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Sonia Slater (Administrator of the estate of Wakako Nishida deceased) v Robert Simm [2007] EWHC 951 (Ch)

Application by administrators against the former partner of the deceased to determine the defendant's interest in three properties acquired by the couple during their relationship.

There were three properties involved: the home they lived in and two other properties bought as investments. With each property the judge had to review the transactions and decide the level of the defendant's interest. A further complication was the judge's finding that the defednat had lied either in his financial statement or in his evidence to the court and this counted against the defendant in the final orders.

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Neutral Citation Number: [2007] EWHC 951 (Ch)
Case No: HC06C00002
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/04/2007

Before :

MR JUSTICE PETER SMITH
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Between :

Sonia Slater (Administrator of the estate of Wakako Nishida deceased) (Claimant)

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Robert Simm (Defendant)

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Mr RC Wilson (instructed by Clintons) for the Claimant
Mr Robert Simm (Litigant in Person)

Hearing dates: 23rd and 24th April 2007
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Judgment

Peter Smith J:
INTRODUCTION
1. The Claimant is the Administratrix of Miss Wakoko Nishida who died on 18th May 2004. Miss Nashida died intestate domiciled in Japan. Letters of Administration were granted to her estate on 12th May 2005 to Sonia Slater a partner in the firm Clintons to the use and benefit of Tadashi Nishida (her father) limited until further representation be granted.

2. The Defendant is the former partner of Miss Nashida. They lived together from 1992 until her death in 2004 but they never married. This dispute arises out of the failure properly to set out clearly the respective interests of Miss Nishida and the Defendant in 3 properties. Those 3 properties are all in Hampstead. First there is 35 Greenhill ("35"). Second there is 77 Greenhill ("77") and third there is 114 Greenhill ("114").

3. Miss Nishida and Mr Simms lived in 77. After her death he has continued to reside there. Numbers 35 and 114 were bought as investment properties and are rented out. The rents mostly cover the mortgage payments.

ACQUISITION OF 35
4. This property was acquired on 21st November 1997. The purchase price was £145,000. Acquisition costs were £3,237.04. Miss Nishida according to the completion statement contributed £23,237.04. Mr Simms apparently contributed £25,000 and the balance of the monies were provided by a mortgage from AIB Group (UK) Plc (not Bank of Ireland referred to in the completion statement). Miss Nishida was registered as a sole proprietor with title absolute under Title No. NGL584813.

5. Although Mr Pow the solicitor who acted on the transactions (and who gave evidence before me) wrote on 10th February 1998 referring to a declaration that was to be executed that declaration never came into force. The letter further stated that it was the intention for there to be a declaration but none was signed. The letter also stated that no one else was interested in the property. This letter has not been satisfactorily explained.

TITLE TO 77
6. This property was acquired for a price of £266,000. Additional expenses of acquisition meant that a total of £270,985 was required. Miss Nishida according to the completion statement paid £26,600 and £44,385.49 (total £70,985.49) the balance of the purchase monies of £200,000 were raised by a mortgage from Allied Irish Bank. This property was purchased on 15th October 1996. Mr Simm disputed that Miss Nishida provided the £26,600 but there is no evidence to show that he provided it. Mr Pow in a letter to Mr Simm dated 1st December 2006 said that the £44,385.49 was provided by Miss Nishida but he was not sure about the £ 26,600. At the time of the original acquisition the title was under a short leasehold interest. On 20th December 2000 an extension lease was obtained on payment of an extra consideration. There is a dispute as to whether or not the payment for that extension lease was paid by Mr Simm or Miss Nishida. On the balance of probabilities I am of the view that Miss Nishida paid it and it is reflected in a Trust Deed to which I shall make reference below. The original title was NGL162386. However with the extension lease dated from 20th December 2000 a new title was created (NGL804491). That title was created on 26th November 2001 some 3 years after the initial purchase of the lesser leasehold interest. There was initially some confusion because the Declaration of Trust although dated 2nd March 2001 referred to the earlier title number and did not expressly address the acquisition of the extension lease. The reason for that might be that whilst the extension lease was granted on 20th December 2000 it was not actually registered until 26th November 2001.

