BL-2023-000167 - [2025] EWHC 1976 (Ch)

A declaration by the Court is a judicial act, which ought only to be made if the Court is satisfied by evidence: Wallersteiner v Moir [1974] 1 W.L.R. 991 per Buckley LJ at p. 10291-D.

The relevant principles applicable to the granting of declaratory relief were summarised in Rolls-Royce plc v Unite the Union [2009] EWCA Civ 387; [2010] 1 W.L.R. 318 per Aikens LJ at [120]:

In applying those principles in The Bank of New York Mellon, London Branch v Essar Steel India Limited [2018] EWHC 3177 (Ch), Marcus Smith J held, at [22], that, where a defendant is absent at the trial of a claim, the Court should adopt a conservative mindset against the granting of a declaration, notwithstanding that the absence of the defendant is not the claimant’s fault and may be the fault of the defendant.

The Court may grant a declaration as to parties’ rights, the existence of facts, or as to a principle of law, where those rights, facts, or principles have been established to the Court’s satisfaction. The Court should not, however, do so just because such rights, facts or principles have been established; the Court has to consider whether, in all the circumstances it is appropriate to grant the declaratory relief sought: Financial Services Authority v Rourke [2002] C.P. Rep. 14 per Neuberger J.

The particulars of claim refer to an HMRC investigation into the claimant’s company, Coldco Limited (properly Coldco Refrigeration Limited) in the period 2013 to 2015, and its subsequent liquidation. According to the particulars of claim:

“19.

In the course of the liquidation and bankruptcy proceedings and as a result of discussions with the defendant the claimant accepts he sought to conceal various assets from HMRC by transferring the assets into the defendant’s name namely:

a [Echo Heights]

b [53ER]

c [3EAG]

(“the properties”)

d cash in the claimant’s possession generated from his various business interests”.

…

21.

The Claimant accept [sic] these transactions purporting to show that the defendant now owned the properties was in fact a sham and done for the sole purpose of avoiding liability to the HMRC

…

23

As to the cash transferred to the Defendant, the monies were deposited into a Turkish bank account, namely Ziraat bankasi (the “Turkish trust account) primary account number 76239535-5083.

24.

The Turkish trust account was hled in the sole name of the Defendant, and the account was intended to facilitate the Claimant’s Turkish business interests.

25.

The monies in the bank account were held by the Defendant on trust for the Claimant.

26.

The parties agreed, upon the Claimant being discharged from his bankruptcy, all assets would be transferred back to the Claimant.”

The claimant pleads that the defendant withdrew money from the account for the benefit of herself and others in a total amount of approximately £6m. As I have explained above it became apparent that those withdrawals were not from the Turkish Trust Account but from the Turkish Company Account and that the claim to damages or compensation in this respect could not be pursued.

The particulars of claim plead that the claimant purchased Echo Heights in 2004, 53 ER in 2013 and 3EGA in 2014. The pleading originally contained the sentence “Each of these three properties were purchased with the Claimant’s own funds. But when the pleading was amended that sentence was deleted and replaced by “The Defendant made no financial contribution to any of these properties.” The pleading also referred to the claimant having spent £700,000 towards refurbishing 3EGA.

The claimant’s witness statement explains that he came to this country as a teenager as a refugee from his native Turkey. He explains that he studied hard to learn English and to enable himself to graduate from university with a good degree in computer science. Subsequently he says he started a refrigeration business run through a company called Coldco Refrigeration Limited (05129960) (Coldco).

He says that he and Debbie Brown were involved in the operation of Coldco. The claimant separated from Debbie Brown and began living with the defendant in an apartment owned by him at 306, City Lofts, 7 St Pauls Square, Sheffield (the Sheffield Flat) in about 2010.

The claimant says that he formed further companies in 2009: You Shop Limited (07002996) and You Shop Properties Limited (070445343) through which he operated a number of retail outlets in London. In 2011 he incorporated Seven Days Stores Limited (07846182) with an equal 50% shareholder, Bakthyar Agha. That company ran a number of retail outlets in Sheffield.

The claimant goes on to explain that on 18 July 2013 HMRC wrote to ColdCo explaining that £287,000 was due as a result of non-payment of tax. The claimant sought advice from solicitors who apparently advised that liquidating ColdCo was the answer to the problem. The claimant instructed insolvency practitioners to implement this advice and on 10 September 2013 liquidators were appointed.

The claimant’s witness statement says this:

“39.

I was receiving a lot of correspondence from the liquidators and one evening in 2013 at [the Sheffield Flat] while we stood by the window Havin and I discussed in detail that, because of my situation with HMRC and the liquidators, she would hold my money and assets in trust for me. She agreed to this for the sake of our family and assured me that I could trust her completely. She also suggested that we postpone getting married in order to protect the monies and the assets. We agreed that once the issues with HMRC were concluded she would return all my assets and cash to me.

“40.

