NARGHIS BEGUM v (1) NADEEM ISSA (2) SHAMEEM AKTAR ISSA - and – THE MORTGAGE WORKS [2014] EW Misc B51 (CC)

IN THE COUNTY COURT
Sitting in Leeds
[2014] EW Misc B51 (CC)Case No Case No: 3 NE 30071Venue The Court House, Oxford Row, Leeds LS1 3BG
Between
NARGHIS BEGUMClaimant(1) NADEEM ISSA (2) SHAMEEM AKTAR ISSA - and – THE MORTGAGE WORKSDefendants Intervenor
Before
His Honour Judge BehrensJacqueline Smart (instructed by Appleby Hope & Matthews) for the ClaimantElizabeth Darlington (instructed by Watson Woodhouse) for the First DefendantAntoine Tinnion (instructed by Askew Bunting LLP) for the Second DefendantHearing dates: 22, 23 and 24 October 2014Date 5 November 2014

Judge Behrens :

[1]Introduction This is an unfortunate family dispute over the property rights in respect of 107 Chalford Oaks, Acklam, Middlesbrough TS5 8QQ ("107 Chalford Oaks").[2]Although Narghis Begum and Nadeem Issa were never married they went through an Islamic ceremony of marriage in September 2000 and cohabited until 2011. There were 2 children from the relationship. Narghis Begum never worked and left financial matters to Nadeem Issa.[3]In 2005 they bought 107 Chalford Oaks. It was transferred into joint names with an express declaration of trust that they held it as joint tenants. In 2007 there is highly controversial transfer whereby Narghis Begum is said to have transferred 107 Chalford Oaks into the sole name of Nadeem Issa for nil consideration (save for an indemnity in respect of sums due under the mortgage). Narghis Begum says she never signed this document. Nadeem Issa and (so far as relevant) his brother Shameem Issa say that she did.[4]Following the breakdown of the relationship between Narghis Begum and Nadeem Issa in 2011 Nadeem Issa sold 107 Chalford Oaks to his brother Shameem Issa for £120,000 with a gifted deposit of £30,000 promising to give vacant possession on completion. Shameem Issa bought the property for investment purposes. He intended to fund the purchase by letting it out to tenants.[5]It is Narghis Begum's case that she never consented to the sale. There were a number of incidents in 2011 and 2012 as a result of which there have been a number of other proceedings between the parties to which it will be necessary to make brief reference.[6]Narghis Begum is currently occupying 107 Chalford Oaks with her 2 children, one of whom is partially sighted and registered disabled. The mortgage instalments are being paid by Shameem Issa who receives nothing from Narghis Begum. Narghis Begum is paying all the other outgoings.[7]There are accordingly a number of issues to be resolved: 1. Whether Narghis Begum has any beneficial interest in 107 Chalford Oaks. This turns on the question of whether she signed the 2007 Transfer. If she did sign it there is the further question of whether it was intended to transfer anything more than her legal interest in 107 Chalford Oaks. 2. If Narghis Begum's beneficial interest survived the events of 2007, the question arises whether it was overridden by the registration of Shameem Issa's title in 2011. Narghis Begum contends that her interest is an overriding interest by virtue of her occupation. Nadeem Issa and Shameem Issa accept that Narghis Begum was in actual occupation but contend that she ought to have responded to "informal inquiries" that were made of her in the early autumn of 2011. 3. If Narghis Begum's interest survived the sale to Shameem Issa, a number of questions arise under the Trusts of Land and Appointment of Trustees Act 1996 ("TOLATA") as to what should happen to 107 Chalford Oaks. Narghis Begum wishes to live there until her youngest child is 18 or finishes her education. Shameem Issa wishes to realise his investment by selling the property. There are also issues under TOLATA and/or the principles of equitable accounting as to what payments should be made by Narghis Begum in respect of her occupation since the separation and for the future. 4. Shameem Issa's interest is subject to a mortgage in favour of The Mortgage Works. The Mortgage Works are a party to these proceedings. Although, in the interest of saving costs, it did not appear at the trial it set out its position in a witness statement by Louise Batty dated 19 August 2014. It is content to abide by any order of the Court. However insofar Narghis Begum has a beneficial interest which overrides the interest conferred by its registered charge it seeks to be subrogated to the rights of any earlier mortgage binding on Narghis Begum.[8]The sums involved in this dispute are not large. The valuation suggests that its value is of the order of £120,000. The costs of this litigation have been high. In those the circumstances the parties are anxious that I attempt to deal with as many of these issues as possible in order to avoid further expensive legal proceedings. 2. The facts 2.1 The relationship[9]Narghis Begum and Nadeem Issa started cohabitation in September 2000 when they entered into an arranged Islamic ceremony. It is not suggested their marriage is recognised under English civil law, but for the purpose of this judgment I shall describe it as a marriage. There were two children of the relationship – Nadeem born on 14 November 2001 and Iqra born on 24 March 2005. Iqra is partially sighted and registered disabled.[10]Narghis Begum did not work throughout the marriage. She said it was agreed between them that he would work and that she would look after the children.[11]The relationship broke down in 2011. Narghis Begum alleges that Nadeem Issa was violent and controlling towards her. Although Nadeem Issa denies the violence it is to be noted that the police have been involved on at least two occasions and on one occasion Nadeem Issa accepted a caution. It is also to be noted that Nadeem Issa was prosecuted following the incident in May 2012. The prosecution was unsuccessful. He left 107 Chalford Oaks in May 2012 after the incident giving rise to the prosecution. 2.2 106 Costa Street[12]Narghis Begum and Nadeem Issa initially lived with Nadeem Issa's family until 2002 when they moved into 106 Costa Street, Middlesbrough, a property then owned by Nadeem Issa's father. At some time Nadeem Issa's father gave the property to Nadeem Issa. According to Nadeem Issa 106 Costa Street was worth about £30,000. There was no mortgage.