Soutzos v Asombang & Ors [2010] EWHC 842 (Ch)

Case No HC08C01237

[2010] EWHC 842 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 23/04/2010

Before

MR JUSTICE NEWEY

Between

THEODORE ION SOUTZOSClaimant

JOSEPH ASOMBANGDefendants

FIONA CATHERINE DAWKINSDefendant

CHRISTINE ELLEN FOXDefendant

Mr Sebastian Prentis (instructed by Olephant Solicitors) for Claimant

The Defendants appeared in person. for in person

Hearing Hearing dates: 16 February – 8 March 2010

Judgment

[1]This case arises out of loans which the Claimant, Dr Theodore Soutzos, made to the First Defendant, Mr Joseph Asombang.

[2]It is common ground that in 2005 Dr Soutzos lent Mr Asombang sums totalling £620,000 and that none of that money has been repaid. However, Mr Asombang was made bankrupt in 2008, and he contends that he was released from liability, pursuant to section 281 of the Insolvency Act 1986, in respect of his loans to Dr Soutzos when he was discharged from bankruptcy last year. Dr Soutzos argues otherwise on the strength of section 281(3) of the Act, which provides that a person’s discharge from bankruptcy does not release him from “any bankruptcy debt which he incurred in respect of … any fraud or fraudulent breach of trust to which he was a party”. It is Dr Soutzos’ case that he was induced to make the loans to Mr Asombang by fraudulent misrepresentations and that section 281(3) means that Mr Asombang continues to be liable to him for these misrepresentations.

[3]Dr Soutzos further alleges that all three Defendants are liable to him for unlawful means conspiracy and that the Second and Third Defendants, respectively Miss Fiona Dawkins and Miss Christine Fox, are also liable to him for dishonestly assisting the misapplication by Mr Asombang, in breach of trust, of the loan moneys or for knowing receipt of such moneys. In addition, Dr Soutzos challenges(a) declarations of trust which Miss Dawkins and Miss Fox entered into in respect of properties at 122 Uxbridge Road, Shepherds Bush, London W12 (“122 Uxbridge Road”), 10 Shepherds Bush Road, London W6 (“10 Shepherds Bush Road”) and 10 Wadsworth Road, Perivale (“10 Wadsworth Road”) and

(b) transfers of 122 Uxbridge Road and 10 Shepherds Bush Road from Miss Dawkins to Miss Fox. Further, the Particulars of Claim ask for an inquiry and/or declarations as to the trusts on which 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road are held.

[4]It is also (if somewhat faintly) alleged by Dr Soutzos that Mr Asombang borrowed the £620,000 on behalf of Miss Dawkins as an undisclosed principal.

[5]Failing all else, Dr Soutzos seeks declarations as to the sums which Mr Asombang would owe him but for his discharge from bankruptcy.

The Claimant

[6]Dr Soutzos is a consultant psychiatrist in private practice in London. He has clearly enjoyed considerable success in his profession: in 2004 he gave his income as “circa £400K”. He is at present the subject of certain disciplinary proceedings before the General Medical Council, but these are of no relevance to the matters which I have to decide.

[7]In my judgment, Dr Soutzos was an honest witness who told the truth as he saw it. That, however, is not to say that his recollection of events was by any means always accurate. He himself acknowledged that his recollection of the first two of the loans mentioned below was poor, but he suggested that this was the case because there had been no problems in relation to them and so no need to remember them. He thought that he remembered the later loans better, and that may be so. However, the loans which remain outstanding were made only a year after the first two, and Dr Soutzos had, I gather, no recollection of, for example, a property at 59 Ormiston Grove, Shepherds Bush, London W12 (“59 Ormiston Grove”) in respect of which he proved to have executed a document cancelling a registered charge in his favour at much the time that the first of the loans now at issue was made. While Dr Soutzos may remember the later loans better than the earlier ones, I do not think I can have much confidence in the accuracy of his recollection of events relating to even the later loans. Accordingly, I can place only limited reliance on Dr Soutzos’ evidence on contentious matters in the absence of corroborating evidence.

[8]Dr Soutzos was represented by Mr Sebastian Prentis.

The Defendants

[9]Before becoming bankrupt in 2008, Mr Asombang had been carrying on business as a property developer and builder. He had previously operated a car hire business.

[10]Mr Asombang was first made bankrupt on 9 November 1993. It appears that he subsequently enjoyed success as a property developer. However, in 2002 a Mrs Batooneh instituted proceedings against him for the recovery of certain loans, and in July of the next year, following a trial, Buckley J gave judgment against Mr Asombang both in that action and in an action brought by a son of Mrs Batooneh, Mr Ravanshad, which was heard at the same time. Mr Asombang said in evidence that his liability had been of the order of £1 million and that he had sold property to enable him to discharge this liability; he said that he had paid off the “majority” of the judgment from his own assets, maintaining that he could not recall how he had paid the rest.

[11]By her own account, Miss Dawkins first met Mr Asombang nearly 20 years ago when she was employed by him. In more recent times, there has been a personal relationship between the two. Mr Asombang and Miss Dawkins were both, however, somewhat vague about their relationship. Mr Asombang said that there had been an on-and-off relationship between himself and Miss Dawkins, that he had been in a personal relationship with Miss Dawkins for over three years and perhaps up to 10 years, and that he and Miss Dawkins could have lived together at some point at premises at Chelsea Close, London but that he could not pin down when he lived there. For her part, Miss Dawkins said that she did not think that she and Mr Asombang had lived together until about 2003 and that they had not been living together all the time since then; she referred to the two of them living at the Chelsea Close address and said that she had also stayed at premises which Mr Asombang owned at Emlyn Road, London W12. Whatever ups and downs there may have been in their relationship, it seems to me that during the period with which I am principally concerned, from 2004 onwards, it is fair to regard Mr Asombang and Miss Dawkins as partners on a personal level. The two have a son, born on 5 December 2004, and both parents gave their address as Chelsea Close when registering the birth. That there was a personal relationship between Mr Asombang and Miss Dawkins is consistent with, and helps to explain, the imprecision in, and apparent lack of commercial logic to, the financial arrangements between the two.

[12]Miss Dawkins said in evidence that she carried on a property developing business of her own. However, Mr Asombang played, in my judgment, a dominant role in at least some of the transactions in which Miss Dawkins was involved. It was abundantly clear from his evidence and from the submissions he advanced on behalf of himself and the other Defendants that Mr Asombang was very familiar with property transactions undertaken in Miss Dawkins’ name. Further, Mr Asombang’s and Miss Dawkins’ occupations are given respectively as “Property Developer” and “Administration Manager” in their son’s birth certificate. Miss Dawkins also described herself as an “Administration manager” in a number of other documents: for example, a 2001 loan agreement with Mrs Marina Penna and a 2004 letter to Montague Lambert. In similar vein, Mr Anthony Penna (Mrs Penna’s husband) said in evidence that he only knew Miss Dawkins as Mr Asombang’s secretary, and Miss Cindy Butts, another witness, remembered that Miss Dawkins had played no part in discussions although she had been in the office. Miss Butts commented that in all her dealings with Mr Asombang “he was most definitely the one in charge”.

[13]A linked question relates to use of the trading name “Assured Property Services”. Miss Dawkins and Miss Fox pleaded in their Defence that Miss Dawkins was “the sole proprietor of Assured Property Services”, and Miss Dawkins later confirmed in a witness statement that she “solely traded as APS and it was not a company or partnership”. Miss Dawkins operated, moreover, a bank account in the name “Ms F C Dawkins T/A Assured Property Services”. However, Mr Asombang also used the trading name “Assured Property Services”. For example, Mr Asombang formerly had a bank account in the name of “Joseph Asombang trading as Assured Property Services”, a 2004 agreement to which Miss Dawkins was a party includes a reference to “Joseph Asombang t/a Assured Property Services”, and Mr Asombang sent letters on “Assured Property Services” writing paper. At trial, Mr Asombang and Miss Dawkins maintained that they had each, separately, carried on business under the name “Assured Property Services”. It is far more likely, however, that Mr Asombang and Miss Dawkins carried on business as “Assured Property Services” together, and with Mr Asombang as the dominant figure. Thus, Mr Qumar Islam referred to Mr Asombang and Miss Dawkins trading together as “Assured Property Services”, and he thought that an individual who had worked for “Assured Property Services” had probably been working for Mr Asombang and Miss Dawkins together. Further, Mr Asombang and Miss Dawkins used the same writing paper, bearing the same “APS” logo.

[14]Miss Fox worked for some 13 years for Faron Sutaria & Co Ltd, estate agents in West London, of which she became a director. She has known Mr Asombang and Miss Dawkins for more than a decade, and the two bought and sold properties through Faron Sutaria when she was with the company. Like Miss Dawkins, Miss Fox gave evidence for Mr Asombang at the trial of the Batooneh litigation in 2003. Miss Fox left Faron Sutaria on 30 March 2007, having given notice of resignation in a letter dated 26 October 2006.

[15]Mr Asombang, Miss Dawkins and Miss Fox all gave evidence, but I am unable to treat any of them as a reliable witness. A feature of the evidence of all of them, but especially Miss Dawkins and Miss Fox, was a tendency to say that they did not remember the answers to questions they were asked in cross-examination. It seems to me, however, that they would sometimes deny recollection not because they genuinely could not remember but as a way to avoid providing a substantive response; in this context, it was notable that Miss Dawkins and Miss Fox found it possible to comment on matters raised with them by Mr Asombang.

[16]In certain respects, the Defendants’ explanations of events do not obviously make sense. For example, Miss Fox’s explanation of a £100,000 loan which she made to Mr Asombang in September 2002 was that he was a friend and that she was in a position to lend the money. However, the loan was apparently made on an interest-free basis and without any security, documentation or set repayment date. There is no reason to suppose, moreover, that Miss Fox was so wealthy that £100,000 was an insignificant sum to her. In the circumstances, I do not think that I was told anything like the whole truth. When giving judgment in 1998 in some proceedings brought against Mr Asombang and Miss Dawkins by a Mr Frankland, Mr Recorder Merriman observed that he was satisfied that Mr Asombang and Miss Dawkins had not told him the full story; I have the same feeling.

[17]There are other respects in which I consider that evidence given by the Defendants was untruthful. I have already said that I do not accept the accounts Mr Asombang and Miss Dawkins gave of use of the trading name “Assured Property Services”. Another illustration of evidence I found incredible is to be found in the explanations I was given of a document dated 26 January 2004 and headed “FIONA DAWKINS – STATEMENT OF ASSETS”. Both Mr Asombang and Miss Dawkins stated in witness statements that Miss Dawkins had sent this document to Mr Islam on 31 January 2004 “as back-up information for a proposed purchase”. During cross-examination, however, Mr Asombang and Miss Dawkins sought to row back from their written evidence. Mr Asombang professed not to know why the document had been created and suggested that someone else should be asked who the author was. For her part, Miss Dawkins said that she had never seen the document until the present litigation and that she could not say what it was. I do not accept this evidence. In my judgment, Mr Asombang and Miss Dawkins each knew who wrote the document and why and that it was sent to Mr Islam. They attempted to disavow the document because they realised that it was inaccurate and misleading. Mr Asombang himself accepted that it was “a pretty misleading document”, and Miss Dawkins agreed that it was not accurate as a statement of her assets.

[18]The position is similar in relation to a document headed “Christine Fox – Projects and liabilities”. Miss Fox said in a witness statement that this was “sent to [Mr Malik] on 11 October 2007 … in order that he could attempt to source finance for [her] to re-mortgage [10 Wadsworth Road]” with a fax from Mr Asombang. Mr Asombang nonetheless claimed in cross-examination that he did not know who had created the “Projects and liabilities” document and that he could not be sure that it was the document that Mr Malik was given. As regards Miss Fox, she said in cross-examination that she believed that she had created, and Mr Malik had been sent, the bottom half of the document; she asserted that she had not created the whole of the document (specifically, the upper part, which she agreed was inaccurate). She further suggested that she had cut-and-pasted from elsewhere some of the information in the part of the document for which she accepted responsibility. I am unable to accept either that the evidence which Mr Asombang and Miss Fox gave about the “Projects and liabilities” document was correct or that Mr Asombang and Miss Fox believed it to be so.

[19]In short, I am afraid that I cannot regard any of the Defendants as a reliable or even a truthful witness.

[20]The Defendants did not have legal representation, but conducted the proceedings themselves with considerable skill.

