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Home > Judgments > 2010 archive

Kaur v Matharu [2010] EWCA Civ 930

Ancillary relief case involving an alleged third party TOLATA claim by a relative of the Husband. On appeal, the Circuit Judge had permitted oral evidence in support of the TOLATA claim. The Court of Appeal held that the Circuit Judge had been wrong to do so and in the course of the judgment reviews the law on admission of fresh evidence in appeals.

This appeal was brought by the Wife in respect of the decision of the Circuit Judge on application from the Husband and his brother to admit fresh evidence on the hearing of their appeal of the District Judge's decision as to the Wife's ancillary relief application and the brother's TOLATA application.

The Wife was 31 and the Husband was 45.  The parties married in 2001 and lived at the Husband's parents' home from 2002.  The parties' child was born in 2003 and in the same year the Husband bought a property ("the Property") opposite his parents' home in his sole name and had the Property renovated.  The parties did not move into the Property but moved elsewhere.  By late 2005, the marriage was in difficulties and around the same time the mortgage was discharged with monies apparently advanced by the Husband's sister.

Coincidentally, the Husband's brother was also going through marital breakdown and facing an ancillary relief claim. He transferred his property to his father and it was later said in the proceedings that the two brothers were engaged in property arrangements in order to defeat or diminish the financial claims that they were facing.

The Husband asserted that in relation to the Property he held the legal title as bare trustee for his brother, who he asserted had put up the money for purchase, and also the money for renovation.  This issue was therefore live in the ancillary relief proceedings commenced in 2006 by the Wife and resulted in the brother obtaining leave to intervene in the proceedings culminating in his TOLATA application in 2008.

The District Judge decided the TOLATA case, rejected the evidence of the Husband and his brother as being deliberately dishonest and transferred the Property to the Wife outright and free from mortgage.

The Court of Appeal noted that there was before the District Judge a good deal of documentary evidence in relation to the sister's part in the discharge of the mortgage in 2005 and that at no stage did either the Husband or his brother seek to call the sister to give evidence or introduce any written statement from her and they relied on the paper documents alone.  The Husband and his brother sought to adduce fresh evidence in the form of a detailed affidavit from the sister, exhibiting and introducing some documents that were not before the District Judge.

The Court of Appeal found that there was nothing that could be said to be fundamentally fresh or arresting and the material was simply additional material already before the District Judge.  Therefore it came as a surprise that the preliminary application to the Circuit Judge to admit the further evidence did not receive short shrift, but took a full day to decide a straightforward application involving the exercise of a judicial discretion encased in Family Proceedings Rule 8.1(3)(b) and guided by some limited authority.

It took the whole day because the Circuit Judge allowed oral evidence of the sister.   While under the authority of Ladd v Marshall, one of the determining issues for an application to admit fresh evidence is its credibility, as a matter of proportion it was not appropriate to admit oral evidence.

The Court of Appeal allowed the Wife's appeal and set aside the decision of the Circuit Judge to admit the fresh evidence on the basis that he was plainly wrong to do so rather than having misdirected himself on the law as the Wife claimed.  There was no argument available to the Circuit Judge to relax the rule in Ladd v Marshall in the TOLATA aspect of the case and the Circuit Judge was wrong to view the circumstances surrounding the Husband's sister's redemption of the mortgage as the crucial issue.  That was not the crucial issue; it was who had funded the purchase, the renovations and payment of mortgage instalments, not who had redeemed the mortgage.

The District Judge had all of that evidence before him and the Circuit Judge had been plainly wrong to allow the Husband and his brother to admit the fresh evidence.

