“Although phrased as a sham, the issue was whether there was a debt which should be taken into account when determining the financial claims between the husband and the wife. It is not clear whether the parties and the court have taken into account the effect of Harman v Glencross[1986] Fam 81 ,[1986] 2 WLR 637 ; Austin-Fell v Austin-Fell[1990] Fam 172 ,[1990] 3 WLR 33 ; and Kremen v Agrest[2013] EWCA Civ 41 ,[2013] 2 FLR 187 . As the application for a charging order was made after the date of the wife’s financial application it would seem, as set out in Rayden on Divorce at [23.270]–[23.280], that the “court will have to balance the claims of the debtor's creditor and the debtor's spouse”
“And Upon the Court considering that the Proposed Intervenor [the wife] should apply for a transfer of her claim under [the MFPA 1984] … to the Family Division … as the more appropriate forum, so that, if the Claimant herein (LT Ltd) applies to enforce its charging order, the application by the Claimant and the Proposed Intervenor’s claim may be heard together under [the MFPA 1984].”
“(vii) Because a degree of dishonesty is involved in a sham there is a very strong presumption that parties intend to be bound by the provisions of agreements into which they enter, and intend the agreements they enter into to take effect. However, this does not elevate the standard of proof, which is set at the balance of probability. Nonetheless the test is a stiff one and there is a requirement of very clear evidence given the seriousness of the allegation.” (judge’s emphasis) As this matter will have to be reheard, I would just add a note of caution about the words emphasised by the judge. In my view, if the issue is proof of a sham rather than simply proof of a debt, a better guide to the approach the court should take is that set out, for example, in the judgment of Sir Geoffrey Vos C (as he then was) in Bank St Petersburg PJSC and another v Arkhangelsky and others[2020] 4 WLR 55 when dealing with the standard of proof: “[44] It does not seem to me that the law is now much in doubt. It is encapsulated in the following passages from Baroness Hale of Richmond’s judgment in In re B [In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening)[2009] AC 11 ) which, though stated to be applicable to care proceedings are, I think, of more general application in civil proceedings: ‘64. … Lord Nicholls’s nuanced explanation [in In re H] left room for the nostrum, ‘the more serious the allegation, the more cogent the evidence needed to prove it’ to take hold and be repeated time and time again in fact-finding hearings in care proceedings …’ ‘70. My Lords, for that reason I would go further and announce loud and clear that the standard of proof in finding the facts necessary to establish the threshold under section 31(2) or the welfare considerations in section 1 of the 1989 Act is the simple balance of probabilities, neither more nor less. Neither the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts. The inherent probabilities are simply something to be taken into account, where relevant, in deciding where the truth lies.’ ‘72. As to the seriousness of the allegation, there is no logical or necessary connection between seriousness and probability. Some seriously harmful behaviour, such as murder, is sufficiently rare to be inherently improbable in most circumstances. Even then there are circumstances, such as a body with its throat cut and no weapon to hand, where it is not at all improbable. Other seriously harmful behaviour, such as alcohol or drug abuse, is regrettably all too common and not at all improbable. Nor are serious allegations made in a vacuum. Consider the famous example of the animal seen in Regent’s Park. If it is seen outside the zoo on a stretch of greensward regularly used for walking dogs, then of course it is more likely to be a dog than a lion. If it is seen in the zoo next to the lions’ enclosure when the door is open, then it may well be more likely to be a lion than a dog.’”
“[117] In general it is legitimate and conventional, and a fair starting point, that fraud and dishonesty are inherently improbable, such that cogent evidence is required for their proof. But that is because, other things being equal, people do not usually act dishonestly, and it can be no more than a starting point. Ultimately, the only question is whether it has been proved that the occurrence of the fact in issue, in this case dishonesty in the realisation of the assets, was more probable than not.” ‘64. … Lord Nicholls’s nuanced explanation [in In re H] left room for the nostrum, ‘the more serious the allegation, the more cogent the evidence needed to prove it’ to take hold and be repeated time and time again in fact-finding hearings in care proceedings …’ ‘70. My Lords, for that reason I would go further and announce loud and clear that the standard of proof in finding the facts necessary to establish the threshold under section 31(2) or the welfare considerations in section 1 of the 1989 Act is the simple balance of probabilities, neither more nor less. Neither the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts. The inherent probabilities are simply something to be taken into account, where relevant, in deciding where the truth lies.’ ‘72. As to the seriousness of the allegation, there is no logical or necessary connection between seriousness and probability. Some seriously harmful behaviour, such as murder, is sufficiently rare to be inherently improbable in most circumstances. Even then there are circumstances, such as a body with its throat cut and no weapon to hand, where it is not at all improbable. Other seriously harmful behaviour, such as alcohol or drug abuse, is regrettably all too common and not at all improbable. Nor are serious allegations made in a vacuum. Consider the famous example of the animal seen in Regent’s Park. If it is seen outside the zoo on a stretch of greensward regularly used for walking dogs, then of course it is more likely to be a dog than a lion. If it is seen in the zoo next to the lions’ enclosure when the door is open, then it may well be more likely to be a lion than a dog.’”