Other witnesses

[21]In addition to the parties, I heard evidence from four other witnesses: i) Miss Cindy Butts Miss Butts is a member of the Metropolitan Police Authority. In the course of her career, she has also, among other things, been a political researcher for a number of MPs, advised the Crown Prosecution Service on hate crimes and served on the Judicial Appointments Commission. She came to know Mr Asombang as a result of her family and his living in the same area of London when both were children. Miss Butts was plainly a truthful witness; indeed, the Defendants did not suggest otherwise. Unsurprisingly, however, her recollection of events was not perfect; she herself spoke of having in the past blocked out of her mind the events to which she was testifying. ii) Mr Qumar Islam Until 2008 Mr Islam was an independent mortgage broker. During the period relevant to this case, he was working for Black Cats Associates in Wembley. Mr Islam said that he had known Mr Asombang since 2002/2003 and had arranged finance for a number of property transactions involving Mr Asombang up to early 2007. He gave evidence in these proceedings on behalf of the Defendants. I found him to be a truthful and reliable witness. iii) Mr Anthony Penna Mr Penna, who is a solicitor, was one of those who presented the petition on which a bankruptcy order was made against Mr Asombang in 2008. In the present proceedings, he gave evidence for the Defendants. There is no reason to doubt that Mr Penna was an honest and reliable witness. His evidence is, however, of relatively little significance in the context of the issues I have to decide. iv) Miss Nagina (“Nikki”) Sharif Miss Sharif is an estate agent and a director of Future Homes, an estate agency in Wembley whose offices were adjacent to those of Black Cats Associates. Miss Sharif struck me as an honest and open witness. Unsurprisingly, given the passage of time, Miss Sharif’s recollection of events was not accurate in every detail: I think, for example, that she was mistaken in recollecting that the first of the loans referred to below was repaid before the second was made. For the most part, however, I consider her evidence to be reliable.

The loans

[22]Dr Soutzos made, in total, five loans of relevance to these proceedings.

[23]There is a dearth of documentation relating to these loans. Only one of the loans, the third, was the subject of a written contract, and there is very little contemporary correspondence between the parties.

[24]Amongst the most useful sources of documentary evidence are “Matter Account Reports” obtained in the course of the proceedings from Montague Lambert, a firm of solicitors. Montague Lambert were instructed in relation to numerous transactions by one or other of the Defendants, and they also acted for Dr Soutzos to a limited extent. They prove to have maintained separate accounts for the different matters on which they were instructed, and print-outs in respect of these accounts provide information about, in particular, money movements relating to them. In the case of Mr Asombang, Montague Lambert also had a “general matters” account which was not tied to any specific transaction. In all, Montague Lambert appear to have maintained upwards of 261 accounts for Mr Asombang, reflecting the fact that he was involved in numerous property transactions.

The first and second loans

[25]It is common ground between Dr Soutzos and Miss Sharif that they became friends after meeting at a gym in 2003 or early 2004. It is also common ground between them that Miss Sharif introduced Dr Soutzos to the person to whom the first and second loans were made. The two have differing recollections as to who the borrower was, and also as regards other aspects of the loans.

[26]The first and second loans were respectively of £40,000 and £38,700. Dr Soutzos transferred the former sum to Mr Islam on 28 May 2004 and the latter to Montague Lambert on 1 July 2004. He received back sums of £40,700 and £47,000, the £40,700 by way of a cheque drawn on a Montague Lambert client account and the £47,000 by way of a cheque drawn on an account in the name of a Ms B Kaur. Both cheques were paid in by Mr Islam, on respectively 1 July 2004 and 12 August 2004.

[27]No record of the terms of either loan is available. Dr Soutzos said in evidence that he thought that there had been letters setting out the terms of the loans, but he is probably mistaken about this. Miss Sharif said that there were no written agreements for the loans.

[28]There is dispute as to which payment discharged which debt. Dr Soutzos said that the £40,700 was in respect of the earlier loan and the £47,000 the later loan. The Defendants, on the other hand, argue that the £47,000 represented repayment of the initial, £40,000 loan and that the £40,700 related to the £38,700 loan made that same day.

[29]There is also dispute as to the identity of the borrower. Dr Soutzos stated in his written evidence that each loan was made to Mr Asombang, but the Defendants maintain that both loans were made to Mr Islam. When giving oral evidence, Dr Soutzos explained that his recollection of the loans was limited, but said that he was 80% sure that the first loan was to Mr Asombang and 95% sure that the second was. Pressed in cross-examination with documents showing that the first loan was transferred into an account of Mr Islam and that the repayment was deposited by Mr Islam, Dr Soutzos appeared at one stage to accept that that loan must have been to Mr Islam, but he changed his mind when reminded that the Montague Lambert cheque for the £40,700 bore the manuscript annotation, “A1241/203 P.S”.

[30]Dr Soutzos gave the following account of the loans in a witness statement:

“The first deal [Mr Asombang and I] did together was in the Spring of 2004. I agreed to advance £40,000 to Asombang to finance a property he was buying. He said that I would get £40,700 back within 2 weeks. From recollection, he wrote me a letter setting out the terms of the deal; however I cannot now locate a copy of it. In any event, in accordance with this agreement, on 28 May 2004 I transferred the sum of £40,000 by bank transfer to an account nominated by Asombang. On 1 July 2004, Asombang paid me by bank transfer the £40,700 as agreed… Following the successful completion of the first deal, Asombang asked for a further advance to finance another property purchase he had in the pipeline. I agreed to advance £38,700 on the basis that I would get £47,000 back within a matter of weeks. Once again I believe it is likely that there was a letter setting out the terms of this arrangement but I have been unable now to locate it. In any event, on 1 July 2004 I transferred £38,700 into a bank account nominated by Asombang, in accordance with the agreement. Once again, I received a total of £47,000 into my bank account as agreed.”

[31]However, Mr Islam was categoric in his evidence that both loans were made to him and not to Mr Asombang. He explained that he borrowed the £40,000 to assist with his purchase of 66 Sudbury Court Drive, Sudbury Hill, which became his home. He said that he needed to borrow the money because his previous home had not yet been sold and that he agreed to repay Dr Soutzos £47,000 in August 2004. Come August, Mr Islam said, he borrowed money from a friend, Mrs Kaur, so that he could repay Dr Soutzos, later reimbursing Mrs Kaur when the previous home was sold.

[32]As regards the £38,700 loan, Mr Islam said that he borrowed this money on a very short-term basis to facilitate the completion of a property transaction. Mr Islam thought that the money was needed because a client was mortgaging the property in question for more than the true purchase price. The loan, Mr Islam said, was repaid later on the day it was made by the payment to Dr Soutzos of the £40,700.

[33]Mr Islam’s account is supported by evidence given by Miss Sharif. Miss Sharif said that she had asked Dr Soutzos whether he could help Mr Islam with the purchase of his new home and that Dr Soutzos had subsequently lent Mr Islam money for that purpose. She said that she had also learned at the time that Dr Soutzos had made a second loan to Mr Islam.

[34]Mr Islam’s account is supported, too, by contemporary documents. A letter of April 2004 from solicitors acting for Mr Islam refers to contracts having been exchanged on 66 Sudbury Court Drive, and Mr Islam’s bank statements confirm his receipt of the £40,000. The bank statements show, too, that Mr Islam made a £20,800.06 payment on the same day, and an annotated “purchase completion statement” suggests that the £20,800.06 was used to fund a balance required for the purchase of 66 Sudbury Court Drive.

[35]As regards the £38,700 loan, Mr Islam’s version of events is consistent with the transfer of the money to Montague Lambert and with the fact that £40,700 was returned to Dr Soutzos by way of a Montague Lambert cheque on the same day.

[36]It is puzzling that the Montague Lambert cheque bears the annotation “A1241/203 P.S”. Mr Asombang is referred to in Montague Lambert’s records as “A1241”; the annotation thus appears to relate to the firm’s matter 203 for Mr Asombang. However, Mr Asombang told me, without contradiction, that the £40,700 payment did not feature in the “Matter Account Report” for the relevant account. In any case, the annotation does not lead me to doubt the fact that the £38,700 loan, like the £40,000 loan, was made to Mr Islam. It is possible that the property transaction for which the £38,700 was borrowed was in some way connected to Mr Asombang, but, even if that is the case, it does not follow that Mr Asombang was the borrower or that Dr Soutzos had yet met him.

[37]I find, accordingly, that, contrary to Dr Soutzos’ recollection, his first two loans were made to Mr Islam and not Mr Asombang, the £40,700 payment was in discharge of the second loan and the £47,000 payment related to the first loan. I also accept that, as I was told by Mr Islam and Miss Sharif as well as Mr Asombang, Dr Soutzos met Mr Asombang for the first time in the context of the third loan.

[38]It is instructive to consider the following passage from Dr Soutzos’ main witness statement:

“I was introduced to [Mr Asombang] in early 2004 by a friend, Nikki Sharif, who worked as an estate agent with the firm, Black Katz in Wembley. Nikki Sharif knew that I was interested in investing in property. She told me that Asombang was a property developer, who was often looking for finance on a short term basis, offering a good rate of return. She said that his projects generally matured in a matter of weeks. She said that she felt that he was trustworthy and said that in any event she would supervise the deals and ensure everything was above board. She subsequently supervised the first three deals ….”

In contrast, Miss Sharif said in evidence, and I accept, that she worked for Future Homes rather than Black Cats, that Dr Soutzos was not introduced to Mr Asombang until the autumn of 2004, that she was in no position to vouch for Mr Asombang and did not do so, and that she did not undertake to supervise the deals and that she did not do so. As I have already said, I believe that Dr Soutzos was a truthful witness. His recollection of matters relating to the first two loans was, however, very poor.

The third loan

[39]Dr Soutzos’ third loan was much larger, of £415,000.

[40]Mr Islam explained the background to this loan as follows in a witness statement:

“Mr Asombang approached me some time around September/October 2004 and asked if I knew anyone that would be interested in lending money for a deal that he was brokering. I asked Mr Soutzos and he said he would be interested. Mr Soutzos then met Mr Asombang at Nikki Sharif’s office for a 10-15 minute meeting one evening in September/October 2004.”

Miss Sharif likewise said, and I find, that Dr Soutzos was introduced to Mr Asombang by Mr Islam in her office in the autumn of 2004. Miss Sharif explained that she was herself introduced to Mr Asombang by Mr Islam on the same occasion.

[41]The “deal that [Mr Asombang] was brokering” was the purchase of 122 Uxbridge Road. Miss Fox said, and I have no reason to doubt, that she introduced 122 Uxbridge Road to Mr Asombang and Miss Dawkins. Miss Fox said that 122 Uxbridge Road was thought to be a good financial investment, especially as a large development was in prospect in the area.

[42]Montague Lambert wrote to Dr Soutzos about the proposed loan on 28 October 2004. Their letter began as follows:

“I write to confirm that I act for Fiona Dawkins of Intra House 196 Uxbridge Road London W12 9RA and my client intends to borrow from you the sum of £415,000.00 … to use for her property buying activities.”

[43]It seems clear that Dr Soutzos entered into a written agreement with Miss Dawkins relating to the loan. The only copy I have seen is unsigned, but there will surely have been a signed version. The draft provided for Dr Soutzos to lend £415,000 to Miss Dawkins. The £415,000 was to be repaid on the “Redemption Date”, which was to be six weeks after the date of the advance, with a “Lending Fee” of £32,000 (to be increased by 1% of the outstanding loan per month in the event of delay). Dr Soutzos was to be given by way of security a charge over parts of 122 Uxbridge Road.

[44]Montague Lambert acted for Dr Soutzos as well as Miss Dawkins in relation to the grant of the intended charge. However, Mr Robert Cohen of Montague Lambert told Dr Soutzos in a letter that, while he believed that he could protect Dr Soutzos’ position as a lender, he was “not able to accept responsibility for either the negotiation of terms or the tax consequences of [Dr Soutzos’] lending activity”. Mr Cohen also suggested that Dr Soutzos should seek separate advice on the terms of the loan agreement, but he (Dr Soutzos) did not in fact do so.

[45]On 5 November 2004 Dr Soutzos transferred £415,000 to Montague Lambert. The acquisition of 122 Uxbridge Road was completed five days later, on 10 November, at a price of £1,250,000, and Miss Dawkins was subsequently registered at the Land Registry as the property’s proprietor. A “final cash statement” which Montague Lambert prepared in connection with the purchase showed as receipts the £415,000 advance from Dr Soutzos, a deposit of £10,000 and a “Balance from sale of 5 Flats” (meaning, flats at 122 Uxbridge Road) of £1,146,389.00. The payments listed included not only the purchase moneys and normal incidental expenses but these items:

“Payment to G Asombang As instructed 14,000.00 Payment to Asombang A1241-237 (Ronnie Elmhurst) On a/c of costs as instructed 2000.00”

As instructed 14,000.00 Payment to Asombang A1241-237 as instructed 2000.00”

Payment to Asombang A1241-237

[46]Montague Lambert had an account in Miss Dawkins’ name in respect of the purchase of 122 Uxbridge Road. The first entry on the “Matter Account Report” for this account records the transfer of £10,000 from Mr Asombang’s “general matters” account, and it was evidently this money that was used to pay the £10,000 deposit.

[47]The reference in the “final cash statement” to “A1241-237” relates to another Montague Lambert account. The account in question is again one of Mr Asombang’s, headed “claim by Ronnie Elmhirst”.