7. The Declaration of Trust dated 2nd March 2001 after the recital Miss Nishida and Mr Simm were the registered proprietors under Title No NGL162386 as tenants in common recited that the purchase price was provided as to £200,000 by Mr Simm and as to £100,000 by Miss Nishida. As I have said I am satisfied that reflects the initial purchase price but an initial sum paid to acquire the extension lease. Recital 3 states "the parties have agreed to enter in to this Deed for the purpose of recording the rights, duties, powers and obligations of each of them in respect of [77]".

8. In my view the declaration was intended to govern the parties' relationship as regards both interests.

9. Under the operative parts of the Deed they declared that they held the property upon trust as same with powers to postpone the sale and to hold the net proceeds of sale thereof for themselves as tenants in common in equal shares after deduction there from of the sum of £200,000 due to Mr Simm and £100,000 due to Miss Nishida.

10. The second operative provision referred to the original charge in favour of Allied Irish Bank of £200,000 executed on 15th October 1996. By that charge of course Miss Nishida and Mr Simm jointly and severally became liable to repay the £200,000 as they were both the registered proprietors. However under clause 2 it was acknowledged that represented Mr Simm's contribution to the acquisition and he was liable as between him and Miss Nishida to indemnify her for the whole of the mortgage. That was reflected of course by the first claim of £200,000 referred to in clause 1.

11. There were provisions in clause 5 regulating the right of each party to seek to sell the property in the event that their relationship ended. Significantly under clause 7 if either of them died the survivor was given an option to purchase the deceased's share at a fair market price agreed or settled by arbitration in default. The right was to be exercised no later than 3 months from the death and the sale completed within 6 months. Mr Simm never exercised that right because he told me he could not afford to do so.

TITLE TO 114
12. This property was acquired on 19th May 1998. The gross purchase price including acquisition costs was £157,839.72. There was a mortgage from AIB of £100,000 and of the balance £60,160.35 was provided by Mr Simm although the completion statement is addressed to Miss Nishida.

13. As I have said above this too is an investment property.

14. On 2nd March 2001 Miss Nishida and Mr Simm entered in to a Declaration of Trust in respect of this property also. In this case after reciting that Miss Nishida was the sole registered proprietor of the property (Title No NGL450108). After reciting the charge to AIB it also recited that half the purchase price was provided by Mr Simm and he also is liable for half of the mortgage. Somewhat enigmatically the Declaration of Trust in this case declared that they held the property "upon trust to sell the same with power to postpone the sale and the net proceeds of sale thereof for themselves as beneficial joint tenants in equal shares". The phrase of beneficial joint tenants in equal shares is of course mutually stultifying. Fortunately I have not been required to wrestle with that clause and the case of Slingsby's case (1587) 5 Co. Rep. 18b at 19a and Joyce v Barker Bros (Builders) Ltd [1980] 40 P&CR 512 and Martin v Martin [1987] 54 P&CR 238. Had I been required to do so I would have concluded with some hesitation that the intention of clause 1 was to create a tenancy in common equal shares and that was reinforced by clause 7 which provided for an accrual of a deceased party's interest to the survivor on the basis that the mortgage was taken over. That clause would not be necessary if the beneficial interests were joint, because it would operate automatically in that way without the clause.

15. Both the Trust Deeds for 77 and 114 were executed after Mr Pow's letter of 29th November 2000 which stated that both 77 and 114 were jointly owned. In the case of 114 it was suggested that there was a Declaration of Trust (but none was in existence at that time). 77 was in their joint names. Mr Pow then drew Declarations of Trust in the respect of these properties which I presume are the 2 Deeds of Trust that came into force on 2nd March 2001. In respect of number 35 he said that that was in the name of Miss Nishida but that "they were about to make arrangements between themselves". Contrary to the letter on completion although Mr Pow said that that property was in Miss Nishida's sole name he did not say that no other person had an interest.

16. At first sight the position as regards numbers 77 and 114 appears to be governed by the Declarations of Trust. In the case of number 35 (and Mr Wilson who appears for the Claimant acknowledges this) prima facie Miss Nishida and Mr Simm would be entitled to a proportionate interest beneficially in that property reflecting their contributions to the purchase price. There is no document which governed their interest in that property. On that basis he would have been entitled to approximately a 1/6th share. However in his evidence before me he limited his entitlement to the fixed sum of £25,000.