Summary by Richard Tambling, barrister, 1 Garden Court

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Case No: B4/2010/0526
Neutral Citation Number: [2010] EWCA Civ 930
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BIRMINGHAM CIVIL JUSTICE CENTRE
(HIS HONOUR JUDGE RODGERS)

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Wednesday, 23rd June 2010

Before:
PRESIDENT OF THE FAMILY DIVISION
(SIR NICHOLAS WALL)
LORD JUSTICE THORPE
and
LADY JUSTICE BLACK

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KAUR  Appellant
 
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MATHARU & ANR Respondents


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(DAR Transcript of
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Miss Dorothy Seddon (instructed by Rashid & Co Sols) appeared on behalf of the Appellant.

Mr Nick Starks & Miss Nergis Matthews (instructed by Clark Brooks) appeared on behalf of the Respondents.
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Judgment

(As Approved by the Court)

Crown Copyright©

Lord Justice Thorpe: 
1. This is an appeal from the decision of HHJ Rodgers at the Birmingham County Court.  His order of 22 January 2010 granted an application by the appellants to an ancillary relief judgment of a district judge to admit fresh evidence on the hearing of the appeal. 

2. The history is not uncomplicated, and I extract the relevant parts from a note submitted by Mrs Seddon, who appears for the appellant today.  First of all, I take the context of the ancillary relief claim decided by the District Judge.  He had before him an applicant wife aged 31, and a respondent husband aged 45.  The husband is a UK citizen of Indian origin or descent, and the wife is an Indian citizen.  Their marriage was arranged and was celebrated in India in 2001.  Following the marriage, the husband sponsored the wife's immigration to this jurisdiction.  He declared that they would be residing as a couple at an address in Ansford, 45 U Road.  In fact, the husband lived with his parents at an address in Handsworth, 11 M Road, and it was at that address that the wife resided on her arrival in the United Kingdom in October 2002.  The wife gave birth to the only child of the marriage, A, in August 2003.

3. Late in that same year, the house across the road at No. 14 M Road came on the market as the result of the death of the owner.  It was purchased by the husband in his sole name, and considerable works were carried out to render the property fit for their future marital home.  The parties did not in fact move in, but moved to alternative premises.  By December 2005, the marriage was in difficulties.  There was domestic violence, for which the husband received a criminal conviction and sentence.  There is no doubt that there was a mortgage on No. 14, and that at about that date, the date of the criminal proceedings, the mortgage was discharged with monies apparently advanced by the husband's sister.  At about this time, the husband's brother was also going through marital breakdown and facing an ancillary relief claim.  He transferred his property to his father and accordingly it was later said in these proceedings that these two brothers were engaged in property arrangements in order to defeat or diminish the financial claims that they were facing.

4. In relation to No. 14, the husband's assertion was that he held the legal title as bare trustee for his brother, who he asserted had put up the money for purchase, and also the money for renovation.  That issue was live in the ancillary relief proceedings commenced by the wife in May 2006 and resulted in the brother obtaining leave to intervene in August 2006.  By way of aside, I record that in October 2006 a maintenance pending suit order was made in favour of the wife at the monthly rate of £250, and nothing has been paid under that order. 

5. The ancillary relief proceedings commenced before District Judge Sheldrake, when he heard two days of evidence in the autumn of 2007.  He resumed the hearing on 30 January 2008, and on 25 March 2008, the brother, no doubt in an attempt to fortify their stance in the wife's ancillary relief, issued a TOLATA application.  That came before a Deputy District Judge on 2 April.  He was made aware of the fact that the ancillary relief proceedings had been pending and progressing in District Judge Sheldrake 's court, and instead of transferring the TOLATA across to be joined with the ancillary relief, he simply dismissed it as being otiose.

6. The District Judge's conclusions on the evidence and submissions that he had heard were the subject of a judgment in draft which was circulated to the parties, and resulted in a letter of 15 January 2009, in which those acting for the brothers invited the District Judge to extend his judgment to include findings of fact in relation to paragraphs 29 (a)-(g) of the draft judgment.  Paragraphs 29(a)-(g) of the draft judgment recorded the husband's case, and amongst the assertions advanced were not only that all the monies for purchase, for costs of purchase, for refurbishment, for receipt of rental payments, for mortgage instalments, were all dealt with by the brother and with the brother's money, but there was also the assertion in paragraph F:

"The brother redeemed the mortgage in December 2005, having been sent the money by his sister in order to do so."