[48]The “G Asombang” mentioned in the “final cash statement” is Mr Asombang’s sister Gwen, who is a teacher. Mr Asombang accepted that during this period moneys were paid to Miss Gwen Asombang on his behalf. He treated her, effectively, as a bank.

[49]A deed dated 10 November 2004 provides for Miss Dawkins to hold 122 Uxbridge Road on trust for herself and Miss Fox in equal shares. The parties to the deed are Miss Dawkins and Miss Fox, and their signatures are witnessed by a Mr Martin Friel and Mr Brendan Boylan, both of whom used to work for Mr Asombang. The recitals state the following:

“The Trustee [viz. Miss Dawkins] is the registered proprietor of the freehold property known as 122 Uxbridge Road …. The property is subject to a mortgage dated 10th November 2004 in favour of Lancashire Mortgage Corporation Ltd and the amount outstanding at the date of this deed is £450,000 The Trustee acknowledges that the Beneficiary [viz. Miss Fox] has contributed towards the Purchase Price of £1,250,000 and the Mortgage payments and has paid towards repairs and improvements to the Property and costs of purchase ….”

One of the deed’s clauses states:

“It is agreed that there will be a refurbishment programme to refurbish flats 1, 2 & 3 and the interior of the ground floor commercial premises at a cost of £85,000 which will be paid by The Beneficiary”

[50]I shall return to this document, the validity of which is challenged by Dr Soutzos, later in this judgment.

[51]In December 2004 Montague Lambert opened an account in Miss Dawkins’ name in respect of a lease of a flat at 122 Uxbridge Road. The relevant “Matter Account Report” begins with the receipt of “sale proceeds” of £230,000. In the next month or so sums totalling more than £150,000 were paid out to Miss Gwen Asombang for Mr Asombang’s benefit. The debits on the account also include payments of about £33,000 to “A1 Travel” and a payment of £42,500 to “P Dillon”. Mr Asombang and Miss Dawkins both disavowed any recollection of who “A1 Travel” were, and they also said that they did not know why “P Dillon”, who Mr Asombang said was a friend of both himself and Miss Dawkins, was paid. I think it unlikely that Mr Asombang and Miss Dawkins told me all that they knew about these matters.

[52]In February 2005 Lancashire Mortgage Corporation Limited lent Miss Dawkins £450,000 on the security of 122 Uxbridge Road, enabling Dr Soutzos to be repaid. In a fax dated 26 February 2005 to Montague Lambert, Dr Soutzos said the following:

“I’ve spoken to Joseph and request you to transfer the mortgage funds on 122 Uxbridge Road (Sum of £455,300) to my current account …. We have discussed further joint ventures and I will be arranging transfer back for amounts to be arranged between myself and Joseph.”

On 28 February 2005, Montague Lambert, in accordance with written instructions from Miss Dawkins, transferred £440,300 to Dr Soutzos.

[53]The £440,300 that Dr Soutzos was paid was £15,000 less than was due to him. Dr Soutzos said the following about this in a witness statement:

“When I raised the shortfall with Asombang, he said that the costs of this transaction had been higher than expected, which is why there was a shortfall but in any event I should not worry as he would make it good on the next deal that we did together.”

For his part, Mr Asombang said as follows in a witness statement:

“I was aware that Lancashire had revised [Miss Dawkins’] mortgage offer to £450,000 and this would leave a shortfall to pay [Dr Soutzos] after fees had been paid. [Miss Dawkins] asked me if I would approach [Dr Soutzos] to request that he accept the sum of £440,300 in full and final settlement. [Dr Soutzos] was in agreement and duly signed the DS1 to release his charge. … It was not until the time that [Dr Soutzos] was transferring the last payment for £50,000 [in respect of the next, fourth loan] that he told me that he wanted to reduce this by £15,000 to take into account the reduction in his fee from the Uxbridge Road deal …. I reluctantly agreed in the knowledge that I would be able to make up this fee from the transactions that I intended to make.”

In similar vein, Miss Dawkins said:

“After fees had been taken, this left a shortfall to repay [Dr Soutzos] and as [Mr Asombang] had introduced me to [Dr Soutzos], I asked him if he would liaise with [Dr Soutzos] to reduce the fee payable. It was agreed that I would re-pay £440,300 to [Dr Soutzos] in full and final settlement of the loan. I spoke with Montague Lambert to advise them of the revised amount and faxed them on 28th February to confirm my instructions.”

[54]Dr Soutzos and Mr Asombang thus agree that the £15,000 shortfall was, in the event, rolled over into the fourth loan. The witnesses differ somewhat as to when and in what circumstances this treatment of the shortfall was agreed, but the likelihood is, I think, that(a) Dr Soutzos must have accepted that he would receive no more than the £440,300 in repayment of the third loan at about the time that that sum was transferred to him (and before he signed a form DS1 to confirm the discharge of his security over 122 Uxbridge Road) and

(b) the roll-over was agreed at the same time. In other words, I do not accept Mr Asombang’s evidence that the roll-over was first raised when the last payment in respect of the fourth loan was being made in April 2005.

[55]It was Dr Soutzos’ evidence that Mr Asombang had spoken of the purchase of 122 Uxbridge Road being effected in Miss Dawkins’ name as a “device”. For example, Dr Soutzos said the following in an affidavit he swore at the outset of the proceedings:

“[Mr Asombang] also told me that … the property would be bought in the name of Dawkins but not to worry as this was simply a device and in fact he would be in control and I would only have to deal with him.”

Mr Asombang denied saying anything like this to Dr Soutzos, but I think it probable that he said something along these lines. Dr Soutzos remembered chuckling to himself about this and thinking that this was how property developers did things. The likelihood of Mr Asombang having made such a remark is, as it seems to me, increased by the fact that, as the “Matter Account Reports” illustrate, there was no clear separation between Mr Asombang’s finances and Miss Dawkins’ as regards the 122 Uxbridge Road transactions. It is noteworthy in this context that the last entry in the “Matter Account Report” for the purchase of 122 Uxbridge Road records a transfer of the balance on the account to Mr Asombang’s “general matters” account.

[56]Dr Soutzos spoke in his evidence of Miss Sharif having been “involved in supervising this deal”. Here, however, Dr Soutzos is, I think, mistaken: Miss Sharif herself said that the deal was supervised by Mr Islam not her, and Mr Islam also said that he supervised the deal.

[57]It was Dr Soutzos’ recollection, too, that Mr Asombang had “referred to Dawkins both as his sister and his business partner on a number of occasions”. While, however, Mr Asombang may have referred to Miss Dawkins as his business partner, I doubt whether he spoke of her as his sister. Mr Asombang denied that he had done so, and I cannot see why he would have. I suspect that Dr Soutzos misunderstood or has misremembered a reference to either Miss Gwen Asombang or (which may be more likely) Mrs Mary Sylva, who is Mr Asombang’s twin sister.

The fourth loan

[58]In March and April of 2005 Dr Soutzos advanced sums totalling £485,000 to Mr Asombang. As a result of the roll-over of £15,000 from the third loan (see paragraphs 53 and 54 above), Dr Soutzos was taken to have lent £500,000.

[59]As with the earlier loans, Dr Soutzos stood to make a large profit. It is common ground between the parties that Dr Soutzos was to be entitled to an extra £100,000 (making £600,000 in total) on repayment.

[60]The parties differ as to when repayment was due. Dr Soutzos’ recollection is that the loan was to be repaid at the end of September 2005. In contrast, Mr Asombang maintains that repayment was not due until January 2006. The parties also disagree as to what was to happen if the loan was not repaid on time: Dr Soutzos thinks that it was agreed that interest would be payable at the rate of 1% per month, but Mr Asombang denies this. There is scope for such disputes because no written loan agreement was drawn up, and I do not find it at all easy to resolve them. On balance, I think Mr Asombang is probably correct as to the date for repayment, since Dr Soutzos might be expected to have been unwilling to make a further unsecured loan to Mr Asombang (as he did) had repayment of the fourth loan already been overdue. On the other hand, it is more likely than not, in my judgment, that there was agreement that interest at the rate of 1% per month should be paid. There had been such an arrangement in relation to the third loan, and Dr Soutzos is likely to have wanted something similar with the fourth loan.

[61]Before Dr Soutzos advanced any money, he was taken by Mr Islam to see a solicitor from Simon & Co of Southall. The meeting took place on a Sunday at the solicitor’s offices. It was Dr Soutzos’ evidence that Mr Islam had told him at the meeting that Mr Asombang could be a slow payer, and Mr Islam accepted that he had said this. Dr Soutzos also thought that the solicitor had warned him against making the fourth loan. Mr Islam’s recollection was somewhat different: that the solicitor had advised that the deal was do-able but that there needed to be a watertight contract. In the event, Dr Soutzos proceeded with the loan without any formal contract.

[62]Dr Soutzos remembered being taken to see a number of properties by Mr Asombang. As he recalled events, the properties visited included 10 Shepherds Bush Road, a building in Harrow known as Morley House and some premises in Hammersmith near Charing Cross Hospital. In his evidence, Mr Asombang denied taking Dr Soutzos to see any properties, but in my judgment the “afternoon’s property viewing” of which Dr Soutzos spoke probably took place.

[63]Dr Soutzos’ written evidence appeared to suggest that he had been to 57-61 West Wycombe Road, High Wycombe (“57-61 West Wycombe Road”). In cross-examination, he said that he did not remember going to 57-61 West Wycombe Road, but he thought that Mr Asombang had showed him a brochure relating to this property. My impression, however, was that Dr Soutzos’ evidence on this point involved a degree of reconstruction, and I am not satisfied that Dr Soutzos was shown documentation regarding 57-61 West Wycombe Road. Mr Asombang himself disputed having shown Dr Soutzos materials relating to the property.

[64]The fourth loan was foreshadowed by the fax referred to in paragraph 52 above, in which, as already mentioned, Dr Soutzos said that he and Mr Asombang had “discussed further joint ventures” and that he would “be transferring back for amounts to be arranged” between himself and Mr Asombang.

[65]The loan was negotiated between Dr Soutzos and Mr Asombang. Dr Soutzos said that Mr Asombang did not mention Miss Dawkins (or Miss Fox) in relation to this loan and that, as far as he was concerned, the loan was between him and Mr Asombang. Miss Dawkins said that she did very little work for anyone during 2005 and that she was at home in April 2005; her son Joseph had been born in the preceding December.

[66]The first payment in respect of the fourth loan was made on 18 March 2005, when Dr Soutzos transferred £250,000 to Montague Lambert. A “Matter Account Report” shows that the money was credited to an account in the name of Mr Boylan, who seems to have used it to buy the ground floor flat at 59 Ormiston Grove. This flat had apparently been purchased by Miss Dawkins on 25 November 2003 with funding from GMAC-RFC Limited. On 27 September 2004, a Mr Gershinson and a Mr Davidson were appointed as Law of Property Act receivers in respect of the property, and on 18 March 2005 they sold it to Mr Boylan, seemingly at auction, for £228,000. On the same day, there was a drop of at least £207,000 in the balance standing to the credit of the account to which Dr Soutzos’ £250,000 payment had been credited, and Mr Boylan executed a document charging the Ormiston Grove flat with the payment to Dr Soutzos of £250,000. The likelihood is that this charge reflects the fact that all or most of Dr Soutzos’ £250,000 payment was spent on the acquisition of the Ormiston Grove flat. The flat changed hands again on 24 May 2005, when it was bought from Mr Boylan by Mrs Sylva, Mr Asombang’s twin sister, for £330,000 with, it seems, funding from Kensington Mortgage Company Limited.

[67]The Ormiston Grove charge came to light only in the course of the trial. Neither Dr Soutzos nor Mr Asombang had any recollection of the charge, but I think that both of them are likely to have known of it at the time. It emerged that in May 2005 Dr Soutzos signed a form DS1 to cancel the charge. Mr Prentis suggested to me on instructions (Dr Soutzos having already completed his evidence) that Dr Soutzos might have thought that the form related to 122 Uxbridge Road, but it is far more probable that Dr Soutzos has just forgotten the Ormiston Grove charge. The form DS1 refers on its face to Ormiston Grove, and it is, moreover, hard to see how the form would have been supplied to Dr Soutzos unless he had been understood to know of the charge.

[68]Dr Soutzos’ next payment in respect of the fourth loan was made on 6 April 2005, when £100,000 was transferred to Montague Lambert. This sum was credited to an account in the name of Miss Dawkins in respect of “p/o 10 Shepherds Bush Road, W8”. The “p/o” will be an abbreviation for “purchase of”.

[69]An acquisition of 10 Shepherds Bush Road had been in contemplation since the previous year. A memorandum of sale dated 12 July 2004 records that an offer for the property from “Ms F. Dawkins” of “APS Ltd” had been accepted, and in the following month Montague Lambert sent out pre-contract enquiries for a purchase by Miss Dawkins. Contracts for the purchase of 10 Shepherds Bush Road by Miss Dawkins were exchanged on 7 April 2005, and some of the £100,000 which Dr Soutzos had paid on the previous day was used to fund a £35,000 deposit.

