Zhiming Huang & Ors v Credit Suisse (UK) Limited [2025] EWHC 1159 (Ch)

[2025] EWHC 1159 (Ch)

IN THE HIGH COURT OF JUSTICE Claim No. PT-2023-000198

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

PROPERTY TRUSTS AND PROBATE LIST (ChD)

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 12 May 2025

Before

Caroline Shea KC

B E T W E E N :

Between

ZHIMING HUANGClaimant

XIAOXING WANGClaimant

MUER HUANGClaimant

CREDIT SUISSE (UK) LIMITEDDefendant

Michael Booth KC and Stuart Armstrong (instructed by Wedlake Bell LLP) for Claimants

John McGhee KC and Daniel Gatty (instructed by Ashurst LLP) for Defendant

Hearing Hearing dates : 9 and 10 December 2024

JUDGMENT

(amended under CPR 40.12(1))

Deputy High Court Judge Caroline Shea KC:

Introduction

[1]This is my reserved judgment following the hearing of the Claimants’ application for summary judgment on(1) their claim against the Defendant for rectification of the land register by removing references to certain charges secured on properties registered in the Claimants’ names; and

(2) the Defendant’s counterclaim for a declaration that if it fails successfully to defend the claim it is entitled to be subrogated to certain third party charges and the debts they secured, with consequential relief. No substantive submissions were made in support of the second element of the application, concerning the Defendants’ Counterclaim, stands or falls with the issue as to whether the third party charges are forgeries. The factual background

[2]On 16 April 2021 the Defendant bank (CSUK) made a loan of nearly £11 million (the April Loan) to a company called Xingli Capital (XCapital). The April Loan was secured by charges over eight properties four of which were registered in the names of the First Claimant, and one each in the names of the Second Claimant (wife of the First Claimant) and the Third Claimant (daughter of the First and Second Claimants, a student at UCL). (The other two properties over which charges were granted are not material to the issues before me). I will refer to the properties in the ownership of the Claimants collectively as the Six Properties, and to the charges on the Six Properties as the Charges.

[3]At the time the April Loan was granted the four properties owned by the First Claimant were subject to four existing charges to secure earlier lending (the Former Charges): three of Former Charges were in favour of Together Commercial Finance Limited (Together). The fourth property was originally charged in June 2020 in favour of MT Finance Limited (MT Finance). It was redeemed on about 31 March 2021 using funds possibly (though this is not entirely clear) including a contribution from the First Claimant’s sister, Ms Donglin Huang. A further charge was then granted in favour of Reflex Bridging Limited (Reflex). The Former Charges were redeemed by the monies advanced under the April Loan.

[4]On 9 September 2021 CSUK made a further loan to XCapital of £1.5 million (the September Loan). A ninth property was added to secure the September Loan. The ninth property was owned by Mr Zhe Zhang (Mr Zhang). Mr Zhang is the husband of Liu Liwei, who is the daughter of Donglin Huang, and hence the niece of the First Claimant.

[5]XCapital is an English company registered at Companies House, The First Claimant is its sole shareholder and Mr Zhang its sole director. So the April Loan and the September Loan (together the Loans) were made to a company the entire beneficial interest in which lay with the First Claimant.

[6]The First Claimant is a successful Chinese businessman who resides chiefly in Hong Kong. He either is or was the owner of a retail business in the Guizhou province of China. That business appears to comprise a group of related companies, variously referred to as “Xingli Group” and “Guiyang Xingli Department Store Group Co Ltd” (the Xingli Group).

[7]The First Claimant claims that he only became aware of the existence of XCapital, and of the Charges, in September 2021, after the monies under the Loans had been advanced, and the Six Properties charged. He claims that whilst the Charges appear to bear his signature, he did not sign them and was wholly unaware of them before the latter part of September 2021. He claims he was also unaware of nine letters of independent legal advice (ILAs) which were produced to the Defendant confirming that the Claimant had received independent legal advice concerning the April Loan. The ILAs had been required by CSUK to confirm that independent legal advice had been provided in relation to the Charges, and also in relation to a guarantee from the First Claimant, and a charge over the First Claimant’s shareholding in XCapital. The ILAs were all signed by a Mr Henry Ho, a solicitor whose involvement in the Charges and the Loans features heavily in the Claimants’ case. When the September Loan was made, a further seven ILAs were provided, signed by or in the name of Mr Ho.

[8]The Claimants’ solicitors, Wedlake Bell, by letter to CSUK dated 3 March 2022, asserted (for the first time far as CSUK was concerned) that the Claimants had not signed the Charges and knew nothing about them until after the event. The letter indicated that the Claimants had made a claim against XCapital and Mr Zhang alleging fraud (the Zhang Claim), and informed CSUK that they intended to apply for rectification of the land register which showed that the Six Properties were subject to the Charges.

[9]The Zhang claim was issued in February 2022, and on 20 December 2022 the Claimants obtained summary judgment against both defendants at a hearing at which neither appeared or were represented. Neither defendant had served a defence. By paragraph 7 of the order made following that hearing (the Zhang Claim Order), Mr Zhang was required to make an affidavit identifying who had signed various documents involved in the CSUK lending. The Zhang Claim Order was drafted by the Claimants’ legal team. Paragraph 7 listed the documents the signatures on which required to be addressed in the affidavit, but the Charges were not included in the list.

[10]Mr Zhang complied with the Zhang Claim Order by affidavit dated 12 January 2023 (the Zhang Affidavit). In it he admits that he signed some documents which purport to be signed by the First Claimant and one document which purports to be signed by Mr Ho. Mr Zhang gives no evidence as to why he signed the documents in the name of the First Claimant, and does not address the question whether any of the Claimants were either aware of him doing so or had given him authority to do so.

[11]Due principally to sales of some of the charged properties, XCapital has repaid some £5.3 million, and a further £1.35 million has been recovered following the appointment of receivers over and the sale of a further secured property. At the time of the hearing approximately £7 million was still owed to CSUK, with interest continuing to accrue. XCapital went into compulsory liquidation in October 2023, with liquidators appointed. The Claim

[12]Against that background, the Claimants have brought this claim seeking an order requiring the Chief Land Registrar to rectify the land register by removing references to the Charges. They assert that neither the First Claimant nor the Second Claimant speaks or writes in English. They say that Mr Zhang and his wife are resident in England and until the alleged fraud was discovered were treated by the Claimants as trusted family members. Mr Zhang had no authority to incorporate XCapital, and the Claimants were wholly unaware of its incorporation, shareholdings and directorships.

[13]The First Claimant gives evidence about the background to the acquisition of the Six Properties. He wanted to make long-term property investments in England for the benefit of himself, the Second Claimant and the Third Claimant. The First Claimant provided all purchase funds for the Six Properties and needed no additional finance. Mr Zhang was given authority to act as the Claimants’ agent in connection with the acquisition of the Six Properties and to take all steps necessary to purchase them. It was also agreed that after the purchase Liu Liwei would act for the Claimants in connection with the management of the properties. Neither Liu Liwei nor Mr Zhang had any authority to raise borrowings against or enter into any charges or other forms of security over the Six Properties. Accordingly it is the Claimants’ case that both the Former Charges and the Charges were entered into without their knowledge or consent. Any of the Former Charges or the Charges purporting to bear the First Claimant’s signature was a forgery perpetrated by or procured by Mr Zhang.

[14]Connected with the deception is the allegation that Mr Zhang misappropriated funds provided by the First Claimant for the purchase of the Six Properties. The First Claimant had paid £4,232,255 to GCL (solicitors acting for the Claimants on the purchases) for the purposes of buying the Six Properties and another property, Flat 503, 4 Wood Crescent (Flat 503). However Flat 503 was not in the event purchased and so around £1.737 million of the monies advanced by the First Claimant remained unspent. The Claimants claim that the First Claimant was not told that the purchase of Flat 503 had not gone ahead, and the unspent funds were not returned to him. It is alleged that Mr Zhang led the First Claimant to believe that Flat 503 had in fact been purchased, by including it in a schedule of properties entitled “Mr Huang Zhiming’s British Properties” which Mr Zhang gave to the First Claimant in 2019. On or around 11 June 2021, Mr Zhang produced to the First Claimant what appeared to be a true copy of the title register relating to Flat 503, showing the First Claimant has been the registered proprietor of a long leasehold interest dated 27 April 2018. This it is said was not a genuine document, but rather was a forgery, created in order to deceive the First Claimant into believing that Flat 503 had been purchased in his name.