SUBSEQUENT EVENTS CONCERNING 77/114
17. Here there is some difficulty. The Claimant contends that the express words of the Trust Deeds were changed in the light of subsequent events. On 29th May 2002 according to a hand written note there was a conversation between Mr Pow and Mr Simm which discussed the interests in 77. It suggested that Miss Nishida was to pay him £50,000 and £2000 per month with a total of £62,000 and take an increased interest in number 77. Mr Simm denied there was any such conversation but I reject hat. I can see no reason for Mr Sow to make up a telephone note and a bogus conversation. This led Mr Pow to write a letter to Mr Simm dated 3rd July 2002 which reflected the hand written notes of the attendance note of 29th May 2002. It referred to Miss Nishida making payments of £62,000 and a fresh Declaration of Trust being provided in respect of 77 for her to receive 10% of the gross proceeds of sale. He asked for confirmation of that and copied Miss Nishida in to the correspondence. On 19th August 2002 he sent a further letter both to Mr Simm and Miss Nishida. This is slightly different because it referred to £86,000 which it was said Mr Simm owed Miss Nishida "in respect of repayment of his business loan" together with a further £15,000 which he owed Miss Nishida generally.

18. Mr Simm did not reply to that letter. He stated in his evidence that Miss Nishida was in the habit of intercepting his correspondence but I reject that evidence. I am satisfied that he read that letter.

19. The letter is further supported by an examination of Miss Nishida's bank statements which show £20,777.47 and £55,000 being paid to Mr Simm's account on 27th June 2002 (designation "R Simm Loan" and "R Simm O/D"). A further sum of £10,000 was paid on 2nd July 2002 i.e. the day before the letter of 3rd July referred to above. The description there is merely "R Simm". Mr Pow's letter of 19th August suggests that the £100,000 (including the £86,000) was to be an acquisition of a further share by Miss Nishida in flat 77. There are some difficulties about that. Also on 19th August 2002 Mr Pow wrote another letter to Miss Nishida stating "I am just writing to give you formal confirmation that the side letter relating to flat 114 has now been cancelled, so that you are absolutely entitled to the entire proceeds of sale of this property".
20. This was a very curious letter. Mr Pow in his evidence said that the side letter meant the Trust Deed. First it is somewhat surprising for an experienced property solicitor to advise the parties in effect that a Trust Deed could simply be cancelled. For example the question of the indemnity provisions under the mortgage are not considered. Second it is not clear how Miss Nishida acquired the interest in 114. Third he never communicated with Mr Simm. Mr Pow somewhat unsatisfactorily said he was merely asked to record the cancellation and he did so. He said the same in an attendance note on Miss Nishida dated 6th May 2003. However he recorded her there telling him that she bought out Mr Simm. That also reflected an email dated 3rd July 2002 which Miss Nishida sent to Mr Tett. He was her and Mr Simm's accountant. In that email she sought advice as to the Capital Gains liability on 114 on the assumption that she had paid Mr Simm £100,000. The advice was given. Mr Simm denied there was any sale of his interest in 114 for £100,000.

21. His evidence was that the £86,000 was her contribution towards the expenses in a business that they ran together buying and selling art. This was something that he had not really raised before. His evidence therefore was to the effect that Miss Nishida put that £100,000 into that business and it came out in the form of profits. He has never produced any accounts for this business (although he did produce accounts for a different Gallery in his statement in matrimonial proceedings arising out of his divorce). He also said that the business between Miss Nishida and himself made a profit of £20,000 each per year. He never produced any documentation in respect of this nor did he refer to it in his matrimonial proceedings.

