

32. By this stage they were clearly under acute financial pressure.  The applicant's case is that throughout she had been "walking on eggshells" and trying to contain the respondent's volatile temperament.  In January 2013 whilst they were living in the single bedroom Queens Gate flat with their two children (then aged 2 years and 9 months respectively), the applicant sent the respondent an email with her thoughts on how they might juggle their finances in order to meet future interest payments due to the Bank.  At that point in time, as her email shows, they were trying to refinance the debt with alternative mortgage lenders.  Nothing came of those attempts.  In a document attached to her email, the applicant had compiled a schedule showing the ownership of each property, its current value and the rental income and expenses to be set off against each.   Both Rutland Gate and Falcon House are clearly identified in that schedule as being her properties. 

33. It appears that they had been able to agree a six month rollover facility with the Bank in respect of the second loan on Westbourne Terrace.  At that stage, the global liability to the Bank stood at £6.677 million and the rental income generated by the three properties which were then let (including Westbourne Terrace) was £234,000 gross per annum. From that sum had to be deducted service charges, agents' fees and repairs.  There was no income coming into the household apart from the rent.  In addition, there was a raft of debt amounting to c. £80,000 or more including unpaid tax, medical bills and the return of a tenant's deposit in the sum of £25,000.  In August 2013, the applicant was able to re-let Falcon Court for a further year for just over £90,000 per annum.  However, with effect from December 2012, nothing further was paid to the Bank who eventually appointed receivers to enforce its security.

34. Those receivers were 'stood down' by the Bank in December last year (2015) during the currency of this litigation because of a complaint which the respondent had made internally about its handling of matters.   Whilst I have not seen any evidence, I am told that the complaint has recently been dismissed with the result that the Bank's remedies remain at large.  I was told by Mr Goward who appeared on behalf of the Bank on the first day of the hearing that it is prepared to stay its hand in terms of immediate enforcement pending a determination in these proceedings of the parties' respective beneficial interests in the properties and the apportionment of their respective liabilities for the secured debt.  I suspect that the interim order for the sale of Westbourne Terrace has given the Bank some comfort but it cannot be expected to wait much longer.  Both the applicant and the respondent are anxious to avoid forced sales at auction and each seeks an orderly marketing exercise of some, if not all, of the properties at the conclusion of these proceedings.

35. In July 2013, the Russian tenant vacated Westbourne Terrace.  The parties moved back in to their former home although, by now, their relationship had completely foundered.  The allegations of violence and intimidation against the respondent which the District Judge found proved numbered fourteen in all and each separate incident occurred during the period between January 2012 and their final separation in September 2013. On 30 September 2013, the applicant obtained non-molestation injunctions against the respondent which were expressed to last until further order of the court.  As I have already said, the hearing before me was conducted with a degree of civility and restraint which is a credit to both parties given the unhappy history which led to the final demise of their relationship.  The respondent has now re-established regular contact with his sons and it was evident to me that that relationship is an important one to him and one which brings him much pleasure. 

The course of this litigation
36. These proceedings were initiated by the applicant at the beginning of April 2014.  In May that year the respondent applied for the production of Mishcon de Reya's conveyancing file in respect of the purchase of Falcon House.  The applicant filed her Points of Claim on 29 May 2014.  The respondent's Points of Defence were served on 12 June 2014.  Standard disclosure was made by lists exchanged on 18 November 2014 followed shortly thereafter by the respondent's statement of evidence.

37. At the conclusion of an unsuccessful FDR hearing before Mostyn J on 11 December 2014, directions were given which anticipated amended pleadings from both sides.  The applicant's amended Points of Claim were served on 22 December 2014, the Bank's amended Points of Reply followed on 2 January 2015 and the respondent's amended Defence was filed on 12 January 2015.

38. Throughout the year and more which it has taken for this hearing to determine the outstanding issues between the parties, the applicant has been residing with the children at a separate flat which has been made available for her use in the building in which her parents live.  The two children live with her there when they are not spending time with their father.  For his part, he has remained in occupation at the former family home in Westbourne Terrace.

39. On 19 January 2016, WC Limited, the second respondent as the legal owner of that property, confirmed to the applicant's solicitors that the company was presently illiquid and any order made in these proceedings must take account of the company's obligations and liabilities.  This having been agreed, the company has taken no further part in either the hearing or the proceedings other than through correspondence with Mr W, to whom I have already referred.

The issues for determination
40. Thus, I turn to the two fundamental issues which I need to determine in order to enable the start of the process which will eventually bring about the unravelling of the financial affairs of the applicant and the respondent.

41. They are as follows:-

(i) What is the nature and extent of the respondent's beneficial interest (if any) in the Falcon House apartment ?   As I have said, it is his case that there was a specific agreement between them at the time, recorded in writing and signed by the applicant, to the effect that, as future cohabiting partners who had agreed to service jointly the debt on the two mortgages taken out to fund the purchase, they each held a 50% beneficial interest in the property.  The applicant has no recollection of signing any such document.  She denies there was any such agreement.  I have a report from a jointly instructed expert graphologist, Dr AG, who has concluded that the signature of the applicant on the document produced by the respondent is more likely to be a "simulation" than a genuine signature (she does not use the word 'forgery') although the evidence which supports her conclusion, whilst positive, is "only weak".

(ii) What legal consequences flow from the purchase of Westbourne Terrace and, in particular, the agreement by the applicant to allow her two properties at Falcon House and Rutland Gate to be used as collateral security for the primary loan of £2.475 million ?  Are these properties thereby impressed with a constructive trust whereby the beneficial interest in all three is now held jointly for the parties on a 50:50 basis ? The respondent pleads a "pooling agreement" whereby the entire property portfolio was thenceforth to be held on the basis of equal beneficial ownership. The applicant denies that there was ever any such agreement, arrangement or understanding between them that any beneficial interest in either of the apartments at Falcon House or Rutland Gate should pass to the respondent.  At no stage, on her case, was there any intention on her part to transfer value to the respondent by way of gift.

42. It is common ground that the property at Westbourne Terrace which was purchased as a family home would be jointly owned beneficially notwithstanding the fact that the legal title would be held by WC Limited.  What separates the parties is the extent of the beneficial interest which each holds in that property.

The parties' respective cases
43. The applicant seeks the following declaratory relief:-

(i)         a declaration that she is the sole beneficial owner of Rutland Gate and Falcon House;

(ii) a declaration that the respondent is the sole beneficial owner of Queen's Gate; and

(iii) a declaration that together the applicant and the respondent are the joint beneficial owners of Westbourne Terrace as to 82%  for the applicant and 18% for the respondent.

44. Further, she seeks an order for the sale of Westbourne Terrace (I have granted that interim relief, by consent) and a direction that the net proceeds of sale (after payment of sale costs and the second loan), together with the funds currently being held offshore in Jersey (now £957,204), are applied to pay down the borrowing on the primary loan to £2 million.  That is broadly equivalent to the level of debt which was secured separately with different mortgage providers across the three properties before the 2011 transaction was entered into with the Bank.  Any balance remaining should be divided as to 82% to the applicant and 18% to the respondent.  This percentage division reflects the equity split between them as it was prior to the remortgage.  Thus:



Net equity

Rutland Gate value as at 2011                                                



Less existing mortgage                                                             









Falcon House value as at 2011                                              



Less existing mortgage                                                         






Queen's Gate value as at 2011



Less existing mortgage                                                          






Total equity across x3 properties in 2011



Applicant's equity



Respondent's equity



45. In terms of responsibility for the remaining mortgage debt to the Bank (i.e. the primary loan), the applicant contends that the liability should be apportioned as to 71% for her account and 29% for the respondent's account.  This, she contends, reflects their respective positions in 2011 immediately prior to the transaction with the Bank.  This can best be seen from the following table:-


Mortgage debt 


% split  

Rutland Gate  

Falcon House   







Queen's Gate 

Queen's Gate (2nd mge: GE)

Judgment debt 3


( 94,870)













46. The respondent's case is that all four properties are now the subject of a joint "pooling agreement".  That agreement, he contends, is evidenced in part by the applicant's signature on the document dated 21 December 2008 confirming the joint beneficial ownership of the Falcon House apartment. In due course I shall need to consider carefully the circumstances in which that document came to be introduced into this litigation and the weight which it properly attracts as evidence of such an agreement.  For the time being, it is sufficient to record the respondent's case that the subsequent restructuring of the financing for the property portfolio in 2011 was part and parcel of this "pooling" arrangement or agreement which the parties had concluded as between themselves and which began with the purchase of their first shared home at Falcon Court.   

The Law 4
47. Despite the original intention that a trust deed would be drawn up to sit at the head of, and govern, the linear structure of WC Ltd's ownership of the Westbourne Terrace apartment, this was never done.  The Bank's corporate trustees regard the respondent as the beneficial owner of the shares in the company; he, in turn, regards himself as holding those shares on trust for himself and the applicant in equal shares.  Whilst Mr Pointer and Mrs Carew Pole suggest in their opening note that the production of such a trust document would have provided a conclusive answer to the issue of their respective shares in the property, this submission in based upon the (now) familiar doctrine established in Pettitt v Pettitt [1970] AC 777 and confirmed in Goodman v Gallant [1985] EWCA Civ 15, [1986] 1 FLR 513.  As a strict proposition of law, they are, of course, correct.  However, for my part, I am not necessarily persuaded that such a trust instrument in the particular circumstances of this case would necessarily have provided a definitive answer. In accordance with the tax advice from Child & Child, I suspect that the intention was to draft the trust deed in such a way that the applicant, the respondent and the children would all have been named as within the potential class of beneficiaries who might benefit under wide discretionary powers vested in the trustees, subject to any underlying letter of wishes which the (unidentified) settlor or nominated protector of the trust might have signed.