[70]On 8 April 2005 there was emailed to Dr Soutzos, seemingly from Miss Dawkins’ email address (although Mr Asombang said that the email account of a Mr Franchi, who used to work for Mr Asombang, had in fact been used), a letter from Mr Asombang headed:

“Re: 10 Shepherds Bush Road, London W6 8TH 57-61 West Wycombe Road, Hertfordshire HP13”

. The first two paragraphs of the letter read as follows:

“Please find enclosed the schedules of the purchase costs of the above properties, and below I have briefly summarised the security that I can provide and how I intend to repay the borrowings I require for these two properties. As you are aware I cannot give you a charge on West Wycombe Road. The funds I require to complete the transaction are £215,500.00 and the funds required to complete 10 Shepherds Bush Road are £201,450.00 and I will be able to give you a first charge on the first floor of Shepherds Bush Road. The purchase price of the first floor is £90,000.00 but in terms of the value of the individual property components this figure should be ignored as the individual purchase prices are simply figures that have been agreed between the Vendor and myself for VAT purposes. Upon purchase the first floor will be worth approximately £230,000.00 as a residential unit for which it already has planning consent. There is now also the possibility that I will be able to give you a second charge on the shop, basement and freehold of 10 Shepherds Bush Road or sign up an agreement through the solicitor to cover you.”

[71]Dr Soutzos attaches considerable importance to this letter, which, he says, contained misrepresentations. Mr Asombang, on the other hand, says that the letter contained a proposal which was not, in the event, proceeded with. I shall return to the letter later in this judgment.

[72]57-61 West Wycombe Road, to which reference was made in the April letter, had been the subject of a proposed purchase since the previous autumn. On 26 November 2004, agents acting for the vendor of 57-61 West Wycombe Road had written to Montague Lambert enclosing confirmation of the sale of the property to “Assured Property Services”, and the enclosed document identified the purchaser as “Brendan Boylan Esq Assured Property Services”. A few days later, Montague Lambert informed the vendor’s solicitors that they were acting “on behalf of Assured Property Services in their proposed purchase”. However, in a further letter to the vendor’s solicitors of 23 March 2005 Montague Lambert said that their clients were “Fiona Dawkins and David Obaze”, and it was Miss Dawkins and Mr Obaze who were named as the purchasers when contracts were exchanged on 18 April 2005.

[73]By then, Dr Soutzos had made two further payments, of £100,000 on 14 April 2005 and £35,000 on 19 April 2005. In each case, the money was transferred to Montague Lambert and credited to Miss Dawkins’ account for “p/o 10 Shepherds Bush Road”.

[74]A £25,000 deposit was paid when contracts for the purchase of 57-61 West Wycombe Road were exchanged. The £25,000 was debited to a Montague Lambert account in Mr Boylan’s name. The money to pay the deposit had been transferred to that account earlier on the same day from Miss Dawkins’ account for “p/o 10 Shepherds Bush Road”. The deposit was thus indirectly funded from the sums which Dr Soutzos had paid to Montague Lambert and which had been credited to Miss Dawkins’ account.

[75]Miss Dawkins’ acquisition of 10 Shepherds Bush Road was completed on 23 May 2005. A cash statement prepared by Montague Lambert gives a total cost of £782,391.03, funded as to £35,000 by the deposit (see paragraph 69 above) and as to £723,569.03 by mortgage advances from Lancashire Mortgage Corporation Limited, leaving a balance required of £23,822. The majority of this appears to have come from the proceeds of sale of 59 Ormiston Grove. Stamp duty of £10,575 and legal costs of £3,513.25 were paid following the transfer of £14,357.61 on 26 May from Montague Lambert’s account “B1762/4”, which was an account in the name of Mr Boylan relating to 59 Ormiston Grove. As mentioned above, Mr Boylan had sold the flat at 59 Ormiston Grove to Mrs Sylva on 24 May, so the £14,357.61 is likely to have been derived from the proceeds of sale.

[76]A declaration of trust dated 23 May 2005 provides for 10 Shepherds Bush Road, like 122 Uxbridge Road, to be held on trust for Miss Dawkins and Miss Fox in equal shares. The deed recites:

“… The property is subject to a mortgage dated 23 May 2005 in favour of Lancashire Mortgage Corporation Ltd and the amount outstanding at the date of this deed is £540,000 The Trustee acknowledges that the Beneficiary [viz. Miss Fox] has contributed towards the Purchase price of £700,000 and the Mortgage payments and has paid towards repairs and improvements to the Property and costs of purchase ….”

Further, the deed provides:

“It is agreed that there will be a refurbishment programme to include the redecoration of the common parts, repairs to the roof, and refurbishment of the 1st and 2nd floor flats. This will include the supply and fit of new kitchens; new bathrooms; new wooden flooring, new skirting and architrave, painting and decorating throughout and new internal doors, at a cost of £75,000, which will be paid by the Beneficiary”

As with the deed in respect of 122 Uxbridge Road, the signatures of Miss Dawkins and Miss Fox are witnessed by Mr Friel and Mr Boylan.

[77]As regards 57-61 West Wycombe Road, Land Registry entries record that this was acquired in the names of Miss Dawkins and a Mr David Omurogie Junior Obaze at a price of £500,000 plus £87,500 VAT. Completion took place on 31 May 2005. There was a net mortgage advance of £379,686.37 from Lancashire Mortgage Corporation Limited. The costs of the acquisition were otherwise financed for the most part from a sum of £208,900 which had been transferred on 26 May 2005 from Mr Boylan’s account in respect of 59 Ormiston Grove to an account in his name for 57-61 West Wycombe Road, the balance on which latter account was transferred on 31 May 2005 to a newly-opened account for the purchase of 57-61 West Wycombe Road in the names of Miss Dawkins and Mr Obaze. An “Originator’s Slip” prepared within Montague Lambert in respect of this transfer attributes it to “incorrect client ledger”. It is fair to infer that the £208,900 was derived from the proceeds of the 24 May sale of 59 Ormiston Grove.

[78]I know relatively little about Mr Obaze, who did not give evidence. Miss Dawkins said that he was a friend and that, for a period, he rented a room in her then home. She explained, too, that she had sold him a flat and subsequently rented it out for him. Miss Dawkins said that she could not remember either why she and Mr Obaze had become the purchasers of 57-61 West Wycombe Road or whether Mr Obaze had contributed towards the purchase costs of 57-61 West Wycombe Road, though she pointed out that Mr Obaze had undertaken joint responsibility for the mortgage. For his part, Mr Asombang said in cross-examination that Mr Obaze had wanted to get involved to make money, but he accepted that the available evidence did not show Mr Obaze to have put any money into the acquisition. Mr Asombang suggested in closing submissions that Mr Obaze had funded some work at the property, but there was no evidence to this effect. This is one of the areas in which, in my judgment, Mr Asombang and Miss Dawkins failed to tell me all that they knew.

[79]In broad terms, the fourth loan seems to have been disbursed as follows. The £250,000 which Dr Soutzos advanced in March 2005 was used for the purchase of 59 Ormiston Grove (in Mr Boylan’s name) and then, when that property was re-sold in May, similar sums were applied towards the purchase of 57-61 West Wycombe Road (in the names of Miss Dawkins and Mr Obaze) and, to a much smaller extent, costs arising from the acquisition (in Miss Dawkins’ name) of 10 Shepherds Bush Road. The sums (totalling £235,000) which Dr Soutzos lent in April 2005 funded the payment of a £35,000 deposit on 10 Shepherds Bush Road and a £25,000 deposit on 57-61 West Wycombe Road. £33,830 of the balance went on stamp duty on Miss Dawkins’ purchase of a flat at Morley House in Harrow. The remainder of the money was largely applied for the benefit of Mr Asombang. £12,400 was transferred to a Montague Lambert account in his name relating to a property in Tunis Road, London W12, and £10,000 was transferred to another Montague Lambert account in his name. Sums amounting to some £108,000 were paid to Mr Asombang’s sister Gwen for the benefit of Mr Asombang (as Mr Asombang agreed).

[80]Although Mr Asombang had detailed security he could give in his letter of 6 April, no security was in fact provided over 10 Shepherds Bush Road or 57-61 West Wycombe Road. When asked why he had not taken security, Dr Soutzos said that he could not remember.

[81]None of the fourth loan has been repaid.

The fifth loan

[82]The fifth loan was of £120,000.

[83]On 23 November 2005 Mr Asombang sent Dr Soutzos an email in the following terms:

“I am contacting you about this deal I mentioned where I am looking for £120,000 with a return of £45,000 in total would be £165,000. But for that amount of return I will need until 10 January 2006 to pay this entire amount back. Although I could probably pay back a bulk of this money by Christmas. I would need you to send £30,000 today To my sister Natwest account number which I will text within the hour this will allow the transfer to happen instantly so I can access the money on Friday I will then contact you on either Monday or Tuesday next week where to send the £90,000 to another account I am confirming with this email that I am accepting the money from yourself as per the terms above”

[84]Mr Asombang said that the “deal” referred to in the first sentence of this email was the proposed loan. In contrast, Dr Soutzos argued that the “deal” in question was the purchase of 37 Vespan Road, Shepherds Bush, London W12 (“37 Vespan Road”). I shall come back to the email later in this judgment.

[85]Dr Soutzos made payments totalling £120,000 within a week or so of the 23 November email being sent. He transferred £30,000 to Mr Asombang’s sister Gwen on 24 November 2005 and a further £90,000 to Miss Dawkins on 1 December 2005. There is no documentary evidence as to how the £30,000 paid to Mr Asombang’s sister was used, and Mr Asombang said that he did not know what had happened to the money. Much of the £90,000 paid to Miss Dawkins was withdrawn from her bank account in cash in the course of December 2005. Small sums were paid during December 2005 to Mr Boylan, Miss Dawkins’ brother and in respect of rent. £26,721.50 was withdrawn by way of a draft, again in December 2005.

[86]37 Vespan Road was bought in Miss Dawkins’ name at about the same time, but none of the £120,000 advanced by Dr Soutzos was applied towards the purchase. Land Registry entries show that the acquisition was completed at a price of £215,003 on 15 December 2005. A cash statement sent by Montague Lambert on the same day records that the costs were met by a net advance of £174,259.75 from Lancashire Mortgage Corporation Limited, a deposit payment of £10,750, a payment by Miss Dawkins of £33,942.60 and a £212.64 transfer from the proceeds of a property at 68 Davisville Road, London W8 (“68 Davisville Road”). It is apparent from a “Matter Account Report” in Miss Dawkins’ name for the sale of 68 Davisville Road that the £33,942.60 was also derived from the proceeds of sale of that property. The £10,750 deposit was attributable as to £8,000 to a further advance from Lancashire Mortgage Corporation Limited on the security of 57-61 West Wycombe Road (raised, Mr Asombang said, on the strength of works that had been carried out there), while £2,500 was withdrawn from Miss Dawkins’ bank account on 17 November 2005 (i.e. before Dr Soutzos advanced any of the £120,000) and Montague Lambert received the £250 balance in cash on 18 November (again before Dr Soutzos advanced any of the £120,000).

[87]Mr Asombang had said in his 23 November 2005 email that he would need until 10 January 2006 to make full repayment. Dr Soutzos said, and I accept, that he had stressed to Mr Asombang that the loan had to be repaid in the January, because Dr Soutzos would require the money so that he could pay tax that would be due by the end of that month. However, none of the loan was in fact repaid by January 2006. According to Dr Soutzos, Mr Asombang told him that a sale of 37 Vespan Road had fallen through, Mr Islam confirmed that, and Mr Asombang later said that, although a sale of the property had been achieved, Lancashire Mortgage Corporation Limited had refused to release the funds necessary to allow Dr Soutzos to be repaid. Mr Asombang, on the other hand, denied ever talking to Dr Soutzos about the sale of 37 Vespan Road, and Mr Islam said that he had no recollection of having referred to a sale of 37 Vespan Road having fallen through or, indeed, of having had any involvement with that property. At all events, no repayment has ever been made.

[88]Miss Dawkins granted a long lease of the ground floor and basement of 37 Vespan Road on 26 June 2006 at a premium of £320,000. A statement of account prepared by Montague Lambert indicates that, after discharge of the Lancashire Mortgage Corporation Limited mortgage and payment of costs, Miss Dawkins was left with some £59,000 (comprising a deposit of £31,976.50 plus a balance of £27,331.20).

[89]Dr Soutzos never visited 37 Vespan Road.

[90]10 Wadsworth Road comprises industrial premises and offices.