What I predicted was happening and I had already entrusted my assets to Havin Hevedi’s name as a form of temporary protection. I admit I was thinking I had nothing to lose and after one year I would be discharged and put my life back together with return of my assets and monies in trust of Havin Hevedi.”

The claimant says that in an attempt to preserve goodwill associated with the Coldco name, he changed ColdCo’s name to Retail Refrigeration Ltd in July 2013. In 2014 he formed a new company called Kenzina Ltd (09075895). He says he later changed that company’s name to Coldco Group Limited (New Coldco). The claimant was neither a shareholder nor director of this company.

The claimant explains that he sold You Shop (Properties) Limited in 2014. He also says that he sold You Shop Limited’s stores for a total of £1,700,000 of which £900,000 was transferred by bank transfer to his solicitors FW Meggitt & Co, £400,000 was paid to that firm in cash and £400,00 was paid to himself in cash.

In addition the Claimant says that he sold his shares in Seven Days Stores Limited to his co-owner in 2012 for cash of £785,000, which was paid between 2012 and 2015 and kept at the Sheffield Flat.

The claimant’s written evidence is that he bitterly regrets liquidating Coldco and the consequences that have followed. Among the consequences referred to in his witness statement was his application for bankruptcy and an adjudicator making a bankruptcy order on 6 February 2020.

The claimant’s witness statement explains that 53ER was purchased at auction. He says that he gave his solicitor, Mr Meggitt of F W Meggitt & Co, a full bag of cash for the purchase price. He says that he walked with Mr Meggitt to his firm’s branch of Yorkshire Bank and the bank cashiers counted out the cash. He says that he subsequently spent £400,000 on the property such that it increased significantly in value. He complains that it was sold by the defendant after the commencement of these proceedings at a substantial undervalue. He refers to “my agreement” with the defendant that “she was to hold it on trust and that it would be returned to me.”

The claimant’s witness statement explains that of the £880,000 purchase price of 3EGA, £690,000 was paid by bank transfer from Mr Meggitt’s firm and that the balance was paid as to £140,000 by the claimant in cash to Mr Meggitt’s firm and £50,000 was transferred from the defendant’s Barclays account to Mr Meggitt’s firm. He says that the source of the defendant’s £50,000 was the Turkish Trust Account and that he was therefore the source of those funds.

He goes on to say:

“51.

Once all necessary legal work was completed I took Havin to FW Meggitt’s office and confirmed, as per my earlier discussion with Havin that this property was to be entrusted to her on a temporary basis due to my circumstances. This was in front of Fred and she agreed that she was aware of my situation plus we had already done the same thing with the commercial property [53 ER].”

His witness statement goes on to give some detail of the refurbishment works at 3EGA and claims that he spent in excess of £1.2 million on the property from his personal and business accounts. He says that he engaged Turkish contractors for the purpose. In order to pay the contractors he gave cash to the defendant to take to Turkey pay them. He complains that the defendant misappropriated some of the cash. He complains also about the defendant’s extravagant spending once they moved into 3EGA in 2016.

He explains also that the defendant went to Turkey after the discussion about property and money in 2013 and opened the Turkish Trust Account. He says that he paid in over £4.5 million representing money from his businesses and that this money belonged to him. I have explained the limited extent to which this claim can be substantiated by reference to the documentary evidence.

He explains that he formed a Turkish company, Coldco Group Insaat Limited (Coldco Insaat), on 12 October 2016 for the purpose of conducting business in Turkey. He says that the defendant was a director of Coldco Insaat and that he used the monies in the Turkish Trust Account to support or guarantee Coldco Insaat’s obligations and thereby obtain favourable credit terms with suppliers.

He says that he told the defendant that he wished to transfer all his assets from her name to “the bare trust in our children names but she refused.” It appears from the reference in the statement to the claimant’s discharge from bankruptcy that at least one of these occasions was after the claimant’s discharge.

He goes on to explain that the defendant provided him with false information about the Turkish Trust Account and that because that false information matched with his own calculation, which was not documented in the hearing bundle, he did not question the position until after he and the defendant separated in 2021.

No other witnesses were called by the claimant. He served hearsay notices in relation to statements made by the defendant’s sister and her father in the family proceedings that took place between the claimant and defendant concerning their children. The relevant thrust of these family members’ evidence was that the defendant had no possible source of money with which to effect property purchases.

Mr Meggitt was not called to give evidence and his files were not obtained. The claimant’s solicitors contacted Mr Meggitt in early 2023 asking about the Sheffield Properties. In his initial response, written without access to any documents, Mr Meggitt explained that he had acted for the claimant in relation to the Sheffield Properties. He wrote a more formal letter on the 14 April 2023 addressed “to whom it may concern” under the heading “53 East Bank Road”. That confirmed that Mr Meggitt had represented the claimant in connection with various property transactions and that he acted in the purchase of 53ER at auction and, although he did not have his original file, he said that he remembered the case because it was the only time in his career that a client had come to his office with significant funds to complete in cash. He explained that:

“Because of the money laundering requirements at the time I decided to take [the claimant] to my Bank which was Yorkshire Bank, Fargate, Sheffield. We got a private room and [the claimant] described to the Bank representatives how the funds had been taken out of his various businesses. When the Bank officials were satisfied with his explanation they took his money and credited it into my clients account from where it was used to complete the purchase of the property which was in the name of [the defendant].”

