“[52]…… It strikes me as unreal to proceed on the Insolvency Application by reference to GH’s interests as a member when in short time there will be a hearing in the Financial Remedy Proceedings to determine the Section 37 Application, which determination will be binding upon GH. In light of the debarring order, there can realistically be only one of two outcomes – either EF is the beneficial owner of the shares, or CD is the beneficial owner of the shares and in which case they are a financial resource available to meet AB’s assessed reasonable needs. Therefore, the reality is that GH is pursuing the Insolvency Application without any legitimate interest as a member for doing so, but rather in an attempt to pursue his interest as a prospective purchaser of the site. [53.] I am not satisfied that GH has standing to bring the Insolvency Application. …….. Risk that the loan is not repaid in full [87.] Firstly: a. GH argues that there are good reasons for thinking that GUTHRUM may be unable to repay SPV(PA) the£4 million . GH states in his written evidence that he expects GUTHRUM to be badly run by EF. b. EF argues that she has adduced credible evidence of her ability to run GUTHRUM profitably and well. But even if that proved not to be the case, WINNIPEG’s exposure to GUTHRUM’s credit risk is short term, since the intention is for GUTHRUM to obtain long term refinancing from a commercial bank within 18 months. c. GH argues that whether a bank would be prepared to provide substitute lending of£3.5 million to GUTHRUM after 18 months is speculative at best, and involves an unsafe assumption as to what value a bank would place on the site. If GUTHRUM is unable to repay SPV(PA) then SPV(PA) will be unable to repay WINNIPEG. It might be expected that GUTHRUM would be able to pay something to SPV(PA) even if put through an insolvency process, and that SPV(PA) might then be able to pay something to WINNIPEG even if SPV(PA) is itself put through an insolvency process. If, in the meantime, the court orders EF to buy GH’s shares in WINNIPEG, it will have to estimate the amount that GUTHRUM would be able to repay SPV(PA), and SPV(PA) be able to repay to WINNIPEG. This exercise is likely to be difficult, and inherently uncertain. d. EF argues that there is no reason to fear that WINNIPEG will not be repaid in full, since on GH’s own case GUTHRUM’s site is worth nearly£1.75 million in excess of the loan amount. [88.] Ultimately, I consider that an analysis of the risk of default is academic for the purposes of the Injunction Application. By virtue of s.996 of the 2006 Act, the court has a wide discretion as to the nature of the relief to be granted in that it can “make such order as it thinks fit”
"[19.] The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces. [20.] Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events."
“[22.] In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“[14] 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.”
“…….In the case of a contract which is based partly upon oral exchanges and conduct, a party may have a clear understanding of what was agreed without necessarily being able to remember the precise conversation or action which gave rise to that belief. As the Court of Appeal pointed out, the tribunal did not make any specific findings about what was said at the interviews or on any other occasion. But the terms of the engagement must have been discussed and these conversations must have played a part in forming the views of the parties about what their respective obligations were. The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done. But when both parties are agreed about what they understood their mutual obligations (or lack of them) to be, it is a strong thing to exclude their evidence from consideration. Evidence of subsequent conduct, which wouldbe inadmissible to construe a purely written contract (see Whitworth StreetEstates (Manchester) Ltd. v. James Miller and Partners Ltd. [1970] A.C. 583) may be relevant on similar grounds, namely that it shows what theparties thought they had agreed. It may of course also be admissible for the same purposes as it would be if the contract had been in writing, namely, to support an argument that the terms have been varied or enlarged or to found an estoppel.”