[91]10 Wadsworth Road was purchased in Miss Dawkins’ name for £1,099,999 on 7 July 2006 from administrators. A cash statement prepared by Montague Lambert for the transaction refers to a mortgage advance from Lancashire Mortgage Corporation Limited of £986,327.25, a sum of £109,970 “from Richards Solicitors” (who were acting for Lancashire Mortgage Corporation Limited) “for deposit – 13.06.2006” and a “Bridging amount” of £60,000. On 7 August 2006 it was agreed that Lancashire Mortgage Corporation Limited should lend a further £100,000. The indebtedness to Lancashire Mortgage Corporation Limited was secured over 122 Uxbridge Road, 10 Shepherds Bush Road and 57-61 West Wycombe Road as well as 10 Wadsworth Road.

[92]It is evident from a “Matter Account Report” in respect of the transaction that the “Bridging amount” of £60,000 came from a Montague Lambert account for Miss Butts. The £60,000 is described in a document prepared by the Defendants as a “Personal loan to Fox”, but that is at best an over-simplification. What happened was as follows. The £60,000 transferred to the account for the purchase of 10 Wadsworth Road derived from a payment of a corresponding amount made by a Mr Ricardo Franassovici which was credited to an account in Miss Butts’ name in respect of “Bridging Finance”. Mr Franassovici’s payment represented a loan. Mr Franassovici was repaid from an advance of some £155,000 which Birmingham Midshires made to Miss Butts on 17 July 2006. £70,000 of this money was paid to Mr Franassovici in respect of his £60,000 loan plus interest, and £27,724.76 of the balance was paid to Mr Asombang.

[93]Montague Lambert explained what was proposed in a letter to Miss Butts dated 4 July 2006. They said: “You are the sole and unencumbered owner of Flat (UG04) 104 Cavalier House in Uxbridge Road Ealing. As a result of your previous and long standing dealings with Joseph Asombang you and he have agreed (without and involvement of mine) that you will permit your flat to be used as a money raising vehicle so that you may lend money to Mr Asombang for use by him/his associate Fiona Dawkins (for whom I also act) in a property transaction in which she is involved. There is a degree of urgency in that transaction. Because of that a two stage loan is being considered. Stage 1 is a bridging loan of some £65,000 which if you agree is to be completed virtually straight away. That loan is to be provided by another client of mine (whom I have acted for for many years) and will be made available on the strength of:-a. a clear title on your flat…

b. my undertaking to the lender that I am irrevocably instructed by you in connection with the (Stage 2) mortgage and that I have your irrevocable instructions that out of the proceeds of the mortgage I am authorised by you to deduct the sum necessary to repay the lender of the Stage 1 loan and all costs (including my own) in connection with the Stage 1 loan. Stage 2 is a mortgage loan for £155,000 approximately to be taken in your name and using the flat as security from a mainstream lender (Birmingham Midshires I believe) which will be for a normal 25 year mortgage term and will have regular monthly payments due and will also require repayment of the capital borrowed…. It is out of the proceeds of this Stage 2 loan that the money for repayment of the Stage 1 loan will be available and out of the balance left over will be available to pay costs and expenses and then anything left up to £100,000 will be for Joseph Asombang and the remainder (£55,000) is for you….” (In the event, the bridging loan was £60,000 rather than the £65,000 mentioned in Montague Lambert’s letter.)

[94]On the following day, a written agreement was concluded between Mr Asombang and Miss Butts. This provided for Miss Butts “to invest in the First Party [namely, “Joseph Asombang trading as Assured Property Services”] the sum of £100,000”. The agreement went on to stipulate as follows:

“2. The First Party is to utilise this investment within his property business, Assured Property Services from 5th July 2006 to 21st January 2007, extendible at the agreement and discretion of both parties. 3. The First Party to return to the Second Party [namely, Miss Butts] on expiry of the investment period the initial investment of £100,000.00 and a return of £25,000.00 to give a total of £125,000.00.”

[95]In the event, Miss Butts has never received any repayment. Her loan to Mr Asombang, like Dr Soutzos’ loans, remains outstanding.

[96]A declaration of trust dated 7 July 2006 provides for 10 Wadsworth Road to be held on trust for Miss Fox. The recitals state (among other things):

“… The Property is subject to a mortgage dated 7th July 2006 in favour of Lancashire Mortgage Corporation Ltd and the amount outstanding at the date of this deed is £1,150,000 The Trustee acknowledges that all expenses of the purchase over and above the mortgage advance were paid by the Beneficiary [viz. Miss Fox]. The purchase price of The property was £1,150,000. The Mortgage payments, repairs and improvements to The Property and costs of purchase have all been provided by the Beneficiary ….”

The deed records that it “is agreed that there will be a refurbishment programme the cost of which will be paid by the Beneficiary”. The deed further provides as follows:

“In the event of a sale of The Property, the net sale proceeds thereof shall be determined by deducting from the sale price the amount outstanding under the Mortgage, all legal fess, estate agents’ commission, and valuer’s fee (if any) and a fee in the sum of £50,000 payable to the Trustee [i.e. Miss Dawkins]. The balance of the proceeds are for the sole benefit of the Beneficiary”

Miss Dawkins’ signature is witnessed by Mr Boylan and Miss Fox’s by Mr Asombang.

[97]A computer print-out appears to show that this declaration of trust was first created on 20 June 2006 and last saved on the computer at 3.54 pm on 7 July 2006.

Acquisitions made by Miss Fox

[98]In October 2007, Miss Fox bought two flats at Morley House in Harrow. The registered proprietor of the flats was Miss Dawkins, who had acquired the flats in 2003 with funding from Bank of Scotland plc. However, Miss Fox purchased the flats at auction from receivers appointed by Bank of Scotland plc as mortgagee. Miss Fox bought the flats for sums totalling £742,000 with finance from Derbyshire Building Society. The amount paid by Miss Fox was insufficient to discharge Miss Dawkins’ liability to Bank of Scotland plc, and the latter has brought proceedings against her to recover the shortfall (see below).

[99]On 29 January 2008 Miss Fox acquired both 122 Uxbridge Road and 10 Shepherds Bush Road (in respect of each of which Law of Property Act receivers had been appointed) from Miss Dawkins with funding from Abbey National plc. The price paid in respect of the former was £478,368 and the price paid for the latter was £427,632, giving a total of £906,000. Miss Fox explained, and I accept, that the £906,000 figure was designed to ensure that the indebtedness to the existing mortgagee, Lancashire Mortgage Corporation Limited, was discharged. Montague Lambert explained how the figure was arrived at in an email of 22 January 2008 to solicitors acting for Abbey National plc:

“In accordance with the Trust Deed, the situation is that the half value of the property is as follows: - 10 Shepherds Bush Road - £700,000.00 ÷ 2 = £350,000.00 122 Uxbridge Road - £783,000.00 ÷ 2 = £391,500.00; giving a total price of £741,500.00 However, the amount required to redeem the Lancashire Mortgage Corporation charge is £906,000.00. Therefore there has to be an additional payment. My client agreed to make that payment and to avoid uncertainty on Stamp Duty, my thought is that the purchase prices should be adjusted and become as follows: 10 Shepherds Bush Road - £427,632.00 122 Uxbridge Road £478,368.00; making the total price for both properties £906,000.00.”

[100]In other words, the value of Miss Dawkins’ half share in the properties (which were what, in substance, Miss Fox was to buy) was calculated to be £741,500, but the purchase price was set at £906,000 so as to redeem the existing mortgage.

Events leading to Mr Asombang’s bankruptcy

[101]On 13 December 2007 HM Revenue and Customs presented a bankruptcy petition against Mr Asombang. The petition alleged that Mr Asombang owed a total of £382,946.64. Part of this was attributed to a judgment for £69,914.37 which had been obtained against Mr Asombang on 1 December 2004 and which remained largely unpaid. The indebtedness was otherwise said to arise from tax and national insurance contributions going back, in part, to the year 2002/2003, with interest, penalties and surcharges. A statutory demand was stated to have been served on Mr Asombang in October 2007.

[102]A further bankruptcy petition was presented on 15 January 2008. In this case, the petitioners were Mr and Mrs Penna and a Mr Bernard Kelly. Mr Asombang was said to owe Mr Kelly £148,346.95, principally pursuant to an agreement made on 30 September 2003 by which Mr Asombang had undertaken to repay £119,200.22 within nine months. A rather larger sum, £337,756.93, was alleged to be owed to Mr and Mrs Penna. The petition explained as follows:

“The debt due to Mr and Mrs Penna arose in the course of a series of written transactions between them and [Mr Asombang] between 2001 and 2004 in which Mr and Mrs Penna advanced moneys to the debtor to finance the debtor’s business as a property developer, against the debtor’s promises to repay the same together with agreed fees and interest upon the several dates and the terms set out therein.”

[103]At about the end of February 2008, Dr Soutzos, by his solicitors, himself served a statutory demand on Mr Asombang. A similar statutory demand was served on 29 February 2008 on Miss Dawkins, but she applied to have the demand set aside.

[104]On 30 April 2008 Mr Asombang was adjudged bankrupt on the petition which had been presented by Mr and Mrs Penna and Mr Kelly.

[105]The present proceedings followed more or less immediately.

Judgments against Miss Dawkins and Miss Fox

[106]On 8 December 2008 Derbyshire Building Society obtained judgment against Miss Fox for £945,521.09 in respect of the money she had borrowed to buy the Morley House flats in October 2007 (see paragraph 98 above).

[107]On 7 January 2009, Miss Dawkins was ordered to pay Bank of Scotland plc £526,419.15 in respect of loans secured on the Morley House flats which had been sold to Miss Fox but where the proceeds of sale had been insufficient to discharge Miss Dawkins’ indebtedness (see paragraph 98 above). Bank of Scotland plc served a statutory demand based on this judgment on Miss Dawkins in September 2009, but it has not presented a bankruptcy petition against her.

[108]Lancashire Mortgage Corporation Limited has also pursued Miss Dawkins. In a letter dated 8 May 2009, it called on Miss Dawkins to pay £1,858,000 plus interest and costs.

Sales of 122 Uxbridge Road and 10 Shepherds Bush Road

[109]122 Uxbridge Road and 10 Shepherds Bush Road have both been repossessed and sold by receivers. Land Registry entries show that the sales were completed in May 2009 for £461,000 and £210,000 respectively.

[110]Receivers have also, I gather, been appointed in respect of 57-61 West Wycombe Road and 10 Wadsworth Road.

Statements of account

[111]In the course of these proceedings, the Defendants prepared documents listing payments made as between Mr Asombang and Miss Dawkins and as between Mr Asombang and Mr Boylan. The documents imply that, overall, Mr Asombang owes a nominal amount to Miss Dawkins but is owed a nominal amount by Mr Boylan. However, Mr Prentis demonstrated in cross-examination that the documents take no account of various payments and provide no real guidance as to where the balance of account may lie as between Mr Asombang and either Miss Dawkins or Mr Boylan.

The burden and standard of proof

[112]The burden of proof rests, of course, on Dr Soutzos, and the standard of proof is the ordinary civil standard. It is, accordingly, incumbent on Dr Soutzos to establish his case on the balance of probabilities. If and to the extent that what he alleges is inherently improbable, that is a factor to be taken into account when considering whether the event in question is more likely than not to have occurred. Lord Hoffmann explained the civil standard of proof as follows in In re B (Children)

[2008] UKHL 35

(in paragraph 15):

“There is only one rule of law, namely that the occurrence of the fact in issue must be proved to have been more probable than not. Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities. If a child alleges sexual abuse by a parent, it is common sense to start with the assumption that most parents do not abuse their children. But this assumption may be swiftly dispelled by other compelling evidence of the relationship between parent and child or parent and other children. It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred. In many cases, the other evidence will show that it was all too likely. If, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start one's reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so. The fact is that one of them did and the question for the tribunal is simply whether it is more probable that one rather than the other was the perpetrator.”

In the same case, Baroness Hale of Richmond said (in paragraph 72):

“… 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.”

Fraudulent misrepresentation Law

Fraudulent misrepresentation

[113]The tort of fraudulent misrepresentation (or deceit) is committed where a person makes a false representation, knowing it to be untrue or being reckless as to whether it is true, and intending that the representee should act in reliance on it, and the representee does so rely and suffers loss as a result.

[114]Rix LJ explained as follows in AIC Ltd v ITS Testing Services (UK) Ltd

[2006] EWCA Civ 1601

(at paragraphs 253-254): “It is sometimes said that the necessary representation must be unequivocal. That is too broad a statement to be accurate. Because dishonesty is the essence of deceit it is possible to be fraudulent even by means of an ambiguous statement, but in such a case it is essential that the representor should have intended the statement to be understood in the sense in which it was understood by the claimant (and of course a sense in which it is untrue) or should have deliberately used the ambiguity for the purpose of deceiving him and succeeded in doing so …. As Cotton LJ said in Arkwright v Newbold

(1881) 17 Ch D 301

at 324: ‘In my opinion it would not be right in an action of deceit to give a plaintiff relief on the ground that a particular statement, according to the construction put on it by the Court, is false, when the plaintiff does not venture to swear that he understood the statement in the sense which the Court puts on it.’ It remains true, however, that in any case of fraud the dishonest representation must be clearly identified.” ‘In my opinion it would not be right in an action of deceit to give a plaintiff relief on the ground that a particular statement, according to the construction put on it by the Court, is false, when the plaintiff does not venture to swear that he understood the statement in the sense which the Court puts on it.’