7. The judge acceded to the application to a very limited extent.  He added to the draft only two new paragraphs, paragraphs 41 and 56.  Paragraph 41 was to this effect:

"My assessment of the evidence of the husband, as set out in the preceding paragraph, includes the evidence to which I have referred in paragraph 29.  Much of the evidence to which I have referred in that paragraph are supported by documents that show that the various payments referred to were apparently made by the brother.  For the avoidance of doubt it is my view that the husband was, in reality, funding the purchase and refurbishment of No 14, and that it was a useful device, for the husband's own purposes, to make it appear that the payments were being made by the brother.  I repeat my view, already given in paragraph 39 above, that the evidence of the husband in this case cannot be relied on."

The additional paragraph 56 reads:

"For the avoidance of doubt I also find that there is no question of any resulting trust in relation to No 14 arising out of the activities of the parties to this litigation."

8. The only other paragraphs that I need read from the judgment of the District Judge are paragraph 48(f) and 49.  Paragraph 48(f) relates to the evidence of the brother.  Of that, in this respect the District Judge said:

"(f) He said that he borrowed over £60 thousand pounds from his sister in order to pay off the mortgage on No 14.  He further said that he borrowed the money at the rate of 8% per annum although he said that he had done so because he could not afford the contractual mortgage rate of 5.5%.  He further said that he was due to repay this loan 6 months after it was paid to him, but produced no documents to support that contention.  It was notable that there was no evidence adduced from the sister and neither had she started any proceedings to recover this loan, despite the fact, based on the evidence of the brother, that it was very considerably overdue for payment. 

49. I accept the submission made by the wife that the evidence of both the husband and the brother should be entirely rejected.  Both of them make unsustainable assertions about their income, savings and financial dealings.  Both of them have lied in formal documents.  There is no cogent compelling evidence to support the case made by the husband and the brother that No 14 was owned by the brother.  On the contrary, all the controvertible evidence adduced in this case, mainly in documentary form, supports the proposition that both the legal and beneficial estate in No 14 is vested in the husband."

9. At this point in the history, I take stock.  The District Judge had essentially decided the TOLATA case, rejecting the evidence of the husband and brother as being deliberately dishonest, and accordingly he had had within his sights the legal and beneficial ownership of No.14 as the target of the wife's ancillary relief claim.  He went on to deal with that, admittedly in short order, holding that in the light of the husband's failure to observe or honour the pending suit order, it was extremely unlikely that the wife would ever recover periodical payments for herself, or any support for the only child in the family, and accordingly the practical remedy was to capitalise her future claims and meet her future needs by transferring to her No. 14 outright and free from mortgage.

10. It is important to stress at this point that there was before the District Judge a good deal of documentary evidence in relation to the sister's part in the discharge of the mortgage in December 2005.  It is also to be stressed that at no stage did either husband or brother seek to call the sister to give evidence, or to introduce any written statement from her; they relied on the paper documents alone.  Plainly, they were disappointed, and perhaps disgruntled, by the outcome before the District Judge, and that led to the issue of the appeal and the application to adduce fresh evidence in the form of a detailed affidavit from the sister, exhibiting and introducing some documents that were not before the District Judge.

11. So what was the extent of the new material that husband and brother sought to introduce?  The documents are to be found at B38-51, and within those documents there is evidence of the death of the sister's husband, and her receipt of life insurance monies in the order of some £360,000.  Thus, ability to inject money into No. 14, and the source of the monies available for injection, were plainly established, and there is also at that point some documentary evidence regarding legal advice which she either did take or contemplated taking.  Documents at B80 and 81 demonstrate that she is a lady in employment, and pay slips corroborate that.