[15]A number of other documents purportedly executed by the Claimants are also alleged to be forgeries. They include three facility agreements between XCapital and individual Claimants; a deed of indemnity: a deed of assignment; a deed of guarantee; a subordination deed; a charge over shares and securities; an ordinary resolution of XCapital; and a special resolution of XCapital. In addition, the ILAs expressly state that a Mr Ho, who at the time of the purchase of the Properties was a solicitor at Gately Legal, explained the terms of various documents to the Claimants and that the Claimants confirmed they had signed the relevant documents in the presence of a Ms Gok Yu and a Ms Ranji Tarkan. None of that in fact happened, according to the Claimants. Further documents were produced prior to the September Loan which also required the signature of the Claimants. The signatures appearing on those documents are also said to be forgeries, and the required ILAs were once again purportedly signed by Mr Ho who wrongly stated that the Claimants had received the relevant legal advice. What purported to be the First Claimant’s signature on an ordinary resolution of XCapital is also said to be a forgery.

[16]The Claimants say that Mr Zhang asked to meet the First Claimant on 20 September 2021. During the meeting Mr Zhang told the First Claimant that he had sold Flat 503 which was untrue. At a subsequent meeting on 22 September 2021 Mr Zhang admitted that he had mortgaged the Six Properties without the Claimants’ knowledge or consent and that the dealings with CSUK had nothing to do with the Claimants. At that meeting Mr Zhang signed a document in which he confirmed that “all loan mortgages and selling of [the Claimants’] Properties were my personal actions without their knowledge”. Either at that meeting, or in a phone call the following day, which is said to have been recorded and transcribed, Mr Zhang is recorded as admitting the forgeries, and explaining what motivated him to do what he did. At a further meeting on 28 September 2021, Mr Zhang admitted for the first time that Flat 503 had never been purchased and that he had misappropriated the funds advanced by the First Claimant to buy Flat 503 for his own business enterprise.

[17]In the Zhang Affidavit, Mr Zhang affirmed that he signed various documents relating to the Loans which were purportedly signed by the Claimants. In particular, he signed the documents required to be signed by the Claimants under a number of clauses in the original facility letter relating to the April Loan, and copies of the facility letter in relation to the September Loan; he had signed letters purporting to be from a solicitor confirming that the Claimant had received independent legal advice; and he instructed Mr Ho, a solicitor who was to sign the ILAs.

[18]In those circumstances, the Claimants say, they never knew about much less agreed to the Charges; the signatures on the Charges and associated documentation were forged; the transactions only occurred through the fraudulent activities and forgeries of Mr Zhang; and as a result the Charges are void. The entry of the Charges in the land register for each of the Six Properties was on each occasion a mistake within the meaning of paragraph 2(1)(a) of Schedule 4 to the Land Registration Act 2002, and the land register ought to be rectified to remove references to the Charges. The Defence

[19]In essence, in relation to the central allegation of fraud, CSUK puts the Claimants to proof. CSUK defends the claim relying largely on non-admissions, save in relation to matters of public record or within their own knowledge. Thus the Charges are admitted and averred, but the Claimants’ account of the circumstances in which they came to be signed is not admitted. CSUK pleads the facts within its knowledge as to how the Loans came to be advanced, but makes no admissions as to the accuracy of the information contained in the Zhang Affidavit. Of particular note, at paragraph 30 of the Defence and Counterclaim, CSUK notes that Mr Zhang does not admit in the Zhang Affidavit to forging the Claimants’ signatures on the Charges. He does not refer to them at all, and neither was he required to under the terms of the Zhang Claim Order, the terms of which CSUK say, and the Claimants have not denied, were drafted by the Claimants’ legal team.

[20]In terms of the relief sought, CSUK contends that the land register ought not to be altered so as to remove reference to the Charges, and that even if the Claimants were to succeed in establishing that the Charges were fraudulently obtained, the land register ought not to be altered because there are exceptional circumstances justifying the Court not to make such an order within the meaning of paragraph 3(3) of Schedule 4 to the Land Registration Act 2002. The reasons given (to summarise) are that:(1) if Mr Zhang did defraud the Claimants and CSUK, he was put in a position to do so by the Claimants to such an extent that it would be just for the Claimants and not CSUK to bear the consequences of the fraud; and

(2) the Claimants delayed in notifying CSUK of their claim that the Charges were forgeries until 3 March 2022 notwithstanding their case that they learned of the fraud on 22 September 2021, thereby depriving CSUK of the opportunity to take any action in response to the alleged fraud for nearly 6 months.

[21]If the Claimants succeed in obtaining the relief sought, CSUK seeks by way of counterclaim a declaration that it is entitled to be subrogated to the Former Charges and the debts they secured.

[22]This account of the parties’ respective cases is necessarily abbreviated. When I come to consider the submissions made at the hearing, I shall make specific reference to further details of the Claimants’ case. Basis for the application

[23]In their application for summary judgment, the Claimants assert that there is no defence to the claim, no merit in the counterclaim, and no other reason why disposal of the claim should await trial. At the risk of oversimplifying the very detailed and complex submissions made in writing and at the hearing, the thrust of the Claimants’ application is that: Mr Zhang has admitted the fraud in general and in particular forging the signature of the First Claimant; there are no documents or paper trails linking the Claimants to the Loans, Former Charges or Charges; whilst the admissions and default findings in the Zhang Claim are not admissible in this claim, nonetheless there is direct evidence from Mr Zhang both in the Zhang Affidavit and in the written statement Mr Zhang provided at a meeting on 22 September 2021 which removes any doubt. In those circumstances, and CSUK not having an alternative positive case to advance, there is no realistic defence to the claim and no reason why disposal of the claim should await trial. Basis for opposing the application

[24]CSUK opposes the application, asserting that the claim is not suitable for summary judgment. To be determined at the summary stage would involve in effect a mini-trial on the papers. It asserts that it has a real prospect of both successfully defending the claim (and, for completeness, of succeeding on its subrogation counterclaim if unsuccessful in its defence). Non-party disclosure

[25]CSUK obtained non-party disclosure orders against Gately who acted or purported to act for the Claimants on the Together lending and charges; Together; and Trowers & Hamlins (Trowers), solicitors who acted for XCapital and who are said to have represented to CSUK (through its solicitors Farrer & Co) that they also acted for the Claimants, and had previously acted for them on the Reflex charge. I note that the Claimants deny that Trowers ever acted for them. With the agreement of the Claimants, Reflex and MT Finance have additionally provided some voluntary disclosure.

[26]It appears that Trower’s solicitors, Clyde and Co, had failed to forward 11,000 pages of documents that Trowers had provided pursuant to the non-party disclosure order. Whilst investigations were undertaken to establish exactly how much of the material had previously been provided (of those examined at the date of the hearing it turned out virtually none had been), the documents had not been made available to CSUK by the time of the hearing of the Claimants’ application before me. Evidence

[27]The Claimants’ application for summary judgment was supported by no fewer than 13 witness statements (in some cases more than one from each witness) from: each of the Claimants; Mr Heng Li, who says he was present when Mr Zhang is said to have handed the First Claimant the forged Land Registry documents on 11 June 2021, and who performed follow up investigations culminating in his telling the First Claimant about the Charges; Guo Quing, a personal assistant to the First and Second Claimants; Chen Lan, Chairman of the Xingli Group, who give evidence that the First Claimant resigned from that role in 2014, though he remained on the Board thereafter; Ko Yan Lim, the principal solicitor acting for the Claimants in Hong Kong, who confirms that neither the First nor the Second Claimant speaks or writes in English, and explains the significance of that, particularly in terms of the suggestion that the First Claimant was instrumental in the incorporation of XCapital; John Colenso, a solicitor at Wedlake Bell, solicitors to the Claimants; and Rachel Fitzgerald, also of Wedlake Bell, with day-to-day management of the Claimants’ claim.