[13]106 Costa Street only had 2 bedrooms and was not in a good area. It was sold as part of the transaction when 107 Chalford Oaks was bought in 2005. Completion of the sale took place on 3 March 2005. The net proceeds of sale amounted to £54,598.25, which were sent to Nadeem Issa's bank account by his solicitors on that day. 2.3 107 Chalford Oaks Acquisition in 2005[14]There is a conflict of evidence as to the discussions and the parties' intentions when 107 Chalford Oaks was acquired. It will be recalled that Iqra Issa was born on 24 March 2005 and thus Narghis Begum will have become pregnant sometime in late September 2004. According to Narghis Begum, she discussed buying another house with Nadeem Issa sometime in October 2004. She said it was always agreed that the property would be bought in joint names. She agreed that it was Nadeem Issa who discovered that 107 Chalford Oaks was for sale and that he viewed it first. She however said that she viewed it before agreeing to buy it. She said that there was an appointment at which she, Nadeem Issa and their son viewed it. She repeated that it was never the intention that it would solely belong to Nadeem Issa. It was to be a joint purchase . That was what was agreed when it was bought.[15]It was Nadeem Issa's case that it was always his intention that he should be the sole owner of 107 Chalford Oaks. He would be responsible for the mortgage and all of the outgoings.[16]Mr Tanveer Hussain is the sole proprietary of Prosper Finance, a firm which (amongst other matters) advises on mortgage matters. He is a friend of Nadeem Issa. Nadeem Issa consulted Mr Hussain who advised him that GMAC were offering favourable terms. However, according to Mr Hussain, GMAC were not prepared to lend to Nadeem Issa alone in a situation where Narghis Begum was in occupation of the property. It was necessary for the property to be in joint names. Mr Hussain advised Nadeem Issa that it would be possible to transfer the property into his own name after 2 years when the fixed rate offered by GMAC expired. (In evidence Mr Hussain accepted that any such transfer would require the consent of Narghis Begum). Nadeem Issa did not accept that Narghis Begum had seen the property before they moved in. It had been viewed only by himself and Mr Hussain.[17]Askew Bunting was instructed to act in the purchase. The matter was dealt with by an Associate Solicitor, Mr Dixon. Mr Dixon's first letter dated 28 th November 2014 is written solely to Nadeem Issa. It is clear from that letter that he believed that Nadeem Issa was to be the purchaser.[18]On 10 December 2004, GMAC made a mortgage offer to Narghis Begum and Nadeem Issa in the sum of £94,000. The offer provided for a reduced mortgage rate of 5.24% for 2 years until January 2007 and thereafter the standard variable rate.[19]It is plain therefore that both Narghis Begum and Nadeem Issa signed the mortgage application form. On 22 December 2004 Mr Dixon wrote to both Narghis Begum and Nadeem Issa. The letter referred to the Purchase questionnaire which had indicted that the property was to be in the sole name of Nadeem Issa and drawing the mortgage offer in joint names. It asked them to confirm that the property was to be in joint names.[20]On 24 December 2004 Mr Dixon wrote to both Narghis Begum and Nadeem Issa enclosing the draft contract. The letter referred to "Your Purchase". There is accordingly an inference that they had confirmed that it was to be a joint purchase.[21]It is not clear from the file when contracts were exchanged. However completion took place on 16 February 2005. The completion statement reveals that the purchase price was £134,000, that there was a mortgage of £93,930 and that an additional sum of £41,914 had been received from the purchasers. When she gave evidence Narghis Begum accepted that she had not provided any of the finance for the purchase. It follows that it must have been provided by Nadeem Issa.[22]The TR1 which is dated 15 February 2005 is signed by both Narghis Begum and Nadeem Issa and contains an express declaration of trust in the following terms: The Transferees are to hold the Property on trust for themselves as joint tenants.[23]It is not clear when completion took place. Both the mortgage and the Transfer are dated 15 th February 2005. However it seems clear that Narghis Begum and Nadeem Issa did not in fact sign the Transfer until shortly after 1 March 2005.[24]Following the execution of the TR1, Narghis Begum and Nadeem Issa were duly registered as proprietors under Title No. CE102285.[25]It is common ground and confirmed by the documents that Narghis Begum visited Askew Bunting on 2 occasions during the course of the transaction – once shortly before 2 nd February 2005 and once when the Transfer was signed.[26]There are no file notes on Askew Bunting's file giving detail of any advice that may have been given in relation to the decision to put 107 Chalford Oaks in joint names. Remortgage in 2007[27]Narghis Begum and Nadeem Issa moved into 107 Chalford Oaks following the completion of the purchase in 2005. On 31 May 2005 GMAC assigned or sold its interest in the mortgage to West Bromwich Mortgage Company Ltd ("WBMC").[28]It is common ground that Nadeem Issa paid all the mortgage instalments. It was agreed between the parties that Nadeem Issa would go out to work and that Narghis Begum would look after the children. There was one bank account in the name of Nadeem Issa. All of his wages were paid into that account. Narghis Begum described Nadeem Issa as secretive over his finances. He did not discuss them with her. She had no money of her own. She said that she would never open mail addressed to Nadeem Issa. However she would open and read mail addressed to them jointly. If she was asked to sign a document she would read it before signing.[29]It will be recalled that the mortgage with WBMC was at a fixed rate of 5.24% for 2 years and thereafter at the standard variable rate. By June 2007 the sum due to WBMC was £45,293.32. Thus some £50,000 had been paid off the mortgage in 2 years. There was little or no evidence as to where this £50,000 had come from bearing in mind the modest earnings of Nadeem Issa. It may be that it came from the proceeds of sale of 106 Costa Street. However if it did, a similar question arises as to the source of the deposit of £41,914 which was paid in February/March 2005.[30]In any event, in April 2007 Nadeem Issa consulted Mr Hussain about the possibility of a remortgage on more favourable terms that the variable rate then due under the WBMC mortgage. According to Nadeem Issa he also wanted 107 Chalford Oaks to be transferred into his sole name.[31]As a result of Mr Hussain's advice on 16 April 2007 Alliance & Leicester plc ("A & L") sent Nadeem Issa a mortgage offer of £45,000. The terms included a fixed 3 year rate of 5.29%. On the same date A & L instructed solicitors firm O'Rourkes to act for them in the transaction. Mr Hussain said that he selected O'Rourkes to act for both Nadeem Issa and A & L as he had referred a lot of work to them. O'Rourke's file up to 27 June 2007[32]O'Rourkes' file has been disclosed for the purpose of these proceedings. There are no file or attendance notes dealing with any meetings or advice that may have been given. There is no client care letter addressed to Nadeem Issa or Narghis Begum.