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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Ashby v Kilduff [2010] EWHC 2034 (Ch) (30 July 2010) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/2034.html Cite as: [2010] 3 FCR 80, [2010] EWHC 2034 (Ch)

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		Neutral Citation Number: [2010] EWHC 2034 (Ch )
		Case No: HC09C00732

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		30 July 2010

1. In 1993 the claimant ("Mr Ashby") entered into a relationship with the defendant ("Dr Kilduff') which caught the attention of the Sunday Times. Mr Ashby was a married man and the Conservative Member of Parliament for North West Leicestershire and he took the view that the article was defamatory and sued the publishers for damages for libel: they pleaded justification. After a lengthy trial, the verdict was given for the Sunday Times and an order for costs was made against Mr Ashby. In the ensuing gloom, Mr Ashby decided to put his flat at No. 7B Westleigh Avenue Putney into the name of Dr Kilduff either by a genuine or purported sale. Now, following the ending of their relationship in 2005, the first issue is whether this was by way of genuine sale (as Dr Kilduff argues) or by way of a constructive or resulting trust for Mr Ashby.
2. The second issue is in relation to a flat purchased in joint names in June 2003 for investment purposes with money provided in the main by Mr Ashby, at least one purpose of which was that Mr Ashby should have the benefit to the rental income as a 'pension' during his life. Dr Kilduff's original position was that he has now severed the joint tenancy and seeks an order for sale of the property, payment of one half of the net proceeds of sale of the property and an account of one half of the net income received from it.
3. The outcome will depend on an assessment of the factual issues arising in this case together with the application of some well understood legal principles.

The Facts:

4. In 1991 Mr Ashby was 51 years of age. He had practised as a barrister from 1963 and in 1983 had become Member of Parliament for Leicestershire North West. He had by 1991 been married for some 28 years and had one daughter. In 1991 he met Dr Kilduff, who was a junior doctor some 28 years of age; by the end of 1992 the relationship between the two of them had become very close indeed and in October each decided to buy a flat in a small block at no 7 Westleigh Avenue, Putney. Mr Ashby purchased Flat No. 7B which was on the first floor, (and which at that time was tenanted), and Dr Kilduff purchased 7C which was directly below and had access to a small garden. The idea of both from the start had been that they should live together as a couple while maintaining the appearance of being neighbours and the arrangement of the flats was suitable for achieving this.
5. Each paid £80,000 for his own flat: Mr Ashby paid a deposit of £20,000 in cash and obtained a building society loan of £60,000; he completed the purchase in May 1993 as soon as the tenant departed. Both properties and the garden were in fairly poor condition when they were bought and substantial renovations were then required and made. Each paid the cost of renovating his own flat. From the outset the renovations were planned to ensure that the living quarters were on the first floor, the ground floor was to be used for entertaining. Mr Ashby moved into No. 7B in November 1993, when the renovations were complete; a double bed was then placed upstairs and both Mr Ashby and Dr Kilduff continued living together as a couple in the same household.
6. The two of them cooked, ate, watched television, lived, slept and breakfasted together upstairs; downstairs was used for entertaining and for access to the garden especially in the summer. Each of them had keys to both properties and mutual free access to each flat. Even when Mr Ashby was away, the defendant would sleep upstairs.
7. On the 2 January 1994 the Sunday Times published an article suggesting that Mr Ashby was having a relationship with an unnamed man. Following this, various other newspapers published similar stories, some of which named Dr Kilduff. In those days stories like that could be professionally damaging. Mr Ashby decided to leave No. 7B and moved to other accommodation, letting No. 7B on a shorthold tenancy. He also went to Peter Carter Ruck & Partners ("Carter Ruck"), the well known libel solicitors, and took Dr Kilduff with him. I quite credit the account of Dr Kilduff that it was Mr Ashby who persuaded him to attend on the solicitors and undertook to fund his litigation expenses.
8. In the result, both Mr Ashby and Dr Kilduff issued proceedings against the newspapers who had made the allegations, arguing that their relationship was platonic and not sexual, which was untrue. The newspapers settled with Dr Kilduff, agreeing to pay him £21,000 in damages and his reasonable costs.
9. Mr Ashby's trial was a cause celebre and took place over 3 weeks in late 1995. On 21 December 1995 the jury returned a verdict for the Sunday Times and Mr Ashby was ordered to pay the costs of the litigation. It was anticipated that the costs would be crippling and that the Sunday Times might seek to levy execution on No.7. In addition to this, it was anticipated that Mrs Ashby, who had given evidence at the trial in support of the Sunday Times, would shortly institute divorce proceedings and seek significant financial relief
10. It is undoubtedly the case that these financial pressures played a substantial part in driving the transaction at the centre of these proceedings. Apart from which, as Mr Ashby pointed out, apart from the former matrimonial home in Leicestershire, at which he was no longer welcome, his only other home was flat No. 7B, which he was sharing with Dr Kilduff and wished to preserve. In his statement he put it as follows:

"I wanted to protect my partner, the Defendant and the last thing I wanted was that he should suffer through me. In order to protect our 'home' we discussed transferring the legal title to him through a 'sale'. We wanted to protect our home from any disruptions (from creditors) which never materialised".

