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Cite as: [2008] EWCA Civ 990

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Neutral Citation Number: [2008] EWCA Civ 990
Case No: B2/2007/1823


Royal Courts of Justice
Strand, London, WC2A 2LL
17th July 2008

B e f o r e :




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Mr C Smith (instructed by Andersons Solicitors) appeared on behalf of the Respondent.



Crown Copyright ©

    Lord Justice Dyson:

  1. Miss Williamson first met Mr Sheikh on the internet in February 2002 when she was fifteen years of age. He was in his thirties at the time. She was living at home in Retford and he in Scotland. He came down to Retford that year and they started a sexual relationship almost immediately. She had inherited some £37,000 from her father and grandfather about two years earlier. The Recorder, Mr Recorder Maw, described Mr Sheikh as an industrial economist who had qualifications in accountancy and some expertise in dealing with the management of companies. He was unemployed when he moved to Retford.
  2. By a transfer executed on 24 February 2004, Mr Sheikh purchased 2 Maun Close, Retford. The property was purchased in his name. The purchase price was £82,000 and the cost of purchase £1251-odd. The deposit of £9,451.38 was paid by Miss Williamson. The balance of the purchase price was raised by means of a mortgage in the sum of £78,800.
  3. The parties lived in the property with their child until they separated in January 2005. As I have said, it is not in dispute that the legal title to the property vested in Mr Sheikh alone. Miss Williamson claimed a beneficial interest. The dispute was as to the extent, if any, of that interest and it was that dispute which gave rise to these proceedings. Miss Williamson claimed a declaration that the property was held by Mr Sheikh on trust for the two of them on terms that after the discharge of the mortgage she had a beneficial interest in the first £10,000 and in 60% of the balance of the net equity. Her claim was based on an alleged express agreement made immediately before the purchase of the property on 24 February 2002. Mr Sheikh denied that Miss Williamson had any beneficial interest in the property at all. His case was that he had paid the deposit from the proceeds of sale of a motorcycle and the value of a Smart car, which was sold in part exchange for a Mercedes. It was also his case that it was always their common intention that he would be responsible for all the outgoings on the property and would therefore receive all future proceeds of the sale of the property.
  4. Mr Recorder Maw found in favour of Miss Williamson on all issues. Mr Sheikh appeals with the permission of Mummery LJ.
  5. Before I come to the grounds of appeal, I need to summarise the Recorder's findings and conclusions. The conveyancing was handled by Miss Pitts of Jones and Co of Retford. There is an undated note in her file of the elements of what was initially agreed. This included that Miss Williamson would be entitled to the sum of £8,200 and that the remainder of the proceeds of sale would be split 50/50. On 23 January 2004, Miss Pitts made an attendance note of a conversation she had with her senior partner on the question of whether there would be a conflict of interest. That note reads:
  6. "ALP [that is Miss Pitts] spoke to RKJ [the senior partner] regarding any potential conflict with regard to Miss Williamson's equitable interest in the property. I explained to RKJ that it was intended that a Declaration of Trust would be drafted provided that after the payment of the monies outstanding on the Mortgage the first £10,000 would as net equity be paid directly to Miss Williamson and thereafter the balance of net equity would be divided 60:40 in favour of Miss Williamson.
    It was agreed that there was presently no conflict of interest and that therefore it was in order for me to act for both Mr Sheikh and Miss Williamson in connection with the purchase of 2 Maun Close."
  7. The Recorder found at paragraph 14 of his judgment that the change from £8,200 to £10,000, and from a split of 50/50 to 60/40, emanated from instructions given by Mr Sheikh. The Recorder gave reasons for this conclusion in paragraph 14. I did not understand there to be any challenge to those reasons; in my judgment they are plainly unassailable.
  8. The solicitors drafted a declaration of trust to give effect to those instructions, and sent the draft to both parties under cover of a letter dated 17 February. The letter sought instructions on a number of points of detail, but none of them touched the terms of the draft deed, which dealt with the division of the proceeds in the event of a sale. So far as material, the draft provided:
  9. "3. Mr Sheikh declares that upon a sale of the Property the net proceeds of sale and the net rents and profits until sale are held by Mr Sheikh UPON TRUST for himself and Miss Williamson as Beneficial Tenants in Common and it is intended that on a sale of the Property after deduction of any monies secured by the Mortgage in favour of Cheltenham and Gloucester plc and after the payment of any Estate Agents and legal fees the first Ten thousand pounds £10,000.00 of the net proceeds of sale are to be applied to Miss Williamson and thereafter the balance of net sale proceeds are to be divided so that Miss Williamson will receive a 60% share of the balance of net sale proceeds and Mr Sheikh will receive the remaining 40% share of the balance of net sale proceeds.
    4. Mr Sheikh covenants with Miss Williamson to pay all monies secured by the Mortgage and observe and perform the other provisions contained or implied in the Mortgage."
  10. The Recorder found that Mr Sheikh received the document, the letter and the declaration and understood them. The parties attended the offices of Messrs Jones and Co on 24 February in order for Mr Sheikh to sign the transfer and mortgage deed. These documents were duly executed by him and nothing turns on them. But the declaration of trust was not executed. Miss Pitts says that both Mr Sheikh and Miss Williamson expressed doubt as to whether the declaration was needed. Miss Pitts saw Miss Williamson on her own and advised her strongly to enter into the declaration of trust in order to protect her position. She says that Miss Williamson confirmed that she did not want to enter into the deed, despite the advice. Mr Sheikh's explanation of the reason why the declaration of trust was not executed was set out at paragraph 4 of his defence and counterclaim in these terms:
  11. "The Defendant will further state that the reason the Claimant refused to sign the Declaration of Trust was her stated belief that it would be unfair to have a stake in the property as the deposit for the house had been financed through the sale of the Defendant's Smart Car and it would be the Defendant who would be responsible for the mortgage payments and utility bills. It was always the common intention of both parties that the Defendant would receive all future proceeds of sale of the property."
  12. The Recorder summarised Miss Williamson's version of events at paragraph 17 of his judgment in these terms:
  13. "…Mr Sheikh told her that he did not think the trust deed was necessary and told her in terms that there was no need for her to sign it and (while he might not have used these words) if things went wrong he would see her right. She could trust him without the necessity of a deed. Miss Williamson says that she, obviously again with hindsight, felt under pressure. She wanted obviously to secure the property and buy it, and no doubt at that stage in the relationship with Mr Sheikh she felt she was able to trust him. Because of that pressure I have no doubt she agreed she would not sign it. Mr Sheikh's version of events again I find difficult to follow. He gave rather different accounts in his own statement and under pressure of cross-examination from Mr Smith as to his version of events. He strenuously denies that he influenced Miss Williamson in any way or exerted any pressure and effectively says that it was her idea that there was no need for the declaration of trust. As Mr Smith submits, the idea that a 16 or 17 year old with no experience of these matters in that situation would take it upon herself to make that decision is at least extremely unlikely. Furthermore, Miss Williamson says that when the parties were in the room with Miss Pitts Mr Sheikh actually kicked her under the table when the bit about signing the trust deed came up, and that in dreadful clichéd lawyers' parlance has the ring of truth. It is very likely that did happen, and I find as a fact on the balance of probabilities and having heard the evidence it did happen and that Mr Sheikh evidenced his pressure on Miss Williamson in that way not to sign the trust declaration."
  14. I interpret this paragraph as meaning that the Recorder accepted the entirety of the account given by Miss Williamson as to the reason why she did not enter into the declaration of trust.
  15. I have started with the declaration of trust and the circumstances in which the property came to be purchased, but I need to say something about the issue of the motorcycle and the car. It was common ground that in early 2003 Miss Williamson purchased a motorcycle for Mr Sheikh. The cost was £3,500. There was an issue as to whether this was a gift by her to him, as he asserted, or whether, as she said, the money was a loan. The Recorder gave his reasons at paragraph 8 for finding that it was a loan. It is not clear to me whether Mr Sheikh seeks to challenge that finding. He does not appear to do so in his grounds of appeal, but it may be that in saying what he said to us this morning he did in effect challenge that finding. In my judgment it is impossible for him to challenge a finding of fact which the Recorder made after hearing evidence from both parties and was amply entitled to make.
  16. It followed, so the Recorder said, that Mr Sheikh was not able to rely on the proceeds of the sale of the motorcycle, and to say that they represented a financial contribution to the purchase of the house. So far as the Smart car is concerned, this was purchased in May 2003 by Miss Williamson's mother, but registered in the name of Mr Sheikh because Miss Williamson was too young to drive. Eventually the car was part exchanged for a Mercedes. £7,000 was allowed as the value of the Smart car. Mr Sheikh contended that the car was in fact worth £8,500 and that in some way its value should be attributed to his provision of the deposit on the house. The Recorder accepted the evidence of Miss Williamson in relation to the car, and at paragraph 11 rejected the submission that the value of the car should in any way redound to the benefit of Mr Sheikh. In my view, the position in relation to the Smart car is exactly the same as the position in relation to the motorcycle, and for the same reasons in my judgment the Recorder was amply justified in disregarding the car when he came to consider the funds from which the deposit came to be made.
  17. Having made the findings of fact to which I have referred, the Recorder referred to the law. In particular he referred to Oxley v Hiscock [2004] EWCA Civ 546l; [2005] Fam 211 and Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432. It is sufficient to refer to paragraph 61 in the speech of Baroness Hale of Richmond in Stack v Dowden:
  18. "Oxley v Hiscock has been hailed by Gray and Gray as "an important breakthrough" (op cit, p 931, para 10.138). The passage quoted is very similar to the view of the Law Commission in Sharing Homes (2002, op cit, para 4.27) on the quantification of beneficial entitlement:
    'If the question really is one of the parties' 'common intention', we believe that there is much to be said for adopting what has been called a 'holistic approach' to quantification, undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended.'
    That may be the preferable way of expressing what is essentially the same thought, for two reasons. First, it emphasises that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. 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 [1970] AC 777 without even the fig leaf of section 17 of the 1882 Act."

