Wss v. Dkpa

FCMC 9725 of 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 9725 OF 2012

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Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public)

Dates of Hearing: 5 and 6 June 2014

Date of closing written submissions: 13 June 2014

Date of Respondent’s written Reply: 20 June 2014

Date of Judgment: 15 July 2014

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JUDGMENT
(Preliminary issue)

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Introduction

1.This is a preliminary issues hearing to determine whether or not the Petitioner’s mother, Mrs LSH holds a beneficial interest in a property in London and if so in what proportions.

2.The case concerns the ownership of a property, which if found to be a matrimonial asset, will on the face of it form the largest part of the so called “matrimonial pot”. Put simply the petitioner wife argues that a) she and her mother hold the property jointly as tenants in common with her mother holding a 54.3% share and she holding a 45.7% share, b) in any event her share of the property was purchased with non matrimonial funds and therefore should not be regarded as matrimonial property and c) the intention was always that she and her mother would hold the property on trust for the two children of the family in any event. In essence the wife wishes the property to be excluded from any potential division of matrimonial assets. The husband for his part says that the property was purchased with matrimonial funds and that the original intention was that the wife would be the sole legal and beneficial owner of the property. In the alternative he says that Mrs LSH gifted her share of the property to the wife for estate planning purposes in 2008 and that it would be contradictory to do that and at the same time claim a beneficial share in the property. He says that the property should be included in the “matrimonial pot” and should therefore be taken into account when dividing the parties’ assets.        

3.The issues to be determined

1) Was there any intention that Mrs LSH should hold a beneficial interest in the property either now or in the past?

2) How is the property presently held?

3) Should the property be regarded as a “non matrimonial” property in any event?

4) In the alternative does a trust exist with respect to this property? In particular is the property presently held on trust by the Petitioner on behalf of both herself and her mother for the benefit of the two children of the family and should it on that basis be excluded from the “matrimonial pot”?

Background to the marriage

4.The parties married in Hong Kong in December 1987 when the wife was 30 and the husband 31 years old. The wife is of Australian heritage but grew up mainly in the United States. The husband is also Australian. There are two children of the family, both girls, M who is now 19 and at University and C who is nearly 17 and still at school in Hong Kong. By all accounts the marriage has had its fair share of ups and downs and from the wife’s perspective at least does not appear to have been a particularly happy one. There are other issues arising out of the background which are not relevant to this application and which I will not go into in any detail here, but suffice it to say that there are significant difficulties with respect to the matrimonial home, which was purchased shortly prior to marriage. It is not clear at this stage how this property can or will be valued. In addition there was an incident in June 2011 between the husband and the younger child C, which proved to be the catalyst for the divorce. The husband continues to see M and appears to be committed to working on his relationship with C, which had become extremely strained as a result of the incident.

The litigation

5.On the 6 July 2012 the wife issued proceedings for divorce based on the husband’s unreasonable behaviour. The suit was originally defended but sensibly the parties agreed to amend the petition to include only mild particulars of unreasonable behaviour. The parties also eventually reached an agreement with respect to C and although the wife has sole custody and care and control, the father has retained as much involvement as possible in the circumstances. It is very much hoped that this situation will improve over time.

Background to this application      

6.It is accepted by both sides that the wife’s mother Mrs LSH is a wealthy woman, who has been generous to both the wife and the husband and children during the course of the marriage. For example it is not disputed that she paid for the children’s school fees and for some of the parties’ holidays and that she has provided the wife with access to bank accounts and credit cards – the extent of which is yet to be determined. I should add that since these proceedings have begun the mother has seemingly sought to recoup some if not all of these monies and has claimed that the parties owe her a significant sum of money – presumably by way of a joint debt. Further in a letter dated the 23 April 2013 she has also sought to claim her share of the property presently in dispute. Notwithstanding that it is agreed that during the course of the marriage that she loaned the parties’ the money for the down payment of the matrimonial home in Hong Kong and for another investment property in Australia, which has since been sold. This application however is in relation to the mother’s involvement with the purchase of a property in London in 1995 and the way in which its ownership has evolved since that time. The essential issue concerns the present ownership of that property and whether or not the mother now holds an interest in it and if so in what proportions.

