Nilesh Hirji Pankhania (Appellant/Claimant) v Mrs Kalavanti Narendra Chandegra (by Her Litigation Friend Ronald Andrew Eagle) (Respondent/Defendant)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Patten,Lord Justice Mummery,Lord Justice Treacy
Judgment Date09 November 2012
Neutral Citation[2012] EWCA Civ 1438
Docket NumberCase No: B2/2012/0496
Date09 November 2012

[2012] EWCA Civ 1438



His Honour Judge Harris QC


Royal Courts of Justice

Strand, London, Wc2a 2ll


Lord Justice Mummery

Lord Justice Patten


Lord Justice Treacy

Case No: B2/2012/0496

Nilesh Hirji Pankhania
Mrs Kalavanti Narendra Chandegra (by Her Litigation Friend Ronald Andrew Eagle)

Ian Lamacraft (instructed by BP Legal) for the Appellant

John Small (instructed by Josiah Hincks) for the Respondent

Hearing date : 23 rd October 2012

Lord Justice Patten

This is an appeal by the claimant, Nilesh Pankhania, against the dismissal of his claim for an order for the sale of a registered freehold property at 7, Cossington Street, Leicester ("the property") and for the division of the net proceeds of sale between himself and the defendant in equal shares. The property was purchased on 7 th July 1987 for the sum of £18,500 with the assistance of a mortgage loan from the Market Harborough Building Society in the sum of £17,500. It was transferred by the vendors into the names of the claimant and the defendant as joint tenants to be held by them as tenants in common in equal shares and the transfer (in clause 3) contains an express declaration of trust by the claimant and the defendant to that effect.


Notwithstanding this, the judge, HH Judge Charles Harris QC, held that the legal and beneficial ownership of the property resided solely with the defendant and made a declaration to that effect. The claimant appeals against that order with the permission of Lewison LJ who noted that at no point in his judgment did the judge refer to the fact that there was an express declaration of trust setting out the parties' respective beneficial interests and that, although the judge referred to the defendant's submission that the transfer was a sham, it is far from clear whether he made any finding to that effect.


I should say at the outset that the judge may not have been helped by the way in which the case was presented to him. Being a Part 8 claim, there were no pleadings as such. Agreed directions were given for disclosure and the exchange of witness statements and the case was listed for trial on 26 th January 2011. Sadly on 19 th November 2010, after preparing and signing her witness statement, the defendant suffered a heart attack which caused severe brain damage. As a consequence, the trial date was vacated and on 18 th April 2011 Mrs Ranjana Kotecha, her niece, was appointed her Litigation Friend. The action was directed to proceed as a Part 7 claim but pleadings were not ordered. On 23 rd August 2011 Mr Eagle replaced Mrs Kotecha as the defendant's Litigation Friend and a further hearing took place. On this occasion the claimant's counsel invited the judge to proceed to determine the issue of beneficial ownership on a summary basis on the footing that the defendant had not indicated in her evidence any line of argument which would allow her to go behind the express declaration of trust contained in the transfer. HH Judge Hampton declined to deal with the case in this way and instead gave the defendant permission to serve further evidence which, in the event, was served in the form of a witness statement from Mrs Kotecha. She also ordered both sides to file skeleton arguments.


The action came on for trial before Judge Harris QC on 23 rd November 2011. The claimant's counsel, in his skeleton argument, set out the details of the purchase and referred to the declaration of trust in the transfer. He then explained that, notwithstanding the declaration of trust, the defendant claimed that there was an understanding between the parties at the time of purchase or within the wider family that she was to be the sole beneficial owner and that the property was to be her matrimonial home. The claimant's case, by contrast, was that the property had been purchased in order to provide a home for his uncle (who died on 23 rd November 2003) and, subject to that, was to be an investment for the claimant and the defendant. The principal areas of dispute therefore were whether there was an underlying agreement or understanding capable of displacing the terms of the transfer. The skeleton then addressed the evidence relied on by the defendant but did not discuss in any further detail the circumstances in which a party to an express declaration of trust may be entitled to avoid it.


