Nicolet v Halim

J U D G M E N T

1. LORD JUSTICE TUCKEY: This is an appeal from the decision of Judge Morton Jack given in the Oxford County Court in which he gave judgment against the defendant, Miss Halim, for the claimant, Mr Nicolet, for possession of a flat at 6 South Park Court, Gerrards Cross and for £225,076. At a hearing before this court, constituted by Waller and Neuberger LLJ, on 5th April 2004 the defendant was given permission to appeal on the basis of documents which she found after judgment had been given against her. However, although the claimant was represented at the hearing, the court did not decide whether or not it should receive that evidence as new evidence on the appeal. As the outcome of the appeal is largely dependent upon whether or not we should do so, we had to decide at the outset of the hearing this morning whether to receive the evidence. We decided to do so and I will state shortly our reasons for this decision later in this judgment.

2. The relationship between the claimant and the defendant was unusual, to say the least. The defendant is Egyptian. The claimant was her accountant. He is a chartered accountant. It is clear that they had a close personal relationship of some kind from at least about 1991 until they fell out in June 2002 and these proceedings followed.

3. The flat was bought in the claimant's name in June 1999 and is the subject of a substantial mortgage but has been occupied ever since by the defendant, apart from the time she was serving a sentence of imprisonment for arson.

4. Her case was and is that from the outset the claimant agreed that she would be the beneficial owner of the flat and that he would hold it on trust for her absolutely. The claimant said that this was untrue. His case was that all he had agreed to was that the defendant should be allowed to live in the flat to supervise its renovation, after which it would be sold and its net proceeds would be divided equally between them.

5. The judge accepted the claimant's evidence and held that he was both the legal and beneficial owner of the flat. The defendant, he found, had repudiated the collateral agreement relating to the flat's renovation, which, as the judge put it, had fallen because the renovation had never been completed. The defendant's licence to stay in the flat had been terminated, so she had to leave.

6. The defendant admitted that she had received the money claimed by the claimant. She said that this was part repayment of a larger sum which the claimant had agreed to pay her as compensation for the fact that she had lost money on property deals by occupying and renovating a flat in London at the claimant's request. The claimant's case was that he had loaned this money to the defendant and was entitled to its repayment. Again, the judge accepted the claimant's evidence. He found that the money was a loan and that the time for its repayment had passed.

7. The judge was extremely critical of both parties. He described the claimant as a man of low standards who lacked integrity. The defendant, however, was even worse. Her evidence about the money claim was totally unconvincing. He described her as "an adventuress". He was satisfied that "little regard as the claimant may often have for the truth", his evidence was to be preferred to that of the defendant.

8. It is obvious from that short recital of the facts that at the trial much turned upon the judge's assessment of the parties' credibility.

9. There were a number of formal documents which the claimant had signed in September and October 1999, one of which was backdated, which supported the defendant's case about the flat, but the judge accepted that the claimant had produced these documents to bolster the defendant's appeal against her conviction for what was in effect an insurance fraud and to assist her in raising funds to enable her to purchase the flat from him. There was also a letter written by the claimant to the defendant in December 1991 which confirmed that he owed her £345,000 in compensation for her loss on the property deals. This was written at a time when the defendant was occupying the London flat, which the claimant transferred into her name to avoid his estranged wife's claims for maintenance. The judge held that this letter was not intended to create legal relations.

10. In these circumstances, any general attack on the judge's findings of fact would have been impossible in this court given that they were largely dependent upon his view of the parties' credibility, and a judgment to which I should pay tribute for its clarity and incisiveness.

11. However, after the trial, in circumstances which she explains in detail, the defendant discovered a number of new documents at the back of a garage which she had been using on the ground floor of a neighbouring block of flats. She says that those documents had not been put there by herself but by builders who had come to the flats. There is no reason to doubt her explanation for this discovery, if only because if she had made it before trial, she would surely have produced the documents. It can, of course, be said that she should have found these documents and made them available before trial, but the evidence from her solicitor shows that she was aware of the need to search for relevant documents and had done so.

12. What do these documents show? First, on the issue relating to the flat, there are about half a dozen personal letters written in handwriting by the claimant to the defendant between March and June 1999, which, without going into the detail, seem to me to support the defendant's case to an extent. They certainly contradict the claimant's case.

13. The first of those documents is dated 26th March 1999 and addressed to Suzanne (the defendant's Christian name). It says:

"I have to say I am upset by your comment that once the property is in my name I would claim it to be my own.