[28]Witness statements were produced on behalf of CSUK by James Levi, of Ashurst LLP, solicitors to CSUK; and Aalia Datoo of the litigation team at UBS Group Companies (of which CSUK is one). Further, I was asked to read witness statements made in response to an application by CSUK for non-party disclosure by: Mr Ho, previously of GCL and Gately Legal, now of Chan Neill solicitors; James Whitby, of Together; and Claire Larbey of Trowers.

[29]As well as the witness statements, a chronological documents bundle containing over 8000 pages was prepared. I am grateful to Counsel for producing a realistic reading list. Whilst I understand the need to produce witness evidence containing uncontroversial evidence in order to set out in narrative form the background against which the claim has developed, I am bound to observe that there was a high degree of repetition and redundancy within the witness statements and in the documents bundle, reference to only a small fraction of which was made in the written and oral submissions. That is an undesirable and wasteful state of affairs. The law Summary Judgment

[30]The law applicable to applications for summary judgment is largely uncontroversial. By CPR Rule 24.3, the court may give summary judgment on a claim or an issue if(a) the court considers that the respondent has no real prospect of succeeding on the claim, defence or issue, and

(b) there is no other compelling reason why the case or issue should be disposed of at trial.

[31]Both Counsel relied on the dicta of Lewison J (as he then was) regarding the approach to be taken to the question whether there are real prospects of success in Easyair Ltd v Opal Telecom Limited

[2009] EWHC 339 (Ch)

, at [15]:

“i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success. ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable. iii) In reaching its conclusion the court must not conduct a “mini-trial”. iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents. v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial. vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case. vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction.”

[32]Mr Booth, appearing on behalf of the Claimants, drew my attention to ED & F Man Liquid Products Ltd v Patel [2003] C.P.Rep.51, a decision of the Court of Appeal, in which Potter LJ reminded himself that the distinction between a realistic and a fanciful prospect of success meant “that the defence sought to be argued must carry some degree of conviction” (at [8]). And at [10], Potter LJ after observing that where there are significant differences between the parties as far as the factual issues are concerned the court is in no position to conduct a mini-trial, went on “However, that does not mean that the court has to accept without analysis everything said by a party in statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable.”

[33]As to the effect of admissions in the context of summary judgment, Potter LJ said (at [53]) “… In a case where, with knowledge of the material facts, clear admissions and writing are unambiguously made by a sophisticated businessman who has ample opportunity to advance his defence prior to document, a judge is in my view entitled to look at a case “in the round”, in the sense that, if satisfied with the genuineness of the admissions, issues of fact which might otherwise require to be resolved at trial may fall away.”

[34]Mr McGhee, appearing on behalf of CSUK, in developing the theme of the undesirability of conducting a mini-trial at the summary judgment stage, relied on the decision of the Supreme Court in Okpabi v Royal Dutch Shell [2021] UK SE 3, at [21], endorsing the guidance of Lord Hope in Three Rivers DC v Governor and Company of the Bank of England (No. 3)

[2003] 2 AC 1

at [94-[96]. “[94] For the reasons which I have just given, I think that the question is whether the claim has no real prospect of succeeding at trial and that has to be answered having regard to the overriding objective of dealing with the case justly. But the point which is of crucial importance lies in the answer to the further question that then needs to be asked, which is what is to be the scope of that inquiry? [95] I would approach that further question in this way. The method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well-recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.”

[35]Mr McGhee also relied on Wenlock v Morely

[1965] 1 WLR 1238

, in which Dankwerts LJ said of the inherent power of the court to strike out (at page 1244 B-C):

“This summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power.”

[36]On the summary disposition of a case in which fraud or dishonesty is alleged, Mr McGhee places reliance on the decision of the Court of Appeal in Fashion Gossip v S3 Telecoms (two thousand, unreported) in which Judge LJ expressed himself “troubled about entering summary judgment in a case in which the success of the Claimants case involves, as this one does, establishing allegations of dishonesty and fraud, which are strongly denied, which cannot be conclusively proved by, for example, a conviction before a criminal court”, and on similar dicta in Wrexham FC LtdvCrucialmove

[2006] EWCA Civ 237

, CA at [56-58]; and Allied Fort Insurance Services v Ahmed

[2015] EWCA Civ 841

at [81], [89 - 90]. Standard of proof

[37]My attention was drawn to the standard of proof that will be applied at trial where fraud or dishonesty is alleged. While Mr McGhee did not, quite rightly, suggest that anything other than the ordinary civil standard of balance of probabilities applies, he did submit that where there are serious allegations such as fraud and dishonesty more cogent evidence is required to overcome on the balance of probabilities the likelihood of what is alleged (the unlikeliness itself being context specific): Bank of St Petersburg PJSC v Arkhangelsky

[2020] EWCA Civ 408

, and in particular on the quotation in that case from the judgment of Bryan J in JSC BM Bank v Kekhman

[2018] EWHC 791 (Comm)

in which he quoted Andrew Smith J in Fiona Trust and Holding Coprn v Privalov

[2010] EWHC 3199 (Comm)

as follows:

“Mr Lord also relied on paras 51–58 in Bryan J’s judgment as to the inherent improbability of fraudulent conduct. He cited Andrew Smith J in Fiona Trust at para 1438, where he said that “[it] is well established that ‘cogent evidence is required to justify a finding of fraud or other discreditable conduct’: per Moore-Bick LJ in Jafari-Fini v Skillglass Ltd [2007] EWCA Civ 261 at [73]. This principle reflects the court’s conventional perception that it is generally not likely that people will engage in such conduct: ‘where a claimant seeks to prove a case of dishonesty, its inherent improbability means that, even on the civil burden of proof, the evidence needed to prove it must be all the stronger’, per Rix LJ in Markel International Insurance Company Ltd v Higgins [2009] EWCA Civ 790 at [50]. The question remains one of the balance of probability, although typically, as Ungoed-Thomas J put it in In re Dellow’s Will Trusts [1964] 1 WLR 451, 455 (cited by Lord Nicholls in In re H [1996] AC 563, 586H), ‘The more serious the allegation the more cogent the evidence required to overcome the unlikelihood of what is alleged and thus to prove it’. Associated with the seriousness of the allegation is the seriousness of the consequences, or potential consequences, of the proof of the allegation because of the improbability that a person will risk such consequences: see R (N) v Mental Health Review Tribunal (Northern Region) [2005] EWCA Civ 1605; [2006] QB 468, para 62, cited in In re D(Secretary of State for Northern Ireland intervening) [2008] UKHL 33; [2008] 1 WLR 1499, para 27, per Lord Carswell.”

[38]Mr Booth cautioned against being misled into thinking that the standard of proof is anything other than the balance of probabilities; nor is it correct, he submitted, that serious allegations required more “cogent” proof. He submitted that the situation is as set out by Lady Hale in Re B

[2009] 1 AC 11

, in which (at [62]) she warned against imposing a higher standard than the simple preponderance of probabilities, and quoted a passage of Lord Lloyd from In re H

[1996] AC 563

, in which he posed the question (at p 578) “whether anything should be said about the cogency of the evidence needed to “tip the balance”. For my part I do not find those words helpful since they are little more than a statement of the obvious; and there is a danger that the repeated use of the words will harden into a formula, which … may lead to misunderstanding.” Lady Hale went on to decry the grip that the nostrum “the more serious the allegation, the more cogent the evidence needed to prove it” had taken and said “it is time for us to loosen its grip and give it its quietus”.

[39]I agree with the submission of Mr Booth that this represents the law and is binding at all levels. Mr Booth further relied on the decision of Eder J in Otkritie International Investment Management v Uromov [2014] WL 320340, in which he reiterated the law as set out in In re H, and went on “I am prepared to accept that in a very broad general sense, it may well be true to say that it is inherently improbable that a particular defendant will commit a fraud. But it all depends on a wide range of factors. For example, if the court is satisfied (or it has been admitted) that a defendant has acted fraudulently or reprehensibly on one occasion, it cannot necessarily be considered inherently improbable that such defendant would have done so on another; or if, for example, the court is satisfied (or it has been admitted) that a defendant has created or deployed sham or false documents, the court cannot assume that it is inherently unlikely that such defendant did so on other occasions.”