The Transaction:

11. Discussions in which the prospect of a sale of No. 7B to Dr Kilduff were ventilated took place just before and over Christmas 1995 and into the New Year.
12. Mr Ashby says that on 19^th December 1995, the day that judgment was given, he telephoned Dr Kilduff in some distress and the two agreed to meet for dinner in a Thai restaurant in Wandsworth. Mr Ashby's daughter, Alex Bogoni, flew over to be with him and attended dinner as well. Mr Ashby says that there was a discussion about what to do about the property and that it was agreed between them that it would be transferred into Dr Kilduff s name on the basis that Mr Ashby would pay absolutely all outgoings. Mr Ashby says that he kept his promise to pay everything for 14 years and has now been "completely betrayed". Mrs Bogoni confirmed that the situation was critical; her father appeared to be facing ruin and losing his home; she offered to purchase the house from him and allow him to live there rent free but he would not hear of it. She expressed the view to him that it might not be a good idea to put the house in Dr Kilduff s name but he insisted that Dr Kilduff and he were "very strong".
13. Dr Kilduff agreed that they had met at the Thai Restaurant; however he insisted that there was no discussion about the transaction at that time. He says that he was staying at his family home in Ireland when Mr Ashby telephoned to ask if he would be willing to purchase No. 7B and then rent it back to him as a tenant; that Dr Kilduff said he would think about it. On his return to London they discussed the matter in more detail. He says that "We agreed that I would purchase the property from David at a fair but competitive price and that he would pay me reasonable rent to cover the mortgage and contribute to the cost of repairs." Dr Kilduff says he recognised that the purchase of No. 7B was a good long term investment.
14. In the end it is clear that agreement was reached that Mr Ashby should sell (or purport to sell) No. 7B to Dr Kilduff for £80,000; there would be (or purport to be) a deposit of £20,000 and the balance of £60,000 was to be raised by mortgage; that Mr Ashby would continue to live at the property under what was (or purported to be) a shorthold tenancy agreement at a rental broadly equivalent to the cost of maintaining the mortgage which Dr Kilduff was planning to raise. In any event it was the intention of both of them that they would live together as a couple in the accommodation at both Nos. 7B and 7C as before.
15. In early January Dr Kilduff approached the Nationwide Building Society for a mortgage of £60,000; as he already had one residential mortgage (on No. 7C) he was offered a 'buy to lef mortgage, which was approved in principle on 22^nd January 1996. A valuation of that date showed that No. 7B was at that time still let on an Shorthold Tenancy (to other third party tenants) at £866.67 per month. The tenants vacated in March 1996 and Mr Ashby moved back in.
16. Mr Ashby instructed Hay & Co, solicitors on 18^th March 1996 to act on both the sale and purchase, making it clear to them that this was not an arm's length transaction but one between friends. As mortgages were involved Hay & Co advised that it would be better if Mr Ashby and Dr Kilduff were separately represented and he was allotted to another partner in a sister firm called Fuller Hay.
17. As it happened it was also in March 1996 that Carter Ruck confirmed to Dr Kilduff that they were holding the sum of £28,512, consisting of damages for libel of £21,000 and a balance of £7,512 of costs. On 25^th March 1996 Dr Kilduff asked Carter Ruck to transfer all this money to Mr Ashby's account against the costs which the latter still owed them stating that "in an attempt to pay his legal bills [Mr Ashby] has sold his property in Westleigh Avenue which I have agreed to purchase. As part payment for this the final amount due to me will be made available towards his account with yourselves".
18. By a formal agreement in writing signed on the 26^th April 1996 Mr Ashby agreed to sell and Mr Kilduff agreed to buy No. 7B with full title guarantee. On 27^th April 1996 Mr Ashby sent Dr Kilduff s solicitors a letter confirming that he had received the sum of £20,000 from Dr Kilduff in consideration for the purchase of 7B.
19. On 1 May 1996 Dr Kilduff sent his solicitors a shorthold tenancy agreement "signed by myself and my proposed tenant, Mr Ashby" and this was forwarded to the Nationwide. On 20^th May 1996 Hay & Co informed Dr Kilduff that the Agreement did not meet the Nationwide's criteria; the solicitors circulated a "copy shorthold tenancy agreement" which was then sent to the Nationwide for approval and on 24^th May 1996 Hay & Co was "pleased to inform you that the Nationwide are satisfied with the Shorthold Tenancy Agreement" .
20. Exchange of contracts took place on 7^th June 1996 with completion on 14^th June 1996, at which date a document, executed as a deed, took effect confirming the transfer of the property to Dr Kilduff, "in consideration of the price [of £80,000] the receipt of which is hereby acknowledged". By letter dated 15^th June 1996 Mr Ashby confirmed to Dr Kilduff s solicitors that "the sum of £20,000 was paid to me as long ago as last March". After taking account of the receipt of the balance of £60,000 (from the Nationwide) and the repayment of his own mortgage, Mr Ashby received a cheque from his solicitors for the balance of £2,647.94.
21. Following completion, after the tenant in No. 7B had vacated, Mr Ashby and Dr Kilduff resumed their lives together. To begin with Mr Ashby wrote cheques in favour of Dr Kilduff in the sum of £600 per month, the amount necessary to repay the mortgage instalments when they became due, and endorsed on his cheque book stubs the legend 'R C Kilduff Rent'. Eventually the matter was dealt with by standing order and Mr Ashby's bank account statements were annotated with the legend that the payments were 'rent'. The rental of £600 per month compares with the market rental of £866.67 per month which Mr Ashby received from his tenants of No. 7B until they left in March 1996. The rental amount changed from time to time as the interest rate changed and affected the level at which the mortgage instalments were fixed. I have been shown copy bank accounts from which it is evident that, in addition to the amount paid into the account by Mr Ashby for 'rent', Mr Ashby & Dr Kilduff each made an equal contribution into a housekeeping account in joint names. From this joint account, Dr Kilduff extracted to a personal account in his sole name, monthly by standing order, an amount equivalent to the instalments needed to pay his mortgage.
22. What is clear is that Mr Ashby paid very substantial sums towards the refurbishment and redecoration of the flat. I ignore all payments made prior to March 1996 when the transfer of the property took place as the incidence of these cannot affect the beneficial interests post transfer. It is not in dispute that since 1996 the sum of about £10,000 was paid by Mr Ashby towards a new kitchen and tiling in No. 7B and a further £10,000 in March 2005 towards rewiring and the provision of special lighting fittings and effects; the effect of both these payments I will need to consider.
23. So far as Dr Kilduff is concerned, in about 2000, without informing Mr Ashby, he arranged for a single fresh mortgage covering both flats to be taken out in place of the two separate mortgages on the separate flats; he also made two substantial capital repayments of the amounts due to his mortgagee: the first on 16 August 2001 in the sum of £30,000 and the second in November 2004 in the sum of £40,000. He says that he would not have made these repayments had he not been satisfied that he owned the property and adds: "David and I were in a relationship at the time and there would have been no reason for me to make these payments other than to reduce my liability and therefore increase my equity in the property". Even after this Dr Kilduff continued making overpayments to his mortgage with the result that his indebtedness to the Nationwide was paid off by 2005. He did not tell Mr Ashby of any of the matters in this paragraph because, he told me, they did not concern him and in any event Mr Ashby would not be interested. Mr Ashby strongly disagreed saying that "we lived together, slept together, went out together and holidayed together. Why should he pay £70,000 off the mortgage without telling me a single thing about it and keep this secret for 5 years (sc. until disclosure in these proceedings)?"