“She said she believed he had no need to borrow, because he was a wealthy and influential man in Nigeria, and had run a successful business as a hotelier. I have not been shown evidence to assist me in making findings of his income, savings, assets or borrowing capacity in or around 2009.”
“The steps his company has taken to enforce payment of the loan have been scrutinised by the Court in Nigeria and the High Court in London, and the debt judged to be legitimate, (although it is right to note that the wife’s allegation that the loan agreement is a sham was not raised in either proceedings).”
“(i) the husband did not tell the wife that he had borrowed money to buy the family home in London. The first time she became aware of the existence of the loan was when the husband filed his Form E in May 2019. This was long after the separation, and only came up once financial proceedings were underway; (ii) the husband’s brother insists this was a commercial loan, but the terms of the loan brought no benefit to the intervenor company at all, not even charging interest. The loan was not secured against the property nor in any other way. The intervenor apparently took no steps to ensure that the loan had been used for its intended purpose of purchasing a hotel, and was relaxed to the point of inertia when no repayments were made. However, I bear in mind Mostyn J’s words: ‘The fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham. A distinction is to be drawn between the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them.’ (iii) the loan agreement is asserted to have been drawn up by the intervenor company’s lawyers, but is suspiciously identical in format, font, paragraph numbering and content, to another loan agreement purportedly between the husband’s Nigerian Skyline and the husband personally, advancing£800,000 to enable purchase of the Dower House. This loan agreement also only came to light after the parties’ separation, and during the lifetime of the application for financial remedies; (iv) there is a scent of collusion about the two sets of proceedings in Nigeria. As well as repayment of the debt, the intervenor’s claim form in the Nigerian proceedings seeks repossession and sale of the property at 49 Sherwood Road as an alternative remedy. In his petition for divorce to the Nigerian Court, the husband sought an order that the wife and children be evicted from the property and rehoused in another one. It would seem that the husband and, through his company, his brother, shared the same objective. That objective is consistent with the husband’s objective in the financial remedy proceedings, for the wife and children to be evicted from the property, so that it can be sold and the vast portion of the equity in the house effectively removed from the pot of marital assets; (v) if the loan agreement, subsequent settlement agreement and pleadings are truly commercial and legal documents, they contain a suspiciously high amount of typing errors in respect of dates, the name of the intervenor company which is alternatively named as Linkserve Ventures Transnational Ltd and at other times just Linkserve Transnational Ltd. The loan agreement dated6 August 2009 itself is made between De Skyline Nigeria and Linkserve Ventures Transnational Limited. However, a document apparently from the Nigerian Corporate Affairs Commission, certifies that the company (incorporated in January 2007) was previously known as Linkserves Dynamic Solutions Limited, and only became known as Linkserves Ventures Transnational Limited by operation of special resolution on18 August 2009 , twelve days after the loan agreement was made. (As to this last point, the intervenor’s witness said that the name change had happened sooner but it took Nigerian officials some time to catch up with it).”
“(i) I preferred the husband’s evidence to the wife’s about his financial situation at the time he moved to England. I do not accept that his hotel business was as wildly successful as she suggested. I prefer his evidence that they lived in modest quarters at the back of the guesthouse and that she continued to work in the hotel after the marriage. I would be prepared to accept that he was able to draw funds from his business in order to purchase the Dower House and land for£800,000 . But there is no evidence before the Court to enable me to find to the standard of a balance of probabilities that he did have access to the£1.35 million and associated costs required to purchase the family home in cash. It is for the wife to prove that the property was bought without recourse to a loan from the intervenor; (ii) I accept the husband’s evidence that he entered the UK on Tier 1 (entrepreneur) visa. In January 2009 this was a route available for migrants who wished to establish, join or take over one or more business in the UK. That is exactly what the husband’s intention was. Having successfully run small hotels in Nigeria and a hotel/boarding house near Lagos airport, his intention was to expand the business by creating a similar type of hotel near Heathrow airport. I accept his evidence that the requirements that applied to him on a Tier 1 entrepreneur visa, were for him to have access to not less than£200,000 , to be held in a regulated financial institution, and that it was disposable in the UK; (iii) It was asserted on behalf of the wife in her counsel’s position statement that the husband entered the UK on a Tier 1 (investor) visa, which among other things required the investor to have (i) not less than£1 million in a regulated financial institution, disposable in the ; or (ii)£2 million in net personal assets and a loan disposable in the UK of not less than£1 million loaned from a financial institution regulated by the Financial Services Authority. The wife has not provided any evidence to support the assertion that the husband did enter on this visa, or that he was at any time able to satisfy those criteria. The husband was indeed entering the UK with the intention of setting up a business, consistent with the Entrepreneur visa, he was not intending to invest in other businesses, nor did he. In the circumstances, I reject the wife’s claim that the husband must have had at least£2 million in cash in his bank account when he arrived in the UK; (iv) I accept that the property was registered in the husband’s sole name