The parties’ cases in brief

[115]As articulated by Mr Prentis during the trial, Dr Soutzos’ case is that Mr Asombang represented to him: i) That the fourth loan (of £500,000) would be used for the purchase of 10 Shepherds Bush Road and 57-61 West Wycombe Road, and that those properties would be under Mr Asombang’s control; and ii) That the fifth loan (of £120,000) would be used for the purchase of 37 Vespan Road, and that that property would be under Mr Asombang’s control. Dr Soutzos asserts that, when the alleged representations were made, Mr Asombang had no intention of so using the loans.

[116]In contrast, Mr Asombang maintains that the fourth and fifth loans were not made for any specific property purchases and that, on receipt of the money, he was free to use it in any way he chose. He says, moreover, that Dr Soutzos was not interested in the purpose of a loan, only the amount and return. More specifically, it is Mr Asombang’s case that the letter emailed to Dr Soutzos on 8 April 2005 (see paragraph 70 above) contained a proposal which Dr Soutzos did not pursue.

The fourth loan

[117]Dr Soutzos stated as follows in his written evidence:

“The next deal was proposed to me by Asombang sometime in late February 2005, very shortly before I received the payment of £440,300 from Montague Lambert…. He told me that he had the opportunity to acquire two new properties: one in Shepherds Bush and one in West Wycombe. He said his initial estimate was that he needed £435,000 to buy these properties…. Sometime later [Mr Asombang] called me to say that, having looked at the figures again, he would actually needed £500,000…. After further discussion, I agreed that I would advance £485,000 in cash and roll up the £15,000 owed from the Third Agreement to make up a total advance of £500,000…. Between 18 March 2005 and 14 April 2005, I transferred various sums which added up to £485,000 to the client account of Montague Lambert. I assumed that these monies were going to Asombang or Dawkins but was not particularly concerned as to which one of them precisely the money was going to as I had the reassurances of Asombang that he was ultimately the one who controlled everything….”

[118]During his oral evidence, Dr Soutzos said that Mr Asombang had told him in February/March 2005, around the time of the “afternoon’s property viewing” mentioned in paragraph 62 above, that the fourth loan was for specific property purchases (viz. 10 Shepherds Bush Road and 57-61 West Wycombe Road), and that Mr Asombang had confirmed that in writing in the letter sent on 8 April 2005. Dr Soutzos said that he had sent the first £250,000 to Montague Lambert on 18 March 2005 so that Mr Asombang could start dealing with the properties.

[119]Mr Asombang stated as follows in his written evidence:

“We [i.e. Dr Soutzos and Mr Asombang] had various discussions about the possibility of him entering into a joint venture with me which would involve him purchasing a property on which I would then carry out the building works at my expense, and we would split the profits on the sale of the property. He said he was not interested in investing in any particular property and the important thing for him was that he received his money plus a fee in the correct time frame. I have never shown him any properties during the entire time that I have known him. … I sent an email to the Claimant on 6th April 2005 which did not go through and he eventually received it on the 8th April 2005. This was not a confirmation of the agreed terms, as he alleges, but was a proposal that was not progressed.”

Elsewhere in his written evidence, Mr Asombang said:

“Both loans [i.e. the fourth and fifth loans] were made solely to me by the Claimant to use at my discretion. The loans were not made as is alleged to buy [10 Shepherds Bush Road, 57-61 West Wycombe Road or 37 Vespan Road] or any specific properties.”

[120]In cross-examination, Mr Asombang said that he had had discussions with Dr Soutzos about property, including 10 Shepherds Bush Road and 57-61 West Wycombe Road. He said, however, that Dr Soutzos had not been led to believe that his money would go into 10 Shepherds Bush Road or 57-61 West Wycombe Road and that there had been no discussion of the £435,000 figure mentioned by Dr Soutzos. He also said that, when the fourth loan was made, there were a few potential property transactions in prospect, including one relating to a property in Loftus Road, London W12. He denied intending to mislead Dr Soutzos or in fact doing so.

[121]The task of resolving the factual issues is made much more difficult by the paucity of documentary material, Dr Soutzos’ poor recollection of events and the unreliability of the Defendants’ evidence.

[122]I can summarise my own conclusions as follows: i) Mr Asombang probably mentioned 10 Shepherds Bush Road to Dr Soutzos before he advanced any of the fourth loan. The “afternoon’s property viewing” which I have found took place (see paragraph 62 above) is likely to have included 10 Shepherds Bush Road and to have happened when Mr Asombang was seeking to persuade Dr Soutzos to make a loan and before he had yet done so; ii) However, I am not satisfied that Mr Asombang had said anything to Dr Soutzos about 57-61 West Wycombe Road by the time the latter advanced £250,000 on 18 March 2005. As explained in paragraph 63 above, this property was not included in the “afternoon’s property viewing”, and I have not been persuaded that Mr Asombang showed Dr Soutzos documentation relating to it, or even spoke to Dr Soutzos about it, before the £250,000 payment was made; iii) Nor am I satisfied that Mr Asombang said or did anything to lead Dr Soutzos to believe that the £250,000 would be used in the purchase of 10 Shepherds Bush Road before he paid it. The £250,000 was in fact used to buy 59 Ormiston Grove, and in my judgment Dr Soutzos knew of this acquisition (paragraph 67 above). If that is right, Dr Soutzos cannot have been told that the £250,000 was instead being used to purchase 10 Shepherds Bush Road. That Dr Soutzos cannot remember anything about 59 Ormiston Grove does not undermine this conclusion, but rather testifies to Dr Soutzos’ poor recollection of the relevant events; iv) The likelihood is that, by the time the balance of the fourth loan was advanced in April 2005, Mr Asombang had spoken to Dr Soutzos of the loan being used in the purchase of 10 Shepherds Bush Road and 57-61 West Wycombe Road. Mr Asombang clearly referred to both properties in the letter emailed on 8 April (paragraph 70 above), and the chances are that the email followed on from one or more conversations in which there had been reference to buying the properties. Mr Asombang himself accepted in evidence that he had spoken to Dr Soutzos about the two properties; v) However, I am not satisfied that Mr Asombang said, or otherwise represented, that the fourth loan would be used exclusively for the purchase of 10 Shepherds Bush Road and 57-61 West Wycombe Road. I have already said that Dr Soutzos probably understood at the time that some of the fourth loan was going to be used, and in fact was used, in the purchase of 59 Ormiston Grove. Further, the sums said to be required to complete on 10 Shepherds Bush Road and 57-61 West Wycombe Road were not said to be as high as £485,000 (the amount of the fourth loan less the £15,000 roll-over) even in the letter emailed on 8 April 2005. (The letter gave the funds needed as £215,500 and £201,450, a total of £416,950.) It is, moreover, common ground between the parties that the fourth loan was not due for repayment until at least September 2005. (Mr Asombang says, and I have found, that the loan did not fall to be repaid until January 2006 – see paragraph 60 above.) I can see no reason to suppose that Mr Asombang represented to Dr Soutzos that if money from the fourth loan were applied in the purchase of (say) 10 Shepherds Bush Road but quickly released (because the property was re-sold or re-mortgaged), he would do nothing further with it until the time came for repayment; vi) In the circumstances, it seems to me that Dr Soutzos has established that Mr Asombang represented that he intended at least some of the fourth loan to be applied, in the first instance at any rate, in the purchase of 10 Shepherds Bush Road and 57-61 West Wycombe Road. However, he has not shown that such a representation was untrue. There is no good reason to think that, when he made the representations, Mr Asombang did not intend at least some of the fourth loan to be used in the purchase of 10 Shepherds Bush Road and 57-61 West Wycombe Road, and it in fact was (see paragraph 79 above); vii) I am not satisfied that Mr Asombang said anything to Dr Soutzos, or otherwise made any representation to him, about how 10 Shepherds Bush Road and 57-61 West Wycombe Road would be controlled, if they were bought. In any case, Dr Soutzos has not demonstrated that Mr Asombang lacked control over 10 Shepherds Bush Road and 57-61 West Wycombe Road once they had been bought. Aside from any question as to whether Mr Asombang had a beneficial interest in the properties, it is by no means obvious, having regard to the relationship between Mr Asombang and Miss Dawkins and the intermingling of their financial affairs, that Mr Asombang was not in a position to exercise control over the properties (or at least Miss Dawkins’ interests in them). In fact, it was Dr Soutzos’ own case that Miss Dawkins would do what Mr Asombang told her in relation to financial matters; viii) It follows from the above that the misrepresentations alleged in relation to the fourth loan have not, in my judgment, been proved; ix) Further, I am not satisfied that Dr Soutzos relied on whatever representations Mr Asombang may have made as to how the fourth loan would be used. Dr Soutzos himself gave little or no evidence on this aspect, and I am inclined to agree with Mr Asombang that Dr Soutzos did not attach importance to how his money was to be used. Dr Soutzos said in evidence that he felt that he could trust Mr Asombang, who, he said, was charming and persuasive. The likelihood is, I think, that Dr Soutzos made the fourth loan not because of anything he was told about how it would be used, but because he had confidence in Mr Asombang. That confidence is confirmed by the fact that Dr Soutzos made the fourth loan without any formal contract having been drawn up and without taking any security even though(a) he had been advised not to make the loan or at least that there should be a watertight contract (paragraph 61 above) and

(b) Mr Asombang had detailed security that could be provided in the letter emailed on 8 April 2005.

[123]In short, Dr Soutzos has not discharged the burden of proving that he was misled into making the fourth loan by the representations he alleges.

The fifth loan

[124]Dr Soutzos stated as follows in his written evidence:

“Sometime in November 2005, Asombang called me and told me he had another deal that I might be interested in on a property in Vespan Road, W12. He reiterated that he would shortly be repaying the £600,000 (+ interest) due to me but that this new deal was a ‘banker’ and would give me a quick and healthy return on my advance. He told me that as he was simply buying the property and then selling it on at a profit immediately, he would be able to pay me back by 10 January 2006 at the very latest….”

[125]During his oral evidence, Dr Soutzos said that Mr Asombang often talked about 37 Vespan Road.

[126]Mr Asombang stated as follows in his written evidence:

“There is no mention of Vespan Road or any particular property in the email [of 23 November 2005] and I deny that this loan was meant for that purpose. I did not provide the Claimant with detailed information about what I intended to do with the money and he did not ask. I certainly did not mention that it was a ‘banker’ as he alleges. His only interest was in the return that he would obtain from this short-term loan.”

[127]In cross-examination, Mr Asombang said that he thought that, at the time the fifth loan was made, he was trying to acquire a property at auction and arrange a sub-sale.

[128]My conclusions as regards the fifth loan are as follows: i) I accept that Mr Asombang spoke to Dr Soutzos about 37 Vespan Road. The likelihood is, moreover, that Mr Asombang told Dr Soutzos that he expected to be able to repay Dr Soutzos from the proceeds of the property; ii) On the other hand, I am not satisfied that Mr Asombang indicated that the fifth loan would be used to fund the acquisition of 37 Vespan Road; I am inclined to think that, as Mr Asombang said, he did not provide Dr Soutzos with detailed information about what he intended to do with the loan and that Dr Soutzos did not ask. There is no inconsistency with the reference to “this deal” in Mr Asombang’s email to Dr Soutzos of 23 November 2005 (see paragraph 83 above) since those words are as apt to refer to the proposed loan as to the purchase of 37 Vespan Road. Further, that Dr Soutzos’ recollection may be that he was led to believe that the money would be applied towards the purchase of 37 Vespan Road is of little significance given his generally poor recollection of events; iii) I am not satisfied that Mr Asombang said anything to Dr Soutzos, or otherwise made any representation to him, about how 37 Vespan Road would be controlled, if it were bought, and, moreover, Dr Soutzos has not demonstrated that Mr Asombang lacked control over 37 Vespan Road after its acquisition (compare paragraph 122(vii) above); iv) Nor am I satisfied that Dr Soutzos relied on whatever representations Mr Asombang may have made as to how the fifth loan would be used. Dr Soutzos himself gave little or no evidence on this aspect, and the likelihood is, I think, that Dr Soutzos made the fifth loan (like the fourth loan) not because of anything he had been told about how it would be used, but because he had confidence in Mr Asombang. Mr Asombang was probably right when he said that Dr Soutzos “was never interested in the purpose of the loan, only the amount and date of return”.

[129]As with the fourth loan, I find that Dr Soutzos has not discharged the burden of proving that he was misled into making the fifth loan by the representations he alleges.

Conclusion

[130]Despite Mr Prentis’ skilful and effective cross-examination of the Defendants, Dr Soutzos’ deceit claims have not been made out. Unlawful means conspiracy Law

Unlawful means conspiracy

[131]“A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so” (Kuwait Oil Tanker Co SAK v Al Bader [2002] 2 All ER (Comm) 271, at paragraph 108).