The Matrimonial Proceedings:

24. On 7 March 1996 solicitors acting for Mrs Ashby wrote to Mr Ashby saying that she was considering divorce proceedings. During those proceedings she made an application for financial relief. It is evident that Dr Kilduff has for some time sought to compel the disclosure of documents emanating from Mr Ashby in order to seek to put in evidence how he dealt with the ownership of the assets at issue in this case. It is evident that Mr Ashby has persistently obstructed this, unsuccessfully as it has turned out.
25. In those proceedings Mr Ashby was required by the Matrimonial Rules to complete a full account of his assets by swearing on oath the accuracy of his list of assets in what is called Form E. An examination of this shows that he told the divorce court on 30^th September 1996 that he was "at present living in rented accommodation in Putney" (which, he told me "was not correct, regrettably") and that he did not have a present intention of cohabiting (although he was at that time cohabiting with Dr Kilduff). In a further affidavit date 17^th June 1998 he confirmed that his financial situation had not changed since he swore the earlier affidavit. On 15^th March 1999 he completed and swore the accuracy of Form E in which he confirmed his address at No. 7B Westleigh Road Putney, that it was rented and he was the sole occupant, and that his annual expenditure was £7,200 by way of 'rent'. He claimed he had the need of capital of £300,000 - £400,000 for the purchase of a house.
26. It is Mr Ashby's case that although he had attempted to argue the contrary initially, Mrs Ashby was not fooled and at the Financial Dispute Resolution Appointment he admitted ownership of No. 7B and an order was made on the basis that No. 7B did belong to him. I will need to deal with this later.

Investment Property at 68 Stretford Road, Hulme near Manchester:

27. Alter ceasing to be an MP in 1997 Mr Ashby returned to the Bar but his practice did not take off and he retired in 2001. When his former matrimonial home was sold in 2002 he received a net sum of about £450,000 which he sought to invest in property, in the hope of providing investment income in his retirement. In the middle of 2003, through a friend he was directed to a development in Manchester which he visited and viewed with Dr Kilduff: he decided to buy four buy to let properties off plan and Dr Kilduff bought one for himself as well. A contract for the properties was signed by Mr

Ashby in about May 2003. His instructions were that No 68 was to be in joint names. He was a keen sailor and was proposing to participate in the Atlantic Rally for Cruisers from November 2003 returning to England in about May 2004. He therefore executed a Power of Attorney in favour of Dr Kilduff before he left which was to be used for completing the purchase of all Mr Ashby's flats and No. 68 in accordance with their agreement.

28. Of the four properties only one was purchased in joint names. Mr Ashby stated in his witness statement as follows:

"I instructed that the contract [for no. 68] should be in joint names but never that [Dr Kilduff] should have the beneficial ownership of the property. Indeed he knew that the primary purpose, indeed almost the sole purpose was to invest and to provide an income for me on my retirement and that lie should benefit solely on my death, provided, as I expected, we were still living together.

It was expressly agreed and understood that at all times I would pay all outgoings and receive all rental income and that the property was an investment for me. We have both acted upon this knowledge/understanding and the Defendant has never hinted otherwise."