“(2) Where proceedings for financial relief are brought by one person against another, the court may, on the application of the first-mentioned person— ……. (b) if it is satisfied that the other party has, with that intention, made a reviewable disposition and that if the disposition were set aside financial relief or different financial relief would be granted to the applicant, make an order setting aside the disposition; ……… and an application for the purposes of paragraph (b) above shall be made in the proceedings for the financial relief in question. …… (4) Any disposition made by the other party to the proceedings for financial relief in question (whether before or after the commencement of those proceedings) is a reviewable disposition for the purposes of subsection (2)(b) above unless it was made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any intention on the part of the other party to defeat the applicant’s claim for financial relief. (5) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application …… and the court is satisfied— (a) in a case falling within subsection (2) … (b) above, that the disposition or other dealing would (apart from this section) have the consequence…. ……. of defeating the applicant’s claim for financial relief, it shall be presumed, unless the contrary is shown, that the person who disposed of ……. the property did so ….... with the intention of defeating the applicant’s claim for financial relief.” ……. (b) if it is satisfied that the other party has, with that intention, made a reviewable disposition and that if the disposition were set aside financial relief or different financial relief would be granted to the applicant, make an order setting aside the disposition; ……… and an application for the purposes of paragraph (b) above shall be made in the proceedings for the financial relief in question. (a) in a case falling within subsection (2) … (b) above, that the disposition or other dealing would (apart from this section) have the consequence…. ……. of defeating the applicant’s claim for financial relief, it shall be presumed, unless the contrary is shown, that the person who disposed of ……. the property did so ….... with the intention of defeating the applicant’s claim for financial relief.”
“If the trust is to operate, its essential elements must be defined clearly enough to enable the trustee, or the court in default, to execute the trustee’s duties. There are therefore three main ways in which an express trust must be sufficiently certain: (i) the settlor must intend to impose legally enforceable duties of trusteeship on the owner of the property; (ii) the subject-matter of the trust must be certain; and (iii) the objects or persons intended to have the benefit of the trust must be certain.” (i) the settlor must intend to impose legally enforceable duties of trusteeship on the owner of the property; (ii) the subject-matter of the trust must be certain; and (iii) the objects or persons intended to have the benefit of the trust must be certain.”
“A bare (or simple) trust is one where property is vested in one person on trust for another, but where the trustee owes no active duties arising from his status as trustee. His sole duty is to convey the trust property as the beneficiary directs him. An example is where property is transferred to T “on trust for B absolutely”
“[14.] Because of the liability assumed by the mortgagor in a case where monies are borrowed by the mortgagor to be used on the purchase, the mortgagor is treated as having provided the proportion of the purchase price attributable to the monies so borrowed.”
“English law provides no clear and all-embracing definition of a constructive trust. Its boundaries have been left perhaps deliberately vague so as not to restrict the court in technicalities in deciding what the justice of a particular case might demand.”
"[29] a common intention constructive trust could arise where (i) there was an express agreement between parties as to the ownership of property (ii) which was relied upon by the claimant (iii) to his or her detriment such that (iv) it would be unconscionable for the defendant to deny the claimant's ownership of the property."
“[112.] Again, it is necessary to start from first principles. The foundation of the wife's case is the undoubted fact that the husband funded the acquisitions of all five properties, save insofar as the rental incomes were sufficient to service the mortgage loans. But that, of itself, takes the wife nowhere. For someone may provide money used in the acquisition of a property without thereby acquiring any interest in that property. It all depends upon the character in which the money is provided. Was the money provided by way of gift, by way of loan or in the character of purchaser? Only in the last case will there be any question of a resulting or constructive trust. If there was in truth a gift, the donor has no claim at all. If there was a loan, the lender has a claim for the repayment of his money with interest but no claim to, or any interest in, the property (save insofar as the loan is secured by a charge or mortgage of the property). But if the payment was in the character of purchaser, the investor has a claim to a share in the property by way of a constructive or resulting trust (for present purposes nothing turns on the important conceptual differences between these two classes of trust) and proportionate to his investment. [113.] A simple example will make the differences clear. Let us suppose that A provides£10 and B provides£90 towards the purchase of a property which is bought for£100 and eventually sold for£200 . If A provided the£10 as a gift, then he gets nothing on the sale; the entire£200 goes to B. If, on the other hand, A provided the£10 as a loan, then he will recover the£10 plus interest (say£5 ) – a total of£15 ; the other£185 will go to B. But if A provided the£10 as a contribution to the purchase price and in the character of a purchaser, then, other things being equal, the proceeds of sale will be held on (constructive or resulting) trust as to 10% for A and 90% for B, so A will receive£20 and B will receive£180 . (As will be appreciated, whether A is better off if he lent the money or if he invested it qua purchaser will depend upon whether the property is increasing in value at a rate greater than prevailing interest rates.) [114.] Now whether A provided the money by way of gift, or by way of loan, or qua purchaser is, in the final analysis, a simple question of fact, to be determined in the light of all the evidence as to the relevant circumstances, including, subject to the rule in Shephard v Cartwright[1955] AC 431 (see per Viscount Simmonds at page 445), the parties' evidence as to their intentions at the time. [115.] Sometimes the answer to the question will be obvious, indeed so obvious that the question never arises. A bank which advances money to fund a purchase will usually do so by way of loan, and it makes no difference for this purpose that the loan is secured by a charge or mortgage of the property. Where contributions are made by two people living together as a couple the obvious assumption will be that each is contributing qua purchaser, so their claims inter se, unless they are married, will fall to be resolved through the mechanism of trust law. In other situations the answer may be less obvious. [116.] An illuminating example of the factual difficulties is provided by the decision of the Court of Appeal in Hussey v Palmer[1972] 1 WLR 1286 . I say nothing as to the legal basis of the decision (which is controversial to say the least) and refer to the case simply to draw attention to the differing ways in which the judges analysed the facts with a view to determining whether the money provided by the defendant's mother-in-law, which he conceded had not been a gift, was provided, as Cairns LJ held, by way of loan or, as Lord Denning MR and Phillimore LJ held, qua purchaser entitling her to sue on a resulting trust.”