and no charge registered against it. This could be evidence that the loan was a sham, but it is also consistent with the evidence of the husband and the intervenor, that the husband had not been honest and straightforward with his brother about how he was going to use the funds. The loan agreement provides that the loan should be used to further the business, and repayments would start once the business was trading. It was not intended as a mortgage. In the circumstances, it would not be expected for the intervenor to register a charge on the property when the expectation was that the loan would be repaid once the business started trading; (v) I have only been shown one page of a bank statement from 2009. It is obviously only a snapshot, but it appears to be a contemporaneous document. Its validity has not been challenged. The statement shows the account in excess of£360,000 on11 September 2009 , and over the next couple of months, a further£333,000 coming into the account in five instalments from Yara Commodities. On30 November 2009 a payment of£557,000 was made to Alexander Barnett. The husband gave evidence that this is the name of the solicitors’ firm that did the conveyancing on the purchase of the family home (corroborated by correspondence within the bundle). The husband and his brother gave evidence that Yara Commodities was the foreign exchange service that was used in order to transfer the money from the intervenor’s account to the husband’s account. The amounts and timings of these transfers are consistent with the husband’s account of receiving the monies in instalments, which in turn is consistent with the terms of the loan agreement which provides for payment to be made in a succession of instalments until the sum of£1.6 million was reached; (vi) I recognise the possibility that Yara Commodities could have nothing to do with the intervenor company, and could be a foreign exchange service used by the husband to transfer his own funds from Nigeria to his English account. However, I was presented with no evidence to contradict the evidence of the husband and his brother that the payments shown on the statement were from the intervenor, and made pursuant to the loan agreement; (vii) The applicant has raised suspicion as to the validity of the documents relied upon. I have only been shown photocopies. They are date stamped by the Nigerian Court. I am told that the Court service performs a notary service to certify commercial documents as genuine. It is of course possible that this is not the case, or that it is, and the documents have been back-dated and stamped using stamps obtained as part of a fraud. However, I have not been shown any evidence to support such an assertion, there is no expert evidence as to standard procedure for notarising contracts, as to the types of stamps used, nor any handwriting evidence in respect of signatures purporting to be those of the husband and the intervenor. What I have been told is that these documents were accepted and approved by the High Court in Nigeria as valid evidence of a debt owed by the husband to the intervenor company, and judgment was entered on that basis. In the circumstances, I must be cautious to come to a conclusion that they are fakes, fabricated only in the aftermath of the husband and wife’s separation; (viii) The wife did not receive notice of the Nigerian divorce proceedings, nor of the intervenor’s application in this jurisdiction for a charging order. She asserts this is further evidence of collusion on the part of the husband and the intervenor to go behind her back. The husband has been aware that she and the children have remained living in the former matrimonial home, so it is arguable that he could and should have arranged for service there. However, it is also of note that those proceedings were served on the wife at the address which is formally recorded on the title deeds for the property in order to register her home rights under theFamily Law Act 1996 .”
“(i) It seeks to retry the case afresh. (ii) It rests on a selection of evidence rather than the whole of the evidence that the judge heard (what I have elsewhere called “island hopping”). (iii) It seeks to persuade an appeal court to form its own evaluation of the reliability of witness evidence when that is the quintessential function of the trial judge who has seen and heard the witnesses. (iv) It seeks to persuade the appeal court to reattribute weight to the different strands of evidence. (v) It concentrates on particular verbal expressions that the judge used rather than engaging with the substance of his findings.”
“… in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified.”
“[42] The position is similar with evaluative assessments. An appellate Court will not interfere merely because it might have arrived at a different conclusion. It will do so only if it considers the decision under appeal to have been an unreasonable one or wrong as a result of some identifiable flaw in reasoning, 'such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion' (see eg R (R) v Chief Constable of Greater Manchester[2018] 1 WLR 4079 , para 64, and also In re Sprintroom Ltd[2019] 2 BCLC 617 , paras 76 and 77).”
“[41] The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in Wisniewski v Central Manchester Health Authority [1998] PIQR P324 is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so.”
“In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility. Moreover, it can be significant not only where it is present and the oral evidence can then be checked against it. It can also be significant if written documentation is absent. For instance, if the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party adducing oral evidence is responsible for its non-production, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence.”
“Terms of settlement dated and filed on21/3/2019 is entered as Judgment in this suit”
“(vi) I recognise the possibility that Yara Commodities could have nothing to do with the intervenor company, and could be a foreign exchange service used by the husband to transfer his own funds from Nigeria to his English account. However, I was presented with no evidence to contradict the evidence of the husband and his brother that the payments shown on the statement were from the intervenor, and made pursuant to the loan agreement.”