England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		12th September 2007

1. JUDGE HODGE QC: This judgment is divided into five sections as follows:

(1) an overview of the case;

(2) the background in more detail;

(3) the course of the trial;

(4) my assessment of the witnesses and evaluation of their evidence;

(5) my findings of fact.

2. At my suggestion, and with the agreement of all parties, apart from determining one issue of construction, this judgment is limited to my findings on the disputed issues of fact. The legal consequences of those findings will be the subject of a further judgment once the parties have had the opportunity of assimilating my findings of fact and making further submissions based thereon.

I: Overview

3. This section of my judgment owes much to the helpful written skeleton argument of Mr Richard Gillis QC who appeared for the claimants.
4. This is the trial of two actions which were directed should be heard together by an order of Underhill J dated 5^th February 2007. That was the day originally fixed for the start of the trial of the first of the two actions. That action ("the debt action") was commenced in the Queen's Bench Division by a claim form issued on 10^th December 2004. Originally the parties were Kali Limited ("Kali"), a Delaware corporation, as claimant, and Mr Ashok Chawla and Mrs Anu Chawla as defendants.
5. Mr and Mrs Chawla were divorced in India in February 2001. In the debt action, the claim against Mr and Mrs Chawla relates to a loan, an alleged commission-sharing agreement, and a charge in favour of Kali dated 4^th December 1998, and registered on 15^th November 1999, over a residential property at 27 Waterside Gardens, Reading ("the property"). At that time the property was owned by Mr and Mrs Chawla.
6. Against Mr and Mrs Chawla, the claimants seek repayment of the loan (US$110,000 plus interest); against Mr Chawla, they seek payment of the alleged commission entitlement (which, after deduction of an agreed sum for expenses, they say amounts to €444,678.50, plus interest); and against both Mr and Mrs Chawla they assert that these liabilities are secured against the property under the 1998 charge.
7. Mr Chawla asserts that any monies that may have been due under the loan, and in respect of commission, have already been paid to the claimants. He also denies that the charge over the property ever secured repayment of any commission; rather it was limited to securing repayment of the loan. Mrs Chawla now asserts that she knew nothing about her former husband's business affairs, and that her signature on the charge was forged. Accordingly, she asserts that she is under no personal repayment obligation to either claimant, and that her beneficial interest in the property does not stand charged in favour of Kali. If that defence succeeds, it raises the question of what beneficial interest, if any, Mrs Chawla holds in the property. That is a question that also arises in the second action. Both Mr and Mrs Chawla say that they were joint equal owners of the property, and they rely on the recent decision of the House of Lords in the case of Stack v Dowden [2007] UKHL 17, [2007] 2 WLR 831.
8. On 19^th July 2006, an order was made (on her application) joining Mrs Advani as the third defendant to the debt action. The claim form was amended accordingly on 2^nd September 2006. This was because Mrs Advani claims that she purchased the property from Mr and Mrs Chawla on 19^th February 2004. Mrs Advani asserts that she is now the registered owner of the property; and she applies to have Kali's charge over the property vacated. As regards Mrs Advani (1) the claimants assert that the purported transfer of the property to her was a sham and/or was a transfer in fraud of creditors under Section 423 of the Insolvency Act 1986 and they apply for orders to that effect; and (2) Mrs Chawla asserts (in the second action) that her signature on the transfer to Mrs Advani, and related documentation, was forged so that she retains her one-half beneficial interest in the property.
9. Burlay Trading Limited ("Burlay"), a Bahaman company, was added as second claimant in the debt action by Underhill J's order dated 5^th February 2007. This was on the basis of the claimants' assertion that, on 20^th September 2004, Burlay (which had originally been entitled to any commission) had assigned its claim for commission to Kali. As a result of that assignment, on 8^th October 2004, and at a time when Mr and Mrs Chawla were still the registered owners of the property, Morgan Walker, the solicitors acting in this litigation for both Kali and Burlay, had applied to the appropriate District Land Registry to note that the agreed amount secured against the property by the charge was £330,000. (This was calculated as being some £66,000 in respect of the unpaid loan and interest and some £272,000 in respect of the assigned claim for commission.) Underhill J's order also directed that the debt action should be tried with the second of the two actions, if possible on the dates then fixed for the trial in the Chancery Division of that action, beginning on 9^th July 2007.
10. The second action ("the possession action") was a claim for possession of the property which had been commenced on 10^th August 2006. Mrs Advani is the claimant in the possession action; and the defendants are Mrs Chawla and her adult daughter Ms Anisha Chawla. In the possession action, Mrs Advani claims to be the registered owner of the property, having purchased it from Mr and Mrs Chawla on 19^th February 2004. Mrs Advani's purchase was financed by way of a mortgage advance from the Bank of Scotland ("the bank"), which is a Part 20 defendant in the possession action, and also counterclaims in the Part 20 proceedings. The bank's mortgage advance of £102,000 was used as, to part, to discharge an earlier, admittedly valid, mortgage on the property in favour of Lloyds TSB dated 11^th January 1989 and registered on 11^th April 1989. In May 2006 Mrs Chawla and Ms Chawla had entered into occupation of the property, and it was this that led Mrs Advani to begin the possession action.
11. Mrs Chawla defends Mrs Advani's claim by asserting that her signatures on the sale contract and the associated transfer deed dated 19^th February 2004 were forged. Accordingly, Mrs Chawla asserts that she retains a one-half beneficial interest in the property and the right to occupy the same. She has also brought proceedings against the bank to rectify the charges register so as to remove the bank's charge over her one-half interest in the property. The bank puts Mrs Chawla to proof of her assertions of forgery. If these prove to be well founded, the bank claims damages against Mrs Advani, on the grounds that she did not have the good title to the property that she was required to have; and the bank also claims to be subrogated to the Lloyds TSB charge to the extent that the monies advanced by the bank were used to discharge that charge but are not secured by the charge granted by Mrs Advani.
12. In these two actions, Kali and Burlay are represented by Mr Richard Gillis QC, instructed by Morgan Walker. Originally a firm of solicitors, Arora Lodhi Heath ("ALH"), represented Mr Chawla and purported to represent his former wife, but they came off the record on 24^th January 2007. In a letter to the court dated 2^nd February 2007, Mr Chawla relied upon this development, and his alleged ill health and consequent inability to travel to the UK, to secure an adjournment of the trial of the debt action, then fixed to begin on 5^th February 2007. Since that time, Mr Chawla has not been legally represented; and he has not attended the trial, although, on the first day of the trial, he did give evidence from India by video link. Although, in answer to questions in cross-examination from Mr Gillis, Mr Chawla initially refused to accept the fact, at the end of his video link evidence he acknowledged, in answer to questions from the bench, that he had been deported from the United Kingdom in March 2000 for travelling on false documents; and he claimed that he would not have been allowed to return to the UK for the purposes of this trial. I am somewhat sceptical as to Mr Chawla's professed inability to travel to the United Kingdom, since it is clear from the evidence that he has succeeded in returning to this country on several occasions since his deportation in March 2000. Nevertheless, in view of Mr Chawla's professed inability to travel to the UK, and at his request, and without opposition from any of the parties, I allowed his daughter, Ms Chawla, who holds his power of attorney authorising her to represent him in all legal matters in relation to this litigation, to represent her father at this trial pursuant to Section 27(2)(c) of the Courts and Legal Services Act 1990.
13. Mrs Chawla appeared at trial as a litigant in person, although for much of the time she relied upon her daughter, who also appeared as a litigant in person in her own right, as well as for her father, to present her case for her. Originally ALH had been on the record as acting for Mrs Chawla, as well as for her former husband, in the debt action. In that capacity, on 15^th August 2005, they had filed a defence in the debt action admitting the charge on which Kali sues. However, on 8^th February 2007, Field Seymour Parks ("FSP"), who had been acting for Mrs Chawla and her daughter in the possession action from its commencement, came on the record for Mrs Chawla in the debt action; and they asserted that she had not instructed ALH to act on her behalf. On 16^th February 2007, FSP wrote to Morgan Walker asserting, for the first time, that Mrs Chawla had not signed the legal charge in favour of Kali, although it was not until 4^th May 2007 that they put in a separate defence for Mrs Chawla in the debt action in which they formally asserted that her signature on that charge had been forged. At the end of May 2007, FSP came off the record as acting both for Mrs Chawla in the debt action and for Mrs Chawla and Ms Chawla in the possession action. Since this time they had both been litigants in person.
14. Mrs Advani was represented by Mr Simon Williams of counsel, instructed by Harris Cartier. The bank was represented by Miss Laura John of counsel, instructed by DLA Piper UK.