[40]What can safely be said is that the issue of likelihood is inevitably context dependent, in the sense that that the likelihood of something having occurred will be related to the particular factual background to the act in question. But my decision on this application does not turn on this point and I do not propose to consider it beyond the brief indication I have given of my views on what Mr Booth identified as an area of dispute on the law on this point. Rectification of the register

[41]The law on rectification of the register is not controversial. The Court has power to order alteration of the register to remove void charges from the register pursuant to the Land Registration Act 2002, Schedule 4, para 2(1), on the ground that the registration of the charges was a mistake. Alteration on the ground of mistake qualifies as rectification. Where the power to make an order under paragraph 2 of Schedule 4 arises, the Court must do so unless there are exceptional circumstances which justify its not doing so.

[42]The phrase “exceptional circumstances” was analysed by Morgan J in Paton v Todd

[2012] EWHC 1248 (Ch)

(in the context of paragraph 6(3) of Schedule 4, which confers equivalent powers of rectification on the registrar), in a passage approved by Coulson LJ in Dhillon v Barclays Bank plc

[2020] EWCA Civ 619

(at [46]), as follows:

“[66] …. Thus, in a case within para. 6(3), the court must ask itself two questions: (1) are there exceptional circumstances in this case? and (2) do those exceptional circumstances justify not making the alteration? The first of these questions requires one to know what is meant by “exceptional circumstances” and then to establish whether such circumstances exist as a matter of fact.…. [67] “Exceptional” is an ordinary, familiar English adjective. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual or special, or uncommon; to be exceptional a circumstance need not be unique or unprecedented, or very rare but it cannot be one that is regularly, or routinely, or normally encountered: … Further, the search is not for exceptional circumstances in the abstract but those which have a bearing on the ultimate question whether such circumstances justify not rectifying the register.”

Subrogation

[43]On the law of subrogation, CSUK relies on the general proposition that if land is subject to a charge A in favour of lender A which is redeemed with monies advances by lender B on the security of charge B but charge B is later avoided, then lender B will generally be entitled to be subrogated to lender’s A rights under charge A as if it had not been redeemed. I do not understand that proposition to be controversial and I accept it as governing the counterclaim of CSUK if they should fail in defending the claim. However as noted at the outset of this judgment, this element of the Claimants’ application was not pursued. Approach to the test for summary judgment

[44]An unusual feature of this case is that CSUK has at present no positive case to advance to contradict the Claimants’ account. That is not to say that CSUK will not be in a position to do so in future. Mr Booth urged on me the fact that there is no counter-case at the moment, and there is clear evidence from the Claimants and others as to what in fact occurred. But I bear in mind that CSUK does not need to promote an alternative case in order to successfully defend this claim. The Claimants, even if facing no specific counter-narrative at trial, will nonetheless be required to satisfy the Court on the balance of probabilities that the signatures on the Charges are forgeries and that they were wholly unaware of the Charges and Former Charges, the incorporation of XCapital, and payment out of the Loans, and that the actions of Mr Zhang were taken without the Claimants’ authority. CSUK has put the Claimants to strict proof of the factual matters on which they rely, and will be entitled to test and interrogate the Claimants’ evidence with a view to undermining it. CSUK does not have to prove to the Court what in fact did happen. CSUK can succeed if the Claimants fail to satisfy the Court of their account on the balance of probabilities.

[45]Accordingly the CPR Rule 24 test as it applies in this case is not concerned with whether CSUK as Defendant is able to promote a credible counter-narrative. Rather the focus will be on whether the evidence before the Court on this application is sufficient to justify a conclusion that there is no realistic as opposed to fanciful prospect that CSUK will succeed in so undermining the Claimants’ case that the Court will find on the balance of probabilities that the signatures were not those of the Claimants and that the Claimants knew nothing about them or about XCapital. It is that situation - not proving a contrary case, but undermining the Claimants’ case on the evidence – to which the question of the prospects of CSUK succeeding at trial must be directed when determining the Claimants’ application for summary judgment. The case for summary judgment

[46]Mr Booth, both in his skeleton argument and by way of oral submissions, presented a detailed exposition of why the Claimants say the claim is bound to succeed, and why CSUK has no real prospect of defending it. In what follows, my aim is to distil the evidence and submissions on which Mr Booth relied, whilst doing justice to the breadth and depth of the material covered.

[47]The Claimants base their application on a number of interrelated building blocks, which I am invited to find renders unrealistic the possibility of any successful defence. Those building blocks are:(1) the confessions/admissions of Mr Zhang;

(2) the absence of any paperwork connecting the Claimants to the Charges;

(3) the missing £1.737 million, which by inference must have been misappropriated by Mr Zhang, abetted by Mr Ho;

(4) the lack of any obvious or even potential reason why, if the Claimants had originally signed the Charges, they should now be denying that they did so;

(5) the evidence showing that the Loans were intended for investment in Made in UK Limited, a company of Mr Zhang in which the Claimants had no interest;

(6) the evident forgeries of identity documents provided by Mr Ho to CSUK prior to entering into the Charges;

(7) other fraudulent or suspect behaviour by Mr Ho;

(8) the travel records said to show that the First Claimant had not come to the UK at a time when Mr Ho intimated to solicitors representing lenders involved in the Former Charges that the First Claimant had travelled to the UK for the purpose of signing the Former Charges. Mr Zhang confessions/admissions

[48]The Claimants rely on four distinct instances of alleged confessions or admissions by Mr Zhang. The first was at the meeting on 22 September 2021, during which it is alleged that Mr Zhang admitted that he had mortgaged the Six Properties without the First Claimant’s knowledge or authorisation (and hence without the knowledge or authorisation of all the Claimants); that he had incorporated XCapital without the First Claimant’s knowledge or consent; that he had forged the First Claimant’s signature; and that the dealings with CSUK had nothing to do with the First Claimant.

[49]During the meeting Mr Zhang is also said to have signed a statement in Chinese which Mr Li had prepared in advance of the meeting, which (translated) states:

“Regarding [the Claimants’] properties in London, they were never authorised or entrusted to me … All loans mortgages and selling of their apartments are my personal actions without their knowledge. I will take all responsibilities for my behaviours. I seek to be forgiven. I did not tell my wife… about what I did, nor did she know it.”

The statement went on to identify the properties that he said had been mortgaged or sold by him. They included the Six Properties, and also Flat 503 (which it is accepted was never in fact purchased).

[50]Next is a mobile phone conversation which was recorded and a transcript produced (although the original recording has not been). In summary, the transcript records Mr Zhang saying that he came across some important investment opportunities which he did not have sufficient capital to invest in himself, so he “borrowed” money by mortgaging the Claimants’ properties. He wanted to succeed in business on a grand scale, and mortgaging the Claimants’ properties provided the means by which he could achieve that objective. The transcript records Mr Zhang offering to recompense the Claimants by handing over all his investments for the First Claimant to use as he wished, and from which he was to take the profits. At one point it appears that the First Claimant put to Mr Zhang that he, the First Claimant, had never been informed by Mr Zhang about any mortgages or loans and had never granted him any authorisation to enter into such; and he finished with the question: “Is that true?”. Mr Zhang is recorded as confirming that it was true. Similar admissions were recorded as to the setting up of XCapital, which are said to be all the work of Mr Zhang without the knowledge or consent of the Claimants.

[51]Next, it is said that Mr Zhang attended a further meeting with Mr Li on 28 September 2021 during which Mr Zhang admitted that contrary to what he had previously stated he had never purchased Flat 503 but rather had invested the funds advanced for the purpose of buying Flat 503 in his own company called “Made In London”.

[52]Lastly, reliance is placed on the Zhang Claim in which Mr Zhang (and XCapital) filed no defence or evidence in opposition to the application for summary judgment. Pursuant to the Zhang Claim Order, Mr Zhang filed the Zhang Affidavit affirming that he had signed documents which were purportedly signed by the Claimants.