[132]Such a conspiracy commonly has to be inferred from conduct. The Court of Appeal explained as follows in the Kuwait Oil Tanker case (in paragraph 111):

“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.A further feature of the tort of conspiracy, which is also found in criminal conspiracies, is that, as the judge pointed out (at p 124), it is not necessary to show that there is anything in the nature of an express agreement, whether formal or informal. It is sufficient if two or more persons combine with a common intention, or, in other words, that they deliberately combine, albeit tacitly, to achieve a common end. Although civil and criminal conspiracies have important differences, we agree with the judge that the following passage from the judgment of the Court of Appeal Criminal Division delivered by O'Connor LJ in R v Siracusa (1990) 90 Cr App R 340 at 349 is of assistance in this context: 'Secondly, the origins of all conspiracies are concealed and it is usually quite impossible to establish when or where the initial agreement was made, or when or where other conspirators were recruited. The very existence of the agreement can only be inferred from overt acts. Participation in a conspiracy is infinitely variable: it can be active or passive. If the majority shareholder and director of a company consents to the company being used for drug smuggling carried out in the company's name by a fellow director and minority shareholder, he is guilty of conspiracy. Consent, that is agreement or adherence to the agreement, can be inferred if it is proved that he knew what was going on and the intention to participate in the furtherance of the criminal purpose is also established by his failure to stop the unlawful activity.' Thus it is not necessary for the conspirators all to join the conspiracy at the same time, but we agree with the judge that the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of. In a criminal case juries are often asked to decide whether the alleged conspirators were 'in it together'. That may be a helpful question to ask, but we agree with Mr Brodie that it should not be used as a method of avoiding detailed consideration of the acts which are said to have been done in pursuance of the conspiracy.”

'Secondly, the origins of all conspiracies are concealed and it is usually quite impossible to establish when or where the initial agreement was made, or when or where other conspirators were recruited. The very existence of the agreement can only be inferred from overt acts. Participation in a conspiracy is infinitely variable: it can be active or passive. If the majority shareholder and director of a company consents to the company being used for drug smuggling carried out in the company's name by a fellow director and minority shareholder, he is guilty of conspiracy. Consent, that is agreement or adherence to the agreement, can be inferred if it is proved that he knew what was going on and the intention to participate in the furtherance of the criminal purpose is also established by his failure to stop the unlawful activity.'

[133]Facilitation of another’s tort will not without more render a person liable for conspiracy. Hobhouse LJ said as follows in Credit Lyonnais Bank Nederland N.V. v Export Credit Guarantee Department

[1998] 1 Lloyd’s Rep 19

(on page 46):

“Mere assistance, even knowing assistance, does not suffice to make the ‘secondary’ party jointly liable as a joint tortfeasor with the primary party. What he does must go further. He must have conspired with the primary party or procured or induced his commission of the tort …; or he must have joined in the common design pursuant to which the tort was committed ….”

The present case

[134]Dr Soutzos alleges that there was a conspiracy between the Defendants to obtain money from him deceitfully.

[135]As explained above, I have concluded that Dr Soutzos has not made out his allegations of deceit against Mr Asombang. However, I would have rejected Dr Soutzos’ conspiracy claim even if I had been satisfied that he had been induced to make the fourth and fifth loans by fraudulent misrepresentation.

[136]In her evidence, Miss Fox said that she knew nothing of Dr Soutzos until 2007. She also said that she had no knowledge of Mr Asombang telling Dr Soutzos that his money would be used to buy 10 Shepherds Bush Road or 57-61 West Wycombe Road. It is to be noted, too, that there was no provision for Miss Fox to have any interest in either 57-61 West Wycombe Road or 37 Vespan Road. As regards 10 Shepherds Bush Road, which she and Miss Dawkins were to own in equal shares, only a relatively small part of the purchase costs were borne from money lent by Dr Soutzos.

[137]Turning to Miss Dawkins, she said that Mr Asombang had mentioned to her that he had agreed to borrow £250,000 from Dr Soutzos, but she was not sure that she knew that the balance of the fourth loan had been lent by Dr Soutzos, and she denied that there was any scheme to extract money from Dr Soutzos by deception. She said, moreover, that the £250,000 loan had not been the subject of discussion between her and Mr Asombang; she was not, she said, that interested.

[138]As regards the fifth loan, Miss Dawkins said that she did not know whether she had become aware that Mr Asombang was seeking another loan from Dr Soutzos and that she was not familiar with the discussions between the two. More specifically, she said that she had no knowledge of Mr Asombang telling Dr Soutzos that the fifth loan would be repaid from 37 Vespan Road.

[139]There is, accordingly, no direct evidence that either Miss Dawkins or Miss Fox intended that Mr Asombang should make (or knew that he was to make or had made) any misrepresentation to induce Dr Soutzos to lend money. The weight to be attached to Miss Dawkins’ and Miss Fox’s denials is very much reduced by the general unreliability of their evidence. I bear in mind, too, that the existence of a conspiracy can, typically, “only be inferred from overt acts” (to quote from O’Connor LJ). In the present case, however, there are, in my judgment, no “overt acts” from which a conspiracy can properly be inferred. There is no real evidence to gainsay Miss Fox’s assertion that she did not even know of Dr Soutzos when the fourth and fifth loans were being made. So far as Miss Dawkins is concerned, she accepts that she was aware of the £250,000 loan from Dr Soutzos. Even, however, if she also knew of the balance of the fourth loan and of the fifth loan, there would be no compelling basis for concluding that she had known or intended that Dr Soutzos would be (or had been) deceived into making the loans, the more so since in early 2005 Miss Dawkins was to an extent occupied with her baby son (see paragraph 65 above).

[140]A further point is that it has not been proved that any of the Defendants intended to injure Dr Soutzos. The fourth and fifth loans have not, in the event, been repaid. It does not follow, however, that Mr Asombang had no intention of repaying Dr Soutzos when he borrowed the money. To the contrary, the likelihood is that Mr Asombang was aiming to repay Dr Soutzos. That Mr Asombang was not intending to injure Dr Soutzos is, moreover, suggested by the fact that the latter was given a charge over 59 Ormiston Grove (paragraph 66 above) and by Mr Asombang’s apparent willingness for him also to be given security over 10 Shepherds Bush Road (paragraph 70 above).

[141]In the circumstances, the claim for conspiracy fails.

Dishonest assistance and knowing receipt

[142]To succeed in his claims for dishonest assistance and knowing receipt, Dr Soutzos must establish, among other things, that the moneys which he lent to Mr Asombang in 2005 were the subject of a “Quistclose” trust and that they were applied otherwise than in accordance with that trust. “Quistclose” trusts take their name from the decision of the House of Lords in Quistclose Investments Ltd v Rolls Razor Ltd

[1970] AC 567

[143]“Quistclose” trusts were again the subject of consideration by the House of Lords in Twinsectra Ltd v Yardley

[2002] 2 AC 164

. In that case, Lord Millett explained as follows:

“68 Money advanced by way of loan normally becomes the property of the borrower. He is free to apply the money as he chooses, and save to the extent to which he may have taken security for repayment the lender takes the risk of the borrower's insolvency. But it is well established that a loan to a borrower for a specific purpose where the borrower is not free to apply the money for any other purpose gives rise to fiduciary obligations on the part of the borrower which a court of equity will enforce. In the earlier cases the purpose was to enable the borrower to pay his creditors or some of them, but the principle is not limited to such cases. 69 Such arrangements are commonly described as creating "a Quistclose trust", after the well known decision of the House in Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567 in which Lord Wilberforce confirmed the validity of such arrangements and explained their legal consequences. When the money is advanced, the lender acquires a right, enforceable in equity, to see that it is applied for the stated purpose, or more accurately to prevent its application for any other purpose. This prevents the borrower from obtaining any beneficial interest in the money, at least while the designated purpose is still capable of being carried out. Once the purpose has been carried out, the lender has his normal remedy in debt. If for any reason the purpose cannot be carried out, the question arises whether the money falls within the general fund of the borrower's assets, in which case it passes to his trustee in bankruptcy in the event of his insolvency and the lender is merely a loan creditor; or whether it is held on a resulting trust for the lender. This depends on the intention of the parties collected from the terms of the arrangement and the circumstances of the case.”

Lord Millett went on to say the following about the circumstances in which a “Quistclose” trust will arise:

“73 A Quistclose trust does not necessarily arise merely because money is paid for a particular purpose. A lender will often inquire into the purpose for which a loan is sought in order to decide whether he would be justified in making it. He may be said to lend the money for the purpose in question, but this is not enough to create a trust; once lent the money is at the free disposal of the borrower. Similarly payments in advance for goods or services are paid for a particular purpose, but such payments do not ordinarily create a trust. The money is intended to be at the free disposal of the supplier and may be used as part of his cashflow. Commercial life would be impossible if this were not the case. 74 The question in every case is whether the parties intended the money to be at the free disposal of the recipient: In re Goldcorp Exchange Ltd [1995] 1 AC 74, 100 per Lord Mustill. His freedom to dispose of the money is necessarily excluded by an arrangement that the money shall be used exclusively for the stated purpose, for as Lord Wilberforce observed in the Quistclose case [1970] AC 567, 580: "A necessary consequence from this, by a process simply of interpretation, must be that if, for any reason, [the purpose could not be carried out,] the money was to be returned to [the lender]: the word 'only' or 'exclusively' can have no other meaning or effect."” "A necessary consequence from this, by a process simply of interpretation, must be that if, for any reason, [the purpose could not be carried out,] the money was to be returned to [the lender]: the word 'only' or 'exclusively' can have no other meaning or effect."”

[144]In the present case, Dr Soutzos has not persuaded me that he and Mr Asombang did not intend the fourth and fifth loans to be at the free disposal of Mr Asombang. As I have said above, I am not satisfied that Mr Asombang indicated that the fifth loan would be used to fund the acquisition of 37 Vespan Road, nor that he said, or otherwise represented, that the fourth loan would be used exclusively for the purpose of acquiring 10 Shepherds Bush Road and 57-61 West Wycombe Road. Still less has it been established that there was an agreement between the parties that the loans should be used only for the purpose of acquiring 10 Shepherds Bush Road, 57-61 West Wycombe Road and 37 Vespan Road. It follows that Dr Soutzos has failed to prove that there was a “Quistclose” trust.

[145]Even had he done so, there would have been no basis for him to allege dishonest assistance or knowing receipt insofar as his money had in fact been applied in accordance with the purpose for which (on this hypothesis) it was to be exclusively used. The fourth loan would have been so applied to the extent that it was used in the purchase of 10 Shepherds Bush Road or 57-61 West Wycombe Road (as to which, see paragraph 79 above). Dr Soutzos would still have been merely an unsecured creditor of Mr Asombang as regards money used in this way.

[146]Miss Fox does not appear to have received any of the remainder of the fourth and fifth loans or to have assisted Mr Asombang in any misapplication of such moneys. She could not, therefore, have been liable for dishonest assistance or knowing receipt even if a “Quistclose” trust had been shown.

[147]Further, Dr Soutzos has not established that Miss Dawkins knew or intended that Dr Soutzos would be, or had been, deceived into making the fourth and fifth loans or that Miss Fox knew of Dr Soutzos before 2007 (see paragraph 139 above). In the circumstances, even if I had been satisfied that there had been a “Quistclose” trust and that Mr Asombang had applied the fourth and fifth loans otherwise than in accordance with that trust, I would have taken the view that Dr Soutzos had failed to prove the dishonesty inherent in a claim for dishonest assistance or the unconscionability required for knowing receipt.

[148]The claims for dishonest assistance and knowing receipt accordingly fail.

Were the declarations of trust shams?

[149]It is Dr Soutzos’ case that the declarations of trust in respect of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road were all shams. The last of these provided for Miss Dawkins to hold 10 Wadsworth Road on trust for Miss Fox (subject to, among other things, payment of a £50,000 fee to Miss Dawkins): paragraph 96 above. The other declarations of trust provided for Miss Dawkins to hold the relevant properties on trust for herself and Miss Fox in equal shares: paragraphs 49 and 76 above.

[150]Diplock LJ considered the meaning of the word “sham” in Snook v London and West Riding Investments Ltd

[1967] 2 QB 786

, where he said (at 802):

“As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a "sham," it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v. Maclure and Stoneleigh Finance Ltd. v. Phillips), that for acts or documents to be a "sham," with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a "shammer" affect the rights of a party whom he deceived. There is an express finding in this case that the defendants were not parties to the alleged "sham." So this contention fails.”