7.I should say at the outset that applications of this nature, which as here may go back many years, can be difficult to determine. It is therefore of the utmost importance that where possible the parties involved produce documentary evidence in support of what they say. The difficulty in part is that I am being asked in this instance to assess the truth of a situation, with very little if any documentary evidence in support of what each party has said. Having said that I accept that given that it is the wife and mother who are in the main making the assertions, then it is for them to provide the necessary evidence to support what they say. The difficulty has been further compounded by the fact that the wife’s mother has been unable to give evidence as had been originally intended. Thus it has not been possible for her evidence to be tested in the witness box. I touched upon these difficulties when I excused the mother from giving evidence. In my Ruling of the 22 January 2014 I said at paragraph 5 as follows:

5. Given all of the different and various factors here, it seems to me that it would not be appropriate to exclude the mother’s evidence in its entirety at this stage.  I will …allow the petitioner’s application, namely that she be excused from giving oral evidence.  I am, though, aware of the ramifications of that decision.  It does, it seems to me, come down to the issue of weight but in those circumstances the documentary evidence becomes even more important.  Every effort needs to be made to secure that documentary evidence.

8.At that stage the main concern had been in relation to the mother’s US tax returns. I continued at paragraph 10

10. … In the event that the documentary evidence is produced and it does support the mother’s and indeed the petitioner’s version of events, then I am likely to attach a great deal of weight to her affidavit evidence.  If, however, the evidence is not produced and/or authorisation is not given then it seems to me that very little weight can be attached to her affidavit evidence, but I would expect to be addressed on that in full at the preliminary issues hearing.

9.Although, as I have said, the argument had been in relation to US tax returns the same basic point could be made about the evidence produced generally. As will be seen I was referred to very little evidence to support either sides version of events. For the avoidance of doubt I do not accept, as seems to be suggested by counsel for the wife in his closing, that the fact that the wife produced the original conveyancing file is evidence

… which support P’s [wife’s case] that it was the plain and obvious intention of Mrs H [the mother] and P [the wife] that Mrs H would retain her beneficial interest in the property for the ultimate benefit of Mrs H’s granddaughters.

It does not seem to me that that can be inferred from the conveyancing file as a whole or from the particular documents that I was referred to specifically by counsel.

10.Consequently when considering this matter I have taken the liberty in the first instance of referring to the affidavit evidence in some detail. However prior to that it is necessary to turn to the law.  

The law       

11.Counsel for the wife has set out in some detail the law on the question of the trusts and in particular on both the law on resulting trusts and the law on the presumption of gifts or advancement.

12.However with respect it seems to me that the analysis provided by Ms Irving in her closing and as set out in Bhura v Bhura & Others [2014] EWHC 727 provides the most valuable assistance and consequently I will quote it in full as she has done:-

8.     The applicable legal principles concerning a property dispute such as this are tolerably clear and have most recently been re-stated by the Supreme Court in Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776.  In summary I think they are as follows:-

i) If there is an express declaration of beneficial interests then that is, almost invariably, the end of the matter.  Such an express declaration can only be displaced if it has been procured by fraudulent conduct.  In this case it is said by the wife that the signed TR1 for Mayfield Avenue is a sham.  A sham is of course a species of fraud.  It involves the parties entering into a dishonest compact, i.e. a conspiracy, to express the true state of affairs falsely in the written agreement.  I will analyse the law relating to sham transactions a little later.