48. Given the absence of any governing trust deed or formal declaration of trust, I have to look at imputation or inference in order to address the two issues which I have identified as lying at the heart of this case.  If I am satisfied that it was the parties' common intention that the beneficial interest in any or all of the properties was to be shared in some proportion or another, the court can give effect to that common intention by determining what, in all the circumstances, represents a fair share to apportion to each of the applicant and the respondent.

49. In Oxley v Hiscock [2004] EWCA Civ 546, [2004] 3 All ER 703, Chadwick LJ explained the principles underpinning the existence of a constructive trust by quoting from the judgment of Nourse LJ in the earlier case of Grant v Edwards [1986] 2 All ER 426, [1986] Ch 638.  In para 31, his Lordship said this:-

'In order to decide whether the plaintiff has a beneficial interest in [the property] we must climb again the familiar ground which slopes down from the twin peaks of Pettitt v Pettitt [1969] 2 All ER 385, [1970] 2 All ER 780, [1971] AC 886.  In such a case as the present, where there has been no written declaration or agreement, nor any direct provision by the plaintiff of part of the purchase price so as to give rise to a resulting trust in her favour, she must establish a common intention, between her and the defendant, acted on by her, that she should have a beneficial interest in the property.  If she can do that, equity will not allow the defendant to deny that interest and will construct a trust to give effect to it.  In most of these cases the fundamental, and invariably the most difficult, question is to decide whether there was the necessary common intention, being something which can only be inferred from the conduct of the parties, almost always from the expenditure incurred by them respectively.  In this regard the court has to look for expenditure which is referable to the acquisition of the house: see Burns v Burns [1984] 1 All ER 244 at 252-253, [1984] Ch 317 at 328-329 per Fox LJ. If it is found to have been incurred, such expenditure will perform the twofold function of establishing the common intention and showing the claimant has acted upon it.  There is another and rarer class of case, of which the present may be one, where, although there has been no writing, the parties have orally declared themselves in such a way as to make their common intention plain.  Here the court does not have to look for conduct from which the intention can be inferred, but only for conduct which amounts to an acting on it by the claimant. And, although that conduct can undoubtedly be the incurring of expenditure which is referable to the acquisition of the house, it need not necessarily be so.' [my emphasis]

50. Quoting, subsequently, from the judgment of Lord Diplock in Gissing v Gissing [1970] 2 All ER 780, [1971] AC 886, Browne-Wilkinson V-C said this in Grant v Edwards at page 437 (page 654-55 of the Chancery report):-

'2. The proof of the common intention
(a) Direct evidence (see [1970] 2 All ER 780 at 790, [1971] AC 886 at 905).  It is clear that mere agreement between the parties that both are to have beneficial interests is sufficient to prove the necessary common intention.  Other passages in the speech point to the admissibility and relevance of other possible forms of direct evidence of such intention (see [1970] 2 All ER 780 at 791-792, [1971] AC 886 at 907-908).

(b) Inferred common intention (see [1970] 2 All ER 780 at 790-792, [1971] AC 886 at 908-908).  Lord Diplock points out that, even where parties have not used express words to communicate their intention (and therefore there is no direct evidence), the court can infer from their actions an intention that they shall both have an interest in the house.  This part of his speech concentrates on the types of evidence from which the courts are most often asked to infer such intention, viz contributions (direct and indirect) to the deposit, the mortgage instalments or general housekeeping expenses.  In this section of the speech, he analyses what types of expenditure are capable of constituting evidence of such common intention; he does not say that if the intention is proved in some other way such contributions are essential to establish the trust.

3. The quantification of the right (see [1970] 2 All ER 780 at 792-793, [1971] AC 886 at 908-909)

Once it has been established that the parties had a common intention that both should have a beneficial interest and that the claimant has acted to his detriment, the question may still remain: what is the extent of the claimant's beneficial interest ?  This last section of Lord Diplock's speech shows that here again direct and indirect contributions made by the parties to the cost of acquisition may be crucially important.'  (Browne-Wilkinson V-C's emphasis.)

51. Having undertaken a thorough review of the development of the law in relation to constructive trusts and the developing jurisprudence which underpinned that development, Chadwick LJ took the opportunity in Oxley v Hiscock to summarise the law in this way:-

'[68] I have referred, in the immediately preceding paragraphs, to 'cases of this nature'.  By that, I mean cases in which the common features are: (i) the property is bought as a home for the couple who, although not married, intend to live together as man and wife; (ii) each of them makes some financial contribution to the purchase; (iii) the property is purchased in the sole name of one of them; and (iv) there is no express declaration of trust.  In those circumstances the first question is whether there is evidence from which to infer a common intention, communicated by each to the other, that each shall have a beneficial share in the property.  In many such cases – of which the present is an example –there will have been some discussion between the parties at the time of the purchase which provides the answer to that question.  Those are cases within the first of Lord Bridge's categories in Rosset's case.  In other cases – where the evidence is that the matter was not discussed at all – an affirmative answer will readily be inferred from the fact that each has made a financial contribution.  Those are cases within Lord Bridge's second category.  And, if the answer to the first question is that there was a common intention, communicated to each other, that each should have a beneficial share in the property, then the party who does not become the legal owner will be held to have acted to his or her detriment in making a financial contribution to the purchase in reliance on the common intention.

[69] In those circumstances, the second question to be answered in cases of this nature is 'what is the extent of the parties' respective beneficial interests in the property ?'  Again, in many such cases, the answer will be provided by evidence of what they said and did at the time of the acquisition. But, in a case where there is no evidence of any discussion between them as to the amount of the share which each was to have – and even in a case where the evidence is that there was no discussion on that point – the question still requires an answer.  It must now be accepted that (at least in this court and below) the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property.  And, in that context, 'the whole course of dealing between them in relation to the property' includes the arrangements which they made from time to time in order to meet the outgoings (for example, mortgage contributions, council tax and utilities, repairs, insurance and housekeeping) which have to be met if they are to live in the property as their home.'

52. Thus, the emphasis remains on the search which the court must undertake for the result which reflects what the parties must, in the light of their conduct, be taken to have intended.  However, this does not enable the court to abandon that search in favour of the result which the court itself considers fair.  As Baroness Hale was later to say in Stack v Dowden (see below),

"For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettitt v Pettitt [1969] 2 All ER 385, [1970] AC 777 without even the fig leaf of s 17 of the 1882 Act." (see para [61]) 

53. Three years after Oxley v Hiscock, the Supreme Court gave further guidance as to the necessary elements in constructive trust cases.  In Stack v Dowden [2007] UKHL 17, [2007] 2 All ER 929, [2007] 1 FLR 1858 their Lordships were considering a case where a property had been purchased in the joint names of a cohabiting couple without any express declaration in relation to their respective underlying beneficial interests.  Lord Walker of Gestingthorpe said this in his judgment:-

"[17] ….we can discern that of all the questions to be asked about 'common intention' trusts as they emerge from Pettitt v Pettitt and Gissing v Gissing, the most crucial is whether the court must find a real bargain between the parties, or whether it can (in the absence of any sufficient evidence as to their real intentions) infer or impute a bargain.

[18] In seeking to answer that question we must, I think, focus on the two speeches of Lord Diplock, since these (and especially his later speech in Gissing v Gissing) have been hugely influential in the later development of the law.  In Pettit v Pettitt [1969] 2 All ER 385 at 413, [1970] AC 777 at 822 Lord Diplock saw the court's task as being to ascertain the 'common intention' of the parties.  He saw this as a task to be carried out, not by reference to the old presumptions of advancement and resulting trust, but by examining the facts and imputing an intention to the parties.  He saw this as a 'familiar legal technique', comparable to finding an implied term in a contract.  Lord Diplock used the word 'impute' (in varius parts of speech) at least eight times in the crucial passage ([1969] 2 All ER 385 at 43-415, [1970] AC 777 at 822-825).

54. Quoting further from Lord Diplock's judgment in Gissing v Gissing, Lord Walker emphasised the need for a claimant to have acted to his or her detriment in reliance on a common intention or agreement that each should have a beneficial interest in the property: [1970] 2 All ER 780 at 790, [1971] AC 886 at 905.

55. Later, at para 25, his Lordship considered the impact on the emerging jurisprudence of the judgment delivered by Lord Bridge of Harwich in Lloyds Bank plc v Rosset [1990] 1 All ER 1111, [1991] 1 AC 107.  Lord Walker said this:-

"[25] Lord Bridge then asked himself whether it was worthwhile to add any general remarks by way of illumination of the law.  He limited himself to drawing attention to one 'critical distinction'.  If there is to be a finding of an actual 'agreement, arrangement, or understanding' between the parties it must be 'based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been' (see [1990] 1 All ER 1111 at 1118, [1991] 1 AC 107 at 132.  Lord Bridge continued:

'In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as to the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust.  In this situation direct contributions to the purchase price by the party who is not the legal owner, whether initially or by payment of the mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust.  But, as I read the authorities, it is at least extremely doubtful whether anything less will do.' ([1990] 1 All ER 1111 at 1119. [1991] 1 AC 107 at 1322-133.)"  

56. As Baroness Hale so wisely observed in para 68 of her own judgment in Stack v Dowden:

"The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way.  This is not a task to be lightly embarked upon.  In family disputes, strong feelings are aroused when couples split up.  These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms.  They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake.  A full examination of the facts is likely to involve disproportionate costs."

