England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BRENTFORD COUNTY COURT
(HIS HONOUR JUDGE MARCUS EDWARDS QC)

		Royal Courts of Justice The Strand London
		Monday 18 June 2001

Monday 18 June 2001

1. LADY JUSTICE ARDEN: This is a renewed application pursuant to a judgment which I gave on 27 March 2001. On that occasion, I dismissed an application for permission to appeal but directed that the order which I then made should lie in the office to enable the applicant to provide a draft amended statement of case, which was duly done. Permission had been sought to appeal from the order of His Honour Judge Marcus Edwards QC striking out proceedings brought to set aside a judgment obtained in an earlier action between the parties, which I describe below.
2. Having considered the draft statement of claim, I gave a direction and a provisional ruling in writing. The direction was that unless an application was made in open court, the provisional ruling which I gave should become final and be given in court and that the order which I had previously made should be drawn up and sealed.
3. Very briefly (because the full facts are in my earlier judgment of 27 March), this matter arises out of a previous action between the parties in which the question at issue was whether the defendant, Iris Malhan, was entitled to a beneficial interest in a property, 816 Great West Road, where she and the applicant had cohabited. They were not married. That action was determined in the defendant's favour. Subsequently the applicant discovered that the defendant had acquired another property. He had made that discovery in 1994 and he thereupon brought proceedings to set aside the earlier judgment.
4. The chronology is important. In 1962 the parties commenced their cohabitation in India. In 1964 the respondent migrated to the United Kingdom and there joined the applicant who had moved to the United Kingdom in 1963. They then commenced cohabitation in the United Kingdom. In September 1965 the applicant purchased 29 Salisbury Road as a family home. He and the respondent had children. In 1972, the applicant purchased another property, 37 Queensway, which was rented out. He then returned for a visit to India, leaving the respondent and their children in the United Kingdom. In January 1976, while he was still away, the respondent and the children moved into 37 Queensway. Later in the same year, 29 Salisbury Road was sold by the respondent. In July 1978, 37 Queensway was also sold by the applicant, and 816 Great West Road was purchased and occupied by both parties and their children.
5. In November 1986, the respondent, under an assumed name, purchased 198 Martindale Road, Hounslow, with a mortgage from the Bradford and Bingley Building Society. Her only known source of income at the time was Social Security benefits. It is the purchase of that property, which was not known at the time of the earlier action, and which the applicant only discovered in 1994.
6. The earlier action was commenced in August 1987 in the Brentford County Court. In July 1988, the respondent's solicitors responded to the applicant's solicitors' request and informed them that the respondent had no other property other than 816 Great West Road. They failed to disclose 198 Martindale Road which had been acquired in November 1986.
7. In December 1988, following a trial at the Brentford County Court, judgment was given for the respondent. The matter came to the Court of Appeal, but the appeal was dismissed. The respondent was held to have a beneficial interest in 816 Great West Road.
8. As I explained in my judgment of 27 March, since this is an action between persons who were not married, there was no question of ascertaining all the parties' assets as on a consideration of a claim by a wife on separation. It was a question of finding out whether the parties intended that the respondent should have an interest in 816 Great West Road, the amount of that interest, and whether she relied upon a representation that she should have an interest. It was determined in the 1980 action that it was intended that she should have an interest in the property. The question was the extent of her interest in the property. That was calculated in the action in 1988 by assessing the financial contribution which she had made first to one of the earlier properties which had been bought and then sold, and then by reference to adding her earnings to her husband's earnings to enable the mortgage to be repaid.
9. My provisional ruling in this matter explains the difficulties which the applicant faces. I said:

"In my judgment dated 27th March 2001, refusing permission to appeal I directed that the Order should lie in the office for twenty-one days and that if within twenty-one days a draft amended statement of case was submitted to the Court I would look at the matter again.

I now have before me counsel's draft amended particulars of claim lodged 17th April 2001.

In my judgment I said that I would reconsider my Order:

'if a draft amended statement of case alleging that the monies used for the purchase of 198 were those which the defendant said she had contributed to the purchase of 816.'

I am grateful to counsel for his skeleton argument and draft amended particulars of claim. In paragraph 5 there is an allegation that 'the deposit money for 198 Martindale Road was obtained by the defendant retaining monies she had previously received on the claimant's behalf and for which she had failed properly to account. Such monies include (but are not limited to) the proceeds of sale of 29 Salisbury Road, and the proceeds of insurance claims of 816 Great West Road and various debts collected by the defendant on the claimant's behalf whilst the claimant was in prison. Were this fact disclosed to the trial court it would materially have affected the outcome of previous proceedings.' There is no reference here to the use by the defendant of monies which the defendant said she contributed to the acquisition of 816 Great West Road. Accordingly the terms of my direction are not met.