[53]The Claimants rely on these confessions in effect as admissions. At one point Mr Booth submitted in terms that it “all ultimately comes down to what Mr Zhang presents and says, and what Mr Ho presents and says”. The problem with this submission is that Mr Zhang has not “said” anything in the proceedings with which I am concerned. It is accepted by the Claimants at paragraph 26.15 of the Particulars of Claim that the findings of the summary judgment are inadmissible in this claim. No witness statement by Mr Zhang been procured for the purposes of this application. As far as I am aware, there has been no indication that he is to be called to give evidence in this claim. CSUK can be expected to interrogate such evidence as may be produced at trial. The outcome of such interrogation is impossible to predict. In these circumstances, I can attach very little weight to the signed statement, transcript of a conversation, default summary judgment, or the Zhang Affidavit.

[54]In relation to the Zhang Affidavit, a further troubling point is the fact that the list of documents about which Mr Zhang was required to give information did not include the Charges. This is a point taken by CSUK at paragraph 30 of the Defence and Counterclaim dated 10 August 2023, some fifteen months prior to the hearing of this application. The response in the draft Reply and Defence and Counterclaim was that the reason Mr Zhang did not refer to the Charges in the Zhang Affidavit was that he was not required to. It is said that an inference is to be drawn that he must also have signed the Claimants’ names on the Charges since that could be the only purpose of forging the signatures on the other documents on which he has admitted to forging signatures.

[55]However, the draft Reply and Defence does not address the reason why Mr Zhang was not asked to include the relevant information about the signatures on the Charges, and neither has any explanation been offered since then, beyond a submission made in a footnote to the Claimants’ skeleton argument for this application which states that “only certain questions (relevant to considering the position of other parties to add them in) were put: judgment on the forgery had already been given so it was not geared towards proving that, so absent admissions arise from the structure of the questions.” I do not fully understand this written submission which was not developed at the hearing, and I have not found if of great assistance in answering this question.

[56]This leaves at large two important questions which I am unable to determine. First, why did the list of documents in respect of which Mr Zhang was ordered to give evidence not include the Charges? Second, why in this application for summary judgment, supported by hundreds of pages of witness statements and thousands of pages of documents, and after a two day hearing, has this question, first raised in August 2023, not been answered (beyond the somewhat opaque footnote to which I have referred)?

[57]Lastly, Mr Zhang was not required to, and did not, include in the Zhang Affidavit evidence as to whether the documents he says he did sign were signed with or without the First Claimant’s knowledge or authority. The same footnote I refer to at paragraph 55 above states that “the context of the [Zhang Affidavit] was that it was sworn consequent upon a judgment for forgery, so if authorised signing was suggested the affidavit would inevitably have referred to that.” It may be the case that in the light of the absence of a defence and the fact summary judgment on the claim was granted the Zhang Affidavit was predicated on the signatures being unauthorised forgeries, but for the purposes of this claim it leaves open the question of whether or not Mr Zhang was authorised to provide the signatures of the Claimants which he states in the Zhang Affidavit were provided by him.

[58]In the light of those matters, and those unanswered questions, I cannot accept that for the purposes of this claim there is primary evidence of a confession or admissions by Mr Zhang that he forged the Claimants’ signatures on the Charges, without their knowledge or authority, such that there is no reasonable prospect of CSUK challenging the ability of the Claimants to establish that central element of the claim. That Mr Zhang forged the signatures on the Charges without their knowledge or consent remains for the Claimants to prove, on the balance of probabilities, but they currently have provided no answers to the questions I have highlighted, nor have they produced evidence in the proceedings before me rendering the matter sufficiently certain to justify the grant of summary judgment. We are not in the territory contemplated by Potter LJ in ED & F Man Liquid Products, where clear admissions were unambiguously made by the party who had had ample opportunity to advance his defence. As Potter LJ emphasised (at [53]), if the court is satisfied of the genuineness of the admissions it may follow that issues of fact may fall away. I am in no position to be satisfied that admissions are going to be made at all, much less of their genuineness.

[59]Mr Booth pressed on me that if Mr Zhang had confessed to signing the other documents, it must follow that it was he who forged the Claimants’ signatures on the Charges. I do not see that as the inevitable or even the most likely consequence of the evidence contained in the Zhang Affidavit. Mr Booth also noted that at no point has the recorded conversation or the confessions been formally renounced or denied. He submitted that there is no witness statement from Mr Zhang because he has nothing to say. The point is he has not contradicted it at any point. He has admitted forgery in plain terms. For the reasons I have given I do not accept this submission. Unless they are to be placed in evidence in these proceedings, and the opportunity to test the evidence granted, the “admissions” have no more weight than would be given to any hearsay statement the maker of which does not attend court to submit to cross examination. No evidence of the Claimants’ involvement in Charges

[60]The Claimants submit that from the evidence before the Court it can be safely inferred that the Claimants knew nothing of the Charges. It is said that if Trowers, who purported to act for the Claimants on the Charges, had had any material which revealed the Claimants’ involvement or knowledge of the Charges they would have produced it by now. Accordingly it is safe to conclude Trowers has no such documentation. It is said that only Mr Zhang and Mr Ho could refute the fraud but “will not because of the consequences of giving false evidence and their oral evidence would be incredible when judged against prevent facts and rejected.” No other witness could assist. The transactions lack any commercial sense for the Claimants and the documents which would exist had the transactions been genuine transactions are absent.

[61]In my judgment this submission begs the question. Whilst this might be one, even the most likely, interpretation of the lack of documents, it is not possible without further scrutiny, and without testing the witnesses’ evidence, to draw the inference sought to be drawn. In any event, the lack of any paper trail (if such it proves to be after full disclosure by Trowers, and from the Claimants themselves) tying the Claimants to knowledge of the Charges is not in my judgment sufficient, on its own or taken together with the alleged admissions and confessions, to justify a conclusion that CSUK has no realistic prospect of successfully defending the claim. Too many important questions remain at large, and the outcome of further disclosure of documents and the testing of witness evidence cannot be predicted. If it were to be the case that the Claimants are crying fraud when there was none, it would be manifestly unfair to allow written admissions from non-parties and non-witnesses, and the lack of a paper trail, to carry the day, depriving CSUK of the opportunity to test that evidence.

[62]It was pressed on me that CSUK has had sight of all relevant documents following the non-party disclosure exercise, and that therefore nothing relevant to this issue is likely to emerge by way of further documents. However as at the hearing of this application, some eleven thousand pages of Trowers’ documents remained undisclosed due to an error in complying with the non-party disclosure order. Moreover there has been no disclosure by the Claimants themselves. In the light of those huge gaps, the Claimants’ submission cannot be sustained. Importantly, even if those documents do not produce any relevant evidence, the evidence before me today is not by itself sufficient to support the inferences I am invited to draw, namely, that this must mean that the signatures on the Charges are forgeries, perpetrated by Mr Zhang and Mr Ho, and that the Claimants were wholly unaware of the Charges at the time of their execution.

[63]On the central claim by the Claimants, that the signatures are forgeries, I am further struck by the approach of the Claimants to obtaining expert evidence. The Claimants take the view such evidence is unnecessary because first, the Claimants have the benefit of the series of admissions, and second, they do not have the wet ink originals to supply to an expert. I have already given my views as to the limitations of the admissions on which the Claimants presently rely. As to sourcing the originals, of course CSUK could (and it is fair to believe would) provide those originals for the purposes of obtaining an expert report.

[64]The Claimants point to the fact that the CSUK has not procured its own handwriting evidence yet, in spite of having the original documents, and in spite of being provided with twelve reference signatures. However, the reference signatures provided by the Claimants all post-date the issues in this claim being raised; in other words they were created at a time when the genuineness of the First Claimant’s signature was already in issue. Moreover they were all produced for the purposes of this litigation. Two signatures of the First Claimant alone from around the relevant period were provided, but only in copy form. The originals were not provided. This is clearly an unsatisfactory basis for an expert to work from. What will be required are original signatures from the same period as the transactions said to be forged.

