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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Malhan v Malhan [2001] EWCA Civ 613 (27 March 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/613.html Cite as: [2001] EWCA Civ 613

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BRENTFORD COUNTY COURT
HEARD IN THE GUILDFORD COUNTY COURT
(His Honour Judge Marcus Edwards QC)

		Royal Courts of Justice Strand London WC2 Tuesday, 27th March 2001

1. LADY JUSTICE ARDEN: This is an application by the claimant for permission to appeal from the order of His Honour Judge Marcus Edwards QC dated 27th September 2000. By this order the judge struck out proceedings which had been brought by the claimant against the respondent, arising out of the purchase by her of 198, Martindale Road. The relief sought in those proceedings was that the order in a previous action should be set aside. The judge by his order set aside an order of the District Judge dated 8th October 1996. He allowed an appeal and dismissed the claim as an abuse of the process of the court. By this application the applicant seeks permission to appeal and a stay of the orders in this and the earlier proceedings.
2. This is a second appeal because the judge heard an appeal from District Judge Houston, and thus O.52,r.13 applies, so that it must be shown that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the Court of Appeal to hear it. It is the latter words which would apply, if at all, in this case.
3. I turn to summarize the facts as found by the judge. The history of this case is a little complex. I adopt what the judge said:

"In December 1988 the defendant obtained judgment against the claimant in respect of her application for a declaration of interest and trust in respect of the family home at 816 Great West Road, Isleworth. The claimant alleges the defendant procured that judgment by fraud and misrepresentation and breach of a duty to disclose material facts, by failing to disclose to the court her interest in the property known as 198 Martindale Road. It is said that the effect of that failure was to mislead the court because, if she was purchasing 198, she would have had less to contribute towards 816. Other allegations are made in regard to her claiming income support and legal aid, and at some stage in regard to her getting an ouster order. Those matters are of marginal, if any, importance to this application. The other allegation relates to the credibility of the defendant. It is accepted that the defendant did not disclose her interest in 198 and indeed it is said by her solicitors that she had no interest in any other property. It is a case in which the parties cohabited for many years, from 1962 to 1987. They had two children, now grown up. They bought several properties as family homes, ending with the purchase in 1978 of No. 816. On return from India in 1987 the defendant found 816 locked against her, it having previously been sold at an undervalue to the claimant's relations. She obtained an order allowing her to re-enter and started the first proceedings to which I have referred. They came before His Honour Judge Barr in late 1988. After a trial of, I think, four days, he gave judgment for the defendant and assessed her interest at one-third, the net equity being about £90,000. That decision was appealed to the Court of Appeal but the appeal was dismissed in April 1990. In 1992 or 1993 the defendant bought out the claimant's two-thirds interest in the property. In June 1994 the claimant first got to know that the defendant was the owner of 198 Martindale Road. He soon after issued proceedings in respect of that property, seeking a declaratory judgment and other relief, and in 1996 issued these proceedings to set aside the judgment in the 1988 case for fraud." (The judge said 1998 but I think he must mean 1988). "In October 1996 District Judge Henson made the order which is appealed today. The delay between then and now has largely been accounted for by two visits to the Court of Appeal as well as other interlocutory hearings. For the purposes of this application the court must assume that the facts alleged in the particulars of claim are correct, though the inferences alleged in the particulars of claim to be drawn from the facts were a matter for the court; for example, if this fact were disclosed it would materially have affected the outcome of the proceedings. I must ignore the defendant's case which is, in effect, as the proprietor of No 198 and she is a nominee for others and the purchase money for that property came from others, not from herself."

4. The judge's reasons are set out in the following passage. In effect, he applied the principle set out by Lord Cairns LC in Phosphate Sewage v Molleson (1879) 4 AC 801,814, that a judgment will be set aside only if a fact is proved which "entirely changes the aspect of the case" and which could not by reasonable diligence have been ascertained before. He concluded that the question whether or not the defendant had used the claimant's money was at that stage merely a matter of speculation. He also said that, in the interests of proportionality, since the matter was tried as long ago as 1988 and occupied three days of court time and went to the Court of Appeal, the right course was to accede to the application to strike out. Finally, the judge said, in the proceedings concerning No 198, that if the claimant can show that it was his money that was used to buy the property rather than the defendant's, he would get in those proceedings what he could have obtained in a second trial in the present proceedings. The judge also went into some detail about the 1988 action.
5. Since it was an action between persons who were not married there was no question of ascertaining all their assets, as on a consideration of the proper claim of the wife on a separation or anything of that kind. It was a question of finding out whether the parties intended that the defendant should have an interest, the amount of that interest, and whether she relied upon a representation that she should have an interest. It was determined in the 1988 action that it was intended that she should have an interest in the property. The question was the extent of her interest in the property. This was calculated in the action in 1988 by assessing the financial contribution that she had made, first to a property which was bought and then sold, and then by reference to adding her earnings to her husband's earnings to enable the mortgage to be repaid. In fact, when the matter came before His Honour Judge Marcus Edwards the claimant was saying that the defendant was entitled to a share but that it should be a smaller share. The judge went on:

"If the matter were to be retried with the new information, the net result might still be that the defendant obtains the same share. That is particularly so when the Court of Appeal held, on the facts before them, that they thought that her share should be larger than one-third, the amount found by the judge, His Honour Judge Barr, namely 40%. However, the Court of Appeal made it clear that the computation was necessarily rough."