ii) If there is no express agreement about the beneficial interests then there is likely to be (at least) a tacit understanding.  This is hardly surprising as one would expect that when people enter into what may very well be the most important economic transaction in their lives – buying a home – they would have a pretty clear understanding of who owned what share of it.  In determining whether there was such a tacit understanding, and if so what it was, the court will look at all the evidence holistically and will examine the whole course of the parties’ conduct in relation to the property.

iii) In the rare case where the evidence does not reveal a tacit understanding about ownership the court can reach for the presumptions.  An obvious presumption is that beneficial ownership is the same as legal title (see Jones v Kernott at paras 17 and 51(1)).

iv) Another is the presumption of the resulting trust.  In Pettitt v Pettitt [1970] AC 777 at 824 Lord Diplock doubted that it was of much relevance in the modern era.  In his view it would be “an abuse of the legal technique for ascertaining or imputing intention to apply to transactions between the post-war generation of married couples ‘presumptions’ which are based upon inferences of fact which an earlier generation of judges drew as to the most likely intentions of earlier generations of spouses belonging to the propertied classes of a different social era.”  Some commentators believe that the doctrine has a medieval origin.  The principal problem with it is that that is allows the “solid tug of money” (as Woodhouse J evocatively put it (echoing George Eliot) in Hofman v Hofman [1965] NZLR 795 at 800) “to submerge any faint suggestion that other [non-financial] contributions play a valuable part in the acquisition of family assets”.

v) A further presumption is the presumption of advancement but this can be regarded as being on its death-bed given that it is abolished by s199 Equality Act 2010, which is awaiting implementation.

vi) But presumptions are only presumptions.  In a memorable dictum Lamm J in Mackowick v Kansas City St. J. & C.B. Ry., 196 Mo. 550, 571, 94 S.W. 256, 262 (1906) stated that “presumptions may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts”.

vii) “Actual facts” are those which suggest that a result steered by a presumption is unfair.  Although there are different degrees of emphasis and nuance all of the Justices in Jones v Kernott accepted that where a tacit agreement could not be found by a process of inference the court could impute to the parties a fair agreement which they never in fact made but which they should “be taken” as having made (see paras 45, 60, 72, 85(2)).  Of course, as Woodhouse J pointed out, this involves a “fictional attribution of intention”, but the process has a long pedigree.  One only needs to remind oneself of Lord Denning MR’s statement in Appleton v Appleton [1965] 1 WLR 25 at 28 to see how the wheel has turned full circle.  There he said “A judge can only do what is fair and reasonable in the circumstances.  Sometimes this test has been put in the cases:  What term is to be implied?  What would the parties have stipulated had they thought about it?  That is one way of putting it. But, as they never did think about it at all, I prefer to take the simple test:  What is reasonable and fair in the circumstances as they have developed, seeing that they are circumstances which no one contemplated before?”  I cannot see any difference between that statement and that of Lord Wilson in para 87 where he rhetorically asked “where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair?”

13.Ms Irving continues:-

63. the points sought to be relied on are paras ii) the court will look at all the evidence holistically and will examine the whole course of the parties’ conduct in relation to the property and iii) an obvious presumption is that beneficial ownership is the same as legal title (see Jones v Kernott at paras 17and 51(1)).

64. The case of Quaintance v Jones [2012] EWHC 4416 (Ch) makes clear that there can be a change of intention over time, and that the court is not bound to find that the original intention persists in spite of changes of circumstances.

14.I accept that to be the case. As Ms Irving continues

65. The issue does not turn on whether there is a presumption of advancement or resulting trust, (as had been suggested by counsel for the wife in his closing), as no matter how the question is viewed, the clear evidence is that the mother has no beneficial interest in this property.

15.Thus it seems to me that in the first instance the court is asked to ascertain whether or not there is an express statement of beneficial interest with respect to this property. In the event that there is not, as seems to be the case here, then the court is required to determine whether or not there was a tacit understanding with respect to that ownership. In doing so I am asked to view the whole history of the ownership of the property holistically and over time. In particular I am asked to examine the parties conduct with respect to the property. I also accept that it is important to guard against the benefit of hind sight when going through this exercise.