The claimant says that he has been unable to obtain the file from Mr Meggitt’s firm because he was not their client.

In August 2023 the defendant apparently signed the statutory declarations pleaded in the claimant’s particulars of claim.

Unsurprisingly Ms Powers raised the question of the authenticity of the statutory declarations. An application was made for the claimant’s solicitor, Mr Raheel Khan, to put in evidence explaining the provenance of them. That evidence, to which was exhibited the relevant correspondence, demonstrated that the defendant had contacted Mr Khan in August 2023 stating in a series of emails that she would like to transfer or return ownership of 3EGA to the claimant. Mr Khan responded by inviting the claimant to sign a statutory declaration confirming that 3EGA “was purchased with monies provided by [the claimant] with the intention that I hold the same on trust for him and that at all times he retained 100% beneficial ownership in that property” in front of a solicitor and take such legal advice as she felt in need of.

The defendant returned the 3EGA statutory declaration duly signed.. At Mr Khan’s request the defendant signed a declaration in like terms concerning 53ER.

Unprompted by Mr Khan, the claimant sent him on 21 September 2023 a signed witness statement and a document headed “withdrawal of defence” in which the defendant conceded the claimant’s claim in respect of 53ER and 3EGA.

This sequence of events caused the claimant to bring a summary judgment application. The day before the hearing of that application the defendant instructed solicitors who indicated at the hearing that their client intended to defend and would provide an explanation for how the statutory declarations had come about. The amended defence and counterclaim dated 1 December 2023, which was filed following that hearing contains no such explanation. That pleading has since been struck out and the defendant has not filed any evidence in the proceedings, but it was her case in that pleading that the Sheffield Properties were purchased using her own funds and that they were wholly legally and beneficially owned by her.

In due course, at a time when the defendant was still legally represented, the issues for disclosure that were agreed included:

“6.

How and why were the statutory declarations dated 11 August and 23 August 2023 signed by the Defendant.”

Included in the bundle were copies of a series of WhatsApp messages between the claimant and the defendant in October 2021 and a transcript and a translation of a telephone call between them in January 2022.

The issues are as follows:

In the witness box the claimant was evasive. He repeatedly failed to answer questions and did little to dispel the confusion, both chronological and as to what he was claiming in relation to the Turkish Bank Accounts, to which the material in his pleaded case and witness statement give rise.

Ms Powers asked the claimant to identify the date he claimed to have reached an agreement with the defendant about the beneficial ownership of assets in her name. He eventually suggested that the date was 2021, but then said that there was no specific date rather there was a series on ongoing discussions. I asked a similar question about the agreement so far as it concerned the Turkish Trust Account and the defendant referred to there being several conversations. That evidence simply does not accord with his witness statement where he relies on a conversation with the defendant on a particular evening at a particular place in 2013, which is inconsistent with the arrangement being made after he was made bankrupt.

The defendant was also asked about the occasion on which the defendant attended Mr Meggitt’s office in relation to the purchase of 3EGA at which he says in his witness statement that she agreed that this property was to be entrusted to her on a temporary basis. He refused to accept that that occasion should be called a meeting, which seemed to be a refusal to make an uncontroversial terminological concession where he perceived it might amount to an admission against him. At one point the claimant said that the defendant said nothing on the occasion of that meeting and at another point that she smiled and answered “yes, but did not explain to what the smile or affirmative answer were responses.

It also became apparent that a number of significant events in the chronology, which he had to accept had occurred when they were put to him, were not mentioned in his witness statement. For example the claimant did not mention the disqualification undertaking he gave in May 2015 following Coldco’s liquidation or explain that would have prevented him being a director of New Coldco. Nor did he mention the claim that the liquidators of ColdCo brought against him personally for some £900,000 and the collapse of the trial of those proceedings in January 2020. Nor did he acknowledge that his application for bankruptcy must have, at least in some part, been prompted by the impending retrial of that claim. Another matter omitted from his written evidence was the fact that he forged the defendant’s signature in a Form TR1 in February 2022 in an attempt to have 3EGA registered in his sole name.

The claimant’s answer to the lack of any documented source of funds for the purchases of the Sheffield Properties was that cash had been used either from the sale of You Shop Properties Limited or You Shop Limited’s assets, from the sale of his Seven Days shares or generated from his businesses. He said that Coldco’s small “corner shop” customers preferred paying by cash. According to the claimant it was these cash sources that also funded his transfers to the Turkish Trust Account. The claimant appeared to have no clear appreciation of the difference between cash that might have belonged to him