England and Wales Court of Appeal (Civil Division) Decisions

Rahnema v Rahnema & Anor [2002] EWCA Civ 695 (17th May, 2002)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
Nicholas Warren QC (sitting as Deputy High Court Judge)

		Royal Courts of Justice Strand, London, WC2A 2LL
		17th May 2002

Lord Justice Judge :

1. This is an appeal from the decision of Mr Nicholas Warren QC (sitting as a deputy judge of the High Court, Chancery Division) dated 19^th June 2001, concerning the ownership of 28 St Edmund’s Terrace, London NW8 (“the property”) and a Mercedes Benz 320S (“the car”).
2. The procedural steps leading to his decision need no recitation. There were three possible claimants to the property, Mansur Rahnema, (“Dr Rahnema”) his wife, Shahla Rahbari Rahnema (“Mrs Rahbari”), and her daughter by a previous marriage, Panthea Ansari Motaleb (“Miss Ansari”). That brief introduction fails to convey the remotest impression of the deeply troubled and unhappy background to this litigation, or the convoluted and unsatisfactory evidence with which the judge was forced to grapple. He concluded that the property was held by Mrs Rahbari on trust for Miss Ansari, and that Miss Ansari owned the car.
3. Dr Rahnema and Mrs Rahbari were married on 24^th April 1993, in Virginia Beach, USA. Following their marriage they entered into a marital agreement (“ the agreement”) dated 28^th July 1993. During the first year of the marriage a number of property transactions conveyed the bulk of Dr Rahnema’s assets in property to his wife. These transactions were referred to as the second series of agreements.
4. The marriage was unsuccessful. In November 1997 Dr Rahnema began divorce proceedings in the USA. At the trial the judge was very conscious of the fact that these bitterly contested proceedings were still in progress, and he was anxious to limit any observations he might make to issues which fell directly for his decision.
5. The judge noted that in March 2000 the Virginia Court of Appeals upheld a rejection of Dr Rahnema’s attack on the validity of the agreement, but simultaneously upheld his contention that the second series of agreements was invalid.

He quoted a short passage from that decision.

“Despite the fact that the parties had been married for only a year at the time the deeds were executed and that the marriage lasted only four years, the agreements gave the wife everything her husband had acquired in his 30 years of professional life. The agreements left nothing for husband’s son, who suffered from mental illness and was unable to provide for himself. The commissioner found clear and convincing evidence proved that the agreements were unconscionable”.

6. For present purposes, since July 1993 the agreement governed by the law of Virginia has remained a subsisting valid agreement. The essential criticism of the judge’s decision is that he failed to appreciate the impact of that agreement on the issues before him. There is no doubt that the judge had the agreement well in mind when reaching his conclusion. The question is whether that conclusion was correct.
7. No evidence was offered about the proper effect of the agreement under the law of Virginia, by which it was expressly governed and subject to which it was to be interpreted. Similarly, no evidence was offered about the impact on the agreement, if any, of the decision in Virginia that the second series of transactions was invalid. We have been invited to approach the appeal on the basis that the agreement means what it appears to us, sitting in England, to mean, and no one has suggested that the decision in relation to the second series of transactions has any relevant impact.
8. Under the agreement all the property owned by Dr Rahnema at the date of the marriage, including real estate and bank accounts, became jointly owned by him and Mrs Rahbari. This agreement did not apply to Mrs Rahbari’s property “owned prior to the actual date of the marriage”. The husband expressly waived any rights or interests in such property.
9. Critically to the outcome of this appeal, Clause IV of the agreement provided:

“All property which is acquired during the marriage and prior to any separation of the parties above shall also be deemed marital property and shall be jointly owned.

A. All marital property titled in the names of one or both parties shall be deemed equally owned irrespective of the monetary or non-monetary contributions made toward the acquisition, care or maintenance of such property by either spouse.

B. All marital property for which there is no title shall be deemed equally owned”.

Clause V, which provided for the “treatment” of marital property on separation, divorce or death, ended:

“Any determination of value shall be interpreted to mean the net value which shall require consideration of outstanding liens or charges against any property”.