16.In the event that it is not possible to ascertain a “tacit understanding” then the court then look to presumptions to assist in reaching a decision. Even then a presumption – is just that – a presumption that can be displaced depending on the available facts. Thus I do not necessarily accept that this is simply a “resulting trust” case as was boldly suggested by the wife’s counsel in his closing. Rather it seems to me that this is a case to determine a preliminary issue about ownership where there are a number of potential trust issues.

17.In looking at this final stage I accept that I may pose the question – what is reasonable and fair in the circumstances as they have developed, seeing that they are circumstances which no one contemplated before? In considering this question it seems to me that the only factor which is new is the proposed divorce. This was certainly not contemplated previously. Thus the issue of hindsight also comes into play and should likewise be guarded against. Lastly – even if a presumption can be made it can of course also be rebutted in the light of the actual factual evidence before the court.                                 

The purchase of the property

Original purchase of the property in November 1995

18.The property, which is a flat in London, was originally purchased in November 1995 in the names of the wife and her brother W. There is some dispute between the parties about the reasons for this purchase – which are of little import at this stage of the proceedings in any event. Suffice it to say that the wife says that the property was purchased primarily as a holiday home whereas the husband maintains that the main impetus was concerns about 1997 and the effect that this might have on foreign ownership of property in Hong Kong. In any event regardless of the reasons for the purchase the fact remains that a property was purchased and at a time when seemingly the marriage was a reasonably happy one and the parties had just had their first child.  

19.On the wife’s case she had originally wanted to purchase a property outright from monies that she had saved from her business dealings. She operated a successful PR company at the time. However she could not find anything suitable within her price range of GBP150, 000. Consequently a flat was purchased for GBP285, 000. There is some dispute about this evidence. The husband maintains that the wife contributed most of the purchase price of the property and disputes the origin of some of the funds on the statement of account found on the conveyancing file. In particular there is no evidence with respect to funds held in a Ferris Baker Watts account. The wife confirmed that she had an investment account with them – as seemingly did the mother. The wife said in the witness box that the funds attributed to this source came from her mother. However there is no evidence to back up this statement. In his counsel’s closing the husband maintains that the wife contributed just over GBP273, 000 and that this would account for about 83% of the purchase price. This is disputed by the wife. From the evidence there is no doubt that the wife contributed at least GBP150, 000, perhaps more, and that the remainder of the monies came from her mother. The statement of account from the solicitors shows that GBP328, 467.52p was received in total and GBP320, 813.09p was paid out. This included surveyor’s fees and monies for part of the refurbishment costs of the flat. It is the wife’s case that she contributed 45.7% of the purchase monies and the mother 54.3%. Although from the above analysis it would seem to me that in any event this percentage represents a share of the total cost of purchase as opposed to a share of the actual purchase price. That be as it may it seems to be accepted that at that stage, notwithstanding the fact that the mother provided at least some of the necessary funds, that the property was held in the name of the wife and her brother, W. In her affidavit of the 14 November 2013 the mother says:-

14. Prior to closing on the unit Affiant decided to title her share into Affiant son’s name as he and Affiant already had a number of investment properties which they had purchased together and knowing that he was to hold this property for the benefit of Affiant’s granddaughter.

20.However no documentary evidence was produced to support the mother’s assertion that the property was to be held for her granddaughter’s. It should be noted that at that stage only M had been born.

21.In contrast it is the husband’s case that the property was always meant to belong to both him and the wife. In his affidavit of the 9 January 2014 he said:-

5.  S [the wife] now claims that L [the mother] has an interest in the London property of 54.3%. I do not agree with this and my position remains that it was always intended that the money which L[the mother] put into the London property was as a gift to S [the wife] and a way of L’s estate planning to move funds out of her estate.  I do not agree that she intended to retain an interest in the property.  S did not claim in her Form E that her mother had any interest in the property.