29. The purchase was completed on 8 April 2004 by Dr Kilduff, signing on his own behalf and as Attorney for Mr Ashby, as joint tenants and in the ratio of '50/50': the lease contains a declaration that "where the expression 'lessee' includes two or more persons it is hereby declared between them that they hold the Property upon trust for themselves as beneficial joint tenants ..." The purchase price was £101,495 and was to have been paid entirely by Mr Ashby as Dr Kilduff knew. Notwithstanding this, it appeai-s that somehow the sum of £10,430 came from Dr Kilduff, though it seems that this was unintended and may have been to some extent set off by a payment by Mr Ashby who paid for the furniture for all the flats including Dr Kilduff's.
30. It is agreed that since completion Mr Ashby has paid all the outgoings on the flat and has received the whole of the net income for his own use.
31. It was originally the case of Dr Kilduff that he was entitled to an order that the property be sold and that he should receive not merely one half of the net proceeds of sale but also one half of the net income since the date of purchase. However, the position changed during his cross-examination after he had accepted and reflected on the admission that the property was purchased with a view to providing Mr Ashby with an income in his retirement. I will return to this below.

The Wills:

32. On 29^th June 2003 in anticipation that he was soon going to depart for a spell abroad on the high seas both Mr Ashby and Dr Kilduff decided that they would execute separate Wills. They were executed at the same time and witnessed by their friends and neighbours. Dr Kilduff complains that Mr Ashby has refused to disclose in these proceedings the contents of his Will: but since Dr Kilduff was the main executor and beneficiary and held the original in his possession he has decided to disclose it himself, a matter about which Mr Ashby has bitterly complained.
33. In paragraph (8) of his Will Mr Ashby declared as follows: "To Roderick Ciaran Kilduff I bequeath my share of flat 58^[1] Meridian Square, Hulme, Manchester which we own as joint tenants". There was no express disposition of No. 7B, which Dr Kilduff argued negates the suggestion that Mr Ashby believed he had any beneficial interest in the property, though he did give to Dr Kilduff his "interest in any real estate, whether freehold or leasehold, for life to receive any rents or interests therefrom".
34. In his own Will Dr Kilduff stated that:

"I GIVE

(3) the properties No. 7B and 7C Westleigh Avenue to David Glynn Ashby for life ...

(6) My interest in any real estate property whether leased or freehold, including 58 and 59 Meridian Square ... to David Glynn Ashby ... for life ...

The Parting:

35. Absence, it seems, did not make the heart grow fonder and it was the increasing absences of Mr Ashby for long periods on his sailing ventures abroad which, according to Dr Kilduff, led to a weakening in the bond of affection between the two men. He told me that he had been thinking of separating with increasing intensity since about 2003. It was eventually in September 2005 that the break came. The two men had spent a fortnight on a sailing holiday off the Aeolian Islands, at the end of which Dr Kilduff told Mr Ashby that he was profoundly unhappy and was leaving him and had been thinking in terms of separation since 2003. Mr Ashby had not the slightest suspicion that his relationship with Dr Kilduff was other than mutually strong, had no idea that anything like this might be coming and was completely devastated. By the end of October 2005 Dr Kilduff had packed his things and left No. 7B to live apart downstairs at No. 7C. It did not however end his access to No. 7B, particularly for access to the 'office' in which were kept inter alia the shared computer containing their personal and joint business files and the broadband access. That did not cease until some time in 2007.
36. By now the mortgage had been paid off and Dr Kilduff had no need of payments of 'rent'. He says that he told Mr Ashby that he need not pay monthly rent but could as before contribute to maintenance expenses. He explains that at that time his outgoings were low but Mr Ashby's income was reduced and "As I have stated before I did not seek to make a profit out of letting No. 7B to David - it was not a commercial arrangement but one more governed by the fact that we were in a relationship. I was not concerned about this arrangement continuing after the breakdown of our relationship as in fact it did".
37. In 2006 it appears that Mr Ashby acquired a new boyfriend, a Polish student called Filip Koscielecki, who came initially to stay in No. 7B for a short time in the vacation but since the latter part of 2006 moved his things in and has lived there ever since. Towards the end of 2007 Dr Kilduff sought to persuade Mr Ashby to vacate No. 7B and move into No. 7A (which Dr Kilduff had also purchased) as his tenant at an agreed rent, because he felt that No. 7C was too small and wanted to incorporate No. 7B. Mr Ashby's position was that he would move, provided only that he could take No. 7A as beneficial owner in exchange for what he argued was his entitlement to the beneficial interest in No. 7B. This prompted Dr Kilduff to attend solicitors and seek advice as to his legal entitlement in respect of the various properties.
38. The legal advice was favourable to Dr Kilduff and he disclosed it to Mr Ashby. In early 2008 there was long correspondence between them, which was fairly cordial initially but emotional on the part of Mr Ashby. It did not resolve matters and on 1 April 2008 Dr Kilduff s solicitors sent Mr Ashby a letter giving him notice to vacate No. 7B within two months and requiring him to put No.68 on the market within 28 days and agree to divide the proceeds. By Notice of Severance dated 22^nd June 2009 Dr Kilduff notified Mr Ashby of his intention to sever the joint tenancy in relation to No. 68. He also sought an order for the sale of the property and one half of all the net income generated from No. 68 since the date when it was purchased. In.Iune2009Dr Kilduff served a notice to quit No. 7B. However, Mr Ashby continues to live there pending the outcome of this trial.
39. Mr Ashby issued these proceedings against Dr Kilduff on 10 March 2009 claiming a declaration that he is the sole beneficial owner of No. 7B Westleigh Road (alternatively has the right to reside in the property for as long as he wants to) and no 68; and an order vesting him as the registered proprietor of each property. Dr Kilduff served a defence and counterclaim on 23 July 2009, in which he seeks possession of No. 7B and rent alternatively mesne profits from April 2008. In relation to No. 68 he claims an order for sale, division of the net proceeds of sale and an account of the rent received since its purchase alternatively, a declaration that he has a beneficial interest in the property as a result of a constructive or resulting trust.