[65]In any event it is the Claimants who must prove their case on the balance of probabilities. Their attitude to expert evidence is an oddity I am unable to fathom. One (if not the most) obvious way to support the contention that the signatures are forgeries is to submit them for the scrutiny of a handwriting expert who can provide impartial, independent opinion evidence. It is hard to understand why the Claimants are fighting shy of this, to the point of suggesting that handwriting is not an issue in the proceedings, when a positive opinion would, if not carry the day, have a significant influence on the outcome of their claim. Their failure to do so thus far, together with their stated intention not to do so, does not help persuade me that I can have sufficient confidence in the central claim that the signatures are forgeries to give summary judgment. £1.737 million

[66]The Claimants say that since all payments out of the Claimants’ account (other than those discharging prior charges) went to Mr Zhang, the sum which had been intended to purchase Flat 503 but was not in fact used for that purpose must have been repaid to Mr Zhang. Allied to this is the claim that Mr Zhang actively sought to mislead the First Claimant into believing that he had obtained Flat 503, by showing him what is said to be the doctored Land Registry title bearing the wrong title number. The documents show that when monies were raised by means of the Loans, they were paid by Mr Ho, or at his authorisation, to Mr Zhang. So it is a reasonable inference, the Claimants say, that the monies Mr Ho authorised to go to Mr Zhang included the £1.737m. The Claimant relies on the statement of principle of Eder J in Otkritie that people who have already forged documents or taken money are to be looked at as if they will do it again. The Claimants say: we already know that Mr Zhang has stolen money and he has forged a document purporting to be an HM Land Registry Document. So it is all the more likely that he was the fraudster who signed the Charges.

[67]In my judgment this involves an over-statement of the point Eder J was intending to make. What he actually said (when talking about probability or likelihood) was: “For example, if the court is satisfied (or it has been admitted) that a defendant has acted fraudulently or reprehensibly on one occasion, it cannot necessarily be considered inherently improbable that such defendant would have done so on another; or if, for example, the court is satisfied (or it has been admitted) that a defendant has created or deployed sham or false documents, the court cannot assume that it is inherently unlikely that such defendant did so on other occasions.” (my emphasis)

[68]Eder J was talking there about findings of fact having been made, which increased the likelihood of a further similar finding being justified, so that whilst it was generally unlikely that a person would commit a fraud, if that person had been found to be a fraudster, it was not necessarily inherently improbable that they would have acted in the same way on another occasion. But that observation is predicated on a finding on the facts of the first instance of the wrongdoing. That is not this case. We have the First Claimant’s and Mr Li’s account of how they came to be shown documents which on further investigation appeared to include a doctored document showing the First Claimant as registered proprietor of Flat 503. And we have the allegations that it was Mr Zhang who fraudulently forged the Claimants’ signatures on the Charges. But none of these matters have been tested and it would be premature to apply the effect on probabilities identified by Eder J on the basis of what is thus far mere assertion. I agree with the submission on behalf of CSUK that it is not clear, in the absence of documents showing the transaction(s) in question, that the £1.737 million was stolen by Mr Zhang, and that even if it was it does not necessarily follow that he defrauded the Claimants in relation to the Charges.

[69]Further the evidence is not all one way. On the First Claimant’s instruction, Mr Li carried out searches of the Land Register on the same date, 11 June 2021, that Mr Zhang gave the Land Registry document to the First Claimant. Mr Li established that Flat 503 was registered in the name of someone unknown to and unconnected with the Claimants. At the same time, he inspected the titles of the Six Properties that were registered in the Claimants’ names. By this time, the Former Charges had been registered against those titles and would have appeared on the searches. Yet it is the Claimants’ case that it was only in September 2021 that the First Claimant became aware of the Charges. Mr Booth sought to explain Mr Li’s failure to notice the Charges on the register by suggesting that Mr Li was not an expert in property, or on the land register, and that he was on the lookout for particular information, namely the name of the registered proprietor of Flat 503, and so would not have registered the existence or significance of the Charges. That may prove to be the case, but in my judgment it raises questions concerning the Claimants’ account of what they knew and when, questions which ought properly to be tested at trial. Why would the Claimants deny they signed the Charges if they did sign them?

[70]I was asked to consider the question: why would the Claimants enter into the Charges, and then later seek to deny them? The Claimants say that the arrangements make no sense if they represent some form of consensual dealing between themselves and Mr Zhang. I am not in a position to answer that question, but the fact that the question cannot be answered at this summary stage is not determinative of the facts concerning the Claimants’ knowledge or ignorance of the Charges, nor of the question as to whether the handwriting is indeed that of the First Claimant. These questions remain at large, and it seems to me that CSUK ought in fairness to have the opportunity to review the documentary evidence, to cross examine the Claimants and their witnesses, and to make submissions about the evidence as it is revealed to be after a full trial, including in relation to the absence (if it remains so) of any first hand evidence from the alleged perpetrators of the fraud.

[71]It was also suggested that there was no reason for an individual of the First Claimant’s wealth to raise loans secured against exiting assets. However, CSUK submits that it is not unusual for wealthy individuals to borrow against assets for the purposes of further investment and wealth creation. Moreover, in the witness statement of Ms FitzGerald she states: “Whilst it is true that rich people often borrow money and the First Claimant does …” (my emphasis). She then goes on to say why the Loans would have been a bad commercial deal for the First Claimant, given the high bridging finance interest rates. Even if that is the case (and it remains to be established that the First Claimant could borrow in the United Kingdom at lower interest rates) nonetheless I agree with Mr McGhee that the admission is significant, and is on its face inconsistent with the submission that the Claimants would never seek to raise money secured on the Six Properties.

[72]Mr Booth reminded me that the Claimants have made statements of truth from 2 March 2022 when the pre-action letter was sent to CSUK that they knew nothing about the Charges, and they have held the position from that day to this. From that day no witnesses have come forward to deny what Claimants say. If they were lying, says Mr Booth, “they have simply no means of knowing what material might be out there that might implicate them”. So for example if they did know about Mr Ho’s involvement they would not know what emails might emerge to contradict their story. Mr Booth submitted that only two people would be in a position to deny the fraud. Those are Mr Zhang and Mr Ho, and “neither of them can and neither of them will”. That may be so, but neither is it said that either of them will be giving positive evidence that they acted fraudulently and that the Claimants knew nothing of their deception. In the absence of such evidence, it will be for the Claimants to prove the fraud, and for the Court to give such weight to the Zhang Claim and the Zhang Affidavit, as it sees fit, in the light of the totality of the evidence. Moreover, the submission risks inverting the onus of proof. It would not be for Mr Zhang, or Mr Ho, or CSUK to establish that the signatures were not forgeries and were made without the consent of the Claimants; it is for the Claimants to establish that they were.

[73]CSUK has not indicated that it will have any positive evidence linking the Claimants to the Charges, although it maintains that some may emerge through the further Trowers disclosure, and subsequently the parties’ disclosure, as the parties prepare for trial. It is in my judgment not necessary for CSUK to identify such evidence; it is for the Claimants to prove on the balance of probabilities that the Charges were obtained fraudulently. To do this they will be required to make their own disclosure of relevant documents. There is no way of knowing what will emerge but awaiting that disclosure is in my judgment more than merely a case of waiting to see if something might turn up. To grant summary judgment at this stage would be to risk leaving out of account disclosed documents which may have a bearing on the issues to be decided, including the relationship between the First Claimant and Mr Zhang, and Mr Ho. Incorporation of XCapital

[74]The Claimants point to certain oddities surrounding the incorporation of XCapital. In the Companies House registration form it was stated that the First Claimant was “usually resident in England”, which is said to be factually incorrect. Further all the statements in the document are verified by the subscriber who is supposed to be the First Claimant. But the First Claimant is a non-English speaker, so could not have verified the document himself. The First Claimant’s evidence is that he would not have allowed Mr Zhang to be in charge of anything associated with the name Xingli. It is also pointed out that the address for service contained in the registration form was Mr Zhang’s property in Beaconsfield. If it is right that Mr Zhang set up XCapital and the First Claimant did not, then it can only have been set up as an instrument of fraud. That is a critical element of the narrative demonstrating forgery.