22.He added at paragraph 19:

19. When later a decision was in fact made to buy a more expensive property, S [the wife] told me that L [the mother] would pay towards the purchase price as we could not afford to pay the full deposit with the monies put aside on the type of property we wanted.  S also told me that her mother wanted to ‘even things out’ in terms of the financial gifts, support and transfers given to her and her brother as more money had been given to or spent on W, her brother, than on S.

23.In contrast the wife tries to explain her position in her affidavit of the 21 November 2013 when she says that:-

34. As explained earlier in this affirmation, when my mother and I bought the London property in 1995, we both did so on the basis that my children would ultimately own the property, and I believed therefore that my mother and I were in fact simply trustees of the property for the ultimate benefit of my children.  Upon informing my solicitors (Withers) of such matters, I was advised by them to complete my Form E and my Answer to the Respondent’s Questionnaire in the manner set out above to make that position clear.  Notwithstanding whatever the legal position might actually be, I still regard myself as holding the property on trust for the benefit of my children.

24.She adds at paragraph 35 (a)

35. When [the London property] was originally purchased in 1995, a resulting trust arose whereby my brother W and I held our legal interests in the property on trust for my mother and myself, as to a 54.30% beneficial interest for my mother and a 45.70% for myself – these being the percentage proportionate contributions made by me and my mother towards the purchase price.

Transfer of the property in 1998

25.In or about the 14 September 1998 the property was transferred from the names of the wife and her brother into the names of the wife and her mother. The reasons for this are somewhat vague. The mother says that this was because the brother, W was starting up a new modelling business and she was concerned that the flat might be vulnerable to attack from would be creditors if the flat remained in his legal ownership. In any event it is acknowledged, in solicitor correspondence that the wife and mother each contributed towards half of the purchase price and not in 54.3%/45.7% shares as claimed by the wife since nor in any other shares as suggested by the husband. Further it was agreed that going forward that they would hold the property as tenants in common in equal shares. In the letter of the 12 August 1998 Mr F wrote to the wife and the mother inter alia in the following terms:

I understand that you each provided half the consideration for the original purchase of the above flat although it was transferred into W’s [the brother] and S’s [the wife’s] names.  I gather that they were holding the flat on your behalves and you have now asked me to prepare a Transfer into your names.

I enclose this.  It requires your signatures and I will then send it to W for his signature.

Although no consent is required from the Landlord under the terms of the Lease for the transfer, the Lease requires that you enter into a direct covenant with the Landlord to pay the rent reserved thereby and otherwise to comply with the covenants and conditions therein contained.  I have prepared and enclose a Deed of Covenant for execution; I will hold this until the Transfer has been completed – when it has been returned to me by W – and I will the date and send it to the Landlord.

Finally, and in accordance with our telephone conversation earlier, I have provided that you will hold the flat as tenants in common; as I explained, the main consequence of this is that the flat will not vest automatically in the survivor upon the death of the first of you.

26.The wife has since sought to explain the situation in her affidavit of the 21 November 2013   

35 (b) that in 1998 when title of [the London property]was changed into my mother’s name and my name, we held the property as tenants in common on an express or bare trust in our respective shares of 54.30% and 45.70%.

27.The difficulty however is that there is no contemporaneous evidence to confirm that this was infact the case. Certainly on the face of the documents the property was held by the wife and mother on a 50:50 basis and as tenants in common. Thus it would appear that there was no intention at that time for the property to eventually pass to the granddaughters. Indeed if the mother had predeceased the wife, as one might have expected in the normal course of events, then the property would simply have passed into her estate. There was no specific provision made for the granddaughters that would seemingly have protected their interest, as one might have expected had what the wife and mother said in this respect been correct.