I find it insulting especially when I made it clear that I do not want or expect any financial gain from this property and my only motive is to help protect your assets."

He then discusses the possibility that the flat should be put into the name of a company and continues:

"I also advised that in view of the complexity of incorporating the company and setting up the trust could take some time therefore I suggested that I could hold the property and the mortgage in my name as a trustee. The property would be transferred to the company when appropriate at the same purchase price."

That letter and the letter which follows, which was written three days later and simply says "This property will be transferred to you as soon as I'm requested to do so and at cost of purchase", suggests that the flat was not purchased by the claimant simply on the basis that he would hold it beneficially for the defendant; it was purchased for that purpose, but the flat would become the defendant's when she paid the claimant the price which he had had to pay (by raising the deposit himself and mortgage) to purchase it in the first place.

14. There are later letters. The next, for example, says:

"Hope you trust me enough to purchase the property in my name as your NOMINEE . I know it is not what you want but it is to protect your interest."

Then a month or so later, when the purchase was imminent, he wrote, saying:

"If you want me to sign the trust agreement for the above property prior to exchange of contracts then I must have the document today as I'm away."

There is a later document which refers to him actually signing a trust agreement.

15. None of these documents were before His Honour Judge Morton Jack. I have no doubt that if they had been, they would have had, to put it in Ladd v Marshall terms, an important influence on the result of this aspect of the case. The claimant may have an explanation for them, but if he does not, or if he has and it is not accepted, the documents raise serious doubts about the truth of the evidence which he gave at the trial. They cannot, it seems to me, be explained in the same way as the claimant explains the letters he wrote in September and October 1999. Those letters were, he said, written to third parties for some ulterior purpose. These letters were written personally to the defendant and so are different.

16. The claimant does not challenge the authenticity of these or any of the other documents which the defendant has produced. Mr Strutt on his behalf, however, submitted that we should not admit them. His main point was that they could and should have been obtained for use at trial and it would be unfair to put the claimant to expense and delay because of the defendant's failure to do so. We did not accept these submissions. As I have said, the defendant can be criticised for not finding the documents before she did. Set against that, however, must be the doubt which they cast upon the judge's decision on this aspect of the case. Suffice it to say that although a re-trial is regrettable, justice demands that this is what should happen on this aspect of the case.

17. Should there also be a re-trial of the money claim? Mr Strutt relies here strongly on the judge's finding that the defendant's case that she was owed £345,000 in compensation was incredible. That is certainly a strong point in the claimant's favour. On the other hand, I think, on balance, that there should be a re-trial of this issue as well for much the same reasons as those given by Neuberger LJ when he gave permission to appeal on this aspect of the case. The first point is the general point that the documents as a whole cast further doubt on the claimant's credibility and, conversely, enhance that of the defendant. Secondly, the documents at what are now pages 50, 82 and 91 in the appeal bundle do contain passages which assist the defendant on this aspect of the case, albeit that they are by no means conclusive. They indicate at least an acceptance by the claimant that he owed the defendant money, whereas his evidence at trial was that this was never the case, apart from the fact that he had agreed to indemnify the defendant against any loss she suffered as a result of the London flat being put into her name. However, in the event nothing was due on the indemnity because the defendant was not called on to pay anything to any third party. Furthermore, the parties' money dealings were very much tied up with the acquisition of the flat in 1999 and I think it would be unsatisfactory for the re-trial to be confined to the issue about the flat.

18. Mr Strutt submitted that there really will be nothing left to argue about in this case at a re-trial because the flat is worth £350,000-£400,000, the amount outstanding on the mortgage is now approaching £270,000, and the defendant will have to give credit for the sums which the claimant has expended on this flat, which are in the order of £180,000.

19. Whether the latter claim is justified I cannot say, but if it is that is a reason which obviously both parties will need to take very carefully into account when considering whether this case should proceed to a re-trial. However, it does not persuade me at this stage that it would be wrong to order a re-trial.

20. For these reasons, I would allow this appeal, set aside the judgment below and order a re-trial before a different judge, making it clear that this implies no criticism whatsoever of Judge Morton Jack; it is simply preferable that a judge who has not been involved before should hear the re-trial and make a fresh assessment of the merits of this case on all the evidence which is now available.

21. LORD JUSTICE DYSON: I agree.

22. LORD JUSTICE THOMAS: I also agree.

Order : Appeal allowed and judgment below set aside. Re-trial ordered to take place at the Central London County Court as soon as possible but not before six weeks from today's date. Re-trial to be before a different judge. Costs of the appeal to be costs in the re-trial.