6. Then the judge said that the important period of time, so far as concerned No 186, was the period 1962 to 1986, which was well before the purchase of No 198 in 1986. The effect of that chronology, he said, is likely to make little difference to the aspect of the case which the judge had to try in 1988. Lastly, he said that:

"There is an element of time which needs to be taken into account. Through no fault of the claimant, the discovery was not made until six years after judgment was given in 1988, by which time he had sold his two-thirds to the defendant. It is important to realise that all that the claimant can say at the moment is speculative as to whether the defendant did in fact salt away. It is speculation based upon the mere fact of a purchase of a property in 1986 when, as far as he knew, the defendant had no other source of income."

7. He continues:

"The claim was made simply on the basis of the purchase of No 198 and the speculative argument that it can only have been, or at least there is a prima facie case that it was, obtained by salting away of her own income or of money from the claimant. The claimant's case, put at its highest, in my judgment cannot succeed. It cannot pass the test of the House of Lords in the Phosphate case. The proceedings therefore are an abuse of process. They must be struck out and the appeal allowed."

8. Mr. Oliver Hinds has appeared for the claimant today and has made helpful submissions. I have received a written skeleton argument. He has taken me to the correspondence which shows that before the trial took place the defendant was asked whether she owned any other property and she answered, through her solicitors, that she did not. What is not clear to me is why she was not cross-examined on these matters. There appears to be no suggestion that she was. Mr. Hinds' argument is that, if the respondent's ownership of No 198 had been disclosed in the first action, it would have made a material difference to the outcome of that case. He also referred to the fact that the defendant might have had other moneys which she obtained from the claimant which she could have used to contribute to 816 when they were not strictly her contribution. But that of course is not in issue on this application. Mr. Hinds also makes the point that this was only a strike out application and if the case is struck out there is no hearing on the merits. That is undoubtedly true. The court must assume that what is said in the particulars of claim is correct. The learned judge pointed that out. He also says that no consideration was given by the judge to the impact of the costs that had been awarded against the claimant in the 1988 proceedings. That is a matter which depends on the same point as the question whether the defendant was entitled to the one-third interest. It depends on whether or not there was fraud which would entirely change this aspect of the case.
9. At this point it is a question of looking to see whether the particulars of claim sufficiently establish such a case. It is to the particulars of claim that I turn. The critical paragraph is paragraph 3, in which it is alleged that the judgment was obtained by fraud and misrepresentation of the defendant; alternatively, her failure to disclose material facts when she had clearly a duty to do so; alternatively, by her misleading the court and the plaintiff, in that, in the course of the proceedings, the defendant gave evidence that she did not own any other property when the true fact was that she had a property in her own name, namely 198 Martindale Road. I have to say that I have not been taken to any evidence that she gave, only to the correspondence. All that is being said is that she had a property in her own name. There is not there an allegation that it was purchased by her out of moneys which she said she had used to contribute to No 816. I am told by counsel that the property was bought with a deposit of £23,000 and a mortgage from the Bradford & Bingley of £32,000. The critical question on that analysis is where the £23,000 came from. Later in the same paragraph of the particulars of claim, it is said that she misled the court by failing to disclose her interest in the Martindale Road property and further misled the court, in that if she was purchasing another property, she would have had less to contribute towards the property at 816 Great Western Road. Again, it is not clear whether or not it is said that she was purchasing the property at No 198 out of moneys that she said she had contributed to No 816. That matter is left absent from the pleading.
10. Turning to the judgment, the judge's view, as I have explained, is that it was speculative whether she had salted away moneys and then used them to buy 198. It seems to me that there is no reasonable prospect of appeal against the judge's conclusion on the pleadings as they stand. On the other hand, counsel informs me that there may be a possibility that further matters could be pleaded, and so the order which I am prepared to make is that, if a draft amended statement of case alleging that the moneys used for the purchase of 196 were those which the defendant said she had contributed to the purchase of 816, and that is submitted to the court within 14 days, I will look at the matter again and decide whether or not there should be a further hearing of this application. In the meantime, my order dismissing the application will lie in the office.
Order: Application dismissed; order to lie in the Office for 21 days. If within 21 days a draft amended statement of claim is submitted to the court, the matter to be looked at again by the court. (Order not part of the judgment of the court)