28.The husband for his part said at paragraph 25 of the affidavit of the 9 January 2014:

25. I was never told by S [the wife] or L [the mother] that L owned half the property, or that any part of the property was held on trust for another person.  I knew L had contributed to the purchase price.  I understood this was to help us buy the property – not so that she would have a share in it or own half of it.  This was never discussed when it was purchased, or at any other point during our marriage.  It was only after the divorce petition had been issued and S completed her Form E that this was raised.  I was very surprised to see S claim that she had no interest at all in the London property in her Form E.  I felt that she was trying to keep the London property out of any settlement which she might reach, which is the only obvious real conclusion that can be drawn.

Transfer of the property in 2008

29.On the 10 July 2008 the property was transferred from the joint names of the wife and her mother into the sole name of the wife. Again there is some confusion concerning the reasons for this. In the wife’s affidavit of the 21 November 2013 she says:

31. In late spring of 2008, I met my mother in London.  At some point my mother raised the issue of my holding her interest in the property for her in my name.  I understood she had been advised in the USA that this was the best way to ensure the seamless transition of her interest in the flat to her granddaughters when she died.  I believed this was being done because of something to do with a transfer of the title at least seven years before her death meant there was a tax saving.

30.No formal trust document was established at the time – nor is there any other independent evidence to support the wife’s version of events.  The wife adds:

35. (c ) that in 2008, when title to [the London property] was changed into my sole name, a resulting trust again arose whereby I hold the property on trust for my mother and myself in our respective shares of 54.30% and 45.70%.  Whilst the legal title has passed to me, my mother retains her beneficial interest in the property.

35. (d) there was a suggestion by the Respondent that the 2008 transfer of [the London property] into my sole name, was a gift of my mother’s legal and equitable interest in the property to me.  That is incorrect.

31.The husband for his part comments and with some justification it seems to me that:-

30. … I do not see how L [the mother] can assert that as part of estate planning she transferred the property to S, but then say she still holds an interest.  The two statements are contradictory.

32.To that end Ms Irving has referred the court to the case of Tinker v Tinker [1970] 2 WLR 331 where a husband put a property in the name of his wife in case his business failed and then claimed it as his in divorce proceedings. Lord Denning said in that case:-

“ … I am quite clear that the husband cannot have it both ways. So he is on the horns of a dilemma. He cannot say the house is his own and, at one and the same time, say that it is the wife’s. As against his wife, he wants to say it belongs to him. As against his creditors, that it belongs to her. That simply will not do. Either it was conveyed to her for her own use absolutely: or it was conveyed to her as trustee for her husband. It must be one or the other.”

I agree.

Tax issues

33.The solicitors for the husband had sought copies of the US tax returns for the years in question because they wanted to ascertain whether or not the mother had declared her ownership of the London property to the US tax authorities – beneficial or otherwise and whether she had also declared the gift of that property and/or the alleged trust for the granddaughters. In addition it was not known whether she had declared any income from that property. At the end of the day only two tax returns were produced and they were for 2007 and 2008. In addition a Mrs B also answered questions on the mother’s behalf. It seems that Mrs B had assisted the mother with the filing of her US tax returns going back many years. I would accept that Mrs B’s responses did not really stand up to scrutiny. Further in the absence of the requisite documentary evidence I am unable to attach very much weight to the mother’s evidence on these points as foreshadowed in my Ruling referred to in paragraphs 7 – 9 above.

34.The wife alleged albeit very late in the day, that the reason for the transfer in 2008 was because of a 7 year rule in relation to gift tax. Later she brought up the possibility of generation skipping tax. Again these assertions did not really stand up to detailed scrutiny and had a flavour of being brought into the fray after the event in order to shore up her case. I do not intend to attach any great significance to what the wife said in this respect.

Properties held in trust

35.It was also alleged that there was no documentary evidence in relation to the trust because the family didn’t tend to deal with such matters. This was later shown to be incorrect when the court was shown examples of other properties held in trust by the mother in the United States.