[75]It seems to me that that submission is again predicated on an assumption which remains to be established: if it is right that the First Claimant did not set up XCapital then it must have been a fraud. But that “if” has not yet been established except by the First Claimant’s denial that it was he who incorporated or procured the incorporation of XCapital. Whilst the Claimants can point to some oddities and anomalies in the process of incorporation, that does not without more lead to a conclusion that XCapital must have been set up fraudulently and without the First Claimant’s knowledge. By way of speculation only, it might also have been set up incompetently, or with a degree of inaccuracy, or lack of attention to detail, or at the First Claimant’s behest. Moreover, Mr McGhee pointed to a degree of ambivalence in the evidence of the First Claimant concerning his ability to speak English as opposed to his ability to communicate in English. I was taken to a number of emails in which he conducts email conversations in English with English speakers, albeit these were likely to have been with the assistance of Ms Guo Qing to translate. And there are thirty-eight letters in English regarding the Together loans which were addressed to the First Claimant at his Hong Kong address. The point remains that he typically was able to conduct business in written English, quite possibly with the assistance of his staff, but nonetheless proceeding in English.

[76]Without hearing from the protagonists and without the opportunity to test their evidence, it is not safe to draw the hard and fast conclusions I am being asked to draw. The question remains: is the prospect of CSUK being able to challenge the Claimants’ case merely fanciful? Or is there a realistic prospect of doing so? In my view the oddities attending the incorporation of Capital go both ways, and tend more to the latter than to the former; they raise questions, but the answers are far from obvious, and require to be explored. Funds obtained for investment into Made in London Media Limited

[77]In a letter dated 4 October 2019 Mr Zhang told Together “My uncle and I are taking this bridging loan in order to provide a cash injection into the business “MADE IN LONDON MEDIA LTD”. … The bridging loan will be repaid by the sale of the Property which has now been listed on the market.”

[78]Mr Booth says that the property was not being sold, so this shows that the First Claimant was not involved. That is not what it shows. It shows that Mr Zhang was saying something that the Claimants say was not true. It does not show that the First Claimant was unaware that Mr Zhang was making this statement, nor more generally that he was unaware that monies were being raised. It does involve the same business that Mr Zhang refers to in his confession; but there is no first hand evidence of that confession before me.

[79]The Claimants submitted that it is incredible that Mr Huang should have been involved in the business ventures of Mr Zhang without any paper trail, and without ever seeing any return or having any information about or involvement with the business activities of Mr Zhang. In my judgment it is not inherently incredible that one businessperson could encourage or agree to another raising funds from assets of the first for investment into his business, the more so if they are related by marriage. Moreover, there has been only limited disclosure from the First Claimant and Mr Ho. Further, it is not possible to say conclusively that there will emerge no paper trail of any sort of agreement between them. I am not saying this is likely. I am saying it is not fanciful, and it cannot be ruled out. Forged identity documents

[80]The Claimants say that forged documents purporting to be those of the First Claimant were provided as proof of identity for the purposes of obtaining the Loans. The Claimants rely on a number of apparently doctored bank statements purporting to show a consolidated summary of the accounts of the First Claimant with DBS Treasures, which I understand to be a Hong Kong bank. I was taken to one example, on which can be seen several discrepancies between the statements submitted as evidence of identity and the true original statement for that period. The reference number in the document supplied differs in the last four digits from the reference number which appears on the reference bank statement. The doctored statement contains a date including the year 2109, clearly a mistake. The totals for the savings account and the fixed deposit account are higher in the statement alleged to be a doctored document than those in the genuine statement for the same period. Moreover, there is an arithmetical mistake in the total figure when the two component figures are added together. The statement is certified as a true copy of the original by Mr Ho for Gateley plc. This is just one of a number of such documents which are self-evidently forgeries, as CSUK accepts, including documents purporting to come from UBS as well as DBS.

[81]The submission is that the doctored documents were supplied to satisfy CSUK as to the identity of the applicant, namely the First Claimant, and that this shows he was unaware of the Charges, since if he had been aware of them he could have been asked to provide, and would have provided, genuine documents. There is some force in this submission. The evidence certainly suggests that something less than straightforward was happening. But in my judgment it cannot carry the day whilst the other questions I raise above remain unanswered. Whilst it is clear that the documents are forgeries based on originals, it is, as Mr McGhee submitted, simply unclear who created these forged documents or for what purposes. It also raises the question of how the forger had access to the genuine documents on which to base the doctored documents. No account has been given of that.

[82]The UBS forgeries contain a further oddity. One of them, dated 19 December 2019, deals with three properties which were in fact purchased in the names of the Claimants, and which the Claimants accept were purchased in their names pursuant to their intentions. So it seems as though forged references were supplied for the purposes of transactions into which the Claimants entered knowingly and intentionally. Further forged UBS statements for Rosy Prospect Enterprises Limited, a company owned by Mr Huang, were sent by the First Claimant to Daphne Chi of UBS in June 2024. The First Claimant gives an account of how this came about in his third witness statement, in which he says his long estranged daughter sent them to him in May 2022, two years earlier, in retaliation for her then husband having not been offered a job by Mr Zhang, a story which may prove to be true but is on the face of it bizarre. These anomalies and mysteries make it impossible to draw the inferences I am asked to draw as to the authors of the forged DBS and UBS references, their motivations, or their intentions. Mr Ho’s fraudulent conduct

[83]During the process of obtaining the Charges, everything required from Trowers, whom CSUK understood to be acting for the Claimants, was left to Mr Ho to supply. The Claimants say that the signatures, the execution of documents, and the ILAs all trace back to Mr Ho. If Mr Zhang was responsible for obtaining of £1.737 million, that must have been in conjunction with Mr Ho, since he was at that time responsible for paying out sums from the client account. As I have commented previously, the question of whether Mr Zhang did receive the £1.737 million remains to be proved.

[84]My attention has also been drawn to the fact that Mr Ho has been conspicuously elusive since these matters came to light. I was taken to a number of emails and letters to Mr Ho from Ashurst between August 2022 and June 2023 making repeated requests for a meeting to discuss Mr Ho’s involvement in the Charges. In spite of indications from Mr Ho that he would be willing, that meeting never eventuated.

[85]Mr Ho has provided two witness statements pursuant to the order for non-party disclosure. In essence Mr Ho says that, although in 2021 he was sent documents for signing, he was not instructed to deal with the documents or to arrange for them to be signed (though his statement on this is ambiguous – it is not clear whether this applies merely to a subset of the documents or to all the documents he said he was sent). In any event this statement sits uneasily with an email he exhibits from Ms Catherine Lewis, a partner at Trowers, dated 25 March 2021, attaching certificates of execution concerning the ILAs, in which Mr Ho was expressly requested to select and prepare the appropriate forms, and he was notified that in due course Ms Lewis would send the security documents “to you to arrange for execution by [the Claimants]”.

[86]Mr Ho further says he no longer retains any saved files relating to the Claimants, nor can he locate any emails to the Claimants, CSUK, Mr Zhang or XCapital in respect of either of the Loans. He did not draft attendance notes regarding the ILAs. He no longer holds any GCL or Gately related documents, having left the firm in early 2021, and any such messages were on a work phone which is no longer available to him. He no longer has any earlier communications with the Claimants or Mr Zhang on WeChat since he replaced his phone sometime in 2022, and records were either lost or irrecoverable from the transfer of data from the old phone to the new phone. Mr Booth suggests that at that point, coming after the confessions of Mr Zhang and the instigation of the Zhang Claim, Mr Ho must have been warned by Mr Zhang of the situation the suggestion being that the replacement of the old phone was part of a deliberate attempt to destroy evidence, and I am invited to treat the old phone/new phone evidence with some suspicion.

[87]Following complaints that Mr Ho’s first witness statement did not fully comply with the non-party disclosure order, Mr Ho filed a second witness statement in which said he had conducted further searches which (to summarise) yielded no relevant documents.

