Julie Palmer & Anor v Daniel Sans
[2024] EWHC 2685 (Ch)
Tracy Ann Taylor v Olga Savik & Anor
10 September 2024
[2024] EWCC 7
County Court
A trustee claimed a bankrupt man secretly owned a house in his wife's name. The judge looked at all the bank records and listened to the wife and husband testify. Even though some financial records were missing, the judge believed the wife and said the house was rightfully hers, not the husband’s.
Key Facts
- •Insolvency Act application by trustee in bankruptcy of the second respondent (PR) concerning a Bristol property ('The Grange') registered to the first respondent (OS).
- •Allegation: The Grange was purchased with PR's funds, concealed through a sham transaction.
- •Initial claims: Sham, transaction at undervalue (s. 339 Insolvency Act 1986), fraud on creditors (s. 423 Insolvency Act 1986).
- •Trial focused solely on the sham claim after a stay order on the other claims.
- •Purchase price: £890,000, with additional costs totalling £927,845.58. Financed by a mortgage, OS's funds, and loans from PR and a friend.
- •PR transferred £75,964.60; OS transferred £256,000.
- •OS's salary was temporarily increased, then reversed, raising suspicion of mortgage fraud.
- •Significant sums of money moved between OS's multiple accounts, and between OS and PR/companies.
- •HMRC seized computer hard drives containing relevant financial records, causing significant evidentiary gaps.
- •In POCA proceedings, PR admitted to 100% beneficial ownership of The Grange, but this was subject to OS's claims and not binding on her.
Legal Principles
Sham transaction
Snook v London and Western Riding Investments Ltd [1967] 2 QB 786
Burden of proof in civil cases
Case law generally
Standard of proof in civil cases (balance of probabilities)
Case law generally
Role of judges (accusatorial, not inquisitorial)
Case law generally
Fallibility of memory, preference for documentary evidence
Gestmin SGPS SPA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)
Adverse inferences from failure to call witnesses
Royal Mail Group Ltd v Efobi [2021] 1 WLR 3893
Pleading rules for fraud and dishonesty (CPR 16.4, PD 16 para 8.2)
CPR rule 16.4 and PD 16 para 8.2, Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1
Resulting trusts
Law of Property Act 1925, s 53; Commissioner for Stamp Duties v Perpetual Trustee Co Ltd [1943] AC 425
Outcomes
Sham claim dismissed.
The court found that the first respondent intended to, and did, purchase The Grange solely for herself, using her own resources. No sham transaction or use of the second respondent's assets was found.
Allegations of mortgage fraud (dishonestly overstating income) dismissed.
The evidence did not support the allegation that the temporary salary increase was part of a plan to defraud the mortgage lender.
Application to strike out the claim for non-disclosure was rendered moot by the dismissal of the sham claim.
The court considered the seriousness of the non-disclosure but found it unnecessary to rule on the application in light of the outcome on the merits.
Similar Cases
P v Q, R and S (Claim against Assets of Extended Family)
[2024] EWFC 164 (B)
Arvindar Singh (as trustee in bankruptcy of Mrs Angela Garcha) v Angela Garcha & Ors
[2024] EWHC 1844 (Ch)
Mohammed Khalid Raja & Anor v ATM Law & Ors
[2024] EWHC 2782 (Ch)
Amanda Wade & Anor v Mohinder Singh & Ors
[2024] EWHC 1203 (Ch)