10. Plainly Clause IV applied to property acquired during the subsistence of the marriage by either the husband or the wife. There was some debate in argument whether Clause IV extended to property acquired by the wife from her own pre-marriage funds. In the result we do not have to decide that question. Certainly if the wife benefited from a handsome legacy during the subsistence of the agreement, it fell within Clause IV and was jointly owned. Equally, as it seems to me, if the wife was simply appointed or became a trustee of property belonging to someone else, or acquired property while acting as an agent on behalf of another person, Clause IV would not apply. In the present case, where to put it neutrally and with deliberate imprecision for the moment, Mrs Rahbari was apparently involved in the acquisition of property from her daughter, the first task facing the judge was not to elucidate the meaning of Clause IV, but to ascertain the facts.
11. In this task, the judge was not assisted by the evidence of the three main protagonists. There were cross allegations of serious dishonesty. Each gave evidence, assessed at least in part, as “incredible”. In his detailed judgment, the judge explained why he entertained such reservations about this evidence, and I can see no advantage in seeking to reformulate his observations in fresh language, nor to repeat them. The starting point is the express findings of fact made by the judge about various financial transactions involving the main protagonists after he had reflected not only on their evidence, but also the other witnesses and the documentary evidence.
12. The property

The critical events took place in May 1996, and involved a transaction or series of transactions between Mrs Rahbari and Miss Ansari, and the connected expenditure of a large sum of money by Mrs Rahbari, as well as the source of that money. Dr Rahnema himself was wholly ignorant of these transactions.

13. 20 Sanderstead Avenue, London NW 2 was the matrimonial home of Mrs Rahbari and her former husband. After a dispute, the issue of ownership was resolved in her favour, and the property was transferred to her on 28^th February 1991. On 13^th August 1992, the property was transferred to Miss Ansari for or expressed to be in consideration of just over £160,000. The judge held that the property then belonged to her. After Mrs Rahbari married Dr Rahnema on 24^th April 1993, and during the subsistence of the agreement, 20 Sanderstead Avenue was transferred back to her on 6^th December 1993, in consideration of natural love and affection, and pursuant to a declaration of trust dated 24^th September 1993. The judge held that following the transfer of the title in No. 20 to Mrs Rahbari, she enjoyed full beneficial and then full legal ownership. He left open the question whether Miss Ansari might have been entitled to set the transaction aside, but as she has never sought to do so, for our purposes that question is academic. The judge was however to conclude that at a much later stage, in May 1996, Mrs Rahbari recognised that her daughter had some “moral, perhaps even legal claim” to the eventual proceeds of sale.
14. In February 1994, 20 Sanderstead Avenue was transferred by Mrs Rahbari to her brother, who lived in Iran, and according to the stamp duty certificate, as a voluntary disposition inter vivos. In June 1995, acting under a power of attorney for her brother, Mrs Rahbari sold No.20 to a third party for £220,000, together with £7,000 for antiques, fittings and furnishings.
15. The judge considered a large body of confusing evidence in relation to the proceeds from the sale, but refrained from deciding the question of the beneficial ownership after February 1994 – the date of the transfer to Mrs Rahbari’s brother. That said, it is clear that £227,000 was remitted to Mrs Rahbari on the sale, and in June 1995 her account with the Midland Bank in Jersey was credited with that sum. At that time the balance in the account stood at just under £120,000. On 22 June 1995, just over £261,000 was transferred out of the Jersey account into Mrs Rahbari’s account with the Union Bank of Switzerland. On 2^nd May 1996, a significant date, just under £270,000 was credited from that account to her account with Midland Bank, Golders Green. In the present case it is usually unwise to refer to any isolated piece of evidence from any of the three main protagonists, but both Miss Ansari and her mother asserted that this sum represented the proceeds of the sale of No.20 and fixtures, fittings and antiques. The judge did not accept that the whole of this sum came from the proceeds of sale. Indeed it could not, but on the judge’s findings, it would have included part at least of, and possibly the entire proceeds of sale.
16. On the same day, 2^nd May 1996, Mrs Rahbari’s US Dollar account at the same bank, Midland Bank Golders Green, was credited with $170,000. The sterling equivalent was then added to her sterling current account on 3^rd May. The source of the US currency was Mrs Rahbari’s account at Central Fidelity Bank, Virginia Beach. The judge made no findings whether the funds were subject to the marital agreement, but he rejected the case as originally pleaded that the money represented a loan from Mrs Rahbari’s brother. He also rejected evidence at trial that Miss Ansari had inherited these sums from her maternal grandfather. In brief, therefore, there was no acceptable evidence to show this credit represented sums in which Miss Ansari had any direct or indirect interest. As we shall see, it cannot have been a coincidence that Mrs Rahbari moved a total of £380,000 into her account at the Midland Bank Golders Green when she did, and the purpose of these movements of money could not be in any doubt.
17. The property with which we are directly concerned (28 St Edmunds Terrace) was acquired by Miss Ansari and her new husband, Mr Motaleb, in March 1995 for £520,000. £90,000 was spent on refurbishment.
18. A substantial proportion of the purchase price, (virtually £380,000) was secured under a mortgage account in Mr Motaleb’s name. Having examined the evidence, the judge found that the entire purchase price was found by Mr Motaleb himself out of his own funds and borrowings, and that neither Dr Rahnema nor Mrs Rahbari contributed directly or indirectly to its purchase or maintenance. The judge found that Mr Motaleb, or Miss Ansari and her husband, owned the entire beneficial interest in the property, subject to the mortgage security. The marriage between Miss Ansari and Mr Motaleb ran into difficulties. Eventually, although the date is uncertain, they separated. On parting, Mr Motaleb agreed that Miss Ansari should be entitled to the entire beneficial interest in the property, subject to her acceptance of responsibility for discharging his relatively small personal debts with Barclays Bank, as well as the mortgage debt of virtually £380,000. So this young woman had either to extinguish the whole or part of the mortgage debt, or fund the mortgage repayments, or sell the property and enjoy the balance of the proceeds. Mr Motaleb’s personal debt was extinguished by Miss Ansari from funds derived from the sale of a car which he had given her. This payment has no relevance to the outcome of the appeal.
19. No one seems to have suggested that Miss Ansari ever had any intention of paying the whole or a substantial part of the mortgage debt personally. Mrs Rahbari herself did not, as presumably she could, simply make arrangements to lend the money her daughter required to pay off the mortgage debt, treating the property as a form of security against such a loan. Miss Ansari decided that the property should be sold. Agents were instructed to market it for £580,000. On 3^rd May 1996, a written transaction involving the property was entered into by Miss Ansari and Mrs Rahbari. Daughter and mother formally signed a written agreement with each other, relating to a substantial transaction, without solicitors present, when both had already instructed solicitors separately, giving them to understand that they were involved in a sale and purchase of the property for £300,000, and in the case of Mrs Rahbari’s solicitors at least, together with £80,000 for fixtures and fittings.
20. That intention is reflected in an agreement in writing dated 3^rd May 1996 signed by both Mrs Rahbari and Miss Ansari. The document reads:

“I Shahla Rahbari Rahnema hereby agree that the property situated at and known as Cherry Tree House, 28 St Edmunds Terrace, London NW8 be transferred to me from my daughter Panthea Ansari Motaleb and her husband for the amount of £580,000 plus £80,000 for its fixtures and fittings.

At present we have agreed to redeem the mortgage of £401,324.20 by me paying £300,000 for part of the mortgage and £80,000 for its fixtures and fittings and by her putting up the balance of the mortgage.

Further I agree to pay them the remaining balance of £280,000 (difference between £580,000 and £300,000) in five years or retransfer the property to her and I be refunded, but until such time I hold the said property in trust for my daughter Panthea Ansari Motaleb and she will be receiving from me the interest of her £280,000 at the rate of 7%.”

21. At trial, Mrs Rahbari and Miss Ansari themselves described the 3^rd May agreement as “meaningless” and “rubbish”. The pleaded case was that this agreement was “varied” or “revoked”. In argument rectification was suggested. The judge did not deal expressly with these contentions. Instead, he said that it was not possible to give sense to all of these provisions, and he recorded that Miss Ansari found the agreement difficult to comprehend.
22. The document refers to both an agreement (that is, a contract) and a trust. The striking feature of the first paragraph is the agreement by Mrs Rahbari to buy and her daughter to sell the property for an agreed and commercially sensible price, with payment of part of the price deferred, and interest at an agreed rate due on the balance of £280,000. The second and third paragraphs describe the agreed mechanics of payment, and the fall back position until payment of the full price, or if the price were to remain unpaid after five years. The document is hardly in standard form, but on the face of it, the purchaser, Mrs Rahbari, provides security for her daughter against any failure to pay the full agreed price, by way of equitable charge in her daughter’s favour, and the “trust” identified in paragraph 3 does no more than reflect a temporary arrangement pending payment of the balance. Nothing in the document suggests that Mrs Rahbari acquired the property as a trustee, or indeed an agent for anyone else.
23. The transfer of the property to Mrs Rahbari was registered at HM Land Registry on 7^th May. The transfer expressly identified, first the consideration, £300,000 (a figure deliberately reduced to evade stamp duty obligations), the transferor, Mr Motaleb, with Miss Ansari’s signature under a power of attorney from him, and the transferee, Mrs Rahbari. Nothing was said about any “security” for Miss Ansari, or the balance due to her. On the face of it, and the judge found, this transfer completed the transaction, and Mrs Rahbari acquired title in the property.
24. The Barclays Bank mortgage was discharged. £380,000 was transferred out of Mrs Rahbari’s account at Midland Bank Golders Green to her solicitors, £270,000 on 2^nd May and £110,000 on 3^rd May. In their fee note her solicitors apportioned £300,000 to the sale of the property and £80,000 to fixtures and contents.
25. The judge rejected Miss Ansari’s case that she had provided £380,000 from her personal sources. If so, in my view, it is difficult to see how any part of the payments were contributed by Miss Ansari, whether on the basis of a speculative hope that she might years afterwards have been able to show that she retained some right or title in 20 Sanderstead Avenue after September 1993, or alternatively, on the basis that after 3^rd May 1996, her mother may have been disposed to acknowledge some “moral or even legal claim” to the proceeds of sale. As to Mrs Rahbari, the judge was unable to find whether her funds from Central Fidelity fell within the ambit of the marital agreement. It seems fairly clear however that the proceeds of sale of 20 Sanderstead Avenue represented property she had acquired after the agreement took effect and was subject to it.
26. In any event, the arrangements for the property would have appeared complete. However, one of the recurring patterns in this case is the constant movement of rights and titles to assets. Within a fortnight, on 15^th May 1996, Mrs Rahbari executed a Trust Deed relating to 28 St Edmunds Terrace.
27. The circumstances in which the document were executed was subjected to a close examination. Dr Rahnema’s case was unequivocal. The document was a subsequent dishonest concoction. The judge rejected those contentions.