36.Further when it was put to the wife in the witness box that it was inconceivable that the IRS would simply accept what was said about the property being held in trust without there being some documentary evidence to back up the assertion – the wife said that this was something that she was looking into, the implication being that she accepted that there was a problem.

37.It is against this background that I am now asked to determine the present ownership of the property. As I have indicated there is a distinct lack of evidence supporting many of the assertions made, particularly by the wife and mother who are alleging the existence of a trust when there is virtually no evidence of the same.

Discussion 

Was there any intention that Mrs LSH should hold a beneficial interest in this property either now or in the past?

38.Based on the evidence that has been produced I would accept that as at the date of purchase of the property in November 1995 the mother’s share of the property (whatever that might be) was held on trust for her by her son W. There is no evidence to support the wife’s case that the original intention was that both she and her mother intended to hold this property on trust for the two children of the family. Neither is there any evidence to support the husband’s case that the intention at that time was that the mother’s share of the property was to be gifted to the wife.

39.In or about September 1998 the property was transferred into the names of the wife and mother in equal shares and as tenants in common. I have noted that there was no attempt at that stage to document the wife’s assertion now that the property was held in a 45.7%: 54.3 % ratio or indeed in any other alternative ratio as has been suggested by the husband. Neither was a trust established or any attempt made to document the wife’s case that the property was ultimately to be held in trust for the two children of the family. Thus I would accept that at this stage the property was held by the wife and the mother as tenants in common on an equal basis in keeping with the legal position at that time.

How is the property presently held?

40.In 2008 the mother transferred her share of the property into the name of the wife. The wife’s case that she did this in order to “ensure a seamless transition of her interest in the flat to her granddaughter’s when she died” simply does not carry any weight. Again the wife and mother did not establish a trust to ensure that the mother’s apparent wishes were carried out in a clear and transparent way. I accept that at this stage that the mother transferred her share of the property to the wife as a gift. In coming to this conclusion I have also taken into account the fact that the wife says that she will receive nothing from her mother on her death notwithstanding the fact that by all accounts the mother is a very wealthy woman. In answer to a question about possible inheritance she said in answer to a questionnaire dated the 22 October 2012 as follows:-

Please confirm whether the Petitioner [the wife] has an interest from the estate of and/or expecting inheritance from:-

(a) Her mother – LH

(b) Her aunt – IB; and

(c) Her uncle NS

Answer:

(a) None.  The Petitioner’s mother’s Will declares that she has already provided for the Petitioner during her lifetime.

(b) Yes.  IB left the Petitioner an amount of AUD$20,000, see Attachment to Answer.

(c) Unknown, but unlikely. The Petitioner has not spoken to her uncle in many years and have no idea how to contact him.

41.Further in an e-mail dated the 9 October 2012 the mother’s co director wrote to both the wife and her brother W in the following terms:-

As you may be aware, I am a co-director with your mother on the Board of LSH Investments P/L and act as its lawyer. This is to confirm that your mother holds the Governor’s Share in LSH Investments P/L, pursuant to which she has 76% of the voting rights.  All resolutions, ordinary or special, can only be made by her and therefore she absolutely controls the company and any decisions which may be made concerning its investments or income.  I am further instructed to advise that under her will, that share has been left that share to W.  However until such time as it passes to him, L remains in control.

42.I also accept the points put forward by Ms Irving in her closing that:-

· The lease from 2008 was in P’s [the wife’s] sole name.

· She kept all the rental income.

· She says she reported the rental income for UK tax.  [P7/1999§36]

· Her mother made no tax reporting of rental income.

· The Land Registry Property register shows her as sole owner from 10 July 2008, with nothing registered on the B section to indicate that the property was held on trust for girls.  [P7/1909]

· There is no documentation whatsoever supporting that the property was held on trust for the girls.

· There is no documentation whatsoever supporting that P held a share of the property for her mother, which is what P says; “my mother asked me to hold her share of the investment for her, in my name” [P7/1879 §37].  That is not the same as holding it for the girls, but in any event, it would be wholly inconsistent with estate planning.