[33]The matter was dealt with by an employee solicitor, Mr. Desmond McCarthy. Mr McCarthy felt able to complete the Certificate of Title (in standard form) on 4 June 2007. At that time it is clear on any view that Nadeem Issa did not have title to remortgage 107 Chalford Oaks as Narghis Begum was a joint owner.[34]On the same day at 3.10 p.m there is a record of a phone call from Kerry at Prosper Finance giving details of the previous mortgage.[35]On 15 June 2007 Mr McCarthy wrote to WBMC asking for details of the amount due under its mortgage. On the same date A & L remitted £45,000 to O'Rourkes. On 18 June 2007 A & L wrote to Nadeem Issa referring to the completion of the mortgage on 15 June 2007 and giving details of the payments due.[36]On 20 June 2007 WBMC provided a redemption statement showing £45,293.32 was due under its charge.[37]On a date which is not clear O'Rourkes prepared a draft TR1 for execution by Narghis Begum and Nadeem Issa. A number of points can be noted about the draft transfer: 1. The Transferors are Narghis Begum and Nadeem Issa. The Transferee is Nadeem Issa. 2. The Consideration clause reads: The Transferor has received from the Transferee the sum of £NIL The amount secured under the mortgage at the date hereof is £22,646.66 [The figure of £22,646.66 is in manuscript. The figure may be explained on the basis that it is half of £45,293.32] 3. There is no declaration of trust. 4. In clause 12 the Transferee agrees to indemnify the Transferor against any liability under the Mortgage Execution of the Transfer[38]It is alleged by Nadeem Issa that the TR1 was executed by himself and Narghis Begum at the offices of O'Rourkes on 27 June 2007. He relies on a TR1 dated (in manuscript) 27 June 2007 and apparently signed by Narghis Begum and Nadeem Issa. The TR1 is identical to the draft TR1 save that the figure of £22,646.66 is typed and the date has been added. The signatures of Nadeem Issa and Narghis Begum are said to have been witnessed by Mr Afzal Butt who is said to be a legal assistant at O'Rourkes.[39]Narghis Begum denies that she ever attended O'Rourkes. She denies that the signature is her signature. It is her case that she never intended to transfer her interest in 107 Chalford Oaks to Nadeem Issa. There were no discussions about it and she did not know that Nadeem Issa had done it until 2012.[40]As this is a central area of dispute between the parties it is necessary to set out the rival versions of events in a little more detail. Before doing so a number of points need to be noted. First, a copy of the TR1 has been examined by a handwriting expert whose opinion is inconclusive. Second there is no file note or attendance note to indicate that either Narghis Begum or Nadeem Issa attended O'Rourkes on 27 June 2007. None of the documents on the file (save for the attendance note itself) make any reference to Narghis Begum. Third, there is on the file a photocopy of Narghis Begum's passport which would have been needed to confirm her identity.[41]Nadeem Issa deals with the matter in the Defence which contains a statement of truth signed by him and his witness statement. In paragraph 5 of the Defence, he says: … As such [Nadeem Issa] instructed O'Rourkes Solicitors to act in the transfer of the property. This was discussed with [Narghis Begum] and she was agreeable to the transfer as she had no interest in the property. Narghis Begum came to the offices of O'Rourkes and she was fully advised as to the contents of the Transfer Deed which she willingly signed in the presence of Afzal Butt …[42]He deals with the transfer in paragraphs 10 -14 of his witness statement. In paragraph 12 he says: I can recall attending with Mr Butt when both myself and the Claimant signed the TR1 in the presence of Mr Butt. … To be clear Mr Butt was not known to me when I instructed him to act in the transfer. In paragraph 14: As the house was, in all but name my absolute property there was no question that I would apply for a mortgage in my sole name. As the Claimant had no financial interest in the house she had no beneficial interest to transfer to me and so this was not an issue.[43]When he gave evidence he said that his conversation with Narghis Begum was simple. She was fully aware that the property was intended to belong solely to Nadeem Issa. She fully understood that as far as he was concerned the property would be transferred to his sole name in 2007.[44]He said that they both attended O'Rourkes' offices. He cannot remember the conversation there. He had booked an hour off work. As the offices were some 8 miles away the appointment was relatively short. He remembers Mr Butt being there. He thinks other people may have been there. Narghis Begum came independently. She brought her passport. As far as he could recall Narghis Begum was never given advice separate from him but he could not remember what advice if any was given to her.[45]He remembers signing the TR1 and seeing Narghis Begum sign in the presence of Mr Butt. He also remembers Mr Butt making an assumption that Narghis Begum was unable to understand or speak English which he regarded as inappropriate.[46]Mr Hussain did not attend the meeting and thus cannot give direct evidence about it. However in paragraph 6 of his witness statement he recalls being contacted by Mr Butt and told that a meeting was necessary. He went on: Following the appointment [Nadeem Issa] called me to say that he had been quite offended by Mr Butt who said "Is she from back home?", and was referring to Narghis Begum. Narghis Begum and Nadeem Issa had also laughed about how long the appointment had taken due to the fact that Mr Butt had spent about 30 minutes going through things with them and telling Narghis Begum that she should see a separate solicitor.[47]Narghis Begum's case is quite different. As already noted she does not accept that she had no interest in 107 Chalford Oaks following the Transfer in 2005. It is her case that the matter was discussed in 2004 when she was pregnant with her second child and that it was expressly agreed that it would be in joint names. She says that she never went to the offices of O'Rourkes in 2007 and that she did not sign the Transfer. She was cross-examined about the mail that came to her house. She was aware that the mortgage moved from GMAC to WBMC because a letter was sent to both of them explaining this. She did notice that letters came to Nadeem Issa after 2007 from A & L. She did not open them but she noticed A & L on the back of the envelope. She also noticed the lack of an annual statement from WBMC after 2007. When asked about this, my note of her evidence reads: I did not know the property had been remortgaged. Nadeem Issa told me that the interest rate - he had changed it over . He did not go into too much detail I did not know the lender had changed He said the interest rate on the mortgage was too high so he has changed the interest rate. He never mentioned if it was with the same provider.