England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HH Judge Gerald
CHY 09782

		Royal Courts of Justice Strand, London, WC2A 2LL
		22nd November 2012

Lord Justice Patten :

1. The issues in this appeal fall within a very narrow compass. The claimant, Ms Yvonne Slater, appeals with the permission of Warren J on two grounds against the dismissal by HH Judge Gerald of her claim to a beneficial interest in a property at 61, Dongola Road, London, E13 ("the property").
2. The property was purchased in October 1986 by the defendant and his then girlfriend as tenants in common with the benefit of an interest-only mortgage from the Leeds Permanent Building Society in the sum of £32,000. That relationship ended in September 1988 when the defendant borrowed a further £15,000 from the building society to buy out Ms Kirby's beneficial interest. As part of these arrangements, one of his friends, a Ms Mary Dowdy, became a joint legal owner of the property and a joint mortgagor but it is common ground that she acquired no beneficial interest in the property and that Mr Condappa thereupon became the sole beneficial owner.
3. In 1989 the defendant entered into a new relationship with a Ms Beverley Birch which lasted until 1992. She lived at the property with the defendant and there was a child of the relationship born in December 1990. The relationship ended in acrimony and Ms Birch obtained an order ousting the defendant from the property and began proceedings against him claiming a beneficial interest. Mr Condappa regained possession of the property on 30^th September 1992 and eventually the proceedings brought against him by Ms Birch were discontinued in August 1994.
4. The claimant has known the defendant since they were teenagers. She was married in 1990 and has a daughter from that marriage but the marriage ended in divorce in August 1993. In about 1988 she was granted a tenancy by the local authority of a one-bedroomed flat at 103, The Shaftesbury and the defendant stayed there with her for two months in 1992 whilst he was excluded from the property. It was during this time that their relationship changed and in or about July 1994 she moved with her daughter from the flat to live with the defendant at the property.
5. They were never married but on Valentine's Day in 1996 they did become engaged and the judge accepted that they lived as husband and wife as an established family unit. On 21^st April 1997 a son was born.
6. Aside from their personal relationship, Ms Slater assisted the defendant in a computer business known as SMC which was run as a partnership in which they had equal shares. It was set up after they started living together and, on the judge's findings, produced additional income for them over and above what Mr Condappa received from his regular employment, first with the Hoskins Group (later Capgemini Ernst & Young) and then (after 2002) with Cambridge City Council. Ms Slater had no previous experience working with computers but, with the defendant's help, she attended training classes to gain the relevant expertise. She was, however, an extremely capable administrator, excellent at paperwork, and had largely handled the litigation with Ms Birch on the defendant's behalf. The defendant quickly came to rely upon her to take care of the business side of the relationship and she proved to be extremely capable in that regard.
7. Although Ms Slater was living full-time at the property from 1994 onwards, she did not relinquish her tenancy of the flat at 103, The Shaftesbury and in September 1995 she was granted a tenancy of a two-bedroomed council house at 41, Central Park Avenue for herself and her daughter. In March 2010 she obtained a tenancy of a three-bedroomed house at 50 Thornton Park Avenue, she where now lives with the two children.
8. In January 2005 her relationship with the defendant came to an end and she moved out of the property. The cause of the breakdown was a relationship with another woman which the defendant had been conducting since at least 1999. Although the property had been purchased by the defendant and was beneficially owned by him some time before he set up home with the claimant, her case was that she had been promised a 50 per cent beneficial interest by him in about 1995; that this was confirmed in 1997; and that, although not married, they lived in and treated the property as in their common ownership and paid for the expenses of their home and family life accordingly. The income from SMC was pooled with Mr Condappa's salary to meet their living and other expenses and Ms Slater proceeded on the basis that she had a half-share in the property even though the registered title was never changed. She relies in particular on the occasion in 1997, after they had became engaged, when she says she asked the defendant whether the position about the title would change when they got married only to be told that there was no need to change the paper title because they were already joint owners.
9. Her alternative claim to sole beneficial ownership of the property is based upon an alleged conversation in 1999 when she first discovered that the defendant was having an affair. Her evidence was that she left with the children and went to New York but that on her return the defendant begged her not to leave him and agreed that if he ever betrayed her again or they separated, the property would be hers. She therefore claims to be sole beneficial owner following their separation in 2005.
10. The judge rejected both claims for an interest in the property. He described the claimant's account of the alleged conversations in 1995 and 1999 as fanciful and a lie and preferred the defendant's evidence that beneficial ownership of the property had never been discussed. Given that the claimant and the defendant were the only witnesses and the claims depended upon alleged oral assurances, the credibility of the parties was an important matter for the judge to assess. It is clear from his judgment that he formed a very low opinion of the claimant's honesty and found the defendant to be the more credible witness, although he had been shown to have been dishonest in a number of respects. The judge refers in his judgment to the fact that the claimant pretended to the local authority that she remained living at 41, Central Park Avenue even though she was living full-time at the defendant's property and that when in 1998 the council served a notice to quit on her on the basis that she had ceased to occupy 41, Central Park Avenue as her only or main residence, she succeeded in having a possession order set aside on the basis of a witness statement in which she said that she had always maintained the council property as her home. Similarly she used her purported residence there to continue to receive income support and housing benefit.
11. The claimant accepted at the trial that she had been dishonest in respect of these matters. But the defendant was not himself blameless. No accounts were ever produced for SMC and its income (which was largely received in cash) was never declared to the Inland Revenue by either of the parties. He also accepted that in 1999 a property belonging to his mother was transferred to him so that she could obtain legal aid to bring a claim against her employers. His personal infidelity also does him no credit.
12. The judge, however, took the view that the defendant's own conduct in assisting his mother to deceive the legal aid authorities was not such as to make him unduly concerned about accepting his evidence about the absence of any agreement to share the beneficial ownership of the property. By contrast, he seems to have regarded the claimant as habitually dishonest and said in paragraph 65 of his judgment:

"I have also, of course, had the opportunity of assessing both the Claimant and the Defendant whilst giving evidence and one thing which struck me about the Claimant was how she supposedly admitted her various deceits and perjuries and so on, but in so doing looked me straight in the eye without a flicker of regret, remorse or contrition about what she had done or, indeed, of what she was still doing In my view, she so-called came clean to this court but has not come clean to anybody else or any other agencies who, in fact, suffered a loss, and the reason she has done so to this court is because it suits her to do so to me but it does not suit her in respect of any other of these matters."

13. One of the matters which the judge took into account in forming this view was the defendant's evidence that in 1997 the claimant forged some letters from a potential employer, Manhattan Computer Supplies Limited ("Manhattan"), to bolster her claim for damages arising from a road traffic accident. The accident occurred on 10^th February 1997. In subsequent proceedings against the driver the claimant was awarded damages of £30,794.21 which were paid in February 2003. Part of the evidence the claimant relied on was correspondence from Manhattan suggesting that she was being considered for (and would probably have been offered) a job with the company at a salary of £30,000 p.a. but for the injuries she suffered in the accident which made her unable to work.
14. There were three letters from Manhattan (dated 30^th July, 23^rd August and 26^th September 2001) which had at some stage been scanned on to and saved as image files on SMC's computer system. The defendant said that when the claimant had left but before she removed what she said was her computer, he transferred to another computer a folder file containing three Word documents which he said must have been typed by the claimant. These Word documents are verbatim the same as the letters addressed to Ms Slater on the Manhattan headed notepaper and Mr Condappa says that they indicate that Ms Slater must have forged the Manhattan letters to assist in her personal injuries claim.
15. The judge accepted that there were only two possible conclusions he could reach on this issue. The first was that the claimant had herself composed the three letters and then used them to create forged letters from Manhattan on their notepaper. The second is that the Manhattan letters are (as the claimant maintains) genuine and that the defendant had created the Word documents with a view to discrediting the claimant.
16. In order to rebut the second alternative, the defendant produced copies of the properties box for each of the Word documents which records the dates on which they were created and the date of any modifications. These indicate that the Word files were all created on the dates contained in the letters as typed although, curiously, the letter of 30^th July is shown as having been modified about an hour before the document was created. No expert evidence was given on this issue but the defendant expressed the opinion (which the judge may have accepted) that it was not possible retrospectively to alter the creation date. The claimant's case, however, was that one could falsify the creation date in advance of creating the document simply by altering the computer date and clock and then typing the document and Ms Slater says that she produced examples of how to do this at the trial. So in this way the defendant could have created the three Word files with a creation date in 2001 and then, having altered the clock to its correct date and time, accessed the document on 1^st November 2010 as recorded. On this basis the judge could not be certain from the creation date that the files had been created in the summer of 2001 by the claimant rather than in 2010 by the defendant.
17. Ms Slater says that the forgery allegation had a significant effect on the judge early in the trial and put her at a disadvantage in respect of her credibility throughout the trial from which she never recovered. The judge, she says, did not properly understand how the creation date could have been falsified by the defendant and admitted during the hearing that he was not particularly computer literate. Had he fully appreciated how it could be done he would have been less ready to accept Mr Condappa's evidence that he discovered the files on Ms Slater's computer and that Ms Slater had forged the Manhattan letters. The damage to her credibility from this finding would therefore have been avoided.
18. Significant parts of the transcript including portions of the examination and cross-examination of the parties on this issue are missing but Warren J gave Ms Slater permission to appeal on this point on the footing that it is at least arguable that the judge based his finding that Ms Slater had fabricated the three Manhattan letters in part on an assumption that the creation dates were completely reliable and that, had he not formed this view, his assessment of her overall credibility would have been different. The judge set out his findings on this issue in paragraphs 58-60 of his judgment as follows:

"58. It was the Defendant's evidence that when the Claimant had left the property and before she had removed what was regarded as her computer, he had copied the whole of a file called "redzip" I think which related to the SMC business because he needed all the information on there because all of the paperwork was scanned, which related to SMC warranties and such-like, and that when preparing for this trial, he kept asking for documents and she could not find them and therefore he was flicking through the files on the computer and he came across these three Word files in a discrete folder which was accompanied by the three images of the original letters.

59. In this respect, I have no doubt that the Defendant is telling the truth. The creation and modification dates of the Word documents support what he says and furthermore it was the Claimant (and not the Defendant) who would created documents because that was part of her skills. She was a good administrator, she typed huge amounts of letters of varying lengths and these letters have her fingerprints on them and it simply was not the sort of thing the Defendant would do. In other words, I am sure (and I use that word deliberately to indicate the standard of proof which I here apply) – I am sure that the Claimant fabricated these three letters in order to enhance and support her claim for damages in the road traffic accident claim. Whilst I do not know the extent to which those letters were instrumental in achieving the ultimate claim for damages she received, I have no doubt that they formed part of the evidence in the trial because she accepted it.

60. In short therefore, the Claimant is a person who has lied and deceived and played the system in order to acquire and retain property and money to which she was not entitled. It, of course, does not automatically follow that she is lying in this action and I must bear firmly in mind that, just because she has so acted in the past, it does not mean she is lying now. However, it does mean that I must approach her evidence with utmost caution and special care and scrutiny."