22. The correspondence referred to above described the £86,000 and £14,000 as a loan to be reimbursed out of 77. Although there are these statements that Miss Nishida acquired 114 and paid £100,000 there is no evidence showing she had access to a further figure of £100,000. In my view it is too coincidental for there to be 2 separate tranches of £100,000 in July 2002. On the basis of the material before me I conclude that there was initially a suggestion that the £100,000 would be used to acquire a further interest in 77 but that was subsumed in a decision instead for Miss Nishida to acquire 114. I determine that that is what was the result of the monies that were clearly paid in to the accounts of Mr Simm together with the extra £14,000. He referred to the fact that he paid off loans at the end thereby releasing the guarantee that Miss Nishida had given in respect of the liability outstanding at that time. The difficulty with that of course is that when he pays the loans off at the end he had the benefit of the £86,000 already. Equally I give no weight to the cheques he produced in the course of his evidence for the first time to suggest he was making payments to her in respect of these loans. These were cheques drawn on his bank account between 1st July 1996 and 12th May 2002. They show payments to Miss Nishida of £14,908.65. The second clutch of cheques were payments to various Barclaycard accounts. There were 7 in total and the amount was just over £11,000. Seven accounts are identified on the various cheques yet Mr Simm said Miss Nishida had only one account. All of these were made over the similar period. Therefore it seems to me that they can have no relevance to the dispute before me. In my view the purpose of these payments were as Mr Simm said in the course of his evidence to make balancing payments of profits that were due to Miss Nishida on the sale of paintings or some domestic reimbursement. I am quite satisfied that they have nothing at all to do with the interest in these 3 properties.

23. I therefore conclude that in the case of number 77 the Trust Deed of 2nd March 2001 definitively defines and governs the parties' respective interests. Mr Simm concedes that the property should be sold and I will make an order for the sale of that property.

24. I am satisfied on a balance of probabilities that Mr Simm orally agreed to sell his interest in 114 for £100,000 and received that sum from Miss Nishida. For that to be effective there must prima facie be a disposition in writing as required by Section 53 (1) (c) Law of Property Act 1925. However it does seem to me that the informal arrangement which is evidenced by the payments to his bank account, Mr Pow's telephone attendance note and the email means that Mr Simm became subject to an implied or constructive trust whereby he held his interest in 114 upon trust for Miss Nishida to give effect to the agreement. Such a trust is governed by Section 53 (2) LPA 1925 which is not subject to the requirements in writing. I derive this from the Court of Appeal decision in Neville v Wilson [1997] Ch 14.

25. That leaves number 35. Mr Wilson in his submissions acknowledged that prima facie £25,000 should give Mr Simm an interest on resulting trust principles to Mr Simm. Mr Simm limited it to £25,000; in his evidence he did not see him having any greater interest than the repayment of that sum.

26. However Mr Wilson points to a number of other factors which suggest that in fact Mr Simm had no interest. First there is Mr Pow's letter of 10th February 1998 referred to above where he wrote to Miss Nishida saying there was nobody else interested in 35. Mr Pow did not explain this letter in his witness statement and he was not asked any questions about it. It is contrary to what one would expect given Mr Simm's contribution which was plainly set out in the completion statement. Second Mr Wilson relies upon the attendance note of 6th May 2003 which also deals only with numbers 114 and 77.

27. Against that is Mr Pow's letter of 18th May 2004. This is a significant letter. It was written by Mr Pow on the very day that Miss Nishida died. Mr Simm in his evidence initially said that he gave the letter no consideration at all because he was too distressed over Miss Nishida's death. As his evidence deployed and Mr Pow confirmed in fact Mr Simm had contacted Mr Pow on the day of the death and asked him to set out the position as regards the 3 properties. Mr Pow dealt with number 77 and referred to the Trust Deed and his understanding that it was varied as set out in the letters 3rd July and 19th August 2002 by the further £100,000 paid by Miss Nishida. For the reasons that I have set out above I do not accept that happened.

28. Also Mr Pow referred to 114 and the purported cancellation of the Declaration of Trust but he said "I have a note indicating that this Declaration of Trust was cancelled on 19th August 2002 on the basis that [Miss Nishida] had bought you out of this property but again I have no further information on this". As I have set out above I accept that Mr Simm was bought out but determine that that was on the basis of him receiving the £100,000 which is referred to in the 2002 correspondence.

29. In the case of 35 he correctly set out that it was in Miss Nishida's name and mortgaged to AIB. He said that a Declaration of Trust was contemplated providing that each owned half but it was never proceeded with. However he did remind Mr Simm of his £25,000 contribution.