12. So in the scale of things, there was nothing that could be said to be fundamentally fresh or arresting.  This was simply additional material that illustrated the scene that was clearly in evidence before the District Judge.  So it might have been thought that the preliminary application to the circuit judge to admit this further evidence would have received fairly short shrift, but in the event the circuit judge took a full day to decide this relatively straightforward application, straightforward in that it was not of any complexity and involved the exercise of a judicial discretion encased in Family Proceedings Rule 8.1(3)(b) and guided by some limited authority.  The application took a whole day to determine because the judge allowed the oral evidence of the sister at some length.  What was the justification for that?  I suppose it was that under the authority of the classic case of Ladd v Marshall, one of the determining issues for an application to admit fresh evidence is its credibility; but it does seem to me that as a matter of due proportion, the judge was unwise to admit that oral evidence.  The application was quite safely decided in the overall context, and in the light of the affidavit offered by the appellants.

13. The circuit judge at the end of this long day delivered a very conscientious extempore judgment in which he set the scene.  He then directed himself at some length as to the law and weighed the facts, acknowledging that to grant the application would entail remission for rehearing, and that that would be hard and perhaps even unjust to the wife, who was entitled to rest and relief after such a long drawn out experience of ancillary relief proceedings.  However, he found that the considerations that tipped the scale were that the evidence of the sister went to the crucial issue in the case and that, had it been available to the district judge, there might well have been a different outcome.  Accordingly, the interests of justice required the success of the application.

14. The Notice of Appeal and skeleton argument from Mrs Seddon resulted in a consideration on paper and an oral hearing on notice with appeal to follow.  Mrs Seddon has met with response from both Mr Starks and Miss Matthews, who have submitted skeleton arguments in response.  There is even a respondent's notice.  To that, Mrs Seddon has replied.  The essential submission from Mrs Seddon is that the grant of the application by the circuit judge flowed from his misdirection as to the law.  Alternatively, it was plainly wrong, given that in reality there is nothing fresh in this evidence and that it was simply an endeavour to re-litigate on fresh grounds; or as has been said in many cases, an attempt to have a second bite at the cherry.

15. In a very lucid submission, Mr Starks has asserted that the District Judge's findings in relation to the redemption of the mortgage were nonexistent, or at best scant, and had he applied himself directly to the task, even on the evidence before him, he would inevitably have concluded that the husband's total beneficial ownership could not be married with the extent of his sister's plain investment.  That is a point which I apprehend will survive for Mr Starks if and when this appeal is determined by a circuit judge reviewing the judgment of the judge at first instance. 

16. Mr Starks advanced a robust submission, that this is, in effect, a second appeal, caught by section 55 by the Access to Justice Act 1999, and that there is no compelling reason for the grant of permission and certainly no important point of practice or principle.

17. I reject that submission.  Although it has plausibility from reference only to the order of Judge Rodgers, which of course purports to allow the appeal and remit to a district judge for rehearing, in reality all he was deciding was the application for permission to adduce fresh evidence.  That is an application preliminary to the appellate process and it does not constitute the appellate process itself.  It is accordingly not caught by section 55.  It is easy to demonstrate that in that preliminary area, the judge was hearing an application afresh, an application that had never been considered at district judge level, and accordingly he was the first judge to determine, and in this court is not to be taken as the judge sitting on appeal.

18. I have no doubt in my mind that Mrs Seddon succeeds on this appeal, which should be allowed; but I must first consider upon what basis.  Does she succeed in her submission the judge misdirected himself on the law?  The judge explained that he dealt with the law at some length because it had been the subject of lengthy submissions, and what he considered was a range of statutory material and reported decisions, as well as commentary. He considered the rule itself, that is to say Rule 8.13(b).  He considered the case of Ladd v Marshall [1954] 1 WLR 1489.  He considered the case of Cordle v Cordle [2002] 1 FLR 207.  And he considered the commentary in the Red Book, which seemed to suggest that the rule in Ladd v Marshall applied in ancillary relief without the relaxation that is always permitted in children's cases.  The judge reached his essential conclusion in paragraph 13 of his judgment, when he said:

"It is, therefore, plain to me that Thorpe LJ's reference to 'more liberal rules' has to be read correctly, and the test is that set out in the rule, namely that oral evidence is to be admitted with the clear test of 'the interests of justice'."