II: Background

15. Against this brief overview of the issues in this litigation, it is now necessary for me to go into the factual background in a little more detail. For this section of the judgment, I again acknowledge my indebtedness to Mr Gillis's helpful skeleton argument.
16. Mr Hari Saraf ("Mr Saraf") is a wealthy businessman and one of the beneficiaries of an offshore trust known as the Saraf Family Trust. The trust owns the entire issued share capital of Kali and one half of the issued share capital of Burlay. It is the claimants' case that the other half is beneficially owned by Mr Chawla.
17. The claimants' case is that, in early November 1998, Mr Saraf was told by a mutual associate, a Mr Sidharth Singh, who apparently resides in India, that Mr Chawla was looking to secure a loan of US$110,000, which he required in order to conclude the negotiation of a contract which would then lead to him being paid a substantial sum by way of commission. Mr Saraf subsequently learned that the commission would be paid by a Belgian company, FN Herstal SA ("FNH"), if it succeeded in securing a contract with an Indian company called Hindustan Aeronautics Limited ("HAL"). Mr Saraf asserts that he was told that Mr Chawla was willing to offer half the commission in return for the loan. It is Mr Saraf's evidence that he discussed the matter with the trustees of the Saraf Family Trust and that they agreed to advance the US$110,000 loan to Mr Chawla at 7% per annum interest (compounded monthly) in return for 50% of the commission, on the footing that the loan was to be secured by a charge over the property. It is Mr Saraf's evidence that Mr Chawla agreed to those terms. As it eventually emerged at the trial, it is Mr Chawla's case that any entitlement to commission was to be entirely subject to the exercise of his discretion.
18. Pursuant to that alleged agreement, it is the claimants' case that, on 4^th December 1988, Kali paid the US$110,000 to FNH, and that a deed of charge was executed, apparently by Mr and Mrs Chawla, and dated 4^th December 1998, under which Mr and Mrs Chawla borrowed the US$110,000 from Kali and charged the property with the payment of the loan, interest "and other money to be paid by the Borrower". It is Mr Saraf's case that he subsequently agreed with Mr Chawla to use Burlay to give effect to their agreement for the sharing of the commission payable by FNH; and, thus, it is said, that 50% of Burlay's issued shares were to be held to the order of the Saraf Family Trust, with the remainder being held to Mr Chawla's order, Mr Chawla became a de facto director of Burlay, and Mr Chawla was directed to negotiate on Burlay's behalf the best possible commission contract with FNH. The claimants have not been able to place before the court copies of the contract that Mr Chawla negotiated with FNH. This is because Mr Chawla caused Burlay to enter into an agreement with FNH, dated 26^th April 1999, specifying that the documents relating to the commission agreement would be held by a notary in Belgium. Mr Chawla now denies executing this agreement on behalf of Burlay. Nevertheless, evidence has been obtained by letters rogatory addressed to the Belgian court from M Jean-Paul Demeure, the sales manager for FNH for India. M Demeure was examined before the court at Liege on 3^rd November 2006 and again on 19^th December 2006. His evidence was that (1) Mr Chawla signed a consultancy contract between Burlay and FNH on 26^th April 1999; (2) under that contract, Burlay was to receive a 15% commission if FNH concluded its contract with HAL; (3) the contract between FNH and HAL was worth about €7.5 million and was signed in early 2001; and (4) FNH paid the commission it was due to pay.
19. It is the claimants' case that no commission has been paid to Burlay under the consultancy agreement. The claimants allege that this is because Mr Chawla wrongly directed FNH to pay the commission into Swiss bank accounts in which, it is to be inferred, that he alone had an interest. It is the claimants' case – disputed by Mr Chawla – that Mr Chawla issued two payment instructions to FNH. The first, dated 19^th March 2001, purports to be from "Burley" Trading and appears to be signed by Mr Chawla, although he asserts that this document has been fabricated. This instructs FNH to pay the 15% commission to two designated accounts with Coutts Bank Von Ernst Limited ("Ernst") in Switzerland, one of which was in the name of a company called International Copters BVI ("Copters"). It is the claimants' case that those accounts do not belong to any entity connected with or controlled by any of the Saraf Family Trust, Mr Saraf, Kali or Burlay.
20. The second payment instruction, dated 20^th April 2001, again purports to be from "Burley" Trading and appears to be signed by Mr Chawla. It purports to transfer all of Burlay's interests under the consultancy contract with FNH to Copters. In his evidence to the Belgian court, M Demeure states that the first payment instruction was voided and that the commission was paid by FNH in accordance with the second payment instruction. It is the claimants' case that Copters is owned and/or controlled by Mr Chawla; and that he has wrongfully appropriated to himself the one-half of the commission due under the consultancy contract that should have been paid by FNH to Burlay (for the benefit of the Saraf Family Trust). It is the claimants' case that, upon discovering that Mr Chawla had wrongfully caused the entire commission to be paid to himself, Burlay issued an invoice, dated 5^th April 2002, for €565,678.50, representing the trustees' entitlement to the one-half of the commission that Mr Chawla had wrongly overpaid to himself. The claimants say that Mr Chawla is liable to repay that sum to Burlay, less an agreed amount for expenses allegedly incurred by Mr Chawla, because he acted in breach of his duties as a de facto director of Burlay when he instructed FNH to pay the entire commission to an account in which only he had an interest.
21. It is Mr Chawla's case that he has repaid the loan (with interest), together with any commission that may be due. He relies in support on documentation from Ernst allegedly showing a payment of $110,000 on 14^th June 2001 to a "Mr S"; and upon a payment instruction dated 9^th April 2002 to Ernst purportedly directing that €63,369 be paid to "Mr Hari Saraf's A/C", together with a debit advice from Ernst, dated 10^th April 2002, showing a payment of that amount to "HS". It is the claimants' case that those accounts do not belong to any entity connected with or controlled by any of the Saraf Family Trust, Mr Saraf, Kali or Burlay. The claimants assert that it is striking that none of the documentation disclosed by Mr Chawla identifies the account or accounts to which those payments were allegedly made. They claim that if the alleged payments were indeed made to, or for the benefit of, Mr Saraf, this could easily have been proved by Mr Chawla by identifying the accounts to which the payments had been made. It is said that Mr Chawla has never done this, despite the fact that – so it is asserted – it is only he who has access to this information. The claimants say that they have been formally pressing Mr Chawla for this information since 15^th February 2007; yet it was only during the course of the trial that Mr Chawla agreed – it is said reluctantly – to join with the claimants in formally requesting this information from Ernst; and no response has been forthcoming. The claimants say that the obvious inference is that Mr Chawla's assertion that he made payment to an account or accounts owned or operated by Mr Saraf is false. In any event, the claimants say that the alleged payment of €63,369 is wholly inadequate to discharge Mr Chawla's liability for interest on the loan and one half of the commission.
22. In relation to the purported sale of the property to Mrs Advani, the claimants rely upon a number of features surrounding the transaction, and the financial dealings between Mr Chawla and Mrs Advani generally, as indicating that the sale was a sham transaction or, alternatively, a transaction designed to put Mr Chawla's assets beyond the reach of his creditors. These features are identified at paragraph 35 of Mr Gillis's written skeleton argument. For her part, Mrs Chawla asserts that her signature on the transfer of the property to Mrs Advani is a forgery.

III: Course of the trial

23. The trial began on Monday 9^th July 2007. It was listed for five days. In the event, evidence and submissions took eight days, spread (due to the prior commitments of counsel and the court) over three weeks, ending at about 4 p.m on Friday 27^th July 2007. Prior to the commencement of the trial, I had received written skeleton arguments from Mr Gillis for the claimants, from Mr Williams for Mrs Advani, and from Ms John for the bank. I had also received written submissions and additional appendices from Mr Chawla and (by way of a separate document) from Mrs Chawla and her daughter. Ms Chawla told me that her father had approved the contents of the documents submitted on his behalf.
24. On the morning of Monday 9^th July Mr Gillis began to open the case. His opening was interrupted by the need to move to the video conferencing suite in order to receive Mr Chawla's evidence by video link from India. He was cross-examined, principally by Mr Gillis, but also by Mr Williams, Ms John and Ms Chawla, for about four hours, concluding at about 4.30 p.m.
25. The morning of Tuesday 10^th July was taken up with an application – in the event unsuccessful – by counsel (Miss Amanda Eilledge), instructed by ALH, to set aside a witness summons that the claimants had served upon Ms Khalon, the solicitor who had had the conduct of the defence to the debt action at the time when ALH had been acting on behalf of Mr Chawla and (purportedly) Mrs Chawla. After the lunch adjournment, the court heard, by video link from the United States, the evidence of Nakul Riswadkar, who had witnessed the signatures of Mr and Mrs Chawla on the 1988 legal charge in favour of Kali. He was called by the claimants, and was briefly cross-examined by Ms Chawla. The remainder of the afternoon was taken up by the court hearing the evidence of the two solicitors who had been summoned to give evidence by the claimants, Mr Shak Inayat of Penn Legal (whose firm had acted for both vendor and purchaser, and for the bank, on the sale of the property to Mrs Advani) and Ms Khalon of ALH.
26. On the morning of Wednesday 11^th July the court approved the form of the letter that was to be sent jointly by the claimants and Mr Chawla (acting by his daughter) to Ernst seeking the details of the holder or holders of the accounts into which Mr Chawla had made the two disputed payments of 14^th June 2001 and 10^th April 2002. In the event, no response was ever received to this request. In her closing address on behalf of her father Ms Chawla referred me in this regard to the restrictions upon disclosure imposed by Swiss bank secrecy laws.
27. I then heard from the well-known forensic document examiner, Dr Audrey Giles. She had prepared two expert reports. In the first, dated 30^th October 2006 and prepared on the instructions of FSP as the solicitors for Mrs Chawla in the possession action, Dr Giles had expressed the opinion that there was very strong positive support for the view that Mrs Chawla had not executed the transfer of the property to Mrs Advani dated 19^th February 2004. In the second, dated 7^th June 2007 and prepared on the joint instructions of Morgan Walker for the claimants and FSP for Mrs Chawla in the debt action, Dr Giles had expressed the opinion, as amplified in her oral evidence, that there was very strong positive support for the view that Mrs Chawla had not executed the legal charge of the property dated 4^th December 1998 in favour of Kali. Dr Giles had been required to attend as a witness by the claimants; and she was questioned only by Mr Gillis (for about 35 minutes) and (briefly) from the bench. At the end of Dr Giles's evidence, Mr Gillis concluded his oral opening.
28. In the afternoon, I heard the evidence of Mrs Myra Rego. She was the sole shareholder and director of Burlay and she acted generally for Kali and the Saraf Family Trust. She gave evidence for about two and a half hours, being cross-examined for about an hour by each of Ms Chawla and Mr Williams, and more briefly by Mrs Chawla and Ms John.
29. The whole of Thursday 12^th July and most of the morning of Friday 13^th July was taken up with the evidence of Mr Hari Saraf. During the course of Ms Chawla's cross-examination of Mr Saraf on the Thursday afternoon, and in response to questions from the bench directed to establishing the precise nature of her father's case, Ms Chawla told the court that Mr Chawla accepted that the value of FNH's contract with HAL was some €7.542 million-odd; and that by April 2001 he had received a commission from FNH – which Ms Chawla believed to be 10% of the value of the FNH contract – but he had not mentioned this in his witness statement because it had been illegal to accept such a commission under Indian law. Ms Chawla retracted the latter admission the following morning, handing in a letter stating that she had been mistaken:

"My father never in the past or at any time now has received any commissions from [FNH]. I misunderstood my father on the phone the previous night and made an error to the court."