28. As the Trust Deed was found to be genuine, executed on 15^th May, its effect can be briefly summarised. It was declared that the property, was “now” held by Mrs Rahbari for Miss Ansari as trustee. This was a very different transaction to that entered into on 3^rd May. Having sold the property to her mother, Miss Ansari was effectively revested with all the essential attributes of ownership. Her mother agreed to transfer the property to anyone and at any time her daughter might direct or appoint, and further agreed not to sell or dispose of the property without obtaining her daughter’s express written consent. She appointed her daughter to be her attorney under the Powers of Attorney Act 1971.
29. The judge concluded that Miss Ansari’s claim to the property should succeed on the basis that she enjoyed a beneficial interest in the trust. He noted the evidence that Miss Ansari had been less than happy about the agreement of 3^rd May. He found that she had “been intending to sell the property and to receive, therefore, its value after discharging the mortgage” and “there was never any intention on the part of Miss Ansari .... to pass the equity of redemption to Mrs Rahbari”. Accordingly, the judge concluded that when the formal transfer took place on 7^th May, Mrs Rahbari acquired only as a trustee. Therefore the marital agreement did not bite. As to the sources of the mortgage repayment of £380,000, he left that for decision to the court in Virginia.
30. These conclusions, vital to the outcome of this part of the case, are criticised, in essence on the basis that whatever Mrs Rahbari purported to declare, she could not unilaterally vest herself with authority to declare that she was the trustee of the entire beneficial interest in the property if, under the marital agreement, her husband was entitled to a joint share in it with her. Under the agreement of 3^rd May, she had bought the property within Clause IV of the marital agreement, and on 7^th May her title was registered. Therefore the marital agreement applied there and then: its impact was not somehow postponed until 15^th May, or indefinitely, or at all. These are persuasive arguments. To them, apart from focusing on the judge’s clear rejection of the allegation of concoction, Mr Lamming relied most heavily on the judge’s findings about Miss Ansari’s subjective intentions.
31. If his primary contention were not accepted, then Mr Charles Purle QC submitted that the judge was wrong not to investigate and make findings about the sources of the funds used by Mrs Rahbari to repay the mortgage. Dr Rahnema had a claim on that basis too: there was no evidence to suggest that the funds were assets of Mrs Rahbari owned by her prior to the marriage. The indications were to the contrary, and all the explanations advanced by her, and by Miss Ansari on this topic having been rejected, the reality was that the funds used must have been joint funds within the ambit of the agreement.
32. It would not be right to conceal that I have been a little troubled about the extent of the influence which I suspect Mrs Rahbari may have been able to exert over her daughter in 1996, as on Dr Rahnema before that date. However mother and daughter have made common cause, and the judge was not invited to make, and there was no evidence which would have justified his making, a finding of undue influence.
33. In my judgment, the judge’s findings about Miss Ansari’s subjective intention in early May 1996, even if unassailable as findings of fact, are not sufficient to bear the weight Mr Lamming sought to put on them. The terms of the agreement of 3^rd May are simple, and unequivocal. On its proper construction, at any time before the execution of the Trust Deed, Mrs Rahbari would have been entitled to pay £280,000 to her daughter, and so bring the “trust” to an end, whether Miss Ansari had second thoughts about the transaction or not. In his judgment, the judge indicated that the Trust Deed was the result of a changed attitude by Mrs Rahbari, both in relation to the property (she “had recognised Miss Ansari’s concerns”) and 20 Sanderstead Avenue (“her position had changed”). Without that change of attitude by Mrs Rahbari, to what the judge had already described as a “completed” transaction, there would have been no Trust Deed nor, on the evidence, apart from the subjective intention of Miss Ansari herself, any basis for setting the completed transaction aside. The declaration of trust and the Trust Deed, are entirely consistent with the acquisition of the property by Mrs Rahbari on 3^rd May and 7^th May. If the judge were right, Mrs Rahbari had presented her daughter with £380,000, and simultaneously allowed her to retain all effective rights of ownership in the house. Such a conclusion would have been unsustainable. In my judgment, for the purposes of the marital agreement, the property was acquired by Mrs Rahbari by no later than 7^th May, and neither her changed attitude nor the Trust Deed could alter the essential character of the transaction.