19. It seems to me that the proper approach is to recognise that in the development of law and practice, the case of Cordle v Cordle comes first; and as well as the first judgment, which I delivered, there was a judgment from the President, who in paragraph 39 said this: 

"I entirely agree with Lord Justice Thorpe that any additional evidence sought to be adduced on appeal from District Judge to Circuit Judge in ancillary relief applications should be under the normal appellate principles appropriate to the more liberal traditions of family proceedings, giving the judge discretion to admit evidence if he thinks it appropriate. I would only add that such exercise of discretion to admit additional evidence should be used sparingly."

The rule itself in its essential paragraph, reads thus:

"…oral evidence or evidence which was not before the District Judge may be admitted if, in all the circumstances of the case, it would be in the interests of justice to do so, irrespective of whether the appeal be by way of review or re-hearing."

20. The final authority to which I need make reference is the case of Zeiderman v Zeiderman, which is not a reported decision of this court and which is to be found at [2008] EWCA Civ 760.  I only refer to that because it was a decision of this court in which fresh evidence was permitted in highly exceptional circumstances, and my Lord, the President, who gave the first judgment, emphasised that it was a case turning exclusively on its highly unusual facts, and was not a precedent, and should not be treated by the profession as such.  However, he did say in paragraph 19 of his judgment:

"It was necessary to do justice to the case for it to be resolved, and although Ladd v Marshall is a persuasive authority, it is not one which is automatically followed in family matters, as indeed Thorpe LJ himself pointed out in paragraph 32 of Cordle itself. "

21. The message, it seems to me, drawing these threads of rule and authority together, is that where there is an appeal in ancillary relief from district judge to  circuit judge, the circuit judge always exercises a discretion which is not strictly bound by the principles enunciated in Ladd v Marshall.  However, it will only be in exceptional cases that that discretion will be exercised in favour of the admission of fresh evidence.

22. So although I would not accept Mrs Seddon's submissions that the extempore words of the circuit judge amounted to a misdirection in law, I am in no doubt that he was plainly wrong in the exercise of his discretion.  It is important to emphasise that the district judge had two tasks.  The first task was to resolve the TOLATA application, brought by the husband's brother, that had been effectively transferred to him on 2 April.  The evidence as to the involvement of the sister was squarely and solely in that area.  The first issue, the TOLATA issue, attracted the sister's involvement and the story of the transfer of monies from her account to the intervenor's account.  When the issue came before the circuit judge, again it was sought to introduce the evidence of the sister to dismantle the judge's conclusion on the TOLATA aspect of the case. 

23. It would be plainly undesirable were there to be a noticeably different approach to the admission of fresh evidence when the judge sitting on a TOLATA application chances to be a judge of the family justice system, rather than a judge in a Chancery Division.  So if there be a latitude for relaxation of the rule in Ladd v Marshall, plainly it is there in children's cases; it may be there in ancillary relief cases, too, albeit not necessarily with the same liberality.  But I can see no argument for advancing relaxation in a TOLATA decision which chances to be taken by a family judge rather than a judge in the Chancery Division.

24. Quite apart from that very important consideration, I conclude that the circuit judge was wrong to view the circumstances surrounding the redemption of the mortgage as the crucial issue.  The crucial issue was who had funded the purchase, the renovations, the payment of mortgage instalments; all of which was plainly decided by the judge before ever the question of redemption came into view.  The judge had made the clearest credibility findings, rejecting the evidence of the husband and the brother as fundamentally incredible.  He found they were conspiring to deplete or diminish the wife's claims.  That was an important consideration in the exercise of a discretion.