During the course of his subsequent cross-examination, Mr Gillis later questioned Ms Chawla about this admission and its retraction.

30. After Mr Saraf had concluded his evidence on the Friday morning, Mr Gillis then concluded the claimants' case by referring me to the evidence of M Demeure of FNH; to the unchallenged expert valuation report dated 1^st February 2007 of Christopher Moore FRICS (of Haslams) retrospectively valuing the property in February 2004 (on the basis of an external inspection only, undertaken on 30^th January 2007) at £200,000 if it had been in a reasonable condition; to the affidavit of Ms Vijaya Rajagopal, sworn on 9^th June 2007; to the report (subsequently supplemented by a second brief report) of Mr Chopra, a private investigator; and to the witness statement of Mr Alireza Nurbakhsh, a trainee solicitor with Morgan Walker.
31. Mr Williams then outlined the chronology and opened the documents in the possession action; after which Ms John then briefly outlined the issues insofar as they affected the bank. I then heard evidence from Mrs Advani for about an hour and a half until 4.15 p.m, when I adjourned the trial part heard until Monday 23^rd July, interrupting Mr Gillis's cross-examination of Mrs Advani barely halfway through.
32. Due to prior court commitments on my part the trial could not be resumed until Monday 23^rd July. It had been known that Mrs Advani would not be available to resume her cross-examination on that day, and therefore Ms Chawla and her mother were interposed as witnesses. Mrs Chawla gave evidence first for about three hours, interrupted by the lunch adjournment; and her daughter gave evidence for about two hours, concluding at about 4.45 p.m.
33. Due to the prior commitments of counsel, the trial was then adjourned to Thursday 26^th July, when Mrs Advani resumed her evidence. Mrs Advani's evidence continued for about a further three and a half hours, interrupted by the lunch adjournment. Ms Chawla was then briefly recalled to address two issues not previously addressed in her evidence which she had put to Mrs Advani in the course of cross-examining her. Mr Saraf was then recalled to answer questions about a fax dated 29^th October 1998 allegedly sent to him by Mr Chawla and inserted in trial bundle B1(3) at pages 944A to C. Previously available only in incomplete and redacted form, the full version had only been produced on the morning of Monday 23^rd July and so had not been available at the time of Mr Saraf's original cross-examination. He was examined about this fax by Mr Gillis, cross-examined by Ms Chawla, and answered questions from the bench.
34. In the possession action, Mrs Chawla relied upon a statement from Ms Vijaya Rajagopal dated 1^st September 2006. She had purported to witness Mrs Chawla's signature on the transfer of the property to Mrs Advani dated 19^th February 2004; but in her statement she denied that she had ever seen Mrs Chawla sign the transfer document.
35. For the bank, Ms John relied upon the witness statement dated 10^th January 2007 of Brian Holloway, a litigation assistant employed by the bank's holding company. Pursuant to paragraph 12 of an order made by Master Moncaster on 11^th June 2007, this statement was admissible in evidence without Mr Holloway attending the trial. He exhibited a number of documents contemporaneous with, and relating to, the bank's mortgage advance, including a contemporaneous report and mortgage valuation prepared by Nigel McCarthy MRICS of Colleys, valuing the property in October 2003 at £165,000. That concluded the evidence in the case.
36. Since Ms Chawla wanted some time to prepare her closing submissions, I adjourned early at a little before 4 p.m. Knowing that I had prior court commitments in Liverpool during the following week, I indicated that, providing submissions had concluded by lunchtime the following day, I would deliver an extemporary judgment at 2 o'clock the next day. I had already suggested, and all parties had agreed, that, given the nature of the issues in the case, it would be beneficial for me to deliver a judgment limited, in the first instance, to my findings of fact on the evidence, with a further judgment to follow on the legal consequences of my findings of fact, after the parties had had a proper opportunity of addressing me upon the legal implications of my first judgment. At my suggestion, it was subsequently agreed that it would be beneficial for my first judgment to address one issue of law, namely the true construction of, and the extent of the security conferred on Kali by, the legal charge of the property dated 4^th December 1998.
37. In the event, submissions upon the witnesses and the evidence lasted until about 4 o'clock on Friday 27^th July, leaving me with no alternative but to reserve judgment until the first available date, which was 12^th September 2007. Ms Chawla addressed me first, for about 50 minutes on the morning of 27^th July, initially on behalf of her father, and then of her mother and herself.
38. For Mrs Advani Mr Williams addressed me for about half an hour. He supported Ms Chawla's contentions in the debt action, effectively making common cause with Mr and Mrs Chawla in their defence of the claim against them by the claimants. He pointed to

(1) the late appearance in evidence, both of the incomplete version of the fax dated 28^th October 1998 as an exhibit to Mr Saraf's witness statement and, during the course of the trial, of the redacted, and later of the full, versions of that fax;

(2) the significant documentary evidence of the repayment of US$110,000 in June 2001 and €63,369 in April 2002;

(3) the highly unsatisfactory state of the evidence in relation to the quantification of the precise amount due to Burlay by way of commission;

(4) the highly unsatisfactory state of the evidence in relation to the assignment of the claim for commission from Burlay to Kali;

(5) the highly unsatisfactory way in which Morgan Walker (for Kali and Burlay) had applied to the District Land Registry in October 2004 to note that the "agreed" amount secured against the property was £330,000. (In response to my suggestion, made during the course of Mr Gillis's renewed opening on the morning of Wednesday 11^th July, that this had been "misleading", Mr Gillis had acknowledged that "certainly it could have been better expressed". I accept Mr Williams' characterisation of this exercise as "an attempt to shoehorn the commission into the security the claimants had"); and

(6) the fact that Kali only issued proceedings some six years after the date of the legal charge, and then only because of the sale of the property to Mrs Advani.

Mr Williams parted company from Mrs Chawla's case only to the extent of his submission that the evidence suggested that, from the date of her divorce, she had ceased to have any interest in the property, if she had ever done so before then.

39. For the bank, Ms John, in a powerful address upon which I have reflected at length, submitted that, on the evidence, I could not be satisfied that the claimants had discharged the burden of showing that either the loan or the commission were still owing. Echoing the views of Donald Rumsfeld as to "known unknowns", Ms John submitted that the only thing about which I could be certain was that there were many unknowns. She submitted that everything pointed to the loan of US$110,000having been repaid. There were no written demands and no default notice. The timing and content of Mr Sidharth Singh's email of 12^th March 2001 to Mr Saraf (C206) suggested, contrary to Mr Saraf's evidence, that, in fact, the loan had been repaid shortly thereafter. Given the commercial sensitivity attaching to these dealings in weaponry and military equipment, as evidenced by the claimants' redaction of the 29^th October 1998 email, it was not surprising that payments were anonymised. Mr Saraf's evidence that the legal charge was always intended to include the repayment of the commission, as well as the repayment of the loan, was an after-the-event justification, and cast doubt upon the accuracy and reliability of the remainder of his evidence.
40. In an equally powerful series of submissions, Mr Gillis addressed me for about two hours. I have borne his submissions, and those of the others who addressed me, in mind in preparing this judgment, which has seen a number of changes to the draft which I had prepared overnight on 26^th/27^th July.

IV: Witnesses and evidence

41. I must preface my assessment of the witnesses by reminding myself, as Mr Gillis invited me to do, of the substance and effect of the Lucas direction on lies. I remind myself that, even if one is satisfied that a witness has told lies during the course of his or her evidence, one needs to ask oneself: why has the witness lied? I remind myself of the need to guard against the assumption that a party is lying simply in order to bolster an untrue case. I remind myself that there are many other reasons for lying, particularly so in a case such as the present, where a number of Mr Chawla's dealings concerned armaments and items of military equipment, and where he is presently facing criminal charges in India. A witness may lie in order to bolster a true case.

(1) Mr Ashok Chawla

42. Mr Chawla is some 63 years of age. He was formerly a colonel in the Indian Army. Whilst acknowledging the inevitable distortions involved in giving evidence via a video link from India, I was able to observe him closely under cross-examination. I found him to be hostile, angry and aggressive, hot-tempered and emotional, and shifty. When giving his evidence, Mr Saraf told me – and I accept – that his major domo referred to Mr Chawla as "the man with many names". That is an accurate description of him. He was deported from the United Kingdom in March 2000 because he had been travelling on false documents, carrying papers and other personal items bearing a number of different names. He was clearly dishonest in both his written and his oral evidence. I am entirely satisfied that he was not simply trying to bolster a genuine case. I accept Mr Gillis's submission that his lies were not tangential to the issues between the parties but went to the heart of the case. They were motivated by a clear and deliberate desire to mislead the court on matters directly relevant to the determination of the case. The following are merely examples of his general dishonesty and unreliability as a witness.