“If there is no actual common intention between the parties that the legal ownership of property is not to follow the legal ownership, the court must go on to consider whether such a common intention may be inferred. An inferred intention is, in the case of each party, the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate it in his own mind and even where he acted with some different intention which he did not communicate to the other party. A common intention that beneficial ownership be shared will, in the case of property vested in one legal owner, easily be inferred where there is a direct financial contribution by another to the purchase price…”
“[127] …. the claim to a constructive trust is founded on a wider range of circumstances than the mere fact that the husband initially funded the acquisitions of the Properties – in other words, is founded on an overall assessment of the conduct of the parties from which, it is submitted, one can properly infer a common intention justifying the imposition of such a trust he claim to a constructive trust is founded..”
“[3.(3)] The fact that EF and EF-H purchased PARK ZEROfor YY was confirmed in a letter dated2 June 2005 sent to EF and EF-H by their then accountants, NU, RE & Co. Thatletter stated: “You also purchased a site for YY [sic] which cost£459,844 ”; ……….. [7.] In accordance with her treatment of her other children, EF purchased OVERWATER Caravan Park together jointly with YY in around 2011. The purchase price was£1.6 million . YY funded her share of the cost of acquisition by transferring the beneficial ownership of a caravan site known as PARK ZERO, with an estimated value of around PARK ZERO for a price of£500,000 to EF and EF-H….. …….. [25.] …… GH has no interest in OVERWATER Caravan Park, which is beneficially owned by YY alone….” iii. In CD’s original Defence in the present proceedings, it was stated that:- “[7.] …..in agreeing to the entire issued share capital [of GUTHRUM] being vested in [CD], [EF] was motivated by her desire to provide [[CD] with financial security.” b. It is not disputed that the family relies heavily upon their advisers to ensure that their position is protected. If it was intended that EF was to retain beneficial ownership of the shares then no doubt the advisers would have advised upon the need for and drafted the necessary documentation to record the existence of the trust. They did not. c. The notes to the financial statements for GUTHRUM for the year ended31 July 2016 , which were approved by the Board for issue on6 April 2017 and signed by EF in her capacity as director, record – “11 Control It is the opinion of the directors that CD who holds 100% of the issued share capital of GUTHRUM… is the company’s ultimate controlling party.” controlling party.” d. The notes to the financial statements for WINNIPEG for the year ended31 July 2016 , which were approved by the Board for issue on28 February 2017 , record – “12 Related party relationships and transactions A third party charge of debt was created on2 January 2013 for securing all monies due from WOOD to the Royal Bank of Scotland. Included within other debtors is£1,348,278 (2015 -£1,352,028 ) due from WOOD, a company wholly owned by a director of the company. Also included within other debtors is£558,200 (2015 -£558,211 ) due from GUTHRUM, a company associated by a director of the company. Included within other creditors is£629,275 (2015 -£621,375 ) due to GLENOGIL, a company wholly owned by the directors of the company.”