57. Her Ladyship also recognised the important of context in these family situations.  At para [69], she said this:-

"In law, 'context is everything' and the domestic context is very different from the commercial world.  Each case will turn on its own facts.  Many more factors than financial contributions may be relevant to divining the parties' true intentions.  These include: any advice or discussions at the time of the transfer which cast light upon their true intentions then; the reasons why the home was acquired in joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties' relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses.  When a couple are the joint owners of the home and jointly liable for the mortgage, the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is the owner of the home.  The arithmetical calculation of how much was paid by each is also likely to be less important.  It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally.  The parties' individual characters and personalities may also be a factor in deciding where their true intentions lay.  In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they will always take pride of place over natural love and affection.  At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual."

58. Four years after Stack v Dowden, the issue was once again before the Supreme Court in Jones v Kernott [2011] 1 FLR 45, [2012] 1 FLR 45.  That case concerned a slightly different aspect of the law, namely whether beneficial interests under a constructive trust could be varied by inference or imputation.  There, the family home had been bought in joint names by a cohabiting couple who were both liable for the mortgage but without any express declaration of their beneficial interests.  Lord Walker and Baroness Hale delivered a joint judgment which is now regarded as the most authoritative modern guidance as to the proper approach in cases of this sort.  In my view it now provides the starting point for the road map through this area of the law. Paragraph 51 contains their conclusions set out in the following five headline points:-

[51] In summary, therefore, the following are the principles applicable in a case such as this, where a family home is bought in the joint names of a cohabiting couple who are both responsible for any mortgage, but without any express declaration of their beneficial interests:

(1) the starting point is that equity follows the law and they are joint tenants both in law and in equity;

(2) that presumption can be displaced by showing:

(a) that the parties had a different common intention at the time when they acquired the home, or

(b) that they later formed the common intention that their respective shares would change;

(3) their common intention is to be deduced objectively from their conduct.

'[T]he relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party'
(Lord Diplock in Gissing v Gissing 886, 906, 256 and 271 and 269 and 284 respectively).  Examples of the sort of evidence which might be relevant to drawing such inferences are given in Stack v Dowden, at para [69];

(4) in those cases where it is clear either:

(a) that the parties did not intend joint tenancy at the outset, or

(b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property:

'the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property':

Chadwick LJ in Oxley v Hiscock [2005] Fam 211, para [69].  In our judgment: 'the whole course of dealing … in relation to the property' should be given a broad meaning, enabling a similar range of factors to be taken into account as may be relevant to ascertaining the parties' actual intentions;

(5) Each case will turn on its own facts.  Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were intended (as in case (3)) or fair (as in case (4)).

 This case is not concerned with a family home which is put into the name of one party only.  The starting point is different.  The first issue is whether it was intended that the other party have any beneficial interest in the property at all.  If he does, the second issue is what that interest is.  There is no presumption of joint beneficial ownership.  But their common intention has once again to be deduced objectively from their conduct.  If the evidence shows a common intention to share beneficial ownership but does not show what shares were intended, the court will have to proceed as at para [51](4) and [51](5) above.

[53] The assumptions as to human motivation, which led the courts to impute particular intentions by way of the resulting trust, are not appropriate to the ascertainment of beneficial interests in a family home.  Whether they remain appropriate in other contexts is not the issue in this case."

Analysis and discussion
(i) The purchase of the Falcon House apartment in 2008
59. The property was acquired in the applicant's sole name.  The presumption therefore is that she is the sole beneficial owner.  As Lord Neuberger observed in Stack v Dowden  at para [115], where a home is purchased in the name of only one party, this is almost as likely to have been a conscious decision as where it was acquired in joint names.  Thus, the respondent has first to surmount the hurdle of showing that he has any beneficial interest at all in the apartment in Falcon House, before showing exactly what that interest was.  It is common ground that he made no financial contribution towards the purchase price.  It is also common ground that the relationship between the parties at this point in time was relatively new.  In order to fund the purchase, the applicant was in effect re-mortgaging her property at Rutland Gate since the original mortgage had been repaid in its entirety some eighteen months or two years before the purchase of Falcon House.  The applicant's evidence (which was not challenged) was that her parents had given her the funds with which to redeem the balance of the mortgage debt by way of an accelerated inheritance.  Certainly, by the time she met the respondent, Rutland Gate was mortgage free.  It is also common ground that she, alone, was responsible for the mortgage repayments on both properties between 2008 and 2011 when that mortgage was repaid as part of the financial restructuring with the Bank.

60. The applicant contends that, in the early days of their relationship and at the time of this purchase, the respondent was very concerned to finalise his divorce from his Armenian wife with minimal personal financial exposure.  She advances his reluctance to become involved in the acquisition of a central London property as part of the evidence which supports their common intention and understanding (i) that Rutland Gate was not to be put at risk beyond the security it provided to enable the purchase of Falcon House to proceed; and (ii) it was never their intention that he should acquire an interest in Falcon House since that interest would have to be declared in the context of his ongoing divorce proceedings.  She relies upon a specific conversation, or series of conversations, with the respondent during the course of which she says that she made it clear to him that she was not prepared to put at risk that which her parents had given to her to ensure her future financial security.

61. To this extent, the respondent's own evidence supports what the applicant says.  In his written evidence, he says this:-

"… we agreed on reflection that it would be more sensible for the property to be registered in [the applicant's] sole name as technically I was still married to my first wife at that time."

62. The mere fact that the Falcon House apartment was to be the property in which the parties intended to cohabit is part of the overall circumstances but it is not, by itself, determinative.  Various parts of the solicitors' conveyancing file have been produced during the course of these proceedings.  I accept that, from time to time, the solicitor dealing with the purchase of Falcon House was sending emails to the applicant and the respondent jointly.  This piece of evidence on its own does not, in my judgment, establish a common intention that each was to have a beneficial interest.  Much of the correspondence is addressed solely to the applicant.  However, that email correspondence (which is exhibited to the respondent's statement) leads me to the issue of the written agreement which the applicant is said to have signed confirming their joint beneficial interests in the property.

The alleged "written agreement" in relation to the beneficial ownership of the Falcon House apartment
63. On the day of completion, 20 November 2009, the applicant wrote to the conveyancing solicitor to thank him for overseeing the transaction.  Her email concluded with these words:-

"There is one final single page letter of understand [sic] that we would like you to draft for us, I will brief you on that."

There is no consensus as to what this refers since the exchange stops at that    point.

64. Some seven weeks later, on 14 January 2009, the same conveyancing solicitor sent the applicant an email in which he referred to a telephone conversation he had had with the respondent the previous day.  It is clear from that email that this conversation related to a draft document which had been drafted by either one, or both, of the applicant and the respondent and which had subsequently been sent to the solicitor.  The email is framed in these terms:-

"Further to my conversation with [the respondent] yesterday I can confirm I have had a look through the agreement you have drafted.  Essentially I think that if there were ever any dispute as to the division of ownership the letter would be considered as evidence but would not be a legally binding document in itself.  At the very minimum you should both sign and keep a copy of the letter and you should have your signatures witnessed by an independent third party.

Normally in these situations we suggest that clients speak to our Private client team and arrange to have a deed of trust drawn up reflecting their respective shares in the property.  I would suggest you have a preliminary chat with [another solicitor in the firm] (who I have copied into this email) and she can talk you through the best way forward."

65. It is clear that the document to which the solicitor was referring in that email was not signed. 

66. On 18 November 2014, the parties exchanged lists of documents.  The respondent's document made reference to a "handwritten document signed in November 2008 by the Applicant and me confirming joint beneficial ownership of Falcon House".  That document was not produced since the respondent stated that it was no longer in his control. 

67. It subsequently emerged that, within the conveyancing file held by Mishcon de Reya, there was a typewritten document entitled "Letter of Agreement between [the applicant] and [the respondent]".  It is an unsigned document.  It is drafted in these terms:-

"Regarding: Ownership of 5 Falcon House, 202 Old Brompton Road, SW5 0BU

I, [applicant's name], declare that [respondent's name] and myself have jointly bought the property known as [address as above].  The funding of this property was made possible with two mortgages put in place under my name.

[Respondent's name] and myself are co-habitating [sic] at this property and arrangements have been made for us to jointly service the debts outstanding on the two mortgages.  We are thus jointly responsible for the two debts:
Standard Life: £501,299.00 – Ref number: [details provided]
Bank of Scotland: £1,022,500.00 – roll number: [details provided]

This is to declare that ownership of 5 Falcon House, 202 Old Brompton Road, SW5 0BU, is proportionately owned as follows: [name of applicant] 50%, and [name of respondent] 50%.  Neither of the two parties is permitted to sell or rent or remortgage the property without the written consent of the other party."

68. This document came to light following a search which was made of the file prompted by an exchange of the parties' written statements.  On 23 December 2014 the applicant's solicitors sent a copy of that draft 'Letter of Agreement' to the respondent's (then) solicitors. The letter made these points:-

"1. The document is not executed. This is the clearest possible evidence that its terms were not agreed; and indeed that there never was any agreement that our clients would share the value of Falcon House.

2. There is nothing specifically to indicate either way whether this is the document referred to in the already disclosed email of which your client was anyway an original recipient 5.

3. Disclosure of this document does not constitute waiver of privilege generally in relation to our client's dealings with Mishcon de Reya, nor any other part of the conveyancing file.

4. As we have already made plain, there is no executed "agreement" in the file nor within our client's possession. (Of course if there had ever been an agreement executed by both our clients, not only would your client have retained a copy, but it could not attract legal professional privilege)."