(1) In his first two witness statements, Mr Chawla said that he had been authorised to make those statements on behalf of his wife, and that she had signed the legal charge in favour of Kali. He quickly changed his position in cross-examination, saying that he had merely assumed that she would agree with his evidence, and that he had merely assumed that she had signed the legal charge, having sent it to her for her to sign it via a mutual friend. I am satisfied that in each case he had "assumed" nothing of the sort. He had been estranged from his wife, and separated from her financially, for over 8 years when he made his first witness statement and they had by then been divorced for over 4 years. There was clearly no love lost between them. In the light of the evidence of Mr Riswadkar – which I accept – Mr Chawla must have seen the legal charge being executed by Mrs Chawla or the person purporting to be her.

(2) In cross-examination by Mr Gillis, Mr Chawla told the court that he had never travelled on false documents or been deported from the United Kingdom. He resiled from this position in answer to questions from the bench at the end of his cross-examination, telling me that he could not come back to this country to give evidence, although it is clear from the evidence of Mr Saraf, Mrs Advani and the documents (such as the email of 3^rd September 2004 at C210), that he has returned to this country on several occasions – Mr Saraf put it at three or four times a year – since March 2000.

(3) Whether or not he had been taken ill at the end of January 2007 – and I tend to the view that his evidence of illness was grossly exaggerated –I am satisfied that Mr Chawla's letter to the court of 2^nd February 2007 (B1(3) page 874), seeking an adjournment of the February trial date, was disingenuous at best, and, in fact, was downright dishonest. It omitted to mention that Mr Chawla had been able to attend a criminal court hearing in Delhi the previous day; and it gave the clear impression that he would be able to attend court in England if the trial was adjourned. I am satisfied that Mr Chawla had no intention whatsoever of doing so, whether at the time the letter was written or at all.

(4) Mr Chawla refused in cross-examination to accept that he still used the name "Monty". He told the court that it had been a nickname when he had been in the army, which had not been used since then. In the course of her cross-examination of Mr Saraf, and later in her own evidence, Ms Chawla accepted that her father was known by the name "Monty", and that is borne out by various of the emails such as that at B1(1)/34. I am satisfied that Mr Chawla was deliberately trying to distance himself from documents referring to "Monty".

(5) Mr Chawla gave varying, and inconsistent, accounts of his agreement with Mr Saraf regarding the payment of commission. In the first two of his witness statements in the debt action, he accepted that Mr Saraf, through Kali, would get a share of the profits from the business venture involving FNH. In his third witness statement, Mr Chawla said that Mr Saraf would only do so if he charged interest on only half of the loan. In oral evidence, Mr Chawla said that he never agreed to pay any commission or profit share to Mr Saraf. That is inconsistent with Mr Chawla's own case, which is that he made a payment of €63,369 to Mr Saraf in April 2002. I am satisfied that it was Mr Chawla's perception of the inconsistency underlying his own case that led Mr Chawla later, through his daughter, to say that the payment of any commission to Mr Saraf was to be entirely at Mr Chawla's discretion. I am entirely satisfied that Mr Saraf, as the astute businessman that he is, would never have agreed such a vague and unsatisfactory arrangement. Mr Chawla's entire evidence regarding the commission is inconsistent with the fax of 28^th October 1998, referring to an equal sharing of the commission. I accept that fax as genuine; and I reject as false Mr Chawla's evidence in cross-examination that this was "a totally forged document"

(6) I accept that Mr Chawla was willing to lie about the relationship between himself, Burlay and FNH. In his oral evidence, Mr Chawla denied that he had ever concluded any contract on behalf of Burlay with FNH. It is clear from M Demeure's evidence – which I accept – that this is precisely what he did. It is apparent from the escrow agreement of 26^th April 1999 (B1(1) page 35). I reject Mr Chawla's evidence that that document is a fabrication. I am satisfied that it is genuine. It is referred to in the letter of 15^th June 2001 (B1(1) at page 89). In his oral evidence Mr Chawla sought to distance himself from Burlay, even though in paragraph 2 of her written submissions on behalf of her father Ms Chawla had referred to it as a company "given" to Mr Chawla as a trading vehicle or shell company which he had "used to carry out his business dealings" with FNH with Mr Saraf's blessings.

(7) I am satisfied that Mr Chawla lied about whether he ever received a commission from FNH. On this aspect his case went through four stages.

(i) In his witness statements Mr Chawla accepted that he had been paid a commission by FNH because he asserted that the payment in April 2002 of €63,369 was rolled up interest and commission.

(ii) In his oral evidence, Mr Chawla said that he had never been paid any commission by FNH.

(iii) On the afternoon of Thursday 12^th July Mr Chawla admitted, through his daughter while she was cross-examining Mr Saraf, that Mr Chawla had received a commission – which she believed to be 10% – from the €7.5 million received by FNH from HAL.

(iv) That admission was retracted by Mr Chawla on the following morning.

I accept the submission of Mr Gillis that Ms Chawla's evidence, in cross-examination, as to the reasons for that retraction was totally unconvincing. In any event, the payment instruction dated 9^th April 2002 from Mr Chawla to Ernst, relied on by Mr Chawla, makes his position on this aspect of the case entirely untenable, and justifies Mr Gillis's observation that Mr Chawla has become enmeshed in the tangled web which people weave when they practise to deceive.

(8) In his witness statement in the possession action dated 14^th May 2007, Mr Chawla had said that he had agreed to sell the property to Mrs Advani for £200,000, of which £80,000 was to be applied in repayment of the existing mortgage to Lloyds TSB and the balance of £120,000 was to be paid to Mr Chawla. In his oral evidence, Mr Chawla contradicted this when he said that Mrs Advani had lied to him by telling him that the property was only worth £120,000. When confronted with this contradiction, Mr Chawla tried to wriggle out of it by saying that he had thought that the property had been worth £200,000, and that repayment of the mortgage of £80,000 was to be on top of the £120,000 that was to be paid to him. I found it impossible to reconcile Mr Chawla's increasingly confused and contradictory evidence on this topic, particularly when weighed against the fact of the sale contract and transfer document that he had signed, which clearly stated the sale price to be £120,000.

43. In the light of Mr Chawla's persistent and deliberate lies and evasions, I find myself entirely unable to accept his claims – contradicted by both Mrs Rego and Mr Saraf –that the accounting documents at B1(1) page 37 and following, and at AKC18 were produced by either Mrs Rego or Mr Saraf. I am satisfied that they were fabricated by Mr Chawla. Nor can I accept his challenge to the validity of documents produced by the claimants or M Demeure. I also accept the point made by Mr Saraf in the course of his cross-examination, and relied upon by Mr Gillis in submissions, that Mr Chawla's apparent reversal of the credit of some 50,000 euros or dollars into the account allegedly controlled by Mr Saraf in the name of Bandbox in the middle of August 2001, as allegedly documented at additional appendices AKC8 and page 13 of AKC18 to Mr Chawla's written submissions and at B1(1) page 50, demonstrates that that account was being controlled by Mr Chawla and not by Mr Saraf. I also accept the further point made by Mr Saraf that, if it had been his account that had been credited with money by Mr Chawla, and he had been controlling that account, Mr Saraf would have been foolish indeed to have reversed the transaction, returning the money to Mr Chawla. In my judgment, Mr Saraf is no fool.

(2) Mr Nakul Riswadkar

44. I accept Mr Riswadkar as a patently honest witness who was doing his best to assist the court, but the assistance that he was able to give me was limited. I accept that he witnessed both Mr Chawla, and a woman who purported to be Mrs Chawla, execute the legal charge in favour of Kali together, and at the same time, at Mr Chawla's house in New Delhi in India. However, Mr Riswadkar had asked for no proof of identity from the purported Mrs Chawla, whom he had not previously met. He purported to identify Mrs Chawla in court via the video link, but he had only seen the lady who executed the charge on that one occasion, and that was over eight and a half years previously. Reminding myself of the Turnbull direction relating to the special need for caution when assessing the reliability of visual identification evidence, I fear that I can attach little weight to the purported identification of Mrs Chawla as the lady who executed the charge of the property in favour of Kali in 1998.

(3) Mr Shak Inayat

45. Summoned to attend in his capacity as a partner in Penn Legal, he had had no personal involvement in the sale of the property to Mrs Advani, the responsible fee-earner being Nadeem Khan. I accept his evidence that there was nothing on the Penn Legal file to indicate that there had been any communication with, or any involvement in the sale transaction on the part of, Mrs Chawla. Mr Inayat clearly seemed to me to recognise that his firm's conduct of that transaction left much to be desired.

(4) Ms Khalon

46. I accept Ms Khalon's evidence that before June 2006, and thus at the time of the Defence and Counterclaim in the debt action in August 2005 (which admitted the validity of Kali's legal charge over the property) and in November 2005, when the defendants' disclosure list was served, ALH had received no instructions directly from Mrs Chawla. However, I find that after June 2006, until they ceased to act for both Mr and Mrs Chawla in January 2007, ALH were duly authorised to act for both of them.

(5) Mrs Myra Rego

47. Now some 60 years of age, I found Mrs Rego to be an honest and straightforward witness, albeit one who was at times somewhat out of her depth. She acknowledged that she was not herself involved in agreeing any deduction from the share of the commission to which Burlay was entitled from Mr Chawla. That was a matter dealt with by Mr Saraf. I accept her evidence generally, which provides support, albeit in some respects only limited support, for the claimants' case. I have no reason to doubt, and so accept, her evidence that she was not responsible for producing the accounting documentation relied upon by Mr Chawla.

(6) M Jean-Paul Demeure

48. I accept the evidence of M Demeure, save for his assertion that the loan of US$110,000 was repaid to Kali. I am satisfied that this repayment was made to Mr Chawla. My reasons are: (i) that the payment does not appear in any of the claimants' disclosed bank statements and, more importantly, (ii) that Mr Chawla would not have claimed to have repaid this sum himself unless it had been received into one of his bank accounts. Initially, I was troubled by the fact that the claimants had not sought to obtain from FNH its copy of the unsigned commission contract between FNH and Burlay. However, Mr Gillis told me, in closing, that FNH had been an unwilling witness, reluctant to disclose what it perceived as sensitive commercial documentation; and that in the early part of 2007 the claimants had made a further application to the Belgian court to obtain further evidence from FNH, which had successfully opposed the application. I accept that the claimants have done what they could to secure this document.