[88]Mr Ho’s response to the non-party disclosure order is therefore extremely limited. Moreover, his witness evidence relates only to the search for documents in accordance with the order, and is not intended to be a witness statement for the purposes of addressing the allegations against him in this claim. I am invited to conclude that his evasiveness and the flimsiness of excuses regarding the lack of documents confirm his complicity in the fraud perpetrated on CSUK. I have concluded that, notwithstanding the sparsity of the evidence of Mr Ho is striking, I am not in a position to draw that inference. That is because however likely it is that Mr Ho was involved in misleading CSUK, it is not possible at this summary stage to take the further step required, which is to infer that CSUK has no reasonable prospect of challenging the claim that the Claimants knew nothing about the Loans, the Charges, and XCapital. Whilst it may seem possible if not probable that Mr Ho was involved in fraudulent activity, that of itself does not demonstrate that the Claimants had no knowledge of it. Travel Records

[89]The Claimants rely on a statement made in an email of 11 June 2020 in which Mr Ho, then still working for Gately Legal, confirmed that Gately Legal had the “wet ink version and [was] holding original” of what was described as the mortgage deed. This response followed an email dated 9 June 2020 in which Mr Woods of MT Finance asks Mr Ho to confirm Mr Woods’ understanding that the First Claimant “has in fact flown to the UK and executed the security documentation in your presence. Is this correct?” This particular question was chased by Ms Leona Ho of Taylors, solicitors acting for MT Finance, in an email dated 19 June 2020, followed by a request to see a copy of the entry stamp in the First Claimant’s passport confirming the date he arrived in London, and asking, if the First Claimant was still in London, if he would attend a meeting on the following Monday before release of the funds.

[90]Mr Ho gave short shrift to this request, saying that he was unwilling to provide the requested materials, and unwilling to risk his clients’ “trust in my services and discretion”. He suggests that the information already provided should suffice. He also confirmed that the First Claimant was no longer in the United Kingdom but had returned to China, saying that the First Claimant had “purposely [taken] a flight to London to complete the outstanding signing requirements and he immediately returned to China.”

[91]The Claimants say this was a falsehood as is demonstrated by an examination of the travel movements of the First Claimant. They also say that this is the last piece of the jigsaw showing that Mr Ho is at the centre of everything: he witnesses all the relevant documents; he allegedly provided advice in relation to the relevant documents; he provides the doctored identity documents; he witnesses the signing of all the Former Charges; and he is the one in charge of the documents that are sent to him for the Claimants’ signature. Trowers only have his word that the documents went to Hong Kong; or that the First Claimant ever came to England. It is quite plain, the Claimants say, that the conduct is deliberate and dishonest. It would not be right for the First Claimant to be deprived of his rights just because a solicitor who can plainly be seen to have acted fraudulently has chosen not to proffer any explanation at this stage.

[92]In response to the issue of the significance of the travel records Mr McGhee on behalf of CSUK took a number of points. First, he highlights the fact that the travel records, as they have been presented in the Claimants’ evidence, have been generated at least in part by reference to information provided in a letter from UK Visas and Immigration. That information was qualified by the fact that the Home Office border system holds records of passenger UK entry and exit date only via scheduled commercial routes. So that information would not include details of any private flights taken by the First Claimant.

[93]Next, the same letter also says that the accuracy of the information provided is dependent on the quality of the data submitted by the carriers. Mr McGhee drew my attention to the fact Mr Lim, principal lawyer in Hong Kong advising the Claimants, notes in his first witness statement dated 4 November 2024 that the information provided by UK Visas and Immigration is inaccurate in at least one respect, not of relevance to the particular issues in this case, but demonstrating that it cannot be relied upon to be wholly accurate.

[94]The further point was taken that the documents may have been sent to the First Claimant in Hong Kong to sign, so that the fact that he was not in the United Kingdom on the date of their signing may not necessarily entail that he did not sign them himself, in Hong Kong, as indeed was intended to happen (and may have happened) in relation to the completion of certain documents in March 2021, as set out in an email from Ms Katharine Lewis of Trowers dated 30 March 2021 to Marc Glancy at Farrer’s in which it was said that upon receipt of various documents “we will forward those to solicitors in Hong Kong … to arrange for execution.” That appears to be a reference to Mr Ho who was understood to be in Hong Kong for at least part of 2021.

[95]I will not rehearse the further submissions made about the issue of the First Claimant’s whereabouts on the date of execution of the Charges. The point is that in order to reach a conclusion on that question, which the Claimants say is central to their evidential case, I will in effect have to conduct a mini trial on the documents. But the documents available at this juncture themselves lead to further questions which will need to be put to witnesses, and will also lead to further disclosure. This goes far beyond what is achievable on a summary basis, and highlights that the issues in this case require full disclosure, witness evidence, possibly expert evidence, and a thorough airing at trial. This is not a case for summary judgment. Exceptional circumstances

[96]CSUK submits that in any event, even if the Charges were fraudulently obtained and therefore entered on the register by mistake, there are exceptional circumstances that mean that the court should not order rectification of the register. Without doing a disservice to the careful submissions made by both Counsel on this issue, given my firm conclusion on the central question, visiting this issue in any detail is unnecessary. I will just say this. It seems to me that the facts relevant to the question whether the circumstances are exceptional will be heavily dependent on the findings on the principal questions on how the mistake came to be made. That factual enquiry can only be fairly undertaken by a full trial, for all the reasons I have given. It follows that the question of exceptional circumstances would itself require that the full factual enquiry be undertaken before it can be properly addressed. If anything this highlights a lack of realism, if I may say so, in supposing that the factual foundation of this far from straightforward forgery claim could be determined summarily. Conclusion

[97]The application rested principally on the twin peaks of the contentions firstly that the signatures on the Charges were not those of the Claimants and secondly that there was no evidence demonstrating or suggesting any links whatsoever between the Claimants and the Charges, or the incorporation of XCapital. For the reasons I have given, I have reached the view that neither of those elements, whether considered in combination or in isolation, justify a conclusion that there could be no effective challenge to the Claimants’ case when matters come to be explored at trial.

[98]I have addressed reasonably fully the other pillars on which the application was constructed for two reasons. First, it was right that the careful, detailed and intricate submissions on behalf of the Claimants were addressed, so that the Claimants can be satisfied that the Court has considered their case at its highest. Secondly, in my view the combination of all those elements, rather than supporting the proposition that there could be no realistic as opposed to fanciful prospect of successfully defending the claim, served to highlight that the factual structure underpinning the Claimants’ case is an intricate one, depending on multiple inferences, and that there are questions that remain to be addressed by the Claimants in relation to important aspects of their case.

[99]To give summary judgment at this stage would require in effect a mini-trial on the documents, an outcome warned against by Lord Hope in Three Rivers. It would also be inherently unfair to CSUK, being based principally on accepting witness evidence from the Claimants which CSUK has not been given the opportunity to test, and hearsay evidence which will remain untested if as seems to be contemplated Mr Zhang will not give evidence at trial. It is in my judgment unfair and also unsafe to give summary judgment when so much of the Claimants’ case involves assertions by them as to their state of knowledge, assertions which CSUK is entitled to test. I remind myself of the observations of Lord Hamblen of the Supreme Court in Okpabi, that more complex cases are unlikely to be capable of being resolved by summary judgment without conducting a mini-trial on the documents, and that that process will necessarily have to take place without the benefit of disclosure and oral evidence. That is not the object of the rule, which is designed to deal with cases that are not fit for trial at all. Nor in my judgment is it reconcilable with the right of all parties to a fair trial.

[100]It may prove to be correct that Mr Ho and Mr Zhang have together perpetrated a fraud, harming not only CSUK but also the Claimants whose properties are currently subject to the Charges. But as Lewison J (as he then was) observed in Easyair, because a case turns out at trial not to be very complicated it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. In particular, the Court must be cautious about making a summary determination, even when there is no obvious conflict of facts, where there are reasonable grounds to believe that a fuller investigation into the facts would add to or alter the evidence and so affect the outcome of the case at trial. For the reasons I have given this is such a case. The parties’ disclosure, exchange of witness and expert evidence, and cross examination is essential in order to have a sufficient degree of confidence in the outcome, even if in the event the outcome is that for which the Claimants contend: see again the remarks of Lord Hamblen in Okpabi at 1149, G.

[101]I therefore dismiss the Claimants’ application for summary judgment on the defence and counterclaim. Unless there are any other consequential matters to be dealt with, if the parties cannot reach agreement on the question of costs I would anticipate determining those issues to be addressed by written submissions, with suitable directions for exchange, but will consider any application for an oral hearing if either or both parties feel that to be necessary.