69. I am satisfied on the basis of the evidence before me that the draft agreement to which the conveyancing solicitor, Mr L, had referred in his email to the applicant and the respondent dated 13 January 2009 was the unsigned document which was referred to in Mishcon de Reya's letter dated 23 December 2014.  In my judgment, there is no other plausible explanation of how that document came to be in the file and, in terms of its content, it marries up with the substance of the earlier email written in 2009.  I am told, and I accept, that there is no other identifiable document on the conveyancing file which can be connected with the 2009 email if not this draft agreement.  I am also persuaded that the telephone conversation which took place the previous day between the solicitor and the respondent related to this draft agreement.

70. That is where matters rested until 29 May 2015, some five months later, when the respondent's solicitors, Alexiou Fisher Philipps, wrote to the applicant's solicitors in these terms:-

"Whilst going through a bundle of old documents, which our client considered to be unimportant, he has discovered the missing document signed by both our clients in December 2008 declaring their 50/50 ownership of 5 Falcon House, as referred to in our client's statement."

71. On 10 July 2015, the respondent's solicitors wrote a further letter to explain the circumstances in which this document had come to light.  It recorded the following:

"Our client discovered the signed document on 1 May 2015.  It was amongst a large bundle of historic papers which our client went through at the time he produced his discovery in 2014.  This was a one page document which, despite our client's best efforts, as clearly it would have been in his best interest to produce it as early as possible in these proceedings had he found it, he missed amongst the bundle of irrelevant documents.  As you know, our client was working on his business project from home over a number of years and there are, inevitably bundles of irrelevant papers.

Our client has found no other relevant documents.

Our client does have the original signed document which can be made available for inspection by you….

We understand from our client that there were two originals, one kept by your client and one by ours.  As our client had searched through his papers and not found his original, and as your client had removed many items from the matrimonial home when she departed in September 2013, he believed that she had removed this document.  He now accepts that he was mistaken in that belief but it was nevertheless a genuine one at the time stated.  It remains his belief that your client removed her original and has lied in her evidence by claiming that the agreement was never signed and by producing only an unsigned version".

72. This explanation, as well as the document itself, raises several questions.

73. First, the respondent describes the agreement which he alleges they both signed as a 'handwritten' document.  The respondent told Mr Pointer during the course of his cross-examination that he could not recall whether the document which he and the applicant signed was a typed or handwritten document.  That evidence conflicts with what he said in his list of documents which had been prepared just over a month before the draft (typed) document on Mishcon de Reya's file had been sent to his solicitors.  His list of documents quite clearly refers to a handwritten agreement.  It was put to him that his evidence had changed following the pre-trial review for the purposes of which Mr Pointer and Mrs Carew Pole had produced a Note for the court which identified this discrepancy. 

74. The second point of note in relation to the purchase of the Falcon House apartment is the form of the signed document which was produced by the respondent.  I have seen both the original (which was sent to Dr Audrey Giles, the graphologist) and the copy which is in the bundle.

75. The wording on the signed copy is identical to the wording in the draft found on the conveyancing file.  However, the font used in the signed version is larger than that in the draft version with the result that the line formatting is different.  Further the position on the page of the names of the parties below the signatures which appear on the signed version is different from the layout of their names in the draft version.  Thus, they are not identical copies of the same document although their content is the same.

76. The next point of note in relation to the form of the signed copy is that there are 'headers' and 'footers' at the top and bottom of the single page document.  In the top and bottom left hand corners of the document there is the following:
In the top right hand corner is the date: '23/12/2008 16:40'.  In the bottom right hand corner there is a reference to 'Page 1 of 1'. 

77. When the applicant's solicitor attended the offices of Alexiou Fisher Philipps to inspect the original document, he asked for an explanation of these 'headers' and 'footers'.  He was told by the respondent's solicitor that her instructions were that he had gone to a local newsagent's shop to fax the document to someone.  The respondent was asked about that explanation when he was cross-examined by Mr Pointer.  He confirmed that was what he had told his solicitor and that he had indeed gone to his local newsagent's to fax the document.  He thought he had sent it to Mishcon de Reya's conveyancing department.  Clearly, that cannot have been correct because Mishcon de Reya did not have a signed copy of the document on its files and the draft version does not bear the 'headers' and 'footers' and is in a different format from the signed version.

78. Two signatures appear on the signed copy.  The respondent identified his signature on the document as being his own.  He further identified the manuscript addition of the date ("London, Dec 21, 2008") as being his.  He told me in his oral evidence that the two signatures were written by him and the applicant sequentially and on the same occasion, i.e. on 21 December 2008.  He confirmed that he saw the applicant sign the document.

79. He confirmed that he had found the signed document at home (which I take to be Westbourne Terrace) on 1 May 2015 and had sent it over to Mishcon de Reya on 29 May 2015, almost a month later.

80. It was put to him in cross-examination that he had manufactured this evidence in order to support his case in relation to the Falcon House agreement.  Mr Pointer's suggestion was that he had then replicated the applicant's signature on the signed version of the document and scanned it through a computer and had thereby produced the document which was sent to his solicitor and copied to the applicant's solicitors on 29 May 2015, together with the explanation that it had been "discovered" amongst old papers.  The respondent denied that he had done any such thing.  He was unable to explain why, if a signed version of the document had been available from 21 December 2008, the document in respect of which Mr L was giving advice on 13 January 2009 was an unsigned version.  The respondent agreed (i) that Mr L's email of that date and the advice he was giving was clearly written in contemplation of an agreement; (ii) that the version of the agreement referred to in his email as the document in respect of which advice was sought was plainly a draft; and (iii) that there was no attempt in the applicant's reply to that email the following day to explain to Mr L that in fact the parties had already signed the agreement in that form some three weeks before.  All that the reply said was, "We will get back to you if we feel we would like to set something up with Victoria" (i.e. the solicitor who had been nominated in the firm's private client team).  Further, it appears to be agreed as between the applicant and the respondent that it was the cost of securing advice in relation to a written agreement which preventing them from taking the matter any further.  On the applicant's case, she had no intention of signing any such agreement, regardless of the expense of obtaining legal advice.  It is curious, to say the least, that the respondent's oral evidence was that, notwithstanding the contents of Mr L's email, by mid-January 2009, each of the applicant and the respondent had in their respective possession a signed copy of the document upon which he now seeks to rely.  It is his case that, whilst his came to light on 1 May 2015, the applicant has throughout knowingly withheld her signed copy.    

81. The applicant stated in her written evidence that she remembered that the respondent prepared a document but she denies signing it; she says she simply ignored it.  She told me during the course of her oral evidence that she had no knowledge of what was discussed between the respondent and the conveyancing solicitor during their telephone conversation on 12 January 2009, nor does she have any independent recollection of the subject matter of her email to the solicitor on 20 November 2009 regarding the "single page letter" of understanding which she wanted him to draft.  She presumed that it was a reference to the document which the respondent wanted her to sign.  She recalled that the first time she saw the document which the respondent had prepared was shortly after completion when she saw it on the dining room table at the Falcon House apartment.  The respondent told her that it was important and he wanted to run it past the lawyers.  When cross-examined by the respondent about the document, she told me that she knew she had not signed anything because she was put under pressure by him to sign and was unwilling to do so.  She explained that her parents had helped her financially both in relation to the original deposit on the Rutland Gate flat and subsequently in paying off the mortgage on that property.  This had occurred long before she met the respondent and she had the strongest sense that this was intended by her parents as her financial security which must be "kept safe".  She felt that the respondent's request that she transfer half of the value of Falcon House to him was an unreasonable imposition on her and unfair to her parents who had entrusted the Rutland Gate equity to her for her future security.  She volunteered in her evidence that she was well aware that this was important for the respondent who wanted to feel that acquiring the property at Falcon House was the start of their joint lives together.  She told me that she was very uncomfortable about the entire arrangement and hoped it would just "go away".
82. Pursuant to directions given by the court, instructions were sent on a joint basis to Dr Giles who was asked to express an opinion on the validity of the applicant's signature.  She attended court to speak to her report which is dated 20 January 2016.  For the purposes of her report, Dr Giles had been provided with a number of specimen signatures (twelve, in all) in order that she might compare these with the signature appearing on the signed copy of the agreement relied on by the respondent.  She described the applicant's signature as "a somewhat simple and variable signature which is vulnerable to simulation and difficult to authenticate".   Of the signature which appears on the document produced to her, she includes the following in her Summary of Findings:-

"The questioned signature is variable in fluency and falls outside the range of variation observed in the signatures of [the applicant] provided to me.  These factors lead me to conclude that there is more support for the view that the signature … is a simulation than there is support for the view that it is a genuine signature of [the applicant].  The support, however, is limited by the restrictions placed upon my examinations."

83. For the purposes of her work, Dr Giles's report records that she studied the fine detail of the elements of the signature using low-power stereomicroscopy.  The signatures were also compared directly using the framestore facility of a video spectral comparator.  At internal page 10 of her report, Dr Giles lists six separate points of difference which she observed between the sample signatures provided and that which appears on the agreement which is dated 21 December 2008.  Having recorded that the simple and variable style of the applicant's signature renders it vulnerable to simulation and difficult to authenticate, Dr Giles identifies these points of difference as positive (albeit weak) evidence that the signature on the letter of agreement is not genuinely that of the applicant.

84. In relation to the 'headers' and 'footers' which appear on the document, Dr Giles concludes that (i) the entire document has been produced on an ink jet printer; (ii) the position of the date/time entry and the position of the headers and footers at an angle which matches the angle of the body of the text suggest that the entire letter of agreement (including headers and footers) was printed out on a single occasion; and (iii) there are no techniques available which might assist when the signatures or the handwritten date were applied to the document.  Furthermore, it is not possible to carry out any examination to determine whether the printed date in the top right-hand corner of the document was made before or after the handwritten date.