“[13. (b)] ….it is admitted and averred that GH and EF are the legal owners of 50% of the issued shares in [GUTHRUM]. However, they hold such shares on bare trust for [CD]”
“We have completed accounts for X-1, X-2, X-3 and X-4 for the year ended31 July 2006 and two copies are enclosed. At our meeting we discussed that bankings and cash spendings exceeded recorded income from VAT records and in order to balance the cash account we have had to add£104,000 to takings. The same problem arose in reconciling X-5 figures to31 July 2006 and further additions of£175,345 have been included to balance this account. ………… X-5 was purchased during this year and£4,110,713 was paid out and a bank loan of£3,000,000 taken out towards this. You also paid£251,142 towards the BLACKSMITH site. Several amounts were introduced into this business from WINNIPEG, The X-6 and X-5 accounts. ………….” 122. Therefore, I find that the sum of£251,142 was paid to CD to enable him to purchase BLACKSMITH. 123. However, I do not find that the Loan Agreement is legally enforceable by EF for the following primary reasons: a. The 2008 Letter states that the sum of£251,142 comprised several amounts from WINNIPEG, The X-6 and X-5. There is no breakdown of who paid what. b. It is not disputed that at the time of the Alleged Loan - i. WINNIPEG was owned equally by EF-H, EF and GH; ii. The X-6 was owned solely by GH; and iii. GH was a one third partner in X-5. c. Unsurprisingly having regard to the time that has now elapsed, EF was unable in her oral evidence to say how much of the Alleged Loan was owed to GH. d. EF has failed to establish what, if any, amount of the Alleged Loan was paid by and therefore owed to her and/or EF-H personally. 124. Even if I am wrong about that, and EF was able to establish that the Alleged Loan is owed to her/EF-H personally, I find for the following reasons that it is very much a soft loan, which AN will not be required to repay at the conclusion of the financial remedy proceedings for the following primary reasons: a. CD failed to mention the Alleged Loan as a liability in his Form E. b. In his oral evidence, CD said for the first time that he had received text messages from EF asking when the Alleged Loan would be repaid. Any such texts messages were plainly relevant and ought to have been disclosed, but they were not. I draw an adverse inference that CD failed to disclose these alleged text messages because he did not receive them, and EF did not before the commencement of these proceedings ever seek repayment of the Alleged Loan. c. CD claimed in his oral evidence that he was struggling financially to repay the Alleged Loan. He also claimed that his parents knew that he was struggling financially, although that is of course entirely inconsistent with his claim that EF was pressing him for repayment via text messages. In any event – i. In his Form E, CD stated that “[AB] has demanded large sums of money from me which has significantly depleted the savings I had. I believe that this can be seen from the bank statements that have been provided.” ii. In his oral evidence, CD did not seriously dispute that he had the sum of£156,000 in his Barclays Bank account at the commencement of the financial remedy proceedings. iii. In his oral evidence, CD did not seriously dispute that at the commencement of the financial remedy proceedings he owned a Range Rover valued at£90,000 . iv. In his oral evidence, CD accepted that his updating financial disclosure showed that he had transferred the total sum of£60,940 from his bank accounts to JY. He denied that JY was his new partner, but rather a friend, who was looking after the BLACKSMITH Caravan Park for him. v. It is clear that, since the time of the Alleged Loan, CD has been able to generate a very significant income from which he has chosen to pay for expensive family holidays, luxury motor vehicles, accrue substantial savings, and make large payments to a friend, rather than making any repayments towards the Alleged Loan. d. EF’s failure to demand repayment of the Alleged Loan prior to the commencement of these proceedings combined with CD’s failure to make any repayments of the Alleged Loan in the almost 20 years since BLACKSMITH was purchased (and despite having the financial means to do so), makes it inherently unlikely that CD will be obliged to repay the Alleged Loan following the conclusion of these proceedings. e. I acknowledge that in the Company Proceedings EF successfully sought to enforce several inter-company loans. However, EF only sought to enforce those inter-company loans after she and GH had fallen out. In Family v Family, Falk J held that: “[87.] … GH’s position is that there was a non-contractual understanding between the parties that the loans would remain outstanding ‘indefinitely’…. [88.] It is of course quite possible to enter into informal arrangements or understandings which fall short of a legal agreement, including an understanding that in certain circumstances one entity will not insist on enforcing its legal rights against another…. ……. [93.] In this case there has of course been a material change of circumstances. The relationship between the parties has wholly broken down ….. I do not see how it is arguable that any understanding that the parties had about the loans could realistically be interpreted as surviving this.”