· If the 2008 transfer resulted in exactly the same situation as P says was in place before the transfer, what was the point of it?

I agree with what she says in this respect and the fact that these points all go to support the argument that the wife is now the sole legal and beneficial owner of the property. I accept that to be the case.

43.I should add that I also agree with the husband that it makes no sense at all for the property to be transferred into the wife’s name for estate planning purposes whilst at the same time it is said that the mother retains a beneficial interest, for which there is no documentary evidence. It seems to me that this would be highly improbable.

Conclusion on the property

44.Thus I accept that the property was purchased in 1995 with contributions made by both the wife and the mother – the exact proportions of which are not clear. However on the balance of probabilities it seems to me more likely than not that the wife and mother held the property roughly on a 50:50 basis. This is especially so given the subsequent transfer in 1998. I also accept that originally the wife’s brother W held the mother’s share on trust for the mother and that this situation was corrected in 1998. In 1998 the wife and mother were holding the property on a 50:50 basis as tenants in common. Thus up until 2008 I accept that there was a common intention that the wife and the mother would hold roughly a half share each in the property. It seems to me that this intention changed in 2008 when the mother transferred her share of the property to the wife for estate planning purposes. At that stage the intention must have been for the wife to hold the legal and beneficial ownership outright. Even if the wife and mother had discussed the possibility of leaving this property to the granddaughters I accept that this amounted to no more than a general intention that they should inherit in due course.

45.It seems to me that in these circumstances there is no need to look at the presumptions other than the presumption that beneficial ownership should generally mirror legal ownership. If however I am wrong in this – I would agree with Ms Irving that any presumption of a resulting trust or confirmation of the presumption of advancement is in any event rebutted by the 2008 transfer.

After that time Mrs H [the mother] could not have retained any beneficial interest as she says the property was transferred for estate planning purposes. This is the only act which is supported by documentary evidence showing “intention”. The intention was to divest Mrs H of any interest in the property. (Reply Submission for the Respondent dated the 20 June 2014.)

I agree.

Should the property be regarded as a “non matrimonial” property in any event?

46.In the alternative the wife argues that as her original share of the property was purchased with monies that she had saved that that share should be regarded as non matrimonial property in any event. In support of her assertion she claims that the parties’ maintained separate finances during the marriage (something that the husband disputes) and that the husband was poor with money. With respect that is neither here nor there. The wife purchased her original share of the property with monies earned during the marriage. Prima facie therefore her original share of the property must be regarded as matrimonial property. To find otherwise would run counter to the basic tenet of matrimonial law.

47.In so far as the mother’s original share of the property is concerned – prima facie that too must now be regarded as matrimonial property, since its transfer into the wife’s sole name in 2008. I would however accept that there may be arguments with respect to this half share and how it is to be regarded in the overall scheme of things given that it is an “unequal contribution” made by gift. No doubt this point will be explored further at the Financial Dispute Resolution hearing.

In the alternative does a trust exist with respect to this property? In particular is the property presently held on trust by the Petitioner on behalf of both herself and her mother for the benefit of the two children of the family and should it on that basis be excluded from the “matrimonial pot”?

48.As indicated above I do not accept that a trust exists with respect to this property. No trust was established. There is no written evidence to support the existence of a trust in favour of the two children of the family. It cannot therefore on that basis be excluded from the so called “matrimonial pot”.

Costs

49.Costs should generally follow the event. In this instance although the husband has not won on all points – he has been more successful than the wife overall. Therefore I will make an order nisi to be made absolute in 14 days time that the wife do pay the husband’s costs on a party and party basis to be taxed if not agreed. There shall be certificate for counsel.

Mr. Sebastian Hughes instructed by Oldham Li & Nie for the Petitioner

Ms F Irving instructed by Howse Williams Bower for the Respondent