[48]It is Narghis Begum's case that she had no idea that 107 Chalford Oaks had been transferred until her solicitors made enquiries of the Durham Land Registry in 2011/2012. O'Rourkes's file after the Transfer[49]As already noted there is nothing on the file to suggest that Narghis Begum attended their offices at all apart from her passport. There is no file note or indication that any advice was given to her.[50]A Land Transaction return was completed indicating the transaction completed on 27 June 2007. On the same day Mr McCarthy signed a letter sending £45,293.32 to WBMC and O'Rourkes prepared an invoice for £200 plus VAT in respect its fees. On 18 September 2007 Prosper Finance sent a letter to Nadeem Issa enclosing a completion statement and requesting payment of some £295.32.[51]Following completion Nadeem Issa was duly registered on the proprietorship register as sole proprietor. Events in 2011[52]As already noted the parties separated in 2011 though at least initially they both lived at 107 Chalford Oaks. In her witness statements Narghis Begum alleges that Nadeem Issa was controlling and violent towards her from about 2001. For the most part Nadeem Issa denies that he was violent. I am not in a position to make any findings on the allegations of violence but I note that on a number of occasions the police were involved and that following an incident in August 2011 Nadeem Issa accepted a police caution. As against that a criminal prosecution arising out of an incident in May 2012 resulted in an acquittal for Nadeem Issa.[53]It is common ground that following the incident in August 2011 the relationship was at an end. It is Nadeem Issa and Shameem Issa's case however that on about 1 September 2011 at the Eid celebration at their parent's home there was a conversation about the sale of 107 Chalford Oaks. It is their case that Narghis Begum was present and agreed with what was said.[54]Narghis Begum accepts that Nadeem Issa and the children were present but asserts that she was not present. There are varying accounts of the conversation. In all of the versions it is said that Narghis Begum was present and took part. Nadeem Issa told his father that he was thinking of selling 107 Chalford Oaks. His father said that if you are going to sell he wanted the £30,000 gift put back into it. Shameem Issa said he was interested in buying. When the matter was put to Narghis Begum in cross-examination and when Nadeem Issa gave evidence there was no suggestion that the price was agreed. However when Shameem Issa gave evidence he suggested that the price of £120,000 was agreed at the meeting. Both Nadeem Issa and Shameem Issa said that Narghis Begum agreed. According to Nadeem Issa most of the time she nodded her head but she agreed. He also said that the breakdown of the "marriage" involved her in a lot of shame.[55]Narghis Begum does not dispute that there was such a conversation. However it is her case that she was not present and accordingly could not have agreed.[56]In his witness statement Shameem Issa also contends that following the meeting at Eid he had a number of meetings at the house with his brother when the progress of the sale was discussed. He contends that that Narghis Begum never raised any queries or claimed any interest in 107 Chalford Oaks.[57]When he gave evidence Shameem Issa embellished this evidence to a considerable extent. He said that there were 3 meetings between 3 rd and 12 th September 2011. He said that at the first meeting Nadeem Issa and Narghis Begum actively discussed the things they were going to keep out of the fixtures and had a general discussion about how quickly solicitors would be appointed.. At the second meeting there was an update in Narghis Begum's presence about the appointment of solicitors. At the third meeting Narghis Begum and Nadeem Issa were told that Shameem Issa had appointed a solicitor and both said that that was OK.[58]None of these details were put to Narghis Begum in cross-examination although it was suggested in general terms that Shameem Issa had visited the property and discussed the transaction in her hearing. Narghis Begum had no recollection of any such conversation. As far as she was concerned Shameem Issa did not visit 107 Chalford Oaks if she was there. Transfer to Shameem Akhtar Issa[59]The sale of 107 Chalford Oaks to Shameem Issa can be dealt with relatively shortly. Nadeem Issa instructed Dobson & Sleeman to act for him. Instructions were received shortly before 17 September 2011. Shameem Issa instructed Gary Johnson & Co to act for him on the same day.[60]There is nothing on either file to suggest that there was any correspondence with Narghis Begum. No enquiries were made of her as to whether she claimed any interest in 107 Chalford Oaks or whether she was agreeable to the sale and was willing to vacate on completion.[61]Contracts were exchanged on 8 November 2011. The purchase price was £120,000 with a gifted deposit of £30,000 leaving a balance of £90,000 to be paid. It was an express term of the contract that vacant possession would be given on completion.[62]Shameem Issa funded the purchase by means of a mortgage advance of £89,885 (£92,250 if one includes the arrangement fee and other expenses) from The Mortgage Works. The gifted deposit was disclosed to The Mortgage Works who were content to proceed on that basis.[63]Completion also took place on 8 November 2011. The charge in favour of A & L was discharged by payment of £33,214.44. There is no completion statement on file but Nadeem Issa confirmed in evidence that he received approximately £56,000 (i.e. £120,000 - £30,000 - £33,214) following the completion.[64]Following completion Shameem Issa was duly registered as the registered proprietor of 107 Chalford Oaks.[65]However Nadeem Issa did not give vacant possession on completion as Narghis Begum remained in occupation with their two children. As already noted she claims that she did not discover about the sale until she consulted solicitors in 2012. Events in May 2012[66]According to Shameem Issa he did not want his brother and Narghis Begum to be homeless so he reluctantly agreed that they could stay at 107 Chalford Oaks for a few weeks. Nadeem Issa made him a number of false promises but did not leave until late May 2012.[67]At some time in May 2012 when Narghis Begum and the children were visiting her parents in Leeds Shameem Issa changed the locks at 107 Chalford Oaks. He also made arrangements to install a tenant. In response, Narghis Begum commenced legal proceedings in the Middlesbrough County Court for, amongst other things, an occupation order. At a hearing before DJ Mainwaring Taylor on 14 June 2012 it was agreed that Narghis Begum could return to occupy 107 Chalford Oaks and that no attempt would be made to evict her pending the resolution of this claim.