If the claimant is to be able to bring proceedings to set aside the previous judgment, he must show that there is new evidence (viz the purchase of 198 Martindale Road), that the defendant did not make the contributions for the purchase of 816 Great West Road that she said she had made, and that this evidence would have had a radical effect on the judgment in the earlier action.

It follows that to show that the judgment should be set aside on the ground indicated above, the claimant will have to show not only that the defendant had not made the contributions to the purchase of 37 Queensway which she said she had made, but also that she used these contributions to pay for the deposit of 198 Martindale Road. (There is no allegation that she paid any further part of the purchase price for that property).

The particulars of claim lack dates. However, as I understand it, 816 Great West Road was purchased in 1978 for £21,000. Of this £18,000 came from the proceeds of sale of 37 Queensway and the balance was provided by the claimant. 37 Queensway was sold in 1978. 198 Martindale Road was not purchased until 5 November 1986.

There is nothing to show that the deposit of £10,000 came from monies which Mrs Malhan had stated that she had contributed to 37 Queensway.

In addition, there is nothing to support the allegation in the particulars of claim that the parties did not have a common intention that the defendant should have a beneficial interest in 37 Queensway or 816 Great West Road, as alleged in the particulars of claim. It is clear that there could be no prospect of success on appeal on this issue, ie in seeking to challenge the previous judgment with respect to the establishment of a beneficial interest (as opposed to its quantification). Nor, moreover, is there any allegation that the defendant was a beneficial owner free from encumbrances of 198 Martindale Road. Indeed, the pleading is wholly silent as to the date of the purchase of 198 Martindale Road, the amount of purchase price and how it was in fact paid.

As this is a second appeal, there would have to be some compelling reason to allow the draft amended pleading to be introduced in the Court of Appeal."

10. Mr Hinds, who appeared on the previous occasion, has helpfully provided a skeleton argument and a further draft amended pleading. He has presented his arguments with conspicuous skill and with thorough knowledge of this long-standing dispute, and the court is indebted to him for the assistance which he has given. In his skeleton argument Mr Hinds explains that the draft amended pleading, which I previously saw, has been yet further amended to deal with the funding of the purchase of 37 Queensway. Those matters do not affect today's application.
11. In my original judgment of 27 March I explained that the general rule is that once the appeal processes have been exhausted, a judgment is final. There is an exception to this general rule, where evidence meets the "Phosphate Sewage" test which was formulated in Phosphate Sewage Company Limited v Molleson [1878-79] 4 AC 801. Under the Phosphate Sewage test, the court may set aside a judgment where it is shown that evidence has come to light which would entirely change the aspect of the case and which could not, with reasonable diligence, have previously been discovered.
12. The only possible evidence which falls into this category is the newly discovered evidence that, contrary to what the defendant said at the trial (I am told she said it at the trial, though I have not seen any transcript), she in fact owned another property, namely 198 Martindale Road, which she had acquired in 1986. The defendant contends, in an affidavit which she has sworn, that she acquired this property beneficially. She says that she acquired it as a nominee for her brother. The applicant denies that that is the case.
13. Today Mr Hinds appears before me to renew his application. Essentially he submits that it is sufficient to show that the respondent provided false information and that if the court had had that information before it in the 1988 action, it would have taken a different view of the respondent's credibility as a witness and it would not have awarded her an interest in the home.
14. In my judgment, the provision of material of this nature does not meet the Phosphate Sewage test. The evidence might or might not lead a court to take a different view of the witness' credibility, but that cannot be foretold with any kind of certainty. Indeed, Mr Hinds was constrained to accept that this was so. In my judgment, to meet the Phosphate Sewage test there has to be evidence which on the face of it looks as if it will be difficult to disprove. Of course I am dealing with a case which is only at the pleading stage, since the defendant was successful in having the case struck out on the basis of no reasonable prospect of success. At trial it has to be shown that it is evidence which indeed entirely changes the aspect of the case.
15. As I see it, there are too many gaps in the evidence here for the Phosphate Sewage test to be met. I am proceeding on the basis that the evidence as regards the purchase of 198 Martindale Road is such as could not with reasonable diligence have previously been revealed. But it may very well be a case in which the court would form the view that the evidence about this property could have been ascertained and elicited by cross-examination at trial. Accordingly, for that reason also the Phosphate Sewage test is not met.
16. Nor is it enough (as suggested) to show that the defendant only moved into one of the houses which was jointly occupied by her, the applicant and the children after the applicant had bought that property. This evidence could have been adduced at the trial.Thus, while I am indebted to Mr Hinds for his careful and persuasive arguments, and while in no way can the court approve of the untruthful answers which the defendant gave, for the reasons which I have given in my previous ruling and for these further reasons, I direct that the order which I previously made must now be drawn up.