Kenneth Michael Barnes v Denise Rosamund Phillips
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd Jones,Hayden J,Longmore L.J. |
| Judgment Date | 23 October 2015 |
| Neutral Citation | [2015] EWCA Civ 1056 |
| Docket Number | Case No: B2/2014/0738 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 October 2015 |
[2015] EWCA Civ 1056
Lord Justice Longmore
Lord Justice Lloyd Jones
and
Mr Justice Hayden
Case No: B2/2014/0738
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE MADGE
2YN16765
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Michael Horton (appearing by direct access) for the Appellant
Mr. Mark Simeon Jones (instructed by Dodd Lewis, Blackheath) for the Respondent
Hearing date: 13 October 2015
This is an appeal by Mr. Kenneth Michael Barnes against the order of His Honour Judge Madge made in the Central London County Court on 13 February 2014 whereby he held and declared that the parties held the beneficial shares in their jointly owned property at 88, Leyland Road, London, SE12 8DW ("the property") as tenants in common in shares of 85% in favour of the respondent Denise Rosamund Phillips and 15% in favour of Mr. Barnes.
Factual background
The appellant and the respondent began a relationship in about 1983. They set up home together in 1989, initially living in rented accommodation. They had two children together, Briaa Mercedez Barnes who was born in November 1993 and Vienna Precious Barnes who was born in July 2000.
In January 1996 the appellant and the respondent purchased the property. They paid approximately £135,000 for the property, using approximately £25,000 from their savings for the deposit and taking out a joint repayment mortgage with HSBC for the balance. The property was registered in both their names as joint tenants.
The respondent worked full time as a nurse except for a short while when the children were very small when she worked only part time. The appellant was a self-employed businessman. He paid the mortgage and some of the bills and the respondent paid the rest. Between purchasing the property and 2005 they carried out major works to the property, including installing double glazing, resurfacing the driveway and landscaping the garden. They both contributed to the cost of these works.
In 1988 the appellant purchased a property at 7, Stoke Newington Road which was registered in his sole name and which he rented out. In addition, while the relationship continued, he bought two other properties, 37 and 41 Otter Close, London E15. Both of these properties were registered in his sole name and were rented out. He told the respondent that he considered the properties a business investment for himself.
The respondent's evidence, which was accepted by the Judge, was that in late 2004 and early 2005 she began to notice that the appellant was having financial problems. There were letters and telephone calls from bailiffs. The appellant eventually told her that he was having debt problems. She was angry as he had not long purchased the two flats. Early in 2005 he told her that he wanted to remortgage the property. He kept insisting that they had to remortgage the property otherwise they would lose their home. In her evidence she said that she clearly remembered his words that "you and the girls will be out on the street" if they did not remortgage. He told her that she would have to sign a remortgage document but assured her that everything would be alright. He had said that he would always be with her so that it would be no problem to remortgage and pay off the debt, as he would continue to pay the mortgage.
The remortgage of the property took place on or about the 4 May 2005. The mortgage offer valued the property at £350,000. The London Mortgage Company loaned £145,000 of which £78,930.62, was immediately paid to HSBC to redeem the original mortgage. After the repayment of the HSBC mortgage the funds received on the remortgage were reduced to £66,069.38. The London Mortgage Company was aware that the purpose of the remortgage was to enable the appellant to pay off his debts totalling £64,811 (£12,088 to Egg, £39,716 to Freeway and £13,007 to Mint). It was therefore a term of the remortgage that the debts be paid upon completion of the loan. It was the respondent's evidence that these debts were paid off at this time. Accordingly, as she explained in her evidence, there was almost nothing of the remortgage funds left. However, the appellant gave evidence that he did not pay off the debts to Egg or Mint.
The judge found that shortly before the remortgage the respondent took out a personal loan from the National Westminster Bank in the sum of £10,000 in order to redecorate the property. In order to repay this loan when required, in November 2006 she had to take out a replacement loan for £11,000.
In or around June 2005 the relationship broke down and the parties separated, the appellant leaving the property and moving into one of his other properties. It was the respondent's evidence that after he left the property the appellant at first continued to pay the mortgage and that she initially made payments to support this. However, he only paid the mortgage without problem for approximately eight months. The judge found that during the period 1 June 2005 to 18 April 2008 the respondent made mortgage payments totalling £12,552.27, and the appellant made mortgage payments totalling £22,077.12. It was the respondent's evidence that when the appellant moved out of the property they agreed an arrangement whereby he would pay £250 per month as his contribution to the children. He paid this on various occasions but not on a regular basis. From January 2008 she had sole responsibility for paying all the mortgage instalments as well as having financial responsibility for both children (although the appellant made some contributions to child support). She was also responsible for all the work and expenditure required on the property since 2005. She produced a schedule of expenditure with receipts in respect of £11,261.90, and a total estimated expenditure of £22,671.36.
There was no valuation of the property in 2008. However, at the trial there was evidence of "recent valuations" of the property suggesting marketing at a price between £450,000 and £545,000. The judge took a mid point in the valuations of £497,500. As at the 24 August 2013 the outstanding balance under the mortgage was £113,328.80, and the monthly repayments were then £691.47. The judge allowed for costs of sale at 3% and arrived at a total equity of redemption of around £369,247.
The respondent commenced proceedings against Mr. Barnes in the Bromley County Court for a declaration under section 14, Trusts of Land and Appointment of Trustees Act 1996. The proceedings were transferred to the Central London County Court for trial.
The decision of HH Judge Madge
Judge Madge noted that there was a conflict of evidence on some issues between the appellant and the respondent. He considered that the respondent had been an honest and truthful witness (although mistaken in her original account of the source of the £10,000). The appellant had not been frank and open when it came to disclosure. He had produced no documentation showing his financial position. The judge doubted his evidence that he had not submitted a tax return to the HMRC during the relevant period. The judge also noted his evidence that he did not pay off the debts to Egg or Mint. The judge therefore concluded that whenever there was a conflict between their respective evidence he must prefer the evidence of the respondent. He did not accept the appellant's evidence unless it was corroborated by independent evidence. He did accept the respondent's evidence.
The judge held that on purchase of the property the appellant and the respondent were joint tenants both in law and in equity because that was their intention. The fact that there may have been a slight difference in contributions to the initial deposit made no difference, in his judgement. The fact that the appellant paid the mortgage and the life insurance and that the respondent paid council tax and that they shared utilities again made no difference. Both were contributing equally to what was in effect a marriage without a wedding ceremony. They had both intended to set up a joint home. He may have made a greater financial contribution because he earned more but she no doubt made a greater contribution towards the care of their daughters.
The judge then continued:
"Secondly, there is no evidence that, using lay person's language, the Claimant and the Defendant later formed an actual common intention that their shares would change. There was no specific agreement as to a variation of the shares on the split. I bear in mind in particular what Ms. Phillips said at the conclusion of her evidence. I also bear in mind what Mr. Barnes said … [in] his final case summary, "There has never been a discussion or written agreement with regards to a change in our respective beneficial shares in the property". (at paragraph 37)
The judge had recorded what Ms. Phillips said at the conclusion of her evidence at paragraph 22 of the judgment:
"When giving oral evidence, Ms. Phillips was asked about any subsequent agreement in relation to the parties' respective shares in the property. She was asked whether there were any discussions. She said that the Claimant and the Defendant had tried to sort out the situation. She said, "We may have discussed it in text messages, but so far as agreement I would say no, there was no agreement". (at paragraph 22)
The judge then continued:
"Thirdly, so this is a case where it is not possible to ascertain by direct evidence or by inference what the parties' actual...
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