The Arguments:

The claimant's case:

40. Mr Ashby asserts that he and Dr Kilduff agreed that he would transfer his legal interest in No. 7B to Dr Kilduff on the basis that Dr Kilduff would hold the beneficial interest in the property on trust for him; that Dr Kilduff would obtain a mortgage in his name for the same amount as Mr Ashby still owed but that Mr Ashby would continue to pay absolutely all the outgoings in respect of No. 7B, as before, including the mortgage repayments. That the common understanding or common intention was that Mr Ashby should be the beneficial owner of the property notwithstanding the transfer of the legal interest to Dr Kilduff. He denies that there was in truth a sale of No. 7B to Dr Kilduff or a valid Shorthold Tenancy: both were he says a complete sham.
41. He says that the property was worth a good deal more than the £80,000 price at which it was expressed to be sold (indeed there is in the papers evidence from a single joint expert putting the value of the property at a sum of £ 89,000) and that Dr Kilduff knew it was being transferred at an undervalue; that, although there was a nominal transfer of the mortgage from him to Dr Kilduff, it was he who paid all mortgage instalments; that he did not receive payment of the deposit of £20,000 and did pay all of the legal and other expenses of the transaction (though the evidence to support this is unclear). He says that the Shorthold Tenancy was a sham; he did not get exclusive possession of the premises - it was the intention of both of them that they should share possession; he did not pay rent but instead an amount which equated to the amount due under the mortgage, albeit that the mortgage was now in Dr Kilduff s name rather than his own: and, contrary to the terms of the supposed tenancy agreement, he made very substantial payments towards the refurbishment and improvement of the flat.
42. As regards the expenditure on improvements: I do not believe that the expense incurred prior to the date of transfer in 1996 has any relevance. Nor is it appropriate to have regard to general expenditure on maintenance and mere decoration. Mr Ashby does however rely on expenditure of about £10,000 on the replacement of the kitchen at the property between January and March 1998 and a further expenditure of about £10,000 for rewiring, redesign and refurbishment of lighting and flooring in No. 7B during February March 2005. There is no evidence before me to show by what amount these two items of expenditure increased whatever was the value of No. 7B on the date when the expenditure was incurred.

The defendant's case:

43. Dr Kilduff argues that Mr Ashby truly sold him the whole of his legal and beneficial interest in the property; that the sale was by express agreement and by deed, the consideration was paid in part by a loan raised by him by way of mortgage from Nationwide and in part by the transfer over to Carter Ruck (at Mr Ashby's direction) of a balance of £28,512 which otherwise was due to be paid out to him; that there was a valid Shorthold Tenancy Agreement signed by both of them. The rent was paid at a level lower than the commercial rate because the two of them were in a relationship and Dr Kilduff was not intent on making any short term profit out of the rental. In any event, Mr Ashby also paid for repairs and improvements which were not normally a tenant's responsibility.
44. As regards the cost of improvements: Dr Kilduff argues that there is no evidence that any of the expenditure increased the value of the property or that it amounted to anything other than making the flat more comfortable and pleasant to live in. It was after all Mr Ashby's home in which, after his retirement from practice in 2000 he spent much time - when he was not sailing his yacht in other parts of the world.
45. He alleges that Mr Ashby has fabricated an account of his ownership of No. 7B and No. 68 for gain and throughout these proceedings has been wilfully obstructive in the disclosure of documents.
46. As regards Mr Ashby's averment that the transaction was a "sham", Dr Kilduff argues (1) that in order for a trust to be a sham, both parties to the transaction must intend that the true arrangement is otherwise than as set out in the deed: see per Munby J. in A vA [2007] EWHC 99 (Fam) and he did not; and (2) that a transaction is either genuine or it is a sham. What it cannot be is a sham for one purpose but not for another; and (3) in so far as Mr Ashby might be arguing that the property was put into Dr Kilduff s name as a sham in order to deceive or defraud his creditors and/or his wife's application for financial provision, he has to give evidence of his own immoral act or criminality and the court will not come to his aid: see per Lord Browne-Wilkinson in Tinsley v Milligan [1994] 1 AC 340 and per Beldam LJ in Cross v Kirby [2000] EWCA Civ 426.

The Trial:

47. The trial took place over a period of 4 days. The principal witnesses were Mr Ashby, Mrs Alexandra Bogoni, his daughter, and Dr Kilduff. In addition, Mr Ashby called Godfrey Gillings and Albert Siu; statements by Robert Sheridan, Philip Koelecki and Domenico Shapani were read. Dr Kilduff called Michael Young and Alan Hall.
48. As regards Mr Ashby: he is now 70 years of age. He is a slightly larger than life personality, urbane, extrovert and outgoing, emotional and not embarrassed at displaying emotion; indeed he positively wishes those who listen to him to empathise in and share his anguish. He is capable of great love and devotion and, where it is reciprocated, dispenses unselfish generosity with blind trust and without caution for his own personal and financial self-interest. When his generosity is "betrayed" he responds with demonstrations of intense hurt. He was a person who did not easily (or perhaps at all) accept advice from those who were close to him, believing that he knew better. More particularly, he is self excusing to a great degree; that means that he is able to put a benign spin in retrospect on even the bleakest scenario.
49. As regards his credibility: it seems to me that he could not have fought a libel trial over a period of three weeks and given evidence without repeatedly perjuring himself: in evidence before me he eventually supposed that he must have done so but could not specifically remember. I also need to remind myself that the events into which I am now enquiring happened nearly fifteen years ago. He has a good recollection of some events and dates but it is a recollection not unaffected by his desire then and now to achieve an aim very different from the way in which things have turned out. Apart from which, he would in my judgment be quite prepared to tell a pack of lies if he believed it was just for him and in his interests to do so, in which case he could quite easily persuade himself of the truth and accuracy of an inaccurate account.
50. As regards Mrs Bogoni, it seems to me that for all Mr Ashby's woes he has been blessed with a daughter who idolises and is devoted to him. When she was very much younger she stood in the witness box before the libel jury in support of her father and explained how she believed that the relationship between him and Dr Kilduff was purely platonic: I was not supplied with a transcript of her evidence but I can quite understand how it is that she learned only during the course of the trial that her father might be in an actively sexual relationship with Dr Kilduff. It was not suggested to her in cross-examination that she had concocted her evidence about the Thai restaurant discussions with Mr Ashby and I do not judge that she did. She is however not an impartial and objective witness and the matters about which she came to give evidence happened a very long time ago.
51. As regards Dr Kilduff: he is now 47 years of age and very different in personality. He is quiet, reserved, introspective and reflective. It is not clear to me how deep was his commitment to the relationship with Mr Ashby, which had after all lasted for 14 years, as he did not appear in initial statements to acknowledge what was obviously a mutual relationship which was deeply loving and intimate on both their parts. Although Mr Ashby appears during their relationship not to have kept any secrets financial or otherwise from Dr Kilduff, Dr Kilduff kept his financial affairs very private and, in particular, did not disclose that he was in 2000 making arrangements for the mortgages on both No. 7B and &C to be consolidated and for repayments of capital on what was by now a consolidated mortgage. His attitude to possessions and property was very different from that of Mr Ashby: the latter was a generous giver in the extreme and Dr Kilduff appears not often to have turned down an opportunity to receive.
52. Initially, to his credit, he was prepared not to take any active steps to move Mr Ashby from No. 7B: the position however changed after the end of 2007 and he has used all means at his disposal to argue his case, even to the extent of disclosing matters which he would know would be likely to humiliate Mr Ashby and gravely injure his feelings.
53. When it comes to assessing his credibility, I note first of all that he did not shrink from extracting from newspapers who had told the truth about his relationship with Mr Ashby, substantial damages for libel by falsely representing that he had not been engaging in a sexual relationship with Mr Ashby. During his evidence and cross- examination I judged that he was giving evidence in what I would describe as a controlled manner, responding to questions with a degree of calculation in accordance with the case he was there to promote. Generally, his evidence was more reliable and accurate than that of Mr Ashby though as will appear from my findings there were occasions when I preferred the evidence of Mr Ashby.
54. I did not find that the evidence of the other supporting witnesses assisted me.
55. The conclusions to which I come on the various issues arising in this case are as follows.
56. First of all, there is overwhelming evidence that the purported sale of No. 7B was genuine, although not at arm's length. I do not accept that there was a transfer on express terms or any common understanding that Dr Kilduff was to hold the property on trust for Mr Ashby. Both parties did indeed contemplate that they would continue to live together in No. 7B after the transaction had taken place but I do not find that there was any express or implied obligation imposed on Dr Kilduff requiring him to continue to permit Mr Ashby to live there indefinitely even after their relationship had come to an end.
57. All of the correspondence and formal documentation was expressly to the effect that the property was being sold. The price of £80,000 was known by both parties to have been pitched at a level which was not ungenerous to Dr Kilduff (who points out that the sale did proceed in some haste and without incurring the expense of agents). While these facts are true, it is also true that Mr Ashby was a generous man and such was his belief in the strength of his relationship with Dr Kilduff that he was quite relaxed about being generous in respect of the price as well.
58. I do not accept Mr Ashby's submission that there was no consideration for the sale, First, Mr Ashby's own loan was repaid and the mortgage redeemed and Dr Kilduff assumed a personal liability of his own on a mortgage to the Nationwide Building Society which he eventually paid off initially by periodical instalments from resources which appear to have been in the eyes of the law his own and latterly by two substantial lump sums which again appear to have been from his own resources.
59. As regards the monthly instalments the money for them was paid to the Nationwide from Dr Kilduff s personal bank account, having arrived in that account either by direct cheque payment from Mr Ashby or by standing order from his account at Coutts. The money was paid first into their joint account and from there by standing order to Dr Kilduff s personal bank account, all of which was known to Mr Ashby and occurred with his consent.
60. In addition I reject the proposition that the deposit of £20,000 was not paid. Mr Ashby declared in correspondence to his own and to Dr Kilduff s solicitor and in the deed of Transfer that the balance had been paid. The declaration coincides with the instruction of Dr Kilduff dated 25^th March 1996 to Carter Ruck that the balance of £28,512 in his favour was to be applied in reduction of Mr Ashby's account with them, that "in an attempt to pay his legal bills [Mr Ashby] has sold his property in Westleigh Avenue which I have agreed to purchase. As part payment for this the final amount due to me will be made available towards his account with yourselves". This figure included the sum of £21,000 which was paid by way of damages to Dr Kilduff personally: I reject Mr Ashby's argument that in some way the beneficial interest in that money somehow belonged to him or that the payment should not be taken into account because the money had been obtained by deception. The balance of £7,512 was in respect of costs in respect of which Mr Ashby had already paid £13,500 on account. I note also that Mr Ashby received from his own solicitors on completion a balance of £2,647.94 which he was entitled to and did keep. Although Mr Ashby attempts now to skew the mathematics to suggest that he was not paid the sum of £20,000, at the time he expressly appropriated the £20,000 to the deposit and represented repeatedly at the time that he had received the deposit as I now find that he did, although he might not have had returned to him in full the whole sum advanced by him on account of Dr Kilduff s costs.