Counsel for the defendant in his skeleton argument concentrated on the evidential issues about what the parties and their family intended at the time of the purchase. His skeleton entirely ignores the existence of an express declaration of trust in the transfer but refers instead to inconsistencies on the claimant's part in his account of what was agreed with his uncle and to the defendant's position that the claimant was never intended to have any beneficial interest in the property.


In order to put these arguments in context it is necessary to summarise very briefly what the factual dispute was. The defendant is the claimant's aunt. The family (including the defendant and the claimant's mother, her sister-in-law) came to this country from Kenya in 1967 and the claimant was born here. In 1968 they were joined by the defendant's brother, Harjivanbhai, who is the claimant's uncle referred to in his evidence. The family were all living in a rented flat at 84, Rendell Road in Leicester but later they acquired other property in the same street and the claimant came to live with his parents at 88, Rendell Road.


The property at 7, Cossington Street (a neighbouring street) was identified as for sale by the claimant's uncle. At the time of the purchase in 1987 the claimant was 19 years old. He says in his witness statement that most of the deposit was paid by his uncle who had wanted to purchase the property himself but was not eligible for a mortgage. It was therefore decided that the property should be purchased by the claimant and the defendant. He says that the long-term intention was that his uncle would eventually live in the property and that the parties would sell their interests in it to him. But in 1989 the defendant got married in India and needed a home. He says that he had no objection to his aunt living in the property with her husband at the time but that it was not intended to be a permanent arrangement. Later in 2001 the defendant changed the locks, refused the claimant access, and refused to sell the house to the claimant's uncle. He died in 2003 and the claimant says he paid the mortgage up to that time. Thereafter the claimant and the defendant paid the mortgage in equal shares until 2009 when the claimant issued the Part 8 proceedings seeking a sale.


The defendant in her witness statement also accepts that it was her brother, the claimant's uncle, who found the property but was not able to purchase it himself. But her evidence is that his intention was that she should purchase it. She says that she proceeded to do that and made a mortgage application to the building society in her sole name but was told that her income was insufficient to enable her to borrow the amount she required. As a result, there was a discussion within the family when it was decided that the claimant would become a joint purchaser of the property so that his salary could be taken into account for the purposes of the mortgage. She says that after the purchase was completed there was never any intention within the family that the claimant should occupy the property or treat it as his own and that the intention was that it should become her matrimonial home. The claimant made no contribution to the deposit and the mortgage payments were made by the defendant with only occasional assistance from her brother. She accepts that in 2005 the claimant told the building society that he wished to contribute to the mortgage payments and that he made payments between August 2005 and December 2008 amounting to £2,650. But she says that these payments were never requested by her or discussed between them.


Mrs Kotecha's evidence largely corroborates that of her aunt but she accepted in cross-examination that her statement was based on what her aunt had told her rather than on any first-hand knowledge of her own and it adds really nothing relevant to the issues on this appeal.


The judge set out the family history leading up to the purchase of the property and then said this:

"The claimant's case is a simple one. He is a joint tenant by virtue of the conveyance/paper title and normally the beneficial interest would follow the legal interest. It is in those circumstances for the defendant to establish that the beneficial interest is not in accordance with the legal interest and this, he contends, she cannot do. The defendant argues firstly that the claimant has admitted in evidence that the beneficial interest was understood by him to rest with "the family", not with him personally. Certainly, that the presence of the claimant's name as joint tenant only came about as a convenient method of obtaining a mortgage, which the defendant could not have got on her own sole earnings on her own behalf. It is said that the house was intended, if not from the very outset, then certainly very soon thereafter, as a matrimonial home for the defendant and her husband and it was never envisaged by anyone that the claimant would have any beneficial interest. In short, the transfer in part to him as an expedient sham. Further, the claimant has made next to no financial contribution to the acquisition or maintenance of the...

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