(7) Mr Hari Saraf

49. Mr Saraf is some 65 years of age. I found him to be an astute businessman, intelligent, voluble and fast speaking. I accept Mr Saraf as a generally honest witness who, on the whole, but not at all times, was doing his best to assist the court with his honest recollection of events. I accept that at times Mr Saraf had a genuine, but understandable, difficulty with dates. I consider that he understated –and deliberately so –the extent and course of his dealings with Mr Chawla; but I am satisfied that he was doing so because of the commercial sensitivities attaching to these dealings, involving armaments and military equipment. I accept his evidence of his difficulties in ever succeeding in tying Mr Chawla down. I accept his evidence, supported by Mrs Rego, that they never produced the accounting documents relied upon by Mr Chawla. I accept that Mr Saraf's difficulties in explaining the €121,000 allowance from Burlay's half share of the commission due to it from FNH were attributable to the fact that this was done after "much haggling and argument with Mr Chawla". As Mr Saraf put it in re-examination: "It was effectively a haircut we had to take to realise our monies". I accept Mr Gillis's submission that Mr Saraf had no reason to fabricate his evidence in this respect since this was a deduction from the invoice amount; and Mr Chawla (understandably) does not seek to challenge this express deduction. I was initially troubled by the claimants' failure to obtain FNH's unsigned copy of the commission agreement between itself and Burlay; but, as explained above, my concerns on this point have now been allayed. I accept Mr Saraf's evidence that he did not promise Mrs Advani to sign the form DS1 releasing the property from the Kali charge. I am satisfied that Mr Saraf, as an astute businessman, would never have agreed to do this. To do so would also have been inconsistent with his contemporaneous email to Sidharth Singh of 3^rd September 2004 (C210). It would also have been inconsistent with the claimants' subsequent conduct in causing Morgan Walker to apply to the District Land Registry to note that the agreed amount secured against the property by Kali's charge was £330,000. Whilst I consider that this application was seriously misleading, I do not consider that it would be appropriate to draw from it any adverse inference as to Mr Saraf's honesty or reliability generally, since I am satisfied that he had, by this stage, convinced himself that the Kali charge secured the commission arrangement as well as the original loan, and the precise form of the application was the responsibility of Morgan Walker. Nor do I consider that any inference adverse to the claimants' present case should be drawn from the form of the original and amended Particulars of Claim, which asserted that part of the commission had been paid to Burlay. I consider this to be a genuine misunderstanding on the part of the solicitors who had settled these statements of case, who did not appreciate that the original commission entitlement had been diminished as a result of the allowance made to Mr Chawla by Mr Saraf.
50. I have given anxious consideration to the question whether the claimants, upon which, as Mr Gillis accepts, the burden of proof lies, have succeeded in showing that both the loan and Burlay's share of the commission remain outstanding. Mr Saraf is categorical in his evidence that neither of the payments alleged by Mr Chawla was received into any account opened, owned, operated or controlled by him or by anyone else on his behalf; and his evidence is supported by the disclosed bank statements and, insofar as she could do so, by the evidence of Mrs Rego. I have considered the possibility that, having received repayment of the loan and a small part of the commission due to Burlay, Mr Saraf, having a genuine claim to the balance of the commission payable, has caused these proceedings to be instituted, claiming the full amount, in the belief that Mr Chawla would not be able to establish that he had made any payment at all. However, I accept Mr Gillis's submission that the evidence in the case leads to the conclusion that Mr Chawla has not made the payments that he alleges. My reasons are as follows:

(1) I accept that the claimants have disclosed all relevant bank statements.

(2) Mr Saraf would have been taking a hugely high risk in bringing this action if he had received any repayment because Mr Chawla would almost inevitably have been able to prove the fact of repayment. Effectively, Mr Saraf would have been playing Russian roulette with a six-chamber revolver after the trigger had already been pulled on four, if not five, previous occasions.

(3) The claimants have been asking Mr Chawla to disclose details of the accounts to which the payments were made since their solicitors' letter of 15^th February 2007 (D688). There has been no response. If Mr Chawla had made the payments, he would have disclosed that information voluntarily.

(4) When Mr Gillis asked Mr Chawla in cross-examination for him to write with Mr Saraf to Ernst requesting details of the relevant accountholders, Mr Chawla showed himself reluctant to do so. Initially, he said that there was no need because Mrs Rego had admitted the payments. Then, most reluctantly, he said that he would do so, albeit at the claimants' cost; but that it would have no effect. As Mr Gillis submitted, that was not the reaction of someone who had genuinely made repayment.

(5) I have to ask myself why Mr Chawla has told such obvious lies in this action in relation both to the contract with FNH and its payment of the commission. If he had paid Mr Saraf his due, why should Mr Chawla need to have lied about it? These lies were not merely peripheral; they went to the heart of his defence to the claim.

(6) As Mr Gillis submits, it is striking that it was only on the third day of the trial that it was suggested that the relevant account into which the payments had been received was the Bandbox account. Why was this suggestion only made then? Mr Saraf denies that this was his account; and, as explained above, his denial is supported by Mr Chawla's apparent ability to control the account.

(7) Mrs Advani's evidence – which on this point I accept since it was contrary to her own interests (which lie in defeating Kali's claim under its legal charge of the property) – was that when she first contacted Mr Chawla in June 2004 to complain about the continued existence of the Kali charge, he did not suggest to her that that charge had been repaid. According to Mrs Advani, that suggestion was made for the first time only in August 2004.

51. For these reasons, whilst entertaining reservations about certain aspects of his evidence, I accept Mr Saraf's evidence generally as honest and reliable insofar as it is directed to the issues in dispute between the parties to this litigation.

(8) Mrs Anu Chawla

52. Mrs Chawla is some 58 years of age. She was divorced from her husband in February 2001, although they had lived separate lives, both physically and financially, since the end of 1996. She declined to answer Mr Gillis's apparently innocuous query as to whether she had remarried following her divorce. I accept Mrs Chawla's evidence that she did not execute the transfer of the property to Mrs Advani or sign any of the associated sale documentation. There was clearly no love lost between Mrs Chawla and Mrs Advani: the latter accepted during the course of cross-examination by Ms Chawla that her relationship with Mrs Chawla had broken down quite dramatically in November 1999 at the time of Diwali (the Festival of Lights). Mrs Chawla would have been most reluctant to join in executing any transfer of the property to Mrs Advani, still less one at a sale price of only £120,000 when the price which Mr and Mrs Chawla had paid to acquire the property in January 1989 had been in the order of £89,000. Further, Mrs Chawla's evidence that she did not execute the transfer of the property to Mrs Advani is supported by the expert opinion evidence of Dr Giles; and this was not challenged by Mr Williams on behalf of Mrs Advani. The reason for that became apparent on the morning of the last day of the trial (Friday 27^th July). Mrs Chawla relied upon written evidence from Miss Vijaya Rajagopal, who had acted as the attesting witness to Mrs Chawla's execution of the transfer, in which she denied that she had seen Mrs Chawla execute the transfer. In answer to questions from the bench at the end of her evidence the previous afternoon, Mrs Advani had testified that she had spoken to Mrs Rajagopal about her written evidence, and that she had denied that it was her statement. On the following morning, a corroborative attendance note was produced from which it was apparent that, even if the account in the written evidence presented to the court on her behalf was incorrect, nevertheless Mrs Rajagopal had still not witnessed Mrs Chawla execute the transfer. On the evidence, I find as a fact that Mrs Chawla's signature on the transfer of the property to Mrs Advani was forged, probably by, or at the instigation of, Mr Chawla (there being no other credible candidate).
53. In other respects, I found Mrs Chawla to be a thoroughly unreliable witness; and I cannot accept her evidence on any matter that is in dispute in this litigation (although I endorse her perception, as expressed in her oral evidence, that her former husband's dealings with the property have not been honest). I found Mrs Chawla's written and oral evidence as to why she came to stay at the property in May 2006, after having previously ceased to live there in 1999, to be confusing and contradictory: at one point in cross-examination by Mr Gillis she said that it was related to the imminent maturing (during 2007) of the mortgage endowment policy and consequent repayment of the original Lloyds TSB mortgage on the property, and that she had wanted to know what the property was worth with a view to its possible sale; yet this was not what she had said at paragraph 5 of her witness statement in the possession action (C114).
54. I found Mrs Chawla's attempts to explain why she had not told ALH, after June 2006, that her signature upon the Kali charge was a forgery to be shifting and unworthy of belief. At times she said that this was because ALH were not authorised to act as her solicitors. Not only was this position inconsistent with that which Ms Chawla had adopted in relation to the period after June 2006, both for the purposes of the application by ALH, on the second morning of the trial, to set aside the summons that had been served upon that firm, and during the course of Ms Khalon's evidence on the afternoon of that day, but it was also inexplicable in the light of Mrs Chawla's acknowledged failure to inform ALH, either directly or through her daughter, that they were not authorised to act on her behalf in the debt action. It was also inconsistent with her daughter's oral evidence and explanations. At other times, Mrs Chawla sought to justify her silence about the alleged forgery on the basis that it was only her former husband's half share in the property that had been put in jeopardy by Kali's claim (despite the fact that Kali was asserting that the charge secured some £330,000). At other times, Mrs Chawla sought to justify her silence on the implausible basis that her daughter, who acted as the medium between Mrs Chawla and her former husband, was telling her that Mr Chawla was dealing with the dispute and that it would be sorted out, and that she (Mrs Chawla) did not pay much attention to the matter, but left it to him to do so. A further explanation – that it was because she had first seen the charge document itself only upon receipt of Mr Riswadkar's witness statement dated 30^th March 2007 – was manifestly false; and it was accepted as such by her daughter, as being both inconsistent with the chronology (the first assertion that Mrs Chawla had not executed the Kali charge having been made in a letter dated 16^th February 2007 from FSP to Morgan Walker, some six weeks before Mr Riswadkar had made his witness statement) and contradicted by Ms Chawla's own evidence (that she had viewed the legal charge in June or July 2006 and had told her mother that it was a forgery in September or October 2006). Mrs Chawla could provide no satisfactory explanation for her failure to alert FSP, who were acting as the solicitors for both herself and her daughter in the possession action, to the alleged forgery of her signature upon the Kali charge.
55. Her silence in this regard, when viewed against her timely, determined, and (as I find) honest and true allegation, reflected in the defence that FSP served on Mrs Chawla's behalf in the possession action on 21^st September 2006, that her signature had been forged upon the transfer of the property to Mrs Advani, is simply incredible. In answer to questions from the bench at the end of her evidence, Mrs Chawla told me that she had not said anything to FSP about the proceedings brought by Kali because she had been told by her daughter, and by Ms Khalon, that they would have been sorted out before the possession proceedings could come up for trial. I simply cannot accept this explanation. The debt action was originally due to be heard in the June or July of 2006. It was then adjourned for a trial to commence on 5^th February 2007. Had either trial date been adhered to, the trial of the debt action would apparently have proceeded in ignorance of the alleged forgery of Mrs Chawla's signature on the Kali legal charge. I simply fail to understand how Mrs Chawla, who is not an unintelligent woman, could have been prepared to allow this to happen, consistently with her present allegation that her signature on the Kali legal charge was a forgery. Nor can I understand how Ms Chawla, as her daughter, could have been prepared to allow her to do so.