  19. The Recorder referred to an article by Mr Barnes, which summarised the law as expounded by the majority in Stack v Dowden. The fourth of Mr Barnes' propositions was set out by the Recorder in paragraph 20 of his judgment:
  20. "Fourthly, if the presumption is rebutted the court will search for what the parties must be taken to have intended in the light of their conduct. The court is not entitled to abandon that search in favour of what it considers fair."
  21. That is plainly a reflection, at any rate in part, of paragraph 61 of Baroness Hale's speech. The Recorder then went on to say this at paragraph 21:
  22. "That is crucial to my mind in this case. I do find as a matter of law and fact that the presumption that this property at 2 Maun Close is held in Mr Sheikh's name is rebutted in this case, and it is rebutted for a number of reasons. Firstly and most obviously, Miss Williamson on the facts that I have found provided the equity in the property and she paid the legal fees. Secondly and most importantly, there is the trust deed. That was clearly discussed between the parties on more than one occasion with Miss Pitts. Miss Pitts clearly considered the matter carefully with those in her practice and wrote a letter to the parties setting out what was to be done and the reasons for it. Thirdly, I find, and I do find as a fact, that at the signing of the deed appointment Mr Sheikh persuaded Miss Williamson -- it may be undue influence, it may not be -- but certainly persuaded her it was unnecessary to sign the trust deed, and it was not signed. Nevertheless, as Mr Smith correctly submits, in my view that trust deed is very strong evidence indeed of the parties' intentions in this case as to how the legal title should be held. It seems to me that the court in this case because of the rapid breakdown of the relationship and the fact that the parties separated after less than a year, it is unnecessary to go on and look at what contributions alterations the parties might have made in the course of that time. Obviously the longer the relationship goes on and the longer the property is held in the original way, the more room there is for manoeuvre about contributions and payments of the mortgage and so forth. But that does not figure in this case and it seems to me undoubtedly the case that, firstly, the presumption that Mr Sheikh owns the property in his sole name is rebutted, and, secondly, the parties must have intended, firstly, £10,000 to be repaid to Miss Williamson, and, secondly, the balance of proceeds of sale to be divided 60-40 in her favour."
  23. The principal ground of appeal is that the Recorder should not have relied on the draft declaration of trust as evidence of the extent of the parties' beneficial interests, and should not have disregarded Mr Sheikh's mortgage and other payments in determining the extent of those interests. In my judgment, the decision of the Recorder cannot be challenged. Having made the findings of fact that he made as to the circumstances in which the declaration of trust came to be drafted but not executed, he was fully justified in reaching the conclusion that he did as to the extent of the parties' respective beneficial interests. This is not a case where the deed was not executed because it did not reflect the common intention of the parties; quite the opposite. The Recorder found that it was not executed because it was agreed that such was the trust between the parties that they did not need their agreement to be embodied in a formal document. In this case, unlike many others, the Recorder decided that it was not necessary to embark on a detailed examination of the parties' conduct in order to see what, in the light of that conduct, they must be taken to have intended. In fact, the deed of declaration was powerful evidence of what the parties actually intended, not what they must be taken to have intended.