[68]She has returned to the property and has occupied it since then without interference from Shameem Issa. Nadeem Issa paid the mortgage until he left in May 2012. Shameem Issa has paid the mortgage since then. No payments have been made by Narghis Begum in respect of her occupation. 3. Financial Position of the parties Narghis Begum[69]When she gave evidence Narghis Begum said that she was currently living with the benefit of state benefits. She receives £71 per week Job Seekers allowance, £110 child tax credit per week and £134.80 child benefit per month for the children.[70]She produced a report dated 17 October 2014 from Alison Brown, the Mobility Officer in respect of Iqra (now aged 9). She points out that Iqra is virtually blind in one eye and visually impaired in the other eye. She lacks confidence in unfamiliar surroundings and takes part in an orientation programme to help her gain independence. She is gaining in confidence and is still very nervous when crossing the road. If she had to move area she would struggle to cope. She would need placement in a specialist VI support base and a significant amount of specialist habilitation input to build her confidence.[71]Narghis Begum rejected the suggestion she could live with her parents. It is a semi detached house in Leeds with 3 bedrooms. As well as her parents two other brothers live there. One is married with 2 children.[72]She had been offered an "in principle" mortgage of up to £60,000 with one of her brothers as joint mortgagee. Nadeem Issa[73]Nadeem Issa currently lives with his father brother and sister in law. He is employed by the NHS and earns £1,900 per month. His expenses include £300 per month for fuel, £200 per month board for his father, £348 per month child support for his children, personal expenses of £200 - £300 per month and legal fees (which currently exceed £20,000) at the rate of £500 per month. Shameem Issa[74]Shameem Issa lives at 105 Chalford Oaks, next door to Narghis Begum. He is married with 3 children one of whom has minor learning difficulties. He works for Middlesbrough Council earning £1,500 per month. His wife does not work. He owns 4 properties including 107 Chalford Oaks. The other two properties are 87 Chalford Road and a property in Portman Street Middlesbrough given to him by his father. 4. The first set of issues Execution of the TR1[75]In the light of numerous well-known authorities it was common ground between the parties that the effect of the express declaration of trust in the TR1 dated 15 February 2005 was to make Narghis Begum a beneficial as well as a legal joint tenant. There was no suggestion that there was fraud or mistake.[76]The first critical question is whether Narghis Begum signed the TR1 dated 27 June 2007. This is essentially a question of fact and depends on the credibility of the parties.[77]Both Mr Tinnion and Miss Darlington invited me to reject Narghis Begum's evidence. In paragraphs 3 and 4 of his helpful closing written submissions, Mr Tinnion set out the matters he relied on: 3. The Court's attention is specifically drawn to the following:a. C's signature on the 2007 transfer was witnessed by an independent witness employed by O'Rourkes – Afzal Butt;b. there is no basis for an inference of negligence, still less an inference of fraud, on Mr. Butt's part – by his signature, this is what Mr. Butt said he did, and there is no reason (other than C's denial) to conclude he did not;c. the burden of proof rests on C – C could have sought evidence from Mr. Butt to prove he did not witness her signing the 2007 transfer;d. in addition, Mr. Butt was well known to Tanveer Hussain;e. after the meeting at which the 2007 transfer was signed, both Mr. Butt and D1 telephoned Mr. Hussain about the offensive remark Mr. Butt made about C in D1's presence, D1 to complain, Mr. Butt to apologise;f. as someone who obtained business from Mr. Hussain's recommendations, this is what one might have expected Mr. Butt to do;g. if D1 attended O'Rourkes with a female pretending to be C, it is hard to believe D1 would have called Mr. Hussain to complain – far more likely D1 would have said nothing and kept a low profile, having gotten away with fraud;h. Mr. Hussain's evidence shows C was clearly lying when she claimed not to have attended O'Rourkes and spoken to Mr. Butt on 27 June 2007. 4. The Court is also referred to the following evidence: a. O'Rourkes required proof of ID from D1 and C (as one would expect); b. O'Rourkes had proof of ID on file – copies of D1 and C's passports (C's issued in February 2007), and in D1's case, also a recent utility bill; c. without the passport holder physically present, handing over C's passport would not have proved anyone's ID; d. it is likely whichever employee at O'Rourkes took C's passport to copy it would have looked to see whether the female whose passport it was meant to be looked like the female on the passport photo – ie, a visual check would have been done, and the employee would have raised an issue at the time if they were in any doubt as to identity; e. as Mr. Butt was meant to be witnessing C's signature, and since C's passport was physically there, it is likely that Mr. Butt would also have checked C's passport before confirming he had witnessed C's signature.[78]In his oral submissions Mr Tinnion also submitted that Narghis Begum's evidence that she was unaware of the change of lender from WBMC to A & L was not credible.[79]There is force in some of these submissions but there are strong countervailing points that can be made in Narghis Begum's favour.[80]With respect, I cannot agree that the burden of establishing that she did not sign the TR1 is on Narghis Begum. It is common ground that as a matter of law Narghis Begum was prior to June 2007 entitled to a beneficial half share in 107 Chalford Oaks. It is the Defendants' case that she transferred that half share to Nadeem Issa. In the ordinary way a validly executed TR1 would establish such a transfer. However where, as here, there is a dispute as to whether the TR1 is validly executed the burden is on the Defendants to establish the validity of the TR1.