Diane JULIETTE COLLIER and Michael CLAYTON COLLIER/
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aldous,Lord Justice Chadwick,Lord Justice Mance |
| Judgment Date | 30 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1095 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2001/16299 |
| Date | 30 July 2002 |
[2002] EWCA Civ 1095
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
HIS HONOUR JUDGE RICH QC (SITTING AS
A JUDGE OF THE CHANCERY DIVISION)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Aldous
Lord Justice Chadwick and
Lord Justice Mance
Case No: A3/2001/16299
A. Ullstein QC (instructed by Philip Ross & Co) for the Appellant
D. Phillips QC and T. Nesbitt (instructed by Streeter Marshall) for the Respondent
The appellant Diane Collier is the daughter of the respondent Michael Collier. I will refer to them respectively as the daughter and the father.
On 4th March 1999 the daughter started proceedings in the Chancery Division against the father seeking possession of premises at 146 Clapham High Street, London SW4 and ancillary relief. Those premises comprised at the time a night-club, a recording studio and a penthouse flat. They were all controlled and occupied by the father. The father disputed the claim upon grounds to which I will come later. He also counterclaimed for a declaration that the Clapham High Street premises were held on trust for him and as a consequence sought an order that the freehold and title should be transferred to him.
On similar grounds the father asserted that premises at Chertsey, called "The Empire", that had been operated as a bingo club had been held on trust for him. As a consequence he claimed that he was entitled to the proceeds of sale from the compulsory acquisition that had taken place.
The background facts go back to 1969 when the father acquired the freehold of the Chertsey premises. The freehold of the Clapham High Street premises was acquired by the father in 1979. On 18th December 1986, at a time when the father thought he would be in financial difficulties, he granted the daughter a lease over both premises. Clause 5 of those leases gave the daughter an option to purchase the freehold of the premises on payment of £100,000 in respect of each of them. On 26th January 1987 the daughter registered the options in the appropriate part of the Charges Register.
In June 1995 the daughter gave notice that she wished to exercise the options pursuant to clauses 5 of the leases. The transfers took place in 1996 and 1997. The purchase money of £100,000 for the Clapham High Street premises was provided as to £85,000 by the father and as to the remaining £15,000 by the daughter. She borrowed that money from a company called Litton Grove Properties Ltd and it was secured by a legal charge on her freehold interest in the Clapham High Street premises.
In April 1997 the daughter fell out with the father over a claim by her to a share in the profits of the business that was being run at the Clapham High Street premises. On 4th March 1999 she served a notice to terminate the licence under which she claimed that her father was occupying those premises. That was disputed and there followed these proceedings.
I have set out the way that the properties came into the possession of the daughter. However the various transactions took place against a background of financial worries of the father that arose from his guarantee of the debts of Morton Music Limited. In 1985 Bass Holdings Ltd started proceedings against Morton Music Ltd for breaches of covenant. Those proceedings were decided in favour of Bass Holdings by Scott J in July 1986 and Morton Music, was ordered to pay the costs. Those costs and the damages would have had to be paid by the father. However in 1987 Morton Music's appeal was allowed. Despite that success the father proceeded to mortgage the Clapham High Street premises in July 1989 and the Chertsey premises in December 1989 without informing the mortgages of the options. The subsequent transfers to the daughter of the freeholds had no connection with the Bass Holdings action, but were carried out "with the object of defrauding the respective mortgagees of their security" (see judgment page 5 lines 17 to 20).
The issues before the judge were numerous. For example it was alleged that documents granting the leases should be rectified and also that the father had the full title to the premises because he had occupied the premises for sufficient time to obtain title by reason of his adverse possession. But the main issue turned upon the claim by the father that both premises had been held on trust for him by his daughter.
The main witnesses were the father and the daughter. The judge found the father was "not only a thoroughly dishonest witness, but also a singularly stupid one." As to the daughter, the judge disbelieved her evidence that the premises had been transferred as "a generous gift". He said, "I have no difficulty in disbelieving her and concluding that she had accepted that she should be a mere nominee for the purpose of the transaction and no gift was intended or believed by her."
The judge considered at length the intention of the parties. He held that the leases, when granted, were treated by the parties as if they did not exist. The judge also recorded that "Much time was spent in the course of the hearing investigating the circumstances in which the options [contained in the leases] came to be exercised with Mr Collier's co-operation and, in the case of Southside [the Clapham High Street premises], largely with his money." The judge recorded that counsel for the father had not sought to resist the conclusion that this was done with the object of defrauding the respective mortgagees of their security. The judge concluded that Mr Isaacs, the solicitor who had advised Mr Collier, had improperly colluded with Mr Collier to deceive the mortgagees as to the true position in respect of the leases. The purpose of the exercise of the options was according to the judge, to preserve the father's assets for the family at the expense of the mortgagees.
The case put forward by Mr Collier was that the leases had been granted only upon terms that they should be held on trust for him, so as to reduce inheritance tax liabilities. The judge disbelieved that. He said:
"I do not accept that an inheritance tax purpose was more than at most a small part of his intention in granting the lease. I am satisfied that he feared being liable for costs in an action against Bass Charrington which he had lost at first instance and in which he was then, as he told me, successful in the Court of Appeal only on a technicality."
The judge went on to say:
"I have concluded that he [the father] made the grants to his daughter, upon whose compliance he felt able to rely, with the intention that if it served his interest he would treat the grant as gifts, but if it did not he would claim that the grant was subject to his beneficial interest."
To establish the trust, the father relied upon a letter dated 7th August 1986, an admission against interest made by the daughter's mother and the general tenor and content of the father's and daughter's evidence. The letter of 7th August 1986 stated:
"Dear Daddy,
Should you not decide to sell the above properties elsewhere and transfer them into my name as agreed, they will be held in trust."
The judge held that on the balance of probabilities that that letter was not a genuine document, but had been manufactured by the father in order to deceive the court.
The alleged admission against interest appeared in handwriting on a letter dated 19th April 1990. The handwriting part was that of the father. It was as follows:
"To M. Collier,
I am confirming to you on behalf of Diana, we are both aware and understand Diana has no legal rights as a tenant to the above property. Also Diana has never occupied or paid any rent to you re these premises. It was always agreed the lease has always been held in trust on your behalf."
It appeared to have been signed by the daughter's mother and was stated to have been signed in the presence of the father.
The judge concluded that the daughter had held the leases on trust for the father. He held that the hand-written part of the letter of 19th April 1990 was an admission against interest. He went on:
"Having heard the claimant giving evidence of the "generous gift", which she claims she believes had been made to her, I have no difficulty in disbelieving her and concluding that she had accepted that she should be a mere nominee for the purpose of the transaction and no gift was intended or believed by her."
The judge concluded:
"I have accepted that Mr Collier's intention, at least so far as the tenancies were concerned, was that the claimant should at most be his nominee and effectively the leases should be available to be used only if required in order to deceive. They were shams as between father and daughter. They were intended to be no more. But as is agreed at the Bar, although shams they do have legal effect to pass the legal title to the tenancies which they created and thus to the options that they granted. It follows that their intended effect has to be achieved by treating such title as subject to the trust which Mr Collier asserts, and I so hold. The consequence is that Mr Collier is entitled to retain possession of Southside [Clapham High Street] and, subject to Barclays' interest, is also entitled to the net proceeds of sale of The Empire."
To give effect to that conclusion, the judge made declarations, as sought by the father, that the daughter held the freehold title of the Clapham High Street premises on trust for him and ordered that the freehold title should be transferred to him...
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