61. Thereafter Mr Ashby paid what he consistently described as "rent" either to Dr Kilduff or into a joint account from where it was paid into Dr Kilduff s account. Dr Kilduff thereafter included his receipt of "rent" on his own annual income tax returns to the Inland Revenue, the honesty and accuracy of which has been challenged but on both bases compares well with Mr Ashby's own Income Tax Return made on 27^th January 2000 in which he made a claim for Capital Gains Tax purposes that he had suffered a capital loss of £19,302 on the sale of the property to Dr Kilduff - a sale which he now argues was a sham and at an undervalue.
62. In matrimonial proceedings Mr Ashby persisted in asserting that he did not own No. 7B but lived there as a tenant. He sought to argue that although his initial declaration in those proceedings was regrettably not true, he did at the disposal hearing come clean and accept that he still owned the property and the order subsequently made took this into account. There is no record as to what he said at the disposal hearing, It was argued that it would be a contempt of court to give evidence about what was said at that hearing^[2]. It is unnecessary to decide whether it is a contempt or not as I believe it to be highly unlikely that Mr Ashby's has accurately reported in this court what he said to the matrimonial court on the occasion of the disposal hearing. Contrary to his present evidence and persistent assertions I find that he did not commit perjury when he reported in Form E that lie did not own but rented No. 7B (though he did perjure himself when he swore that he was not cohabiting) but was in fact telling what he knew to be the truth. I do not accept his evidence that he reported at the disposal hearing that the truth was that he was the beneficial owner of No. 7B.
63. Finally Dr Kilduff did, but Mr Ashby did not, purport expressly to make a testamentary disposition of the legal and beneficial interest in No. 7B on his death.
64. Mr Ashby and his daughter's evidence was that there had been a discussion about the transfer of the property on trust to Dr Kilduff and an agreement to do so at the Thai Restaurant on 19^th December 1995. I do not accept that their evidence about a conversation supposedly taking place nearly 15 years ago is accurate. I note that their evidence about it came from the witness box but did not appear in any of their statements which had been signed and disclosed in February 2010.
65. In the light of the considerable documentary and other contemporaneous evidence to the contrary it is impossible to accept that the sale was a sham and therefore the interesting issues set out in paragraph 46 above do not arise for consideration.
66. The Shorthold Tenancy Agreement raises a slightly different matter. There is evidence that a draft of a signed Agreement was supplied to the Nationwide but was not acceptable to it. Subsequently what appears to be an unsigned draft was approved. There is no compelling evidence that it was formally signed; a signed copy has not been produced. Even if it was signed, it is debatable whether it could operate as a valid tenancy agreement where, as here, it was the common intention of both parties to cohabit in the demised premises as their shared home and that this arrangement should continue indefinitely while they continued to be attached to each other. Moreover, the 'landlord' had a key to enable himself to gain access with as much freedom as his 'tenant' enjoyed and was entitled to come and go and live there as he pleased. He was reliant on the availability to him of the 'office' in No. 7B which contained Mr Ashby's computer and the only broadband connection. In any event, it does not appear that any thought was given to renewing the tenancy agreement when the fixed term expired in 1999. Apart from which the terms of the lease relating to the outgoings of landlord and tenant respectively were not observed. It was the case that Mr Ashby continued to pay virtually all outgoings, including the majority of those of a capital nature the responsibility for which was imposed by the Agreement on the landlord.
67. To my mind it does not matter one bit whether the Agreement was technically valid and enforceable under the Rent Acts or not. It was probably necessary that there should be a Shorthold Tenancy Agreement (or what purported to be one) but that was only to enable Dr Kilduff to comply with the requirements of the lender. Neither Mr Ashby nor Dr Kilduff were troubled by the niceties of the obligations supposedly created by the Agreement. For the purposes of this case, the important point about the Agreement and the payments expressed to be 'rent' was not that they established a relationship of landlord and tenant but that they combine with other evidence to negate the contention of Mr Ashby that he occupied the premises by virtue of his own beneficial interest in the property.
68. As regards the expenditure on improvements: as I have indicated, the historic expenditure prior to the date when the property was sold to Dr Kilduff is to be ignored. It seems to me that the expenditure of some £10,000 on a new kitchen in 1998 was too long ago to retain any relevance to the issues in these proceedings. Apart from which it preceded the declarations made by Mr Ashby in the ancillary relief proceedings.
69. However, the expenditure of £10,000 on lighting and flooring may be in a different category. That is because it took place in March 2005 only 6 months or so before the separation. Dr Kilduff told me that he had been unhappy in his relationship with Mr Ashby for some time and that it was during 2003 that he first began to think about bringing it to an end. The probability is that at the time when the expenditure was taking place Dr Kilduff knew that he was going to bring the relationship to an end and was waiting for the right time to do so. While waiting, he not merely did not take any steps to deter Mr Ashby from making the expenditure on improvements but participated in the choices of product which were made.
70. I am quite satisfied that Mr Ashby believed that the relationship between the two of them remained strong and that he was going to be secure living with Dr Kilduff in No. 7B for the foreseeable future even until death, a state of mind of which Dr Kilduff would have been aware. Had Mr Ashby known what was the real state of the relationship and Dr Kilduff s true intentions, I am sure that he would not have expended the money on improvements and Dr Kilduff will have known this. In these circumstances, it seems to me that it would be unconscionable for the court not to intervene, if it has power and if it is just to do so.
71. Mr Ashby has argued that I should have regard to the principles in Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432 in some way. That was a case which concerned an unmarried couple who had taken the conveyance of their family home in joint names and where the court laid down a duty to ascertain the proportions in which they held the beneficial interest in accordance with the common intention as discerned from the whole course of conduct in relation to the property. I do not find the ratio of this case entirely easy to reconcile to the facts of the present case.
72. He has also argued that he is entitled to a beneficial interest in the property due to the operation of the principles of proprietary estoppel. I have been referred to Lissimore v Downing [2003] FLR 308 and Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776 I do not accept this argument as it has been presented. I do not accept that the circumstances gave rise to an express representation or assurance by Dr Kilduff that Mr Ashby was to have a beneficial interest in No. 7B. I do however find it possible to accept that there was an implied representation by Dr Kilduff that the continued occupation of the property by Mr Ashby was assured and the expenditure on the improvements would result in an improvement of living arrangements from which Mr Ashby would continue to benefit. It is clear that the expenditure of £10,000 on improvements constituted a detriment to Mr Ashby and it would in my judgment be unconscionable for Dr Kilduff to retain the benefit.
73. In these circumstances it seems to me that the court has a discretion to determine how the equity can best be satisfied in order to avoid the unconscionable result which would otherwise prevail. It seems that the claim is to be satisfied by the minimum award necessary to do justice (Crabb v Arun District Council [1976] Ch 179, 198) and this may sometimes lead to no more than a monetary award.
74. I am not inclined to the view that the detriment is such that Mr Ashby should be entitled to live in No. 7B for the rest of his life, as he has argued. The choice appears to me to be between a monetary award, plus compound interest from the date the equity arose until the date of this judgment, or permission to continue to reside rent free at No. 7B for a specified period up to and possibly beyond the date of this judgment. I propose to defer making a decision on this point until after submissions have been made to me in writing after the handing down of judgment.