[81]The starting point, as I see it, is the declaration of trust in the TR1 dated 15 February 2004 when 107 Chalford Oaks was acquired. This was signed following the letter dated 22 December 2004 when Nadeem Issa was specifically asked about the intended ownership of 107 Chalford Oaks. Narghis Begum and Nadeem Issa visited Mr Dixon on at least two occasions during the transaction and there is no reason to believe that he did not advise them of the effect of the declaration of trust. To my mind the declaration of trust strongly supports Narghis Begum's evidence as to the intention of the parties in 2004/5. At that time the parties had one child aged 3 and Nadeem Issa was expecting a second child. It is hardly surprising that the parties would agree that the house would be held as beneficial joint tenants. Nadeem Issa's explanation of the reason for the declaration of trust was not convincing. There is no documentary evidence that GMAC required the mortgage to be in joint names and there seems no reason why it should not have been in Nadeem Issa's sole name if Narghis Begum signed the usual disclaimer which mortgagees required in the case of occupiers. I accordingly prefer Narghis Begum's evidence as to the discussions that took place in 2004 and 2005 when 107 Chalford Oaks was acquired.[82]Second, I can see no good logical reason why Narghis Begum should transfer her half share back to Nadeem Issa in 2007 simply because he wanted a reduced interest rate. There is absolutely no reason why the new mortgage should not have been in joint names.[83]Third, (apart from the passport) there is a complete absence of any reference to Nadeem Issa on O'Rourkes' file. Importantly there is no reference to her attending, receiving advice or executing documents. It does not follow from the passport that Narghis Begum attended. There are a number of unsatisfactory features of the file. It is by no means clear how O'Rourkes managed to give a Certificate of Title on 4 June 2007 and to complete the Transaction on 15 June 2007 when Narghis Begum is not said to have signed the TR1 until 27 June 2007.[84]Fourth, there is the fact that Afzal Butt has not been called to give evidence. No explanation has been provided for this. It has not been suggested that he cannot now be found. If, as Nadeem Issa contends, Afzal Butt was present when Narghis Begum signed the TR1, I would have expected him to have been called to say so.[85]Fifth, there is the remarkable difference between Mr Hussain's account of what he was told of the meeting and Nadeem Issa's evidence at the trial as to what happened. Apart from the unfortunate remark about Narghis Begum's origins Mr Hussain is said to have been told that Afzal Butt spent half an hour going through the TR1 in detail with Narghis Begum. Afzal Butt was, of course, only a legal assistant and thus had no qualifications. When Nadeem Issa gave evidence he could not remember if anyone gave advice to Narghis Begum. He could not remember whom he saw or what was said. If Narghis Begum really had received 30 minutes advice from Afzal Butt I would have expected Nadeem Issa to have remembered it.[86]Sixth, I was not impressed with Nadeem Issa as a witness. His evidence was throughout geared to what he wanted and he seemed to have no concept of the joint wishes of the parties. Narghis Begum's description of him as "controlling and secretive" seems very apposite. I have already cited part of paragraph 14 of his witness statement which clearly demonstrates a quite unrealistic attitude to Narghis Begum's rights in 2005. Even his brother referred to "false promises" made by him. In addition there is the unimpressive fact that Nadeem Issa was willing to sell 107 Chalford Oaks over the head of Narghis Begum and his 2 children without making any provision for where they were going to live. I certainly did not feel I could rely on his evidence unless corroborated.[87]In the end I am not satisfied that Narghis Begum signed the TR1 on 27 June 2007. I do not know how a copy of Narghis Begum's passport came onto their file but I do not intend to speculate. Equally, I do not find it at all surprising or incredible that Narghis Begum did not know that A & L had taken over the mortgage.[88]It follows that Narghis Begum's beneficial interest survived the registration of Nadeem Issa's title. There was no valid registrable disposition of a registered estate for valuable consideration. Construction of the Transfer[89]In the light of my views on execution no question of construction arises and thus my views on this issue would be "obiter dicta". The construction of the TR1 would be in accordance with the numerous modern authorities on construction of documents. In general, the subjective intention of the parties is irrelevant.[90]The general principles of construction are set out in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912F-913G; Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38 ; [2009] 1 AC 1101 at [14]-[15] and [21]-[25] and Rainy Sky SA v Kookmin Bank [2011] UKSC 50 , [2011] 1 WLR 2900 at [21]-[30] and may be summarised:(1) the ultimate aim of interpreting a contractual provision is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant;(2) the reasonable person is one who has all the background knowledge which would reasonably be available to the parties in the situation they were at the time of the contract;(3) where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense;(4) poorly drafted contracts do not attract a different approach, but the poorer the quality of the drafting, the less willing the Court should be to be driven to semantic niceties to attribute to the parties an improbable or unbusinesslike intention;(5) however where the parties have used unambiguous language, the court must apply it.[91]My provisional view is that the TR1 was intended to transfer the whole of Narghis Begum's interest and not just her legal title. I think it a somewhat strained construction to limit its effect to the legal interest. That is the view I provisionally think a reasonable person would have understood by the TR1. Undue Influence[92]I am conscious that Narghis Begum's lawyers have not sought to raise the question of undue influence and that accordingly none of the arguments have been devoted to it. Furthermore on the facts as found by me it does not arise.[93]On the face of it, however, this is a classic case where if Narghis Begum had signed the TR1 the court would have inferred undue influence. As Lord Nicholls said in paragraph 14 of his speech in RBS v Etridge [2002] 2 AC 773 : [14] Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties' relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.[94]As already noted Nadeem Issa controlled the couple's financial affairs. The transfer of Nadeem Issa interest is a transaction that calls for a satisfactory explanation. Prima facie, Nadeem Issa has preferred his interests to those of Narghis Begum. Narghis Begum did not receive independent legal advice as to the transaction and thus on the face of it the claim for undue influence would have been made out. 5. The second set of issues[95]Section 29 of the Land Registration Act 2002 provides:
"(1) If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration."