(9) Ms Anisha Chawla

56. Ms Chawla is some 31 years of age. She is an intelligent woman, but she was highly voluble and excitable as a witness. The more her evidence continued, the less convincing it became. As with both her parents, I cannot accept her as a reliable or honest witness. In oral evidence Ms Chawla was firm in her denial that her father had ever told her that her mother had signed the legal charge, despite the fact that that was the clear effect of her own witness statement in the debt action, endorsing her father's own written evidence in that action. Ms Chawla told the court that she had viewed the Kali legal charge in June or July 2006, and that she had told her mother that her signature was a forgery in September or October 2006. Despite this, she never alerted either of the firms of solicitors acting for her mother in the debt action and the possession action to this forgery; and this was so despite the date set for the trial of the former action in June/July 2006 and, later, 5^th February 2007. It is simply inconceivable that Ms Chawla should have acted in this way had she thought the legal charge to be a forgery as regards her mother's signature. Ms Chawla described her mother in evidence as "my friend"; and she acknowledged that she had assumed the responsibility of protecting her mother's interests. I cannot accept that Ms Chawla could have betrayed her mother in this way. Whilst acknowledging that, in certain respects, Ms Chawla found herself torn between her two estranged parents, in the context of their defence of the debt action they are both making common cause.
57. In other respects also both the content and the manner of Ms Chawla's evidence were deeply unsatisfactory. In both respects, Ms Chawla gave an entirely lame and unconvincing explanation of how she had come to retract her admission of her father's receipt of commission from FNH. Her evidence of visiting her father in hospital in India at or about the end of January 2007 was extremely vague and unconvincing. Ms Chawla's explanations, given at the end of her evidence in answer to questions from the bench, for instructing FSP, rather than ALH, in the possession action, and for not informing FSP of the alleged forgery of her mother's signature on the legal charge, were lame and unconvincing: she told the court that she had gone to FSP rather than ALH because the two actions were completely different, and they had wanted local solicitors in Reading; she had not told her mother the magnitude of the Kali claim, and she had wanted to keep her away from that; Ms Chawla and her father were handling the defence of the debt action, and she had told her mother that she did not need to get involved. When I pointed out that, in view of her mother's allegation of forgery, she could not have trusted her father, Ms Chawla said that they could not afford other solicitors. When I pointed out that they had instructed FSP, she told me that she had thought that her father would take care of the debt action; and that he had told her that he had not signed the legal charge on his wife's behalf. When I put it to Ms Chawla that, in view of Mrs Chawla's allegation of forgery in relation to the transfer of the property to Mrs Advani, she could not have believed her father, Ms Chawla said that he had told her that he had done nothing wrong. With each answer that she gave to my few questions from the bench, which were directed to seeking to understand Ms Chawla's motivation for her conduct at the time and the evidence that she had already given to the court, her explanations became more desperate, and her evidence less convincing; and by the end of her evidence it seemed to me that even Ms Chawla recognised the evident difficulties in her conduct and evidence.

(10) Mrs Shashi Advani

58. Mrs Advani is some 52 years of age. Initially, she appeared forthright in her evidence; but as her cross-examination proceeded, and documents were put to her, I found her evidence less convincing. Ultimately, I found her to be an unsatisfactory, unreliable and, in certain respects, untruthful witness. For the reasons stated in paragraph 49 above, I do not accept that Mr Saraf promised her, in or about September 2004, to sign the form DS1 releasing the property from the Kali charge; but I accept that Mrs Advani's evidence in this regard may have been attributable to a misunderstanding of what was said during her telephone conversation with Mr Saraf rather than fabrication on her part. I have already indicated, in paragraph 50(7), my reason for accepting Mrs Advani's evidence that she was not told that the Kali charge had been repaid when she first approached Mr Chawla about it in June 2004, nor for some two months thereafter. Mrs Advani acknowledged in evidence that she did not inform Mr Chawla of the October 2003 bank valuation valuing the property in the sum of £165,000, despite the acknowledged facts that at that time (1) she held his formal power of attorney, (2) he trusted her to act on his behalf and in his best interests, and (3) there was no binding agreement in existence for the sale and purchase of the property at the agreed price of £120,000; and she also acknowledged that she had appreciated in February 2004 that she was purchasing the property at a substantial undervalue. Since these matters do no credit to Mrs Advani, I see no reason to disbelieve her evidence on them. Mr Williams submits that these facts show that Mrs Advani was very much her own woman. In my judgment, they tend to point in the opposite direction. If the sale were a genuine one they would tend to cast Mrs Advani in a very poor light. Although, since Mrs Chawla moved into the property at the end of May 2005, if not before, it is apparent that Mrs Advani has fallen out with Mr Chawla, it is clear from the dealings between them prior to this fall-out that the relationship between them was a close relationship of trust and confidence; and I do not consider that Mrs Advani would have abused their relationship during that period. In my judgment, the acknowledged facts outlined above tend to support Mr Gillis's submission for the claimants that the sale of the property to Mrs Advani was a collusive, rather than a genuine, arrangement; and that it was effected with a view to putting Mr Chawla's assets into Mrs Advani's name.
59. Mr Gillis submitted that I should disbelieve Mrs Advani's evidence that the letter of instruction to Penn Legal dated 8^th January 2004 (B(12) page 346) was typed on that day, and during Mrs Advani's visit to Mr Chawla in New Delhi, because the total sums of money credited to Mrs Advani therein exactly equal, and thereby cancel out the sum of money (£20,860.83) that would otherwise have been due from Mrs Advani to Mr and Mrs Chawla on the completion of her purchase of the property; and Mr Gillis refers me in this regard to the contrasting original and revised completion statements prepared by Penn Legal for the purchaser and dated 18^th February 2005 (B1(2) pages 369 and 382), and the completion statement for the vendor dated 20^th February 2004 (B1(2) page 386). I agree with Mr Gillis that the coincidence is an amazing one; but if the letter had been written after receipt of the original completion statement, and backdated, it is a little difficult to understand why it did not incorporate Mrs Advani's later instruction to Penn Legal to pay the balance of the monies due to Mr and Mrs Chawla on the sale of the property (and derived from the bank's mortgage advance) to Mrs Advani. Despite this difficulty, the coincidence is so great that I find myself driven to accept Mr Gillis's submission; and I find, on the balance of probabilities, that the letter was backdated. I am therefore satisfied that Mrs Advani lied to the court in her evidence about the writing of this letter.
60. Irrespective of that finding, however, I find Mrs Advani's explanation for the payment to herself of the balance (of £18,107.21, derived from the bank's mortgage advance) due to Mr and Mrs Chawla on the completion of Mrs Advani's purchase of the property – which was that it was to enable Mr Chawla to deal with this money in this country – wholly unconvincing; and I am satisfied that Mrs Advani has not told the court the true reason for this payment, which was that Mr Chawla was simply putting this asset into Mrs Advani's name, as his nominee. I am satisfied that Mrs Chawla had no reason to sign, and did not sign, the form of authority dated 31^st December 2004 (B1(2) page 591) authorising the payment of the proceeds of the Lloyds TSB endowment policy to Mrs Advani. Ms Chawla asserted, during her cross-examination of Mrs Advani – and confirmed in evidence when she was recalled after the conclusion of Mrs Advani's evidence – that her father was on a family holiday in Goa at the time that Mrs Advani asserts that this authority was signed by him in New Delhi. Given the general unreliability of Ms Chawla as a witness, I am not sure whether I can accept her evidence on this point; but, in any event, I find it unnecessary to decide whether Mrs Advani has lied in her evidence to the court on this point. This is because I am satisfied that the true explanation for the payment of the proceeds of the endowment policy to Mrs Advani only emerged reluctantly from Mrs Advani during the course of her evidence: that this was done at her insistence in order to provide her with some additional security because of her concerns over the continuing existence of the Kali charge over the property, and the implications for the charge that she had herself entered into with the bank. By the end of 2004, Mrs Advani knew that Kali was claiming that its charge secured some £330,000, and that Kali, through its solicitors, was refusing to release the charge: see the letters at B1(2) pages 556, 529, 530, 551, 561, 562 and 575. Understandably, this was a matter of concern to Mrs Advani, who had entered into a charge in favour of the bank over the property for which she was personally liable. Against this background, she insisted upon receiving the proceeds of the endowment policy. Given Mrs Advani's knowledge both of the state of affairs between Mr and Mrs Chawla and of Mrs Chawla's antipathy towards Mrs Advani, there is no way that Mrs Advani could have thought that Mrs Chawla would have agreed to authorise Lloyds TSB to pay the policy proceeds to Mrs Advani. I therefore find that Mrs Advani must have appreciated that Mrs Chawla had not signed the letter of authority to Lloyds TSB, irrespective of whether Mrs Advani has lied to the court about the circumstances in which that letter came to bear the signatures of Mr and Mrs Chawla.