[151]Arden LJ summarised the relevant legal principles as follows in Hitch v Stone

[2001] STC 229

“[64] An inquiry as to whether an act or document is a sham requires careful analysis of the facts and the following points emerge from the authorities. [65] First, in the case of a document, the court is not restricted to examining the four corners of the document. It may examine external evidence. This will include the parties' explanations and circumstantial evidence, such as evidence of the subsequent conduct of the parties. [66] Second, as the passage from Snook makes clear, the test of intention is subjective. The parties must have intended to create different rights and obligations from those appearing from (say) the relevant document, and in addition they must have intended to give a false impression of those rights and obligations to third parties. [67] Third, 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. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship. [68] Fourth, the fact that parties subsequently depart from an agreement does not necessarily mean that they never intended the agreement to be effective and binding. The proper conclusion to draw may be that they agreed to vary their agreement and that they have become bound by the agreement as varied (see for example Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1966] 1 QB 650 at 683–684 per Diplock LJ, which was cited by Mr Price). [69] Fifth, the intention must be a common intention (see Snook) ….” [69] Fifth, the intention must be a common intention (see Snook) ….”

[152]The matters on which Mr Prentis relied in support of the submission that the declarations of trust in respect of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road were shams included the following: i) The declarations of trust contain inaccuracies. For example, the declarations of trust in respect of 122 Uxbridge Road and 10 Shepherds Bush Road referred to Miss Fox having contributed towards the purchase prices and mortgage payments, but she had not in fact done so. The 122 Uxbridge Road declaration of trust stated that it had been agreed that Miss Fox would fund a refurbishment programme, but by Miss Fox’s own account there was no such agreement. Similarly, although the declaration of trust in respect of 10 Shepherds Bush Road spoke of Miss Fox bearing the cost of a refurbishment programme, Miss Fox maintained that the plan was for her and Miss Dawkins to split the costs. Again, Miss Fox herself said that the declaration of trust dealing with 10 Wadsworth Road was less than perfect; ii) Each of the declarations of trust provided for Miss Dawkins to apply to the Land Registry for a restriction to be entered, but no such application was made; iii) Montague Lambert were not told of the declarations of trust when the properties to which they related were purchased; iv) The declaration of trust for 122 Uxbridge Road described the property as being subject to a £450,000 mortgage in favour of Lancashire Mortgage Corporation Limited, but no such mortgage existed on the supposed date of the declaration of trust (viz. 10 November 2004). Lancashire Mortgage Corporation Limited did not even offer to advance the £450,000 until 2005; v) Miss Fox acknowledged that the declarations of trust were not disclosed to lenders until July 2007. Mr Prentis suggested that the three declarations of trust were created later than the dates they bear, with a view to trying to shift assets away from Miss Dawkins and Mr Asombang, who were in financial trouble.

[153]The Defendants, however, insisted that the declarations of trust were intended to be effective. Miss Dawkins ascribed some of the oddities to the fact that that she had prepared the documents herself, without legal advice, copying from a draft created for another transaction. Some of features noted by Mr Prentis were attributed to the documents’ mistaken use of the past tense when the intention was in fact for Miss Fox to contribute in the future. It was pointed out, moreover, that a computer print-out showed the declaration of trust relating to 10 Wadsworth Road to have been “last saved” on 7 July 2006 (see paragraph 97 above), the date given in the declaration of trust itself. Miss Dawkins and Miss Fox said that Miss Fox had been intended to have the beneficial interests which the declarations of trust provided for her to have. Miss Fox stressed that it was she who had identified the properties: when asked about 122 Uxbridge Road, for instance, Miss Fox said that the venture had been her idea, so it had always been understood that she would be a beneficial owner. Further, Mr Asombang and Miss Dawkins both suggested that declarations of trust had been disclosed to a lender earlier than 2007.

[154]For my part, I can see no real reason to doubt that the three declarations of trust were intended to be effective and so were not shams. Even if Mr Prentis were correct that the declarations of trust had been created with a view to shifting assets away from Miss Dawkins and Mr Asombang, that would not mean that they had been intended to be nugatory. To the contrary, achievement of the supposed objective (shifting assets) would have depended on the declarations of trust being valid. In any case, I have not been persuaded that the declarations of trust were designed to shift assets for the purpose Mr Prentis suggests. The most plausible explanation of the declarations of trust in respect of 122 Uxbridge Road and 10 Shepherds Bush Road is that, as Miss Fox said, it had always been understood that she would be a beneficial owner because she had identified the properties (see paragraph 41 above). As regards 10 Wadsworth Road, it may well be (notwithstanding the fact that Miss Fox did not say so) that this property was bought in Miss Dawkins’ name rather than Miss Fox’s because Miss Fox was at the time still working for Faron Sutaria, and they would not have thought it appropriate for her to purchase the property. In this instance, the print-out giving the date the document was “last saved” shows, to my mind, that the declaration of trust was drafted by the date it bears (viz. 7 July 2006). That the document represents the parties’ intentions is also, I think, indicated by the fact that it made provision for Miss Dawkins to receive a £50,000 fee: why bother to include that in a sham? Unlike the declaration of trust in respect of 10 Wadsworth Road, that for 122 Uxbridge Road must, I think, have been back-dated to an extent (since the mortgage to which it refers did not exist by the date given in the deed), but I do not consider that important: the chances are, in my judgment, that Miss Fox was intended to have an interest from the outset but there was a delay in preparing the declaration of trust. Further, the other oddities and inaccuracies in the declarations of trust can, as I see it, be sufficiently explained by the fact that the documents were home-made.

[155]It follows that I do not consider the declarations of trust to have been shams. In the light of this conclusion, I do not need to consider whether it would have been appropriate for me to declare the declarations of trust invalid in circumstances where(a) 122 Uxbridge Road and 10 Shepherds Bush Road have been repossessed and sold by receivers,

(b) there appears to be no equity either in 10 Wadsworth Road, where again receivers have been appointed,

(d) I have also rejected the money claims which were said to have survived Mr Asombang’s bankruptcy and

(e) Mr Asombang’s trustee in bankruptcy is not a party to these proceedings.

Section 423 of the Insolvency Act 1986

[156]Section 423 of the Insolvency Act 1986 empowers the Court to grant relief where a transaction at an undervalue has been entered into for the purpose:

“(a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make.” (b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make.”

[157]By virtue of section 423(1), a person enters into a transaction at an undervalue if:

“(a) he makes a gift to the other person or he otherwise enters into a transaction with the other on terms that provide for him to receive no consideration; (b) he enters into a transaction with the other in consideration of marriage or the formation of a civil partnership; or (c) he enters into a transaction with the other for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by himself.”

[158]Section 424 of the Act states that an application for an order under section 423 can be made by, among others, a “victim of the transaction”. That expression is defined in section 423(5) to mean: “a person who is, or is capable of being, prejudiced by [the transaction]”.

[159]In the present case, Dr Soutzos challenges the following transactions under section 423 of the Act: i) The three declarations of trust (of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road); and ii) The transfers of 122 Uxbridge Road and 10 Shepherds Bush Road to Miss Fox.

[160]Given the conclusions expressed earlier in this judgment, I can dispose of the allegations in respect of the declarations of trust quite briefly. A short answer is that the declarations of trust were not entered into for the purpose of “putting assets beyond the reach” of a person making (or who might make) a claim, or of “otherwise prejudicing the interests” of such a person in relation to such a claim (see paragraph 154 above). Next, Dr Soutzos has not established that the declarations of trust represented transactions at an undervalue within the meaning of section 423(1). Further, it is not apparent that Dr Soutzos was, or was capable of being, prejudiced by the declarations of trust. Dr Soutzos has accordingly failed to prove that he was a “victim” of the transactions and, hence, his standing to bring a section claim.

[161]The claims in respect of the transfers of 122 Uxbridge Road and 10 Shepherds Bush Road face similar difficulties. If, as I have held, the declarations of trust in respect of the properties were valid, Miss Fox was in effect buying Miss Dawkins’ half share in the properties. It follows that, to show that the transfers had been effected at an undervalue, Dr Soutzos would need to demonstrate that Miss Fox had paid less than half of the total value of the properties. In fact, however, Miss Fox appears to have paid in excess of half of the properties’ total value. The purchase price was increased to £906,000 (£478,368 for 122 Uxbridge Road and £427,632 for 10 Shepherds Bush Road) so that the existing mortgage could be discharged; calculations as to the value of Miss Dawkins’ half shares had suggested a rather lower price (£350,000 plus £391,500, giving an overall figure of £741,500): see paragraphs 99 and 100 above.

[162]In addition, Dr Soutzos has not, in my judgment, proved that the transfers were entered into for the purpose of putting assets beyond the reach of, or otherwise prejudicing, actual or potential creditors. If, as was apparently the case, Miss Fox was paying at least as much as was considered to be the value of what she was gaining (viz. Miss Dawkins’ half shares), it is hard to understand how the transaction can have been thought to be prejudicial to creditors and correspondingly difficult to see how the intention can have been to prejudice creditors. Moreover, there is no obvious reason for Miss Fox to have been willing to assume personal liability on the new, Abbey National mortgage for the purpose of prejudicing Miss Dawkins’ (or Mr Asombang’s) creditors.

[163]A further point is that it is not apparent that Dr Soutzos was, or was capable of being, prejudiced by the transfers, with the result that Dr Soutzos has not proved that he has standing to bring a claim under section 423.

[164]Finally, I doubt whether it would in any event have been appropriate to grant any relief under section 423 of the Act when(a) 122 Uxbridge Road and 10 Shepherds Bush Road have been sold by receivers and

(b) there appears to be no question of any equity in 10 Wadsworth Road either.

[165]I shall not therefore grant any relief under section 423 of the Act.

Trusts in respect of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road

[166]The relief sought in Dr Soutzos’ Particulars of Claim includes an inquiry and/or declarations as to the trusts on which 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road are held.

[167]There seem to me to be several reasons why I should not make an order such as Dr Soutzos asks for. In the first place, it would be pointless. Two of the relevant properties have already been sold for less than the indebtedness secured on them, and there is also, it seems, no equity in the third, which is in the hands of receivers. Secondly, I have concluded that Dr Soutzos has no money claim against Miss Dawkins or Miss Fox; he can accordingly have no legitimate interest in how assets are held as between the two of them. Thirdly, in so far as it might be suggested that Mr Asombang had an interest in the properties, that interest would have vested in his trustee in bankruptcy, yet the trustee is not a party to the proceedings.

[168]Mr Prentis realistically accepted that there were difficulties in pressing for the inquiry or declarations referred to in the Particulars of Claim.

[169]At all events, I do not think that I should either order an inquiry or make declarations.

Was Miss Dawkins an undisclosed principal?

[170]Mr Prentis hardly pressed the claim that Miss Dawkins was an undisclosed principal in respect of the fourth and fifth loans, and in my judgment he was right not to do so. There is no evidence of any real significance that Miss Dawkins was an undisclosed principal.

Contractual claims

[171]Dr Soutzos asked that, were his deceit claims to fail, I should grant declaratory relief in respect of his debt claims against Mr Asombang. It seems to me to be appropriate to take that course, and I shall accordingly grant declarations to the effect that, but for his discharge from bankruptcy, Mr Asombang would have been indebted to Dr Soutzos as follows: i) In respect of the fourth loan, in the sum of £600,000 plus interest at the rate of 1% per month from 1 January 2006 up to the date Mr Asombang was made bankrupt; and ii) In respect of the fifth loan, in the sum of £165,000.

[172]I should be grateful if Mr Prentis would draft declarations to give effect to what I have said and, if possible, seek to agree the wording with Mr Asombang.

[173]I should stress that, by reason of his discharge from bankruptcy, Mr Asombang’s liabilities cannot be enforced against him (compare in this respect Law Society v Shah

[2007] BPIR 1595

, at paragraph 34).

Conclusion

[174]I have considerable sympathy with Dr Soutzos, who was persuaded by Mr Asombang to make large loans in respect of which he has received no repayment at all. However, Dr Soutzos has failed to establish that he was deceived by Mr Asombang into making the loans and, accordingly, that he has any claim which is not within the scope of section 281(1) of the Insolvency Act 1986. Dr Soutzos has also failed to make out his claims against Miss Dawkins and Miss Fox.

[175]In all the circumstances, I shall grant no relief other than the declarations referred to in paragraph 171 above.

Soutzos v Asombang & Ors [2010] EWHC 842 (Ch)

The Claimant

The Defendants

Other witnesses

The loans

The first and second loans

The third loan

Payment to Asombang A1241-237

The fourth loan

The fifth loan

Acquisitions made by Miss Fox

Events leading to Mr Asombang’s bankruptcy

Judgments against Miss Dawkins and Miss Fox

Sales of 122 Uxbridge Road and 10 Shepherds Bush Road

Statements of account

The burden and standard of proof

Fraudulent misrepresentation

The parties’ cases in brief

The fourth loan

The fifth loan

Conclusion

Unlawful means conspiracy

The present case

Dishonest assistance and knowing receipt

Were the declarations of trust shams?

Section 423 of the Insolvency Act 1986

Trusts in respect of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road

Was Miss Dawkins an undisclosed principal?

Contractual claims

Conclusion

Cited in 2 later judgments