19. Although the issue about the documents took up a not insignificant amount of time in the examination of both parties, I do not think it can be said to have been critical to the judge's assessment of the claimant's credibility and therefore to the question of whether he could accept her evidence about the agreements with the defendant about the beneficial ownership of the property. I accept that the judge's preference for the defendant's evidence about the creation of the Word documents was based in part on his understanding about the creation dates. But it is clear from the passages I have quoted and from the judgment when read as a whole that the judge's findings on this issue were treated by him simply as corroborative of the impression about the claimant's credibility which he had already formed from her acceptance that she had been dishonest in her dealings with the local authority and the court. This is plain from what he says in the first sentence of his paragraph 60 and later in paragraph 65 (quoted in paragraph 12 above).
20. I am not therefore persuaded that had he reached a different view about the forgery of the three letters, this would have caused him to re-assess the claimant's overall credibility.
21. The second ground of appeal is, I think, even more tenuous. The claimant's pleaded case is that in 1995 the defendant gave her an express assurance that she would have an equal share in the property and that this was replaced or modified by the later assurance in 1999 already referred to when he agreed that she would get the property in its entirety if he was ever unfaithful to her again or they separated. In her witness statement she also mentions an occasion in 1997 before the couple's son was born when she asked whether her status regarding the property would change when they were married. This, she said, was one of a number of occasions after 1995 when allusions were made to the fact that the property was regarded as in joint ownership but she was never cross-examined about the 1997 conversation; only about the conversation in 1995 which is not dealt with in her witness statement.
22. The judge elicited from her that 1995 was the first occasion when there was any kind of agreement or assurance that she was to have a half-share in the property but rejected this evidence in his judgment on the basis that it was most improbable that the defendant would commit himself to giving the claimant a 50 per cent beneficial interest in 1995 when he had only just fought off the claim by Ms Birch and was only in the very early stages of a serious relationship with the claimant. He seems to have treated her allegation that there was a 1997 conversation as an alternative to the pleaded claim and proceeded to concentrate on the 1995 allegation once Ms Slater had confirmed that the first agreement occurred then. She now submits that this caused the judge to misunderstand her case which was that what happened in 1997 corroborated the state of affairs which had existed since 1995. Instead the judge went on to consider and reject the allegation of a further agreement in 1999 which he said was both too uncertain in its terms to constitute the basis of a trust and, in any case, inherently improbable.
23. Ms Slater was given permission by Warren J to argue as her second ground of appeal that the judge's failure to deal with Ms Slater's evidence that there was a 1997 conversation (on which she was not cross-examined) might be said to have undermined his conclusion that the 1995 conversation or agreement never took place. The 1997 conversation (if it existed) would have tended to confirm that there had been an earlier agreement or understanding that the property was to be jointly owned. But I am not persuaded by this. The judge's reasons for rejecting Ms Slater's allegation about what was said in 1995 seems to me to be soundly based in themselves and do not depend solely on his view of her credibility. The judge was entitled to conclude that, in the light of the recent history, a conversation of that kind is unlikely to have occurred. On that basis, the evidence of a conversation later in 1997 which pre-supposes an earlier agreement of the kind rejected by the judge becomes itself highly improbable. Its credibility is undermined by the judge's other findings. His failure to mention expressly the 1997 conversation does not therefore assist the claimant.
24. For these reasons, I would dismiss the appeal based on the two grounds for which Ms Slater already has leave. But we also heard an application by her for permission to raise an additional ground of appeal which was refused by Lloyd LJ on the papers but then adjourned to an oral hearing before us. This concerns the judge's findings about the income from SMC.
25. In paragraph 33 of the judgment the judge says:

"It was the evidence of the Defendant, which (as I understood it but it was not immediately easy to follow) seemed to be accepted by the Claimant, that the cash (as I have said) was generally not banked but the Claimant would work out what their respective shares were and he would be provided with cash and she would keep whatever was hers. He made all mortgage payments in cash which were made from his income (which I will refer to in a moment) and not from the SMC money. I am not sure much will ultimately turn on that but either way his evidence was that it came from his salary or possibly from his share."

26. Ms Slater says that this is simply wrong. She accepts that she was an equal partner with Mr Condappa in SMC and was therefore entitled to a half-share of the net profits. But the cash received from SMC was not divided up as the judge found. Her oral evidence (which is confirmed by the transcript) was that the money came in and was banked without any prior form of division. It was then used to meet family expenses as a shared fund.
27. There was no evidence to the contrary and it seems to me that the judge was wrong to make the findings contained in paragraph 33. But that is not enough in my view to justify the grant of permission on this ground on the basis that the judge's error has vitiated his conclusions on the issue of beneficial ownership. The principal relevance of the SMC money to the claim is that it is said to support Ms Slater's case that the property was jointly owned. The parties pooled their resources to meet expenses including holidays. They were, as Ms Slater emphasised, a family with combined assets.
28. But for Ms Slater to be able to establish a claim to a beneficial interest in the property, which at the start of their relationship was in the sole beneficial ownership of Mr Condappa, it is necessary for her to establish an agreement or representation made that she should become a joint beneficial owner which she has relied on to her detriment so as to make it impossible for Mr Condappa to seek now to resile from what he promised. The judge has found that there was no such agreement and I cannot see how his mistake as to whether the cash was physically divided up rather than banked affects that. He accepted (in paragraph 82 of his judgment) that the SMC money was used to provide family holidays and a higher standard of living than they would otherwise have been able to afford. But that does not of itself prove the existence of the agreements which Ms Slater relies on.
29. The existence of the SMC money is also relevant to a consideration of whether Ms Slater can establish any relevant detriment so as to raise an equity against the defendant. The judge's finding (which is not really challenged) is that Mr Condappa's income from his regular employment was sufficient to meet the mortgage payments and other expenses relating to the property and that Ms Slater's share of the SMC money was, as the judge put it, simply her contribution to living together as a family. As a matter of authority, that is insufficient to create the detriment necessary to set up an equity in the former. I would therefore refuse permission to add this further ground of appeal.

Sir Scott Baker :

30. I agree.

Lord Justice Mummery :

31. I also agree.