85. Having read Dr Giles's curriculum vitae and her list of qualifications and experience, I am satisfied that she has the necessary expertise to provide this court with an expert opinion and, further, that her opinion, whilst not conclusive, is likely to be the best available evidence on the issue of the authenticity of what is said by the respondent to be the applicant's signature on this document.

Findings and conclusions in relation to the Falcon House apartment
86. In terms of my assessment of parties' credibility, I found the applicant to be a generally truthful and helpful witness.  I have no doubt that it was not easy for her to deal with the respondent's cross-examination given the circumstances leading up to the breakdown in their personal relationship.  Nonetheless, she made eye contact with him throughout and gave her evidence in a clear and careful manner.  Where appropriate, she was prepared to make concessions or tell me she could not remember details.  When providing answers to some of the respondent's questions, she was able to give me colour and detail which went beyond the written structure of the formal pleadings and her written evidence.  I did not interpret this detail to be an attempt on her part to embroider or improperly bolster her evidence.  Rather, it had the clear ring of truth and of memory recaptured as the detail of these events was explored forensically.  At no stage did I have the impression that she was dissembling or deliberately withholding the truth.  Her evidence in relation to the written agreement and the reasons why she was unwilling to sign it were in my judgment both compelling and credible. 

87. That said, I accept the respondent's evidence that, at this point in time (i.e. 2008), their relationship was showing none of the strains which were to surface later.  The photograph albums which he has produced, compiled and edited in part by the applicant, show a young couple who were clearly very much in love and about to embark upon a shared existence together with all the hopes for their future life which are recorded in those albums.  But they are snapshots, albeit vivid snapshots, of the very early stages of this relationship.  It was a relationship which developed very swiftly and one which, within a short period of time, saw them living together at Falcon House as a couple. 

88. Curiously, the respondent was unable to give me any assistance in relation to the circumstances in which the issue of shared ownership arose.  I accept that he was the author of the draft Letter of Agreement. But as to the circumstances in which this document came into being, I heard nothing at all.  He had no recollection of any prior discussion with the applicant about the issue (a surprising fact in itself) and was unable to provide me with any detail at all about when she had signed the agreement or in what circumstances, save that they both signed together two separate copies of the document. 

89. On balance, and having carefully reviewed all the evidence, I am prepared to accept the applicant's evidence that, whilst she had agreed to live with the respondent at Falcon House, she had no intention at that stage, and was not prepared, to "gift" to him a half share in the property which she had purchased without any financial contribution from him.  Whilst I accept that she raised the issue of some form of agreement with the conveyancing solicitors at the time of purchase, I believed her evidence that she was then under some pressure from the respondent to "sign up" to this agreement and that she had hoped very much that, as an issue, it would simply "go away" with the passage of time. 

90. For these reasons alone, I accept that she did not sign any letter of agreement and that it was never her intention that the respondent should be the beneficial owner of 50% of the equity in the Falcon House apartment.  She never made any comparable claim in respect of 50% of the equity in the flat which he owned at the time.  She alone was responsible for all subsequent mortgage payments.

91. However, it is not simply the applicant's evidence which leads me to this conclusion.

92. The explanation offered by the respondent in relation to the circumstances in which the signed document came into being lacks internal coherence and consistency.  I have already referred to the fact that the contemporaneous written evidence in the form of the email from Mr L on 13 January 2009 points unequivocally to the unsigned version of the agreement being the document which he was being asked to consider and advise upon at the time.  It simply makes no sense for the respondent now to suggest that both he and the applicant had, but three or four weeks before, concluded their agreement and signed the document in acknowledgement of that fact.  I am troubled by the fact that, having discovered such a crucial piece of evidence in his case, it took him almost a month to convey the news to his solicitor.  The applicant had produced the draft Letter of Agreement which was in Mishcon de Reya's conveyancing file some five months earlier and I do not find it credible that, having stumbled upon "the smoking gun" as he was sorting through old papers, he took no further action and failed to inform his solicitors for almost a month.

93. I regret that I do not believe his explanation of faxing the document from a local newsagent to Mishcon de Reya.  When cross-examined about when and to whom he had sent the signed document, he confirmed that it was sent on the date appearing on the document (i.e. 23 December 2008) but was initially vague about the identity of the intended recipient. His evidence about this was inconsistent and confused.  He told me that he thought he would have sent it to Mishcon de Reya because he could not think who else might have been interested in its contents.  When it was put to him that it could not have been sent to those solicitors because there was no signed copy on their file, he told me that he had no memory of its intended destination.  Mishcon de Reya did not see the signed version of the document until it was sent to them by Alexiou Fisher Philipps on 29 May 2015.

94. There is a further difficulty for the respondent.  The 'headers' and 'footers' clearly point to this document having been printed from the internet and not from a fax machine.  The certificate signed by Miss Hannell, the respondent's solicitor at the time, shows that those headers and footers were present on the original copy of the document which the respondent had produced to her.

95. It was put to the respondent by Mr Pointer during the course of cross-examination that he had scanned the draft document which had been sent to his solicitors by Schillings into a computer; converted it; and printed it out as a separate document on a sheet of paper which bore the December 2008 header and footer.  Having done that, he then signed for himself and forged the applicant's signature.  The Respondent denied he had done so.

96. Casting more widely to discover where the truth lies in relation to the respondent's evidence, I am troubled by the inconsistency of his case as it appears to have been advanced to his former wife in the context of their ongoing divorce proceedings in 2008 with the case which he seeks to advance before me.  The fact that he agreed that Falcon House should be purchased in the sole name of the applicant in order to put beyond doubt his positon in those divorce proceedings (if that was indeed his intention) suggests that there never was any common intention at that time that he should have such a beneficial interest.  If that was not the position, then the only alternative explanation is that he was deliberately intent on misleading the French and/or English divorce court(s) and was willing to rely on perjured evidence in those proceedings. 

97. In terms of his general credibility, I am also persuaded that the information he gave to the Bank in the context of the financial restructuring which was to take place some three years later was not entirely truthful.  In my judgment, for the reasons I have set out above, there is sufficient evidence in the material before me to lead me to the conclusion that the Bank was indeed under the impression that he held offshore assets to which they could look in terms of security.  Whether this was a deliberate attempt by the respondent to mislead or simply a self-aggrandising and un-particularised assertion of underlying wealth and financial status such as to make him attractive to the Bank as a client, I know not.  But it does not recommend him to me as a reliable and honest witness as to the truth.

98. In my judgment, these factors alone would be sufficient to cast considerable doubt on the credibility of the respondent's evidence.  Here, in addition, I have the expert opinion of Dr Giles.  Whilst her evidence alone would not have persuaded me conclusively that the applicant's signature on the document was not genuine, when taken in conjunction with all the other evidence which I have set out and analysed, I am left in a position of being satisfied on the balance of probabilities that the respondent did indeed simulate the applicant's signature on a document which he himself produced electronically without any input from her. 

99. In conclusion, I am satisfied, and I so find, that the applicant did not sign the original draft which the respondent put in front of her and which was subsequently sent to Mr L in January 2009.  I am satisfied that the document which is referred to in Mr L's email of 13 January 2009 was indeed the draft of the same, or a document similar to, that which was put before the applicant on the dining room table at Falcon House.  I am satisfied that, whilst she was probably not subjected to overt pressure or threats of any kind, the applicant did feel under a degree of emotional pressure to sign up to a proposal which emanated from the respondent and which involved sharing the equity in the flat they had just acquired as their first home together.  I am satisfied that it was a proposal on his part to which she never agreed.  

100. Finally, whilst it has not informed my judgment in relation to these findings, I cannot ignore the fact that, on an earlier occasion, the respondent has been found to have lied to the court about a number of allegations relating to his behaviour towards the applicant.  I have given myself an appropriate Lucas direction (see above) but I regret  that I did not find the respondent to be a satisfactory or reliable witness in terms of the truth of what he was telling me.

101. Thus, on the basis of my findings of fact, I reject the respondent's case that there was an express agreement that the beneficial ownership of the Falcon House apartment would be shared. Neither, for the reasons explained above, am I prepared to draw an inference in relation to the necessary common intention between these parties from their conduct at the time.  In order to establish a beneficial interest, that conduct must have involved some course of financial conduct which is referable to the acquisition of the property.  The respondent does not assert that he made any direct financial contribution towards its acquisition nor does he dispute the applicant's evidence that she paid the mortgages which were taken out at the time of purchase.  I can find no reliable evidence that by that stage they were 'pooling' their resources or operating a joint bank account from which either the mortgage payments, or their day to day expenditure, were paid.  I accept the applicant's evidence that she was paying the mortgage of some £1,700 per month from her rental income from Rutland Gate (some £62,400 per annum gross). As to a mingling, or 'pooling' of their financial arrangements, it is accepted that the parties never had a joint bank account.  Throughout the period of their relationship, they maintained separate accounts.  At this point in time, I am satisfied that such income as the respondent had from his rented property at Queen's Gate was absorbed entirely with the cost of setting up his new business.  For some six months he was renting an office in central London and paying the salaries of three staff (including a personal assistant).  This was the applicant's evidence but it was not challenged by the respondent.  When this proved too expensive without any income from the business, he reverted to working from home. 