34. It was, of course, open to Mrs Rahbari to make whatever arrangements she wished in relation to her own property. She was not however entitled to dispose of Dr Rahnema’s property without his consent. The effect of the marital agreement was that he was entitled to his prescribed share of the property acquired by Mrs Rahbari. As the judge found that Miss Ansari had not provided any of the funds to repay the mortgage, it is unnecessary in this court to examine this issue any further. In my judgement the conclusion that the entire interest in the property was held by Mrs Rahbari on trust for Miss Ansari cannot be sustained.
35. It was suggested that Dr Rahnema was entitled to half the value of the property, and that Miss Ansari’s interest in £280,000, still unpaid to her, was extinguished. That would seem to produce an extraordinary, and unjust result. Miss Ansari, having sold her former matrimonial home, and without yet having been paid the balance of the agreed purchase price, has lost it. Mrs Rahbari and Dr Rahnema share it exclusively.
36. To sustain this surprising outcome, Mr Purle suggested that by virtue of Section 20 of the Land Registration Act 1925, the omission of reference to Miss Ansari’s continuing interest in the property when the transfer was registered on 7^th May extinguished her entitlement to £280,000. I do not agree. It is not necessary to consider the effect of the legislation in detail. In my view Mrs Rahbari was contractually liable to pay £280,000 to her daughter, together with agreed interest until payment. Nothing in the 1925 Act served to extinguish or nullify that continuing obligation. In any event, we are here concerned with the impact of the marital agreement on the acquisition of any property by Mrs Rahbari during the subsistence of the marriage. The agreement sensibly acknowledged that property so acquired might well be subject to outstanding or continuing liens or charges. It was expressly concerned to ensure an equal division of the net (my emphasis) value of each property acquired by either party. In my view Mrs Rahbari’s continuing obligation to pay the balance of the contractual debt incurred in this purchase diminished the net value of the property she acquired, and to his agreed share of which Dr Rahmena was entitled. The 1925 Act has no relevant impact.
37. Mr Purle further suggested that the agreement was tainted by illegality, that is deception of the Inland Revenue. The consequences of this submission on the acquisition of the property were not examined in detail. No question of illegality arose in relation to the agreement of 3^rd May, and there is none which affects Miss Ansari’s entitlement to payment of the balance due to her under that agreement. Although deception of the Revenue cannot be overlooked, what happened here did not serve to deprive either Mrs Rahbari or Miss Ansari of the benefits of the contract which they signed on 3^rd May. Equally the deception practised by one, or other, or perhaps both of them, cannot serve to increase Dr Rahnema’s interest in the property. The full rate of Stamp Duty must be paid, and a copy of this judgment will be sent to the Inland Revenue authorities for consideration whether and if so what, further steps, if any, should be taken.
38. In my judgment the appeal in relation to the property should be allowed. Dr Rahnema is entitled to an equal share in its net value, that is after fulfilment by Mrs Rahbari of the contractual obligation to pay £280,000 to Miss Ansari, together with the contractual rate of interest, and subject to setting off any sums she may have received by way of rent, and subject also to payment of Stamp Duty in full. The precise terms of the order, will, if possible, be agreed between counsel.
39. At the hearing of the appeal, Mrs Rahbari and Miss Ansari made common cause. No argument was addressed on behalf of either of them about the consequences as between them, if it were found that Dr Rahmena had acquired a share in the property in accordance with the marital agreement. In these circumstances, I do not believe that it would be possible, or fair, to attempt to define the rights each may have against the other now that Dr Rahnema’s entitlement in the property, as between himself and Mrs Rahbari, has been identified.
40. The Car