25. There was a wealth of evidence before the District Judge as to the sister's involvement and her asserted role.  There was the important consideration of justice to the applicant, who had really been through the mill to get to the point where she had secured the transfer of the home.  And finally, consideration had to be given to the resources of the court.  This case had taken days and days and days to establish the fundamentally falsity of the defence to the wife's application.  To say that the whole thing had to start all over again de novo, another four days of court time in front of another district judge, and to give this pair the opportunity of a second bite at the cherry seems to me to be a curious exercise of discretion.

26. So for all those reasons, I would allow this appeal and set aside the judge's grant of leave to introduce the evidence of the sister.  Of course, that leaves for determination of the appeal on ordinary appellate principles.  The husband and his brother have every opportunity to say that the circuit judge erred in his application of the section 25 criteria.  That of course is an argument that would hardly interest the intervenor.  In reality, it seems to me that it would be difficult in the extreme for the husband and the intervenor to prevail on the TOLATA aspect of the case, save arguably in an assertion that the findings of the circuit judge were inadequate in the area of redemption of the mortgage.  What is plainly open to the husband is to argue, and I have no idea with what prospect of success because it is not an area that we have broached on this appeal, that the discretionary determination resulting in the transfer of the home to the wife was erroneous.  That is all live for another day before a circuit judge in Birmingham.

27. But today, on the simple question of whether the judge correctly exercised his discretion in admitting the fresh evidence, I would allow the appeal and set aside his order.

Lady Justice Black:
28. I agree with the outcome of the appeal as described by my Lord, Lord Justice Thorpe, and for the reasons that he has given.  I would only add one or two very short comments of my own.  The first is a relatively pedestrian one, noting that of course B80 and 81 in the bundle included an invoice in relation to advice offered to the sister with regard to her property claim/loan, in relation to the property in dispute in this case, and that has been taken into account.

29. The other category upon which I wanted to add one or two remarks was to reinforce what my Lord, Lord Justice Thorpe, has already said about the need to exercise the discretion to admit fresh evidence on appeal only sparingly, whatever, it seems to me, the context in which the matter comes up in ancillary relief, whether it be in determining property rights as between a husband and wife or husband or wife and third party or between husband and wife themselves. 

30. I would also differentiate to an extent the position with regard to the third-party rights in that it may be seen as even more important in that context to be very careful about admitting fresh evidence, and to ensure that the approach taken in ancillary relief proceedings in which that issue happens to come for determination is not markedly different from the approach taken in other civil proceedings. 

31. It is, of course, as important that ancillary relief proceedings achieve finality as it is in any other type of litigation; some may say even more important.  But in any event, I muse on the similarity of the approach in ancillary relief proceedings as dictated by Rule 8.1 and the approach that is to be applied under the CPR.  To see the similarity, one has only to compare the wording of Rule 8.1(3)(b) and something which was said in the case of Transview Properties v Cityside Properties, an authority to which we have been taken in the course of argument, by Mummery LJ.  The rule says:

"….oral evidence or evidence which was not before the District Judge may be admitted if, in all the circumstances of the case, it would be in the interests of justice to do so, irrespective of whether the appeal be by way of review or re-hearing."

The important words there are:

"... if, in all the circumstances of the case, it would be in the interests of justice to do so..."

32. At paragraph 22 and 23 of the Transview Properties decision, Mummery LJ spoke in very similar terms of the exercise that is to be adopted in civil proceedings, saying that permission to adduce fresh evidence should only be granted if, in accordance with the overriding objective, it is just to admit evidence on appeal which was not produced at trial.

Sir Nicholas Wall P

33. I agree with both judgments, and do not wish to add anything.

Order:  Application granted.  Appeal allowed.