102. I accept that, on occasion, there was a payment from the respondent to the applicant in respect of monies which she had provided.  I heard about one such transaction involving either £50,000 or £20,000.  I do not need to make a finding about which figure it was.  The applicant told me, and I accept, that this money came from the proceeds of sale from his Monmouth Road flat.  She says that she does not know what he did with the balance although she suspects that it was ploughed into the start-up costs of his new business.  I accept the applicant's evidence that they kept their finances separate and, whilst they may have had discussions and exchanged emails about cash flow issues and the rent which was being generated by the portfolio of properties, for the most part this did not come until later when the restructured debt became unsupportable.  I do not regard the email which the respondent has exhibited at [C:290] as being evidence which will support a finding in respect of any "pooling" or mingling of their finances.  This is no more than an email which the applicant wrote to the solicitors dealing with the completion of the Westbourne Terrace purchase in connection with some direct debits relating to mortgage arrangements which were in place prior to the 2011 refinancing exercise.  Whilst that email refers to "our accounts", it is clear from the evidence (and accepted by the parties) that they never had a joint account.

103. Quite apart from the absence of a common intention, at no point in the litigation to date has the respondent pleaded or relied upon any evidence of his having acted in reliance on such an intention to his detriment.  As I have said, it is common ground that he made no financial contribution to the purchase price or thereafter to the mortgage repayments.  He had no income at the time save for the rent he received from his Queen's Gate flat.  I am satisfied on the basis of the evidence I have heard that the burden of discharging the majority of their domestic outgoings fell on the applicant's shoulders.  This was a responsibility which I accept she discharged voluntarily since she had the greater rental income and wanted to support him as he tried to establish his new business.  He had no liability in respect of either of the mortgages which she continued to discharge and his assumption of liability for the current mortgage structure did not come until some three years later.

104. In my judgment, not only does the applicant have the benefit of the presumption of sole beneficial ownership, the evidence which I have heard and read points clearly towards the beneficial ownership following the legal title.

105. Thus, in relation to the Falcon House apartment, I will grant the declaratory relief which the applicant seeks.  The respondent has no beneficial interest in this property which is legally and beneficially owned by her.

(ii) The financial restructuring in 2011 and the purchase of the property at Westbourne Terrace
106. There is no issue between the parties but that there was a common intention to share the beneficial ownership of Westbourne Terrace.  The only dispute between them is the extent of the proportions in which that joint beneficial interest was to be held.  I am satisfied that each acted to his/her detriment since the applicant allowed her two pre-owned properties at Rutland Gate and Falcon House to stand as security for the new Bank mortgages whilst the respondent assumed sole liability for both mortgage debts.

107. The respondent asserts that each has a 50% interest in the underlying equity since Westbourne Terrace fell naturally into their original agreement to "pool" or share equally the entire portfolio of properties which they owned.  The applicant's evidence was that there was never any discussion about the precise proportions in which they would own the property although she acknowledges that they intended to share.  Her oral evidence about this aspect of the case was given quite spontaneously and, in my judgment, credibly.  Throughout, she has rejected the respondent's case that there was in place some overarching agreement, arrangement or understanding between them that everything they owned was to be shared equally. 

108. By now this couple had been living together for nearly three years.  They had one child together and the applicant was pregnant with their second child. 

109. In the context of my analysis of the respondent's evidence about the sharing or 'pooling' agreement in relation to the purchase of the Falcon House apartment, I have explained why I have rejected his case.  In relation to the acquisition of Westbourne Terrace, his pleaded case is that "[t]his was a joint venture and the Applicant was an equal partner and participant in it".  The applicant's pleaded case was she was throughout very anxious and reluctant to allow her two properties to be exposed to further borrowing.  She maintains that she made it plain to the respondent that she was not prepared to take any step which might, or would, jeopardise her ownership of those properties or their value. 

110. I remind myself about the law and the guidance given by Chadwick LJ in Oxley v Hiscock (see paras 68 and 69 of his judgment which I have set out in paragraph 51 above).  I ask myself, first, whether there is any cogent or reliable evidence in this case of any discussion between the applicant and the respondent in relation to the proportions in which each was to share.  The Respondent has been unable to assist me with any evidence of specific discussions between them prior to the purchase of Westbourne Terrace.  He relies entirely on the agreement to share equally which he says was the basis upon which they lived their lives together.  In relation to this issue, I have accepted that the applicant's evidence was true:  they simply never turned their minds to the precise proportions in which they were to share.

111. I look to the wider circumstances of the way in which they were operating their finances at the time.  Towards the end of 2010, the two year fixed rate mortgage which was secured on Falcon House came to an end and the mortgage payments doubled overnight from £2,000 per month to £4,000 per month.  Since she was meeting the household expenses (including the mortgage) from her savings and the rental income from Rutland Gate, the applicant's evidence is that she had a discussion with the respondent about selling the property.  There was still no income flowing into the household from his business.  I accept that she was under financial pressure at this point in time.

112. I am also entirely persuaded that the impetus for the restructuring of their finances came from the Respondent.  It was he who opened up the line of dialogue with the Bank and in my judgment it was he who drove those discussions forward over the months from February to September 2011.  The applicant refers in her written statement to her increasing anxiety over the scheme which began to unfold from the foot of the advice received from Child & Child in relation to the proposed structure.  She says this in paragraph 24 of her written statement:-

"I could not see how taking on more debt when I could not afford to service the debt I had already would work but the Respondent said that I should leave it to him and he would set things up for me."

The written advice from Child & Child in relation to the overarching structure of the scheme was sent to the respondent at the end of August 2011.  It is his case that the applicant was shown this document at the time.  She disputes that.

113. That the financial pressure of the mortgage increase was taking its toll on the applicant is readily apparent from some emails relied on by the respondent and exhibited to his statement.  In April 2011, she had sent an email asking him if he was able to transfer £4,000 to her bank account because she was overdrawn.  She said if he could not help, she would draw on her savings and "try to convert some dollars".  By August of the same year, shortly before the remortgage was completed, she had made a further request for funds because she was once again short of money because of a mortgage payment and a credit card bill.  The respondent relies on these emails as evidence of a joint pooling of their resources.  I do not regard them as such.  In my view these requests were no more than the applicant asking for financial assistance with her cash flow from her partner who, at that stage, was contributing nothing towards the cost of the property in which they were living and, in all probability, very little towards their joint domestic economy.  I do not intend this as any criticism of him since this appears to have been the basis upon which they were operating at the time.  The applicant told me that she was supportive of his attempts to set up the business, as – it seems – was her family judging by the significant investment which her father had made.

114. The applicant asserts that she asked on a number of occasions whether she could meet the Bank.  It appears to be accepted that the only time she had any direct discussion with Child & Child was the day on which she signed the mortgage documentation.  It is also common ground that she was told about this meeting some twenty-four hours before the appointment.  I have within the material in the bundle a copy of an attendance note dated 26 September 2011 which was produced by the solicitors on that date as a record of the meeting with this couple.  For his part, the respondent denies that he put her under any pressure in relation to the financial restructuring.  He says she was very keen to go ahead with the purchase of Westbourne Terrace.  He points to an affectionate email which she sent to him on 9 August 2011 when she forwarded to him the details of the property which she had been sent by the estate agent.

115. The applicant has been able to give me details and information about the discussions she had with the respondent during which she asked him how this scheme was to work.  He had told her that, together, the three properties could be let for a total of £150,000 per annum which they could apply towards discharging the payments due to the Bank.  She asked what they would live on and received his assurances that he would either be drawing money from his business or he would find a job.  She told me that she was very concerned that, by taking on more borrowing, she was putting her two properties at risk.  She says that she "repeatedly told the Respondent that [she] needed to make sure, above all else, that [she] did not jeopardise Falcon House or Rutland Gate because she considered these to be what [her] parents had given [her]".  In her mind, the two properties were linked because, without Rutland Gate, she would not have been able to purchase Falcon House.

116. Her evidence was that the respondent had explained the scheme to her in outline.  She was aware that the new property was to be owned by an offshore company which would, in turn, be owned by a trust in respect of which they would be the beneficiaries.   She specifically recalls saying to the respondent on the evening before the meeting with Child & Child that she had never seen any trust documentation (which was true).  As I have already said, it appears that no such trust was ever drawn and executed 6.  She was being asked to put up properties in her own name as security for a significantly increased burden of debt but nowhere could she see evidence that she would have any interest in the new property they would be buying since that was to be owned by an offshore company.  She recalls that the respondent was very stressed at the time and impressed upon her the need to do nothing which might prejudice the "deal" on which he had been working for so many months.  She says that, as they arrived at the solicitors' offices, he told her that she should not "speak too much" or do anything to upset the deal.

117. Her expectation at the time was that the solicitor they were going to see on 26 September 2011, Mr S, would be acting for both of them in relation to the scheme which had been set up with the Bank.  In fact, it appears from contemporaneous correspondence that he was instructed by the offshore company which was to hold the legal title.  She was shown an organograph which purported to explain the structure of the purchase and the ownership of the property.  At that point, Mr S told her that one of his colleagues, Mr P, would need to speak to her separately in connection with signing the Bank's documentation.  She says that she had a fairly brief meeting with this gentleman who informed her that she would be providing her properties as security for the loan which would be used to purchase Westbourne Terrace.  He informed her that if the loan was not repaid, the Bank would be entitled to repossess both properties.