  24. In the course of his address to us this morning, Mr Sheikh attempted to go behind the findings of fact made by the Recorder, and in particular his findings as to the reason why the declaration of trust was not executed, but, as I have already said, in my view it is not possible for Mr Sheikh to challenge those findings which the Recorder made, having heard evidence from both sides.
  25. The only other question was whether the fact that Mr Sheikh had made the mortgage payments required an adjustment of the beneficial interests that were agreed between the parties in February 2004. In his defence and counterclaim Mr Sheikh said that he had made total payments of approximately £18,000. The Recorder decided that no adjustment was required for the reasons that he gave at paragraph 21. In my judgment he was right to do so. First, as he said, the period over which the payments were made was relatively short; but secondly and more fundamentally, the parties must have contemplated when they made their agreement that, at least in the early years, Mr Sheikh would be responsible for the mortgage payments. Miss Williamson was still only seventeen years of age and it was obvious that only Mr Sheikh would be in a position to earn money and make those payments, at any rate for the time being. In agreeing the split that they agreed they must be taken to have assumed that the mortgage payments would be made by Mr Sheikh.
  26. Those are the principal grounds of appeal. Mr Sheikh has a complaint that he thinks that the disparity of age between Miss Williamson and himself was taken against him by the judge and that this amounted to what he has described as age discrimination. There is no doubt that the judge did take into account the disparity of age between them; it was inevitable that he would do so, particularly when considering whether or not Miss Williamson had declined to execute the declaration of trust because she had been pressurised by Mr Sheikh to do so. In my judgment there is no substance in this complaint at all.
  27. The only other matter, referred to more in the written material than developed this morning, is that Mr Sheikh says that he suffers from a degree of learning disability and that, as a litigant in person, he was disadvantaged as a result in his ability to conduct his defence. There is evidence in the papers from a psychologist that Mr Sheikh does indeed suffer from a learning disability, but it is a learning disability which, according to that expert, is such as would be likely to affect his ability to study at degree level. He did not have to obtain a degree in order to represent himself effectively in the trial. The judge said that Mr Sheikh was an intelligent man. We have heard him present this appeal this morning. He is clearly, if I may say so, an intelligent man -- he is articulate; he made all the points that he wished to make clearly, and, so far as I am concerned, betrayed no signs of any disability or difficulty in putting his case across. In my view, therefore, such learning disability as he has did not prevent him from having a fair trial.
  28. For all these reasons I would dismiss this appeal.
  29. Lord Justice Lloyd:

  30. I agree. As the Recorder noted at paragraph 12 of his judgment, the legal title to the property had to be taken in the name of Mr Sheikh, and Miss Williamson could not be one of the registered proprietors of the property because she was under age. But for that, it seems to me clear on the facts that the Recorder found that the property would have been in joint names, and there would have been no question of the presumption in favour of sole beneficial ownership that goes with sole legal ownership. But the matter was in fact even clearer than that, in the light of the circumstances as regards the draft declaration of trust which the Recorder found, so far as disputes of facts are concerned and which my Lord has referred to. It seems to me plain that the Recorder's admirable and succinct judgment is correct and unchallengeable and accordingly the appeal must be dismissed.
  31. Lord Justice Ward:

  32. I am afraid I agree with both judgments, Mr Sheikh, so the appeal must be dismissed.
  33. Order: Appeal dismissed

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