30. That leads me to conclude that no definitive arrangement was entered into in respect of number 35 so that the beneficial interest should be determined according to their contributions directly or indirectly to the purchase price at the time of acquisition. That would give Mr Simm a share representing his £25,000 contribution and he limits it to that. Mr Wilson's final argument on number 35 (and residually on 114) arises out of Mr Simm's actions in a financial provision application arising out of his divorce. On 18th March 2002 Mr Simm swore a financial statement in the divorce proceedings. He deposed on oath that the contents were true. The statement contained a number of omissions in the light of his case before me. It made no reference to number 35 nor to 114. Nor did it make any reference to income arising out of the business he said he was carrying on with Miss Nishida. His statement was challenged by his wife's solicitors and Mr Simm provided an answer to a questionnaire they served in accordance with an order dated 8th April 2002. Question 6 asked him to confirm that he owned no property whether in his sole name or jointly or in a nominee in addition to 77. The answer given was "confirmed". This reflects an attendance note dated 3rd May 2002 (the answer was provided on 7th May 2002) that note between Mr Simm and his divorce lawyers stated that Mr Simm "is very happy with the replies". He confirmed that as far as he was concerned they are all accurate.

31. The position therefore is that Mr Simm either lied in his evidence before me when he asserted he had an interest in 35 and 114. The alternative is that he actually does have an interest but he lied in his financial statement and the replies to the questionnaire.

32. Mr Simm was a litigant in person. He gave evidence and was cross examined but before he answered any questions about this I advised that he had the right to decline to answer any questions on the basis that it might incriminate him. He accordingly declined to answer any questions in respect of his Financial Statement and the answers to the questionnaire.

33. In my view on a balance of probabilities I conclude that he told untruths in his financial statement. In his evidence he tried to suggest that this was the idea of Miss Nishida because she did not want his ex wife chasing properties that she was interested in. I reject that. It is plain in my view that he was responsible for his own false answers and it was quite wrong to suggest it was created by Miss Nishida with his connivance.

34. What is the consequence of this finding? Mr Wilson submits that it is not open now to Mr Simm to assert that he has an interest in the line of the decision of the Court of Appeal Tinkner v Tinkner [1970] P136. In that case a husband bought a garage business and found a house for his family. His evidence was that he intended to buy the house in his own name but he was advised by his solicitors that if the new business venture of which he had no experience should fail the house could be taken by his creditors. His solicitors therefore recommended that he should put the property in his wife's name and that was explained to his wife by the solicitors. That was done but the marriage broke down. The husband applied for a declaration that the house belonged to him absolutely. The Registrar found that the husband was an honest businessman and that the presumption of advancement in favour of the wife was rebutted by the evidence that he had purchased the property. The Court of Appeal overturned that decision. That was on the basis that if he was honest he must have been genuinely intending that the house should belong to his wife and accordingly it did belong to his wife. Lord Denning gave the lead judgment in the effect said that as against his wife he wanted to say that the property belonged to him but as against his creditors that it belonged to her. The presumption of advancement (in favour of his wife) was not rebutted by him saying that he intended to feed his creditors. In essence Lord Denning MR was saying the husband could not have it both ways.

35. There is in my view no evidence to show that Mr Simm decided at the time when 35 was acquired to put it in Miss Nishida's name solely for the purpose of hiding it from his wife he decided to do it later. The question of the parties' intention must be assessed at the time of the acquisition and not by reference to later conduct. It seems to me that he made a decision to lie in 2002 which was several years after 35 had been acquired. Mr Simm did not transfer an interest to Miss Nishida and pretend that interest was hers. That makes the case very different from Tinkner. The present scenario is far more like the House of Lords decision in Tinsley v Milligan [1994] 1 AC 340. I do conclude that the lies that Mr Simm told in his divorce proceedings are not sufficient to rebut the presumption that he acquired a share when the property was acquired several years earlier. In my view applying the Tinsley case Mr Simm can establish his beneficial interest without needing to explain why the property was transferred into the name of Miss Nishida solely (see Tinsley page 376). Therefore the mere fact that he lied in his financial statement in my view is not sufficient to prevent him establishing that he has a £25,000 interest in 35.

36. I have come to this conclusion on the balance of probabilities. I have decided that it is not in the public interest to investigate his answers further and do not propose to refer it to the Attorney General for investigation as to whether he has perjured himself.

37. My conclusion therefore is that Mr Simm has no interest in number 114, has an interest in 77 governed by the Trust Deeds of 2nd March 2001 and has an interest in number 35 limited to £25,000 in the net proceeds of sale after it is sold and the mortgage is repaid.

38. I will settle the form of order after delivery of this judgment.