118. Throughout the course of this one to one meeting, the applicant told me that she could see the respondent through the glass wall.  He was sitting in the reception area looking at her.  It is her case that, on being told that her properties would be at risk in the event of his default, she told Mr P that she was very anxious about the deal and needed to discuss it with the respondent.  Mr P left them alone in the room for a short time.  She says that she told the respondent specifically that she was very concerned about exposing her properties since, whatever happened, she "needed to make sure that Rutland Gate and Falcon House always stayed with me".    She recalls the respondent becoming agitated and she felt under pressure to sign the papers.  He assured her that she needed to trust him and that he would take care of everything.  She says that he assured her once again that her two properties would remain her own.  The rent from those properties would service part of the mortgage debt and he would provide an income to meet their household expenses.  It seems that the applicant was never fully aware of the significance in the scheme of the income which was to have been generated by the investment bond or wrapper.  At all events, the applicant signed the mortgage documentation pledging her two properties as security for the restructured mortgage financing and the purchase of Westbourne Terrace was eventually completed on 5 October 2011.

119. Whilst much of this evidence was set out in her statement, the applicant was pressed about it during the course of the respondent's cross-examination of her.  She said this:-

"Yes – there were direct discussions between us that my inheritance would always be protected.  Rutland Gate, Falcon House – no matter how they were used as collateral, they would need to be wholly protected.  That was our agreement and you promised me that you would never put in jeopardy my inheritance.  You said on more than one occasion that my inheritance would be protected."

120. Of the meeting at Child & Child, she said during the course of her cross-examination that whilst they were alone in the glass-partitioned room, she had said to the respondent, "I am going to sign this and I am going to trust you but I am not happy with it."  He did not seek to challenge that response.

121. She told me in answer to a specific question which I asked her that their relationship was by that stage in some difficulty.  She was heavily pregnant and anxious to avoid outbursts from the respondent, of which she told me there were many by that stage.  She said,

"[The respondent] was very nervous and tense and could have mood swings and they could lead to quite dramatic situations.  I was pregnant with [M] and I can say with certainty that I was not the same person in 2013.  I don't know if that's clear.  I was always afraid of [the respondent's] reaction and always walking on eggshells. My objective was always to keep [the respondent] calm." 7

And later,

"I was not in favour of the entire operation.  I did not want the extra debt.  I went along with it to keep [the respondent] happy, motivated and looking forward because things were not great between us at that time.  I tried to make the best of it; I honestly tried to make the best of it.  I did not know how to service the debt.  I was very unhappy.  I was getting more and more anxious.  I asked to see the Trust.  There was nothing on the papers in my name.  The Trust had not been drawn and my name did not appear anywhere.  You told me that you were my husband and you would take care of me."

122. I accept the applicant's evidence that, by this stage, the restructuring exercise with all its component elements had become something of an obsession for the respondent.  She said during the course of her evidence,

"[The Respondent] has a way of not hearing what he does not want to hear.  From my point of view, I was clear.  I was worried and kept saying 'Let's stay in Falcon House'.  He was so happy about the idea of moving to a big house – a grandiose place – although I am sure part of his interests were for the children.  The reality was clear to me.  It was all very risky.  I kept saying to him, 'The numbers are too close to the edge.  What if one of the properties does not rent ?' He told me he would be earning by then.'

123. The respondent points to the passage in the solicitors' attendance note which records the advice which Mr S gave to the applicant:-

"I summarised that, in view of all of the above and other potentially unknown risks, she should not sign any of the third parties charges and if she did wish to go ahead, she should be fully engaged and present alongside [the respondent] in the negotiation of any financial terms with the Bank.

I explained to [the applicant] that she was free to back out from these transactions at any time before a drawdown of any of the mortgage funds.  She also, however, was keen to secure the new purchase, notwithstanding the Bank's terms.

Notwithstanding my advice, [the applicant] agreed to sign the third party charges, on account of the fact that this was the entire structure [of] the deal with the setting up of [WC Ltd] and the purchase of … Westbourne Terrace."

He relies on that passage of the attendance note as evidence that, contrary to her evidence in these proceedings, the applicant was an entirely willing and enthusiastic partner in the scheme.  Had she wanted to opt out, there – he says – was her perfect opportunity.

124. In my judgment, that position is a material over-simplification of the dynamic of their personal relationship at the time.  I have accepted as true the applicant's evidence of the strain under which she had been placed financially and her attempts to placate the respondent as he became increasingly absorbed over the weeks and months in the complex scheme which he was seeking to negotiate with the Bank.  I find her description of "walking on eggshells" to be a fair representation of the atmosphere between them at the time.  She was caring for a small child and was heavily pregnant with their second son.  I found her description of her private one to one conversation with the respondent at the solicitor's offices to have the clear ring of truth.  The respondent says that he has no recollection of this exchange between them.  I am entirely satisfied that it happened, and that it happened more or less in the way in which the applicant described it to me.  I am not surprised that, by this stage, she felt enmeshed in the deal and unable to back out even when presented with the opportunity by the solicitor.  She knew the personal investment which the Respondent had made in bolting down the final aspects of the deal with the Bank and I accept that she was highly anxious about upsetting him or doing anything which might put the scheme at risk.

125. When she was pressed in cross-examination by the respondent about their intentions in relation to the extent of the beneficial interest which each would have in Westbourne Terrace, she accepted that they never discussed an actual percentage in terms of figures but went on to say this:-

"For me it was an assumption that my share would be higher because of the values in my properties…. It was just an understanding for me that the split would be proportionate to the value of the properties I had put in.  You always agreed that my inheritance would be protected, no matter what we did.  You said that no matter how they were used as collateral, Rutland Gate and Falcon House would be wholly protected in the event of a sale of Westbourne Terrace.  You promised me they would always be protected.  On more than one occasion you said that."

126. The respondent's evidence was that he does not remember the applicant expressing anxiety about the remortgage scheme. This is evidence which I am unable to accept. He told me that it was no secret that their finances were not exactly "top notch" at the time and this was a way of consolidating matters "so that they were more manageable".  He accepted that he had not revealed to the applicant the existence of the second charge on his own flat at Queen's Gate.  He also accepted in cross-examination that he had told her not to worry because he would ensure that nothing went wrong with the arrangement with the Bank.

127. I have already recorded my findings in relation to my assessment of the parties' credibility generally.  In relation to this second transaction in 2011, I accept the evidence of the applicant where it differs from that of the respondent.  At times, she became visibly distressed during the course of her evidence.  She told me that even if she managed to salvage her properties at the end of this litigation, the whole scenario had been extremely detrimental as far as her financial interests were concerned.  Her equity will have been significantly depleted even on the basis of the outcome for which she contends and she is solely responsible for the children at the present time.

128. As I indicated during the course of the hearing, in terms of its financial ramifications, it seems to me that the 2011 transaction has been a financial disaster for both these parties.  The expected income from the bond never materialised leaving the parties exposed from the outset.  Their relationship broke down shortly thereafter and it is accepted that the Bank has received no interest since March 2013 despite the fact that each of the parties has been in receipt of rental income from the properties.

129. That said, sympathy has no part to play in my determination of the facts and the parties' intentions at the time, or the inferences and/or imputations to be drawn from their conduct.

Findings and conclusions in relation to the purchase of Westbourne Terrace and the interlocking mortgage structure
130. The respondent has provided no reliable evidence of any express agreement between them that, at the time of the 2011 transaction with the Bank, their common intention was that the equity in all four properties was to be shared equally.  Simply pointing to the fact that they were living as a family cannot, in my judgment, provide a sufficient evidential basis for his case in circumstances where the evidence pointing in the other direction is so compelling.  I have rejected his case that there was a common 'pooling' of their finances which might lend some support for a merging of their proprietary interests.   I am equally satisfied that the applicant was telling me the truth about her recollection of the specific discussions she had had with the respondent.  I am confident that she did, indeed, and on several occasions, express her concerns to him about the risk which the Bank's scheme entailed in respect of the two properties which she regarded as hers.  I am equally confident in my finding that he did offer her reassurance and confirmed that, come what may, those properties would remain protected within the restructured scheme.  I find his evidence to the contrary to be unimpressive.  I find his account of their relationship and her enthusiasm for the scheme and the purchase of Westbourne Terrace to be overlaid with a superficial gloss which fails entirely to acknowledge the underlying reality of their lives at that time.  The applicant's account of "walking on eggshells" throughout this period and trying to contain the respondent's volatile temperament is lent considerable support by the finding of District Judge Gibson that the first incident of violence perpetrated by the respondent against the applicant took place a matter of weeks after they completed the purchase of Westbourne Terrace.  On that occasion, and at a time when she was seven months pregnant, he pushed her violently to the floor, pressed the sole of his shoe against her cheek and threatened her with a baseball bat.

131. I have no doubt that, having made the move to Westbourne Terrace, the applicant did her best to make it a home for the family.  The fact is that they only lived in the property for eight months before they were obliged to let it for a year in order to service the mortgage payments.  Having moved back at the end of the tenancy in July 2013, the applicant and the children were there for no more than a matter of weeks before the relationship finally came to an end.

132. Returning to my findings and the law which I must apply, I have reached the following conclusions in relation to the purchase of Westbouorne Terrace.

(i)        There was never an express agreement between them to share Westbourne Terrace on the basis of an equal division of the beneficial interest.  I reject the respondent's case in this respect whether it be advanced on the basis of a specific agreement in relation to this particular property or a more general agreement that the entire portfolio of the four properties would be shared.

(ii) There were discussions between them which revolved specifically around the applicant's concern to protect the equity in her two properties at Rutland Gate and Falcon House.  The respondent was very well aware of those concerns.  He offered the applicant reassurance to the effect that her equity in the two properties would be protected within the restructured financial arrangements with the Bank.