68 Stretford Road

75. I accept the account given by Mr Ashby of the purchase of 68 Stretford Road, as set out in paragraph 28 above, with one qualification. I am satisfied that it was the intention of the parties that the ownership was to be jointly held both beneficially as well as legally. Part of my reason for coming to this conclusion is the manner in which the Will of each of the parties was drawn: although the dispositions by each to the other of their undivided share in the flat betrayed a misunderstanding of the effect of a legal and beneficial joint tenancy, it none-the-less appears that Mr Ashby did not claim to hold the whole beneficial interest in the property and knew that Dr Kilduff sought to make a disposition to him on death of the other share. It seems to me to be probable that Mr Ashby came up with the idea of making Dr Kilduff a joint beneficial owner because of a misapprehension that on his death his share would pass on survivorship directly to Dr Kilduff (which it would) but avoiding a route through the Treasury and the imposition of inheritance tax (which it would not).
76. After initial prevarication Dr Kilduff also admitted the accuracy of Mr Ashby's account (but subject to the qualification I made above) during his cross-examination. Although he had originally asked for an order that the property be sold and that he should receive one half of the net proceeds of sale and of the net rents of the property since the date of purchase, this position was abandoned and the argument has been how best to reflect the position advanced by Mr Ashby in any order of the court.
77. Mr Ashby argues that the reality of the situation is that it was common ground that the defendant did not understand the legal niceties of ownership at law as compared with beneficial ownership; that the instruction to the conveyancing solicitors indicating that there was to be 50:50 joint ownership, not tenants in common was ill understood; and that there was no agreement that the defendant would have a beneficial interest until the claimant's death whereupon jus accrescendi would apply; that the agreement was that the beneficial interest vested in the claimant during his life and that the defendant would only benefit on his death.
78. My conclusion is that the correct legal analysis is that the lease in No. 62 was held by Mr Ashby and Dr Kilduff as legal and beneficial joint tenants: that the property was held subject to a trust that Mr Ashby was responsible for all outgoings and entitled to the income from the property during his lifetime. Dr Kilduff was entitled to sever the beneficial joint tenancy and the effect of this is that since 22^nd June 2009 they have held the legal interest in the property as legal joint tenants but the beneficial interest as tenants in common, but subject to the same trust as before, which will not have been affected by the Notice of Severance.
79. As I have indicated, I would value further submissions on the matter in relation to the appropriate order, as mentioned in paragraph 74 above. I would also be grateful if counsel could draw up an agreed order to cover my ruling in paragraph 78.

Note 1   No. 68 was at that date known as '58 Meridian Square' and had not yet been built.    [Back]

Note 2   See President's Direction of 25 May 2000 [2000] 1 FLR 997 at paragraph 3,2.    [Back]