On the judge’s findings of fact this part of the appeal is not sustainable.

41. The car was bought in May 1997. Mrs Rahbari signed the relevant cheques on a current account. She was registered as the keeper of the car. That meant that insurance would be cheaper; that is unattractively deceptive, but, as we know, these things happen. The cost was £60,145.
42. The judge found that £40,000, plus interest of some £100s was produced by Miss Ansari from her personal funds, perhaps from the wealthy Mr Motaleb. The rest was advanced to her as a loan by her mother. The judge expressly found that Mrs Rahbari purchased the car on behalf of Miss Ansari, that is as her agent, after her daughter provided not less than two thirds of the total price.
43. The acquisition of this car by Miss Ansari did not, on his findings, fall within the marital agreement.
44. The appeal in respect of the car fails.

Peter Gibson L.J.:

45. I also agree that this appeal should be allowed to the extent indicated by Judge L.J. But in deference to the judge, to whose full and careful judgment in a difficult case encumbered by evidential and other difficulties I would pay tribute, I add a few words of my own.
46. The crucial question for the judge to determine was whether there was any time in the marriage of Dr. Rahnema and Mrs. Rahbari when she acquired beneficially any property in respect of 28 St. Edmunds Terrace (“No. 28”) otherwise than as trustee. If so, then on the assumption that the law of Virginia is the same as the law of England and Wales (and in the absence of evidence to the contrary that is what the judge and this court must assume) the effect of the Virginian marital agreement was that such property would be jointly owned by husband and wife. Mrs. Rahbari then would not have been free to dispose of that property as though it were her own though she could of course dispose of her own share.
47. The judge’s conclusion was that Mrs. Rahbari acquired No. 28 as trustee for Miss Ansari. For him, as is apparent from his reasons for refusing permission to appeal, the crucial matter was the genuineness of the Trust Deed of 15 May 1996. Mr. Lamming for Miss Ansari submitted that this court should not interfere with the findings of fact made by the judge in para. 73 of his judgment, where the judge said:

“That Trust Deed gives effect to the reality of the situation which was that [No. 28] belonged to Mr. Motaleb/Miss Ansari; there was never any intention on the part of Miss Ansari (who acted in the transaction on behalf of Mr. Motaleb whose power of attorney she held) to pass the equity of redemption to Mrs. Rahbari.”