133. In these circumstances, and in my judgment, the evidence of what they said and did at the time of acquisition supports the clear inference that, had the parties addressed their minds to the question of the extent of their respective interests in Westbourne Terrace, they would have agreed that such interests should reflect the percentage contribution which each was making towards the equity which was being injected into the scheme.  I have already found that there was no merging or 'pooling' of their interests prior to that date.  The applicant was the sole legal and beneficial owner of Falcon House and Rutland Gate at the time Westbourne Terrace was acquired.  A finding that their interests in the latter followed and reflected their respective contributions into the financial restructuring scheme is the inevitable consequence of my acceptance that the respondent had agreed to protect within the scheme the equity which the applicant was introducing by way of security for the Bank.  Even if I am wrong to infer that was their joint intention (which I do not believe I am), then the evidence – in my judgment – supports the imputation of such an intention by the court (whether expressed as an intention, or an agreement, arrangement or understanding between them).  In these circumstances, the presumption of shared beneficial ownership in equal proportions is displaced.

134. In these circumstances, I do not need to consider what outcome a court might consider fair having regard to the whole course of dealing between them in relation to the property.  Their occupation of the property as a home was relatively short-lived in any event and the default in the mortgage conditions was precipitated after only a few short months when the entire scheme collapsed.  Even if I am wrong about the inference or imputation which I have drawn in relation to their intentions at the time (which, again, I do not believe I am on the basis of the totality of the evidence), I would nevertheless consider this apportionment of the beneficial interest in Westbourne Terrace to be a fair outcome.  I remind myself about what was said by Tomlinson LJ in Graham-York v York & Others [2015] EWCA Civ 72, [2016] 1 FLR 407 at para 22.  His Lordship said this:-

"…. It is essential, in my judgment, to bear in mind that, in deciding in such a case what shares are fair, the court is not concerned with some form of redistributive justice.  Thus it is irrelevant that it may be thought a "fair" outcome for a woman who has endured years of abusive conduct by her partner to be allotted a substantial interest in his property on his death.  The plight of Miss Graham-York attracts sympathy, but it does not enable the court to redistribute property interests in a manner which right-minded people might think amounts to appropriate compensation.  Miss Graham-York is "entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property".  It is these last words, which I have emphasised, which supply the confines of the enquiry as to fairness."

135. Thus, had I been considering this category of case (which, on my primary findings, I am not), it would not have been open to me to attempt to navigate some middle way between the parties' respective positions in order to produce some sort of equality of outcome as between them in relation to the beneficial ownership of Westbourne Terrace.  The respondent obviously feels keenly that he will be financially disadvantaged by the outcome proposed by the applicant.  Financial disadvantage and an attempt to ameliorate any perception of the same by a largely discretionary process of readjustment are not factors which can, or should, have any bearing on outcome in this case as a matter of law.  I would still have been obliged to follow a route to an outcome based upon the whole course of their dealings in relation to the acquisition of the property at Westbourne Terrace and that route, based upon my findings, would have led me to apportion their interests as to 82% to the applicant and 18% to the respondent.

136. In terms of the apportionment of liability for the extant loans, I accept that fairness requires that their liability should reflect their respective positions in terms of their proportionate liability for the existing pre-2011 debt.  If their intentions as I have found them to be were that pre-existing entitlement should be reflected in the new arrangements and not merged into joint ownership, it follows that such entitlement would carry with it a similar burden in respect of the debt with which that previous entitlement was encumbered.

137. Thus, by reference to the two tables which I have set out in paragraphs 44 and 45 of my judgment, I shall make a declaration that the applicant is entitled to 82% of the beneficial interest in Westbourne Terrace with the respondent being entitled to the remaining 18%.  In respect of the primary loan, the parties will discharge the sums due and owing to the bank (including interest) as to 71% by the applicant and 29% by the respondent.

138. In terms of hard figures, the parties will be left in the following positions on the basis of the best available evidence as to the current values of the properties.  On the assumption that the funds sitting in the offshore account and held by WH Limited are applied to reduce the primary loan by just over £957,000, the applicant will have borrowings of £1,958,342 and will retain her two properties at Rutland Gate and Falcon House (together worth some £5,125,000), a net position of c. £3.16 million.  The respondent will have borrowings of £944,690 but will be solely entitled to the Queen's Gate flat (which currently has a gross value of £1.35 million), a net position of £405,310.

139. Both parties will have suffered financially as a result of the 2011 transaction.  Each now has a greater exposure in terms of mortgage debt than they did before entering the transaction.  That is the inevitable consequence of the failure of the scheme 8 and the breakdown of their relationship. 

"Tail-end issues"
140. There are two issues which Mr Pointer has described as "tail-end" issues.  The first is chattels.  I have referred earlier in my judgment to my hope and expectation that this is an issue which the parties will resolve as between them.  I have already indicated the course which I am likely to adopt should there be any remaining disputes in relation to the chattels issue.  I propose to say no more about that issue at this stage.

141. The second issue relates to funds which were paid to the respondent in respect of rent and deposits which the applicant contends should have been accounted for by him to her. 

142. First, there is an issue as to the sum of £10,500 which was a deposit paid by tenants in respect of a rental of the Falcon House apartment.  The respondent contends that this was spent on repainting the entire flat at the commencement of the tenancy.  He says that the applicant was fully aware of this expenditure and the need for the work to be completed.  When pressed on the cost of the work in the course of cross-examination, the respondent was not able to provide any exact figures as to cost and Mr Pointer invited me to proceed on the basis that the work is unlikely to have cost as much as £10,500.  I have no reliable evidence as to what was spent; equally, I have no evidence that any balance not spent on the work was "misappropriated" by the respondent.  In the circumstances, I am not proposing to make any order in relation to this sum.  In the context of the figures with which we are dealing, any unspent balance is, in my judgment, de minimis.

143. In relation to the second issue, a sum of £25,000 was paid to the respondent by the Russian tenant who rented the Westbourne Terrace apartment for a year between July 2012 and 2013.  The respondent's evidence was that he had retained these funds to make good the damage which she had caused during the period of her occupation.  He was challenged in cross-examination about an email he had written to the letting agents in November 2013 in which he had promised to return the full deposit to the tenant.  It emerged from his oral evidence that he had in fact spent the money and part had gone to meet the cost of a three week holiday which the family had taken together.  He has offered to indemnify the applicant in respect of any liability for this sum in the context of any remaining dispute between him and the former tenant.  That formal indemnity should be recorded on the face of the order which flows from my judgment.

144. The third and final issue relates to the quarterly rent payment which the respondent received in respect of Falcon House after the parties separated.  Given my finding that she owns the entire legal and beneficial interest in that property, it must follow that she, and not the respondent, was entitled to that payment.  I propose that an adjustment is made to reflect that sum so that she is given full credit for the amount due to her.  Quite where within the structure that financial adjustment will come is something which I hope can be agreed.  If not, I shall give a separate ruling.

Next steps
145. I hope and expect that the draft order which was put before the court can now provide the framework for moving matters forward in terms of the steps which will need to be put in place in order to discharge the liability due to the Bank in an orderly manner and thereby avoid any action by the receivers.  Arrangements will need to be made in relation to the date upon which the respondent is to vacate Westbourne Terrace and, if this is not agreed, I will deal with the matter either on paper or by way of further submissions.

146. I propose to leave it to the parties to liaise as necessary with my clerk.  In the event that a short hearing is necessary to finalise the order, and because I am due to start a case which will absorb the remainder of this term, I will be prepared to list the case at 9.30am on a date before the end of this term convenient to the applicant's legal team and the respondent.   It may well be that the Bank and/or WC Limited will wish to make short submissions on that occasion.

Order accordingly

1 See R v Lucas [1981] QB 720
2 He had some rental income from his flat in Queen's Gate during periods when it was let.
3 The judgment debt of £17,523 which the respondent owed to Lloyds/Black Horse has been included in this table because the judgment creditor obtained a charging order against the respondent's beneficial interest in the Queen's Gate apartment thereby securing the debt.
4 I am grateful to Mr Pointer and Mrs Carew Pole for supplying me with a copy of the judgment of the Court of Appeal in Graham-York v York & Ors [2015] EWCA Civ 72, a copy of which has also been supplied to the respondent.  The case was not referred to during the course of closing submissions and has just been published in Family Law Reports at [2016] 1 FLR 407.  I confirm that I was aware of the decision and have taken into account the restatement of the relevant principles of law as explained by Tomlinson LJ who gave the leading judgment.  Those principles and the authorities from which they are collected have been set out comprehensively in my judgment.
5 This is a reference to the email dated 14 January 2009 to which I have referred in paragraphs 64 and 65 above.
6 There is within the bundle a copy of an email to the respondent from the Bank.  It is dated 24 November 2011 and post-dates the completion of the purchase of Westbourne Terrace [C:303].  From this email it appears that a trust document was then in the course of preparation.  The respondent was to be the settlor and he was to have the power to appoint or remove the Protector who was identified as a Swiss resident named as Mr NS rather than the unidentified Lebanese woman who had been referred to at an earlier point in the negotiations.  Whether or not that gentleman was nominated by the respondent, I know not.  In any event, it does not appear that the trust documentation was ever completed or signed.  If it was, it makes no difference to my judgment or my decision.
7 Whilst I have reproduced my own note of the applicant's evidence, it accords almost entirely with that recorded by Mr Pointer and Mrs Carew Pole in para 32(g) of their closing submissions.  Since he is a litigant in person, I am keen that the respondent should know that this is my note of the applicant's evidence and not a mere repetition of their record of the evidence.
8 I am referring to the loss from the outset of the significant income and the annual 5% draw down which it was intended that the offshore bond or investment wrapper would provide as the foundation for the parties' ability, with the rental income, to service the mortgage interest.