V: Findings of fact

61. Based upon my evaluation of the various witnesses, and of all the evidence in the case, I make the following findings of fact.

(1) I find that Kali paid US$110,000 direct to FNH at the request of Mr Chawla on the footing that it would be repaid by him with compound interest on the security of the legal charge of the property. I do not understand this to be in dispute, but the payment is sufficiently evidenced by the Barclays Bank debit advice dated 4^th December 1998 (C181) and, to the extent that it is disputed, I make the appropriate finding of fact.

(2) I find that there was a commission sharing agreement between Mr Chawla and Kali whereby the latter was to be entitled to 50% of the commission received from FNH. Soon after the initial agreement, Burlay was introduced into the arrangement as the jointly-owned corporate vehicle through which effect was to be given to this agreement. That finding is consistent with the evidence (which I accept) of both M Demeure and Mr Saraf. It is consistent with the fax dated 29^th October 1998, which I accept as genuine. It is also consistent with the fax dated 25^th March 1999 and the escrow agreement dated 26^th April 1999, both of which I find to be genuine documents. As it eventually emerged, Mr Chawla's evidence and case was that the profit sharing arrangement was to be entirely at his discretion. I am satisfied that this is a deliberate fabrication on the part of Mr Chawla. It is not how the arrangement was originally described by Mr Chawla in his first two witness statements in the debt action (C215 paragraph 6 and C245 paragraph 3), both made when ALH were acting as his solicitors. It is inconsistent with the terms of the fax dated 29^th October 1998. Further, I am entirely satisfied that Mr Saraf is far too astute a businessman ever to have agreed such a loose and unfavourable arrangement.

(3) I do not accept that, as a matter of construction, the reference in the legal charge dated 4^th December 1998 to "other money to be paid by the Borrower" extends to the half share of the commission receivable from FNH. As a matter of construction, I am satisfied that the phrase extends only to other monies payable under the legal charge, such as monies payable pursuant to clause 6.2. Mr Gillis accepted in closing, disclaiming any argument founded on redundancy, that the relevant wording was capable of applying to moneys payable pursuant to this sub-clause, and there was therefore something on which the wording could bite. Had the charge been intended to extend to the commission receivable from FNH, I am satisfied that this would have been expressed more clearly and using other words. I consider that there is force in Ms John's submission that the contention that the legal charge extends to the commission was only thought of after the legal charge had already been completed. There is no evidence of any contemporaneous valuation of the property or investigation of the amount then outstanding on the security of the existing Lloyds TSB mortgage so as to establish the then value of the equity remaining in the property, and its sufficiency to meet any part of the potential entitlement to commission, in addition to securing repayment of the US$110,000. Further, the charge was required to be executed by Mrs Chawla as joint registered proprietor of the property as well as by Mr Chawla; yet, to Mr Saraf's knowledge, she was not directly involved in any of the negotiations that led up to the purported execution of the legal charge. Even if the commission arrangement were to be regarded as part of the "admissible background" as between Kali and Mr Chawla, there is no evidence that (1) the commission arrangement was known to Mrs Chawla at the time, or (2) that Kali understood that she was aware of the commission arrangement. Indeed, the evidence is all the other way. I do not accept the submission advanced by Mr Gillis in closing that it is sufficient that the background was known to Mr Chawla, since it was he who had conducted all of the negotiations with Mr Saraf. It was not Mr Chawla who executed the legal charge as his wife's attorney and on her behalf; but rather the legal charge was purportedly executed by Mrs Chawla herself. Even if I am wrong on this, and the wording of the legal charge is not restricted to moneys payable under the legal charge, I am satisfied that, as a matter of construction, it extended only to monies payable to Kali, as the original creditor of Mr and Mrs Chawla, and not to moneys payable to a third party, such as Burlay. Even if I am wrong in my primary view of the true construction of the legal charge, and the phrase was capable of extending to the commission receivable by Kali, when, with the later introduction into the arrangement of Burlay, the entitlement to receive the commission effectively passed from Kali to Burlay, I am satisfied, as a matter of construction, that the legal charge became incapable of biting upon that commission. That being so, it was, in my judgment, not open to Kali effectively to elevate itself into the status of a secured creditor in relation to the commission by the simple expedient of taking an assignment from Burlay, itself an unsecured creditor, of its entitlement to the commission.

(4) I find that, despite the evidence of M Demeure that the loan was repaid to Kali, FNH has not repaid its loan of US$110,000 to Kali. I am satisfied, for the reasons stated in paragraph 48 above, that although, as M Demeure states, the loan was repaid, repayment was made to an account owned, controlled and/or operated by Mr Chawla.

(5) I accept the evidence of M Demeure that FNH received a sum in the order of €7.5 million from HAL, and that Burlay was entitled to a commission calculated at the rate of 15% of that sum by way of consultancy fees. The 15% commission entitlement is consistent with the first payment instruction (later withdrawn), contained in Mr Chawla's fax dated 19^th March 2001, which I am satisfied is a genuine document written by Mr Chawla. I am also satisfied, on the basis of M Demeure's evidence, that FNH sought to discharge Burlay's 15% commission entitlement by paying it over in accordance with the second payment instruction given by Mr Chawla in his fax dated 20^th April 2001, which I am also satisfied is a genuine document written by Mr Chawla. I am further satisfied, and find as a fact, for the reasons stated (in particular in subparagraph 42(7) above) that this payment was made to an account owned, controlled and/or operated by Mr Chawla and not by Mr Saraf, Kali or Burlay.

(6) I am satisfied from the evidence of Mr Saraf, supported (to the extent that she could do so) by the evidence of Mrs Rego and by the disclosed bank statements, that Mr Chawla has not accounted for the loan or any of the commission to Mr Saraf, or to Kali, or to Burlay, or to anyone else on their behalf. I accept, on the basis of Mr Saraf's own evidence, that had he received any sum on account, either of the loan, or of Burlay's commission entitlement, he would have been obliged to account for that sum to either Kali or to Burlay (as appropriate). I therefore reject any submission – which I understood from Mr Gillis to have been abandoned – that any payment to Mr Saraf personally could not be treated as a valid payment to either Kali or Burlay. However, for the reasons set out above, I reject, as a deliberate fabrication, Mr Chawla's evidence that either the loan, or any moneys in respect of interest or commission, were ever paid into any account or accounts owned, controlled and/or operated by Mr Saraf or by anyone else on his behalf. I am satisfied that the documents supporting this case propounded by Mr Chawla were, to his knowledge, pure fabrication. This conclusion is supported by the subsequent conduct (1) of Penn Legal, following the purported sale of the property to Mrs Advani, in requesting, in letters dated 25^th May and 15^th June 2004 (B1(2) pages 443 and 458) redemption statements from Kali, and (2) the evidence of Mrs Advani – which, as I have indicated in paragraph 50(7) above – I accept, that Mr Chawla did not inform her that he had repaid Kali's charge at the time that she first tackled him about it in June 2004.

(7) I find that the share of the commission attributable to the Saraf family trust's half interest in Burlay was initially to be quantified in the sum of €565,678.50 as set out in the invoice dated 5^th April 2002 (B1(1) page 90). I also find, in accordance with the evidence of Mr Saraf, supported (insofar as she was able to do) so by the evidence of Mrs Rego, that Mr Saraf agreed, after much haggling and argument with Mr Chawla, to give credit against this half share for €121,000. As Mr Saraf put it in re-examination, this was a haircut that the trust had to take in order to realise its moneys. It follows that, even if Mr Chawla had paid the €63,369 which he claims to have paid on 10^th April 2002, this would have been wholly insufficient to discharge his liability for the commission.

(8) I find that the assignment from Burlay to Kali of the entitlement to commission was valid and effective. Indeed, it would be remarkable if there had not been such an assignment, in or about September 2004, in view of the contemporaneous involvement of Morgan Walker in applying to the District Land Registry to note the amount claimed to be secured by the charge. In the event, however, this finding is of little significance, since both companies are now parties to the present proceedings, and because of my decision that, on its true construction, the security conferred by the Kali charge does not extend to the payment of the commission.

(9) For the reasons stated at paragraph 52 above, I find as a fact that Mrs Chawla did not execute the transfer of the property to Mrs Advani dated 19^th February 2004, nor did she sign any of the associated sale documentation.