48. But what the judge found to be the subjective intention of Miss Ansari was not expressed to be the intention of Mrs. Rahbari. In any event the finding fits somewhat uncomfortably with the terms of the Agreement of 3 May 1996 (“the Agreement”) and with the fact that the solicitors for Miss Ansari no less than those for Mrs. Rahbari appear to have proceeded, one assumes on instructions from their respective clients, on the basis that No. 28 was to be sold to Mrs Rahbari. The Agreement was plainly one for the sale of No. 28 to Mrs. Rahbari for £580,000 (plus £80,000 for fixtures and fittings). Of the purchase price the balance after the mortgage was paid off, £280,000, was to be paid by her within 5 years, though she had the option within that time of transferring No. 28 to Miss Ansari who in that event was to refund the moneys paid by Mrs. Rahbari. Until the £280,000 was paid by Mrs. Rahbari or No. 28 was transferred to Miss Ansari Mrs. Rahbari was to hold No. 28 in trust for Miss Ansari who was to be entitled to interest on the outstanding £280,000 at 7%. Mr. Lamming rightly accepted that if Mrs. Rahbari had paid the £280,000 at any time before the Deed of Trust was executed, the trust for Miss Ansari would have come to an end. In my judgment it cannot be said that the effect of the Agreement was to leave Miss Ansari as the beneficial owner of No. 28. On the contrary, the effect in law of the contractual rights created by the Agreement seems to me to have been, as Mr. Purle Q.C. for Dr. Rahnema submitted, to make Mrs. Rahbari the beneficial owner of No. 28 subject to an equitable charge in favour of Miss Ansari whilst the £280,000 remained unpaid to Miss Ansari and there had been no transfer to Miss Ansari of No. 28.
49. I can see no reason why the marital agreement should not have applied at that time to Mrs. Rahbari’s beneficial interest in No. 28. That equitable interest subject to the equitable charge was “property” acquired during the marriage, and so it became the joint property of Dr. Rahnema and Mrs. Rahbari. When the legal estate in No. 28 was transferred to Mrs. Rahbari on 7 May 1996, thereby the Agreement was completed. The interests of Mr. Motaleb and Miss Ansari as beneficial owners of No. 28 prior to the sale were overreached. But Dr. Rahnema’s interest continued to be that which had been created by the combined effect of the Agreement and the marital agreement, that is to say an interest extending to half the beneficial interest in No. 28 subject to the debt to Miss Ansari. The transfer could not eliminate that debt or enlarge Dr. Rahnema’s beneficial interest. When Mrs. Rahbari on 15 May 1996 declared that she held No. 28 upon trust for Miss Ansari she could not affect Dr. Rahnema’s prior beneficial interest, though the declaration of trust was effective in relation to her own interest in No. 28.
50. I would therefore respectfully disagree with the judge’s conclusion that Dr. Rahnema acquired no interest in No. 28 as a result of the marital agreement. His error, as it seems to me, lay in treating the finding that the Trust Deed was not the fabrication Dr. Rahnema asserted it was as determinative of the crucial question, whereas it was by the Agreement that Mrs. Rahbari acquired property which thereupon became subject to the marital agreement.
51. For these reasons as well as the reasons given by Judge L.J. I would allow the appeal in relation to No. 28 and make the order which he suggests. There is nothing which I would wish to add to the judgment of Judge L.J. in respect of the appeal in relation to the car, and that appeal will therefore be dismissed.

Lord Justice May:

52. I have had the advantage of reading in draft the judgments of Judge and Peter Gibson LJJ and of discussing this appeal with them. I agree that the appeal should be allowed to the extent which they indicate and for the reasons which they give. I have one additional thing to say with which I understand they both agree.
53. I have found this a very troubling appeal. It has not been straightforward to resolve judicially, but it is obvious that the three parties principally concerned have become embroiled in a series of no doubt highly charged disputes whose resolution has proved to be very costly both personally and financially. The overriding objective of civil litigation in this jurisdiction is to enable the court to deal with cases justly. This includes saving expense and helping the parties to settle the whole or part of their disputes. It would, I think, be quite inappropriate in this case for the court to trespass on negotiations between the parties. On the other hand, it is obvious that the cost of this litigation will have been disproportionate to the monetary value in issue and that, if what remains is not speedily and economically resolved by negotiation, this will only get worse. For this reason, it seems to me appropriate for the court to give explicit encouragement to the parties and their advisers to enter into conciliatory negotiations with a view to bringing the disputes about 28 St Edmunds Terrace to a final conclusion.
Order: For the reasons in the judgments which have been handed down, the appeal in respect of the property at 28 St Edmunds Terrace will be allowed and the appeal in relation to the Mercedes Benz 3205 car will be dismissed. (Order does not form part of the approved judgment)