[96]Subsection (2) provides that the priority of the interest is protected if it falls within any of the paragraphs of Schedule 3. These include: An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to the of which he is in actual occupation except for - "(b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so; (c) an interest –(i) which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and(ii) of which the person to whom the disposition is made does not have actual knowledge at that time..".[97]It is common ground that Narghis Begum was in actual occupation at the time of disposition to Shameem Issa. It follows that the priority of Narghis Begum's beneficial interest in 107 Chalford Oaks was protected unless one of the exceptions set out above applied.[98]Nadeem Issa's occupation of 107 Chalford Oaks would have been obvious to Shameem Issa who lived next door. Indeed Shameem Issa conceded he knew of her occupation. In those circumstances, the exception in paragraph (c) cannot apply.[99]Shameem Issa, however seeks to rely on the discussions at Eid 2011 and the subsequent visits to the property as satisfying the requirements of paragraph (b).[100]In my view he fails to establish his case. There are a number of reasons for this: 1. I am prepared to assume (without deciding) that Narghis Begum was present at the Eid celebrations. I am prepared to accept that there was a general discussion between Nadeem Issa and Shameem Issa and their father as to the sale of 107 Chalford Oaks to Shameem Issa. I do not accept that the price was ever mentioned. I do not accept that those discussions constituted an inquiry made of Narghis Begum in relation to her interest in 107 Chalford Oaks. Nor do I consider that (even assuming that Narghis Begum was present) it would have been reasonable for her to assert her interest then. 2. I do not accept that there were any significant discussions in the presence of Narghis Begum between 3 September 2011 and 12 September 2011. As already noted I do not accept Shameem Issa's evidence that the price was mentioned at the Eid celebrations. Equally I do not accept his evidence as to the detailed nature of the discussions after Eid. If there had been such detailed discussions I would have expected them to have been mentioned in his witness statement and to have been put to Narghis Begum when she gave evidence. I do not accordingly accept that any relevant inquiry was made to Narghis Begum after Eid.[101]It follows that Narghis Begum's beneficial interest has priority over Shameem Issa's interest. 6. The Third Group of Issues 6.1 Occupation[102]Section 12(1) of TOLATA gives a beneficiary who is beneficially entitled to an interest in land the right to occupy the land if the purpose of the trust is to make the land available for his occupation. Under section 13(1) and 14 of the Act the trustees and/or the Court has power to exclude one co-owner on terms which may include making payments. Under section 13(2) the power must be exercised reasonably[103]Under section 15 of TOLATA the Court is required to have regard to factors specified: (1) The matters to which the court is to have regard in determining an application for an order under section 14 include— (a) the intentions of the person or persons (if any) who created the trust, (b) the purposes for which the property subject to the trust is held, (c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and (d) the interests of any secured creditor of any beneficiary.[104]Under section 15(2) the Court is also required to have regard to the circumstances and wishes of each of the beneficiaries who is (or apart from any previous exercise by the trustees of those powers would be) entitled to occupy the land under section 12.[105]The joint intentions of Narghis Begum and Nadeem Issa when the trust was created were to provide a home for both of them and their children. However the parties did not consider what the position would be if the relationship broke down. The relationship has now terminated and Nadeem Issa has moved out. It is still occupied by Narghis Begum and the two children. An important factor is that Iqra is partially sighted and will need significant assistance if she moves area. Whilst Narghis Begum has indicated that she can obtain a mortgage of £60,000 it is unlikely that she could get that mortgage in respect of 107 Chalford Oaks because of course any mortgagee would wish to have the security of a first charge.[106]Narghis Begum would like to occupy 107 Chalford Oaks until Iqra finishes her education, possibly not for 9 years.[107]Shameem Issa purchased 107 Chalford Oaks as an investment. He has a mortgage of £90,000 and (at present) no rental income at all from the property. He accordingly wants to realise his investment as soon as possible. 6.2 Equitable Accounting/ Occupation Rent/ Payments[108]The question of occupation rent or what payments ought to be made for the privilege of occupying the property is now also governed by sections 12 and 13 of TOLATA. The task of the Court was explained by Lightman J giving the leading judgment in the Court of Appeal in Murphy v Gooch [2007] EWCA Civ 603 : 14. Under the previous equitable doctrine the court was concerned only with considerations relevant to achieving a just result between the parties. The statutory innovation is section 15, which requires the court in determining all applications for an order under section 14 to include amongst the other matters to which it has regard:(1) in all cases (so far as applicable) the four matters referred to by Baroness Hale;(2) in the case of applications relating to the exercise by trustees of the powers conferred by section 13 the circumstances and wishes of each of the beneficiaries who is (or apart from any previous exercise by the trustees would be) entitled to occupy the land under section 12; and(3) in case of any other application (other than one relating to the conveyance of land to beneficiaries absolutely entitled) the circumstances and wishes of any beneficiaries of full age entitled to an interest in possession. The wider ambit of relevant considerations means that the task of the court must now be, not merely to do justice between the parties, but to do justice between the parties with due regard to the relevant statutory considerations and in particular (where applicable) the welfare of the minor, the interests of secured creditors and the circumstances and wishes of the beneficiaries specified.