(10) After much anxious consideration, and with some hesitation, I find, on the balance of probabilities, that Mrs Chawla did execute the legal charge of the property in favour of Kali dated 4^th December 1998. I have already indicated, when dealing with the evidence of Mrs Chawla and her daughter in paragraphs 53 to 55 above, why I find it difficult to accept Mrs Chawla's evidence that she did not execute the charge of the property in favour of Kali. Mr Gillis submitted that the omission on the part of either Mrs Chawla or her daughter to mention the alleged forgery to either ALH or FSP at any time before the date set for the rescheduled trial in February 2007 is explicable only on the basis that (1) the signature was not a forgery and/or (2) Mrs Chawla recognised that, since the divorce, she had had no beneficial interest in the property and so was unconcerned about any forgery of the legal charge. The second of these alternative explanations is difficult to reconcile with the facts both of Mrs Chawla's visit to, and stay at, the property in and after May 2006, and also her contemporaneous defence of the possession action. Whilst I accept Mr Riswadkar's evidence as to the execution of the legal charge, for the reasons stated in paragraph 44 above, I can attach little weight to his purported identification of Mrs Chawla as the lady who had executed this document. Clearly Mr Chawla's explanation, in oral evidence, as to his understanding of how the charge came to be executed is false. Mr Chawla was certainly capable of procuring a forged signature upon a document intended to have legal effect. The likelihood is that he did so in relation to his former wife's purported execution of the transfer to Mrs Advani. The expert opinion evidence of Dr Giles obviously carries great weight with the court: her reputation and standing as a forensic document examiner are well known; and Mr Gillis rightly made no challenge to her professional competence and expertise. She was not shaken in her evidence by Mr Gillis's cross-examination. However, Dr Giles herself acknowledged that her opinion was not conclusive; and her expert opinion, however distinguished, is only part of the evidence in the case. It has to be weighed, and evaluated, against all of the other evidence in the case; and, in particular, the sheer incredibility of the combined failures of Mrs Chawla and her daughter, against the context of the original and rescheduled trial dates, and the timeous and persistent allegation of the forgery of Mrs Chawla's signature on the transfer of the property to Mrs Advani, to mention the similar forgery of Mrs Chawla's signature on the Kali charge at any time before the middle of February 2007, as anyone who sat through Mr Gillis's cross-examination of Mrs Chawla and her daughter on this subject will readily appreciate. For these reasons, and after much anxious consideration, I conclude, on the balance of probabilities, that Mrs Chawla's signature on the legal charge is not a forgery. In my judgment, the allegation that it is is a relatively late concoction, inspired, no doubt, by the fact that Dr Giles had supported Mrs Chawla's case of forgery in relation to the transfer of the property to Mrs Advani.

(11) Although, in view of my finding that Mrs Chawla's signature on the Kali charge is not a forgery, it is unnecessary for me to do so for the purposes of the debt action, in the context of the possession action it is necessary for me to make findings of fact relevant to the extent of Mrs Chawla's beneficial interest in the property. The precise quantification of that interest, if any, will have to await legal submissions, in particular in relation to the relevance and effect of the recent decision in the case of Stack v Dowden (cited above). The findings of fact that I make are as follows:

(i) The transfer to Mr and Mrs Chawla contained a clause entitling the survivor to give a valid receipt for capital monies – see page 101 of the Penn Legal file.

(ii) Although the property was purchased in joint names, it was never intended to be the principal matrimonial home, which was in India.

(iii) The property was purchased principally as an investment property, although Mr and Mrs Chawla intended also to occupy the property as an occasional holiday home in the UK, and on occasions when Mr Chawla was in the UK on business.

(iv) The property was purchased with the assistance of a mortgage from Lloyds TSB in the joint names of Mr and Mrs Chawla.

(v) The balance of the purchase price was provided by Mr Chawla.

(vi) The reason for the purchase in joint names was not explored in evidence before me. That was understandable. Because the mortgage had been created as long ago as January 1989, and was discharged in February 2004, there was no relevant documentation available to put to any of the witnesses. Absent such documentation, and given my views on the veracity and reliability as witnesses of both Mr and Mrs Chawla, I would in any event have been likely to attach little weight to any evidence that they might have given on this topic. Although I recognise that it is very close to the difficult dividing line between inference and conjecture, based on my perceptions of Mr and Mrs Chawla, from seeing them give evidence in this case, the inference that I draw from the purchase in their joint names is that this was a requirement of the mortgagee, which was probably led to believe that this was an ordinary domestic house purchase by husband and wife, and therefore wanted to see both names on the register of title and the mortgage; and that both Mr and Mrs Chawla were prepared to go along with this.

(vii) After December 1996, Mr and Mrs Chawla kept their financial affairs and dealings entirely separate.

(viii) Even before 1998, Mr Chawla had paid all of the expenses and outgoings for the property. Although, prior to 1998, these were paid out of a joint bank account, Mrs Chawla was in no financial position to make any significant financial contribution to the property.

(ix) From 1998, Mrs Chawla acknowledged that she had made no contribution to the expenses and outgoings of the property.

(x) Mrs Chawla last lived in the property in 1999; and she did not even visit it between 2001 and May 2006.

(xi) Although Mr and Mrs Chawla were not divorced until February 2001, they separated, both physically and financially, in December 1996.

(xii) Mrs Chawla did not ask, or expect, her former husband to account to her for any of the rental income for the property. He was authorised by Mrs Chawla to deal with it as he pleased.

(xiii) As from the time of her divorce, if not before, Mrs Chawla regarded herself as having no continuing interest in the property.

(xiv) Mrs Chawla's concern about the property was only revived in May 2006, probably at the instigation of her daughter and because of the claim that Kali was making in relation to the property and the problems that this was causing for Mr Chawla. When she appreciated that Mrs Advani was claiming to have purchased the property from Mr Chawla, Mrs Chawla decided that she would assert a continuing interest in the property because she knew that she had not executed a transfer to Mrs Advani, and in the hope of causing problems for a woman whom she disliked.

(12) I find that the sole reason for the transfer of the property to Mrs Advani was that Mr Chawla was using her as a vehicle for the holding of his assets in the UK. I have considered whether the transfer was a simple money-raising exercise on the part of Mr Chawla, or a device to defraud Mrs Chawla of her interest in the property. However, I reject both possibilities. As to the former, the only money actually raised by the transaction (from the mortgage advance from the bank) went into an account in the name of Mrs Advani rather than Mr Chawla. As to the latter, I do not consider that Mr Chawla regarded his former wife as retaining any continuing interest in the property. That was one reason why he was prepared to contemplate the forging of her signature upon the transfer to Mrs Advani. I am entirely satisfied that Mr Chawla was systematically transferring all of his assets in the UK to Mrs Advani for her to make such payments to creditors and others as he should direct. The transfer of the property was all part and parcel of this process. The transfer was made at a considerable undervalue – a price of £120,000 against a contemporaneous bank valuation of £165,000 – and Mrs Advani accepts that she knew this to be the case. On Mr Chawla's own evidence to the court, he understood the property, which he had purchased in January 1989 for a sum in the order of £89,000, to be worth some £200,000. His perception as to the true value of the property in February 2004 is supported by the unchallenged retrospective expert valuation evidence of Mr Moore. The purchase was not an arms' length transaction. The sale was not advertised. There were no agents involved. The purchaser already held Mr Chawla's power of attorney, and the same firm of solicitors acted (with remarkable incompetence) for all of the parties. Even though, in December 2003, Penn Legal had obtained office copy entries which revealed its existence, the existing legal charge to Kali was left outstanding on completion without any enquiry as to the amount remaining secured thereon and thereby leaving Kali in ignorance of the fact of the transfer. For the reasons stated in paragraph 59 above, I have already found that the letter of instruction to Penn Legal, purportedly dated 8^th January 2004, was in fact backdated, in order to manipulate the figures so as to show a nil balance due from Mrs Advani on completion. Other than a nominal £300 paid on account of conveyancing expenses, the only money that actually passed through Penn Legal's accounts in connection with the sale transaction was the bank's mortgage advance of £102,000; and after redeeming the existing Lloyds TSB charge, the balance remaining was paid not to the vendors (Mr and Mrs Chawla) but to the purchaser (Mrs Advani), despite the letter of instruction stating that this was to be paid to Mr Chawla's bank account. It was not transferred into any account in Mr Chawla's name, despite the fact that Mrs Advani held his power of attorney and she could have operated any such account on his behalf. As Mr Gillis observed, honest people, engaged in arms' length dealings, do not use other people's bank accounts in this way. On their own evidence, Mr Chawla was using Mrs Advani as the conduit for making payments to his creditors at his direction. Effectively, Mrs Advani was acting as Mr Chawla's personal banker, being utilised by him to distance himself from his creditors. When in June 2004 Mrs Advani came to appreciate that the property was still subject to the Kali charge, and her title was registered subject to that charge, she effectively did nothing about it, even though she was instructing solicitors to pursue legal proceedings against Mr Chawla and her daughter. Even now there are no legal proceedings pending between Mrs Advani and Mr Chawla. I am satisfied that the real reason for this omission is that this was never a genuine sale and purchase transaction. The consequence of these findings will be a matter for legal submissions.

(13) I am not satisfied that Mrs Advani has ever misappropriated any personal goods or property at 27 Waterside Gardens belonging to Mrs Chawla. On the evidence, I am not satisfied that Mrs Chawla has demonstrated her ownership of any items of value that may have been removed from the property by Mrs Advani.

(14) I am satisfied on the evidence that Mrs Advani has accounted for the rental income of the property in accordance with directions from, and as authorised by, Mr Chawla, who was allowed by Mrs Chawla to deal with the property, and the rental income therefrom, as he wished.

(15) I am entirely satisfied on the evidence that the amount outstanding on the security of the Lloyds TSB charge of the property in February 2004 (£80,367.13), was repaid in full from the proceeds of the bank's mortgage advance to Mrs Advani. I do not understand this to be in dispute; but to the extent that it is, I make the appropriate finding of fact.

62. The consequences of these findings of fact will be a matter for legal submissions, after which I shall deliver a further, hopefully extemporary, judgment.
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