[109]There is however a further complication in this case because substantial payments have been made by Nadeem Issa from the amounts borrowed from the various lenders. The original mortgage in 2005 was in the sum of £93,930. By the date of the 2007 TR1 the sum due to WBMC was £45,293.32. By the date of the 2011 Transfer it had further reduced to £33,214.44. The question arises as to whether under the principles of equitable accounting Narghis Begum has to give credit for her share of these reductions.[110]In Clarke v Harlowe [2005] WTLR 1473 I had to consider the question in the context of a co-owner who paid all the mortgage instalments and who had paid for substantial building work during the relationship. It was suggested that the other co-owner should account for her share of the cost of the improvements. In the course of rejecting the claim I said in paragraph 37: In the ordinary case of cohabitation the common purpose of the implied trust subsists whilst the relationship subsists. During that period whilst the ordinary arrangements for the discharge of the outgoings subsist there is no breach or failure by any one of the parties to honour any obligation owed to the other. Thus in the usual case there is no room or reason for equitable accounting.[111]The decision in Clarke v Harlowe was considered (some might say explained) in the decision of the Court of Appeal in Wilcox v Tait [2006] EWCA Civ 1867 . In the course of his judgment Jonathan Parker LJ said:65. As to the period to which equitable accounting should relate, in a case such as the instant case where the property has been used as a home for both parties but the relationship between the parties has come to an end (what was described in argument as a cohabitation case), the judge was in my judgment right to conclude that that depends upon the intentions of the parties as to how the relevant expenditure should be borne as between them.66. That said, I agree with Judge Behrens in Clarke v Harlowe that in the ordinary cohabitation case it is open to the court to infer from the fact of cohabitation that during the period of cohabitation it was the common intention of the parties that neither should thereafter have to account to the other in respect of expenditure incurred by the other on the property during that period for their joint benefit. Whether the court draws that inference in the given case will of course depend on the facts of that case.[112]This is a case where the parties agreed that Narghis Begum would not work and would look after the children. All financial matters were dealt with by Nadeem Issa. In those circumstances I have no hesitation in coming to the conclusion that it was the common intention of the parties that neither should thereafter have to account to the other in respect of expenditure incurred by the other on the property during the period of cohabitation. The parties separated in 2011 although Nadeem Issa did not move out until May 2012. Thus there will be no equitable accounting in respect of the reduction of the mortgage from £93,920 to £33,214. 6.3 Conclusion on occupation/ occupation rent.[113]Plainly the Court has to perform a balancing exercise between the rights and wishes of Narghis Begum and Shameem Issa. In doing so it must take into account the statutory matters set out above.[114]I am conscious that any order for sale will require Iqra to move and that any move will be disruptive in the short term. However with appropriate assistance she will and can acclimatise to her new environment. In the circumstances I do not think it would be appropriate to delay the order for sale until after she has concluded her education.[115]On the other hand I do not think it would be right to make an immediate order for sale. If my analysis of the position is correct, Narghis Begum has a beneficial half share in a property worth £120,000 subject to a mortgage of £33,214. Accordingly the value of her equity is approximately £43,400 [(£120,000 - £33,214)/2]. If she is able to obtain a mortgage of £60,000 as she believes she will be able to purchase a house for about £100,000. In all the circumstances I will postpone the order for sale for 12 months.[116]Nadeem Issa remained in the property until 24 May 2012. During that period he discharged Shameem Issa's mortgage. I see no reason to compel Narghis Begum to make any contribution to the mortgage whilst Nadeem Issa was living at the property. However after that date Narghis Begum has occupied 107 Chalford Oaks to the exclusion of Shameem Issa. In those circumstances it is appropriate that she should pay an appropriate share of the mortgage instalments from that period. The mortgage for which Narghis Begum is liable is in the sum of £33,214. The actual mortgage which is interest only is in the sum of £92,250. The appropriate share is accordingly 36% (£33,214/£92,250). In my view accordingly Narghis Begum should contribute 36% of the mortgage instalments from 24 May 2012 to the date of sale.[117]In so far as Narghis Begum is not in a position to pay the sums appropriate credit will have to be given following the sale next year. She must, of course, continue to pay the other outgoings. 7. The Fourth Set of Issues[118]In the light of my conclusions it seems to me to be clear that Narghis Begum's beneficial interest has priority over the rights of The Mortgage Works. She was in actual occupation at the relevant time and for the reasons set out above her interest is an overriding interest.[119]However it is clear that that the moneys loaned by The Mortgage Works discharged the loan of £33,214 then due to A & L. Narghis Begum was not bound by the A & L loan as she was not a party to it. However A & L's loan was used to discharge the moneys due under the WBMC loan. In my view A & L would have been subrogated to the rights under the WBMC loan to the extent of the amount due at the date of discharge (£33,214). It follows therefore that The Mortgage Works is subrogated to the rights of WBMC under its charge to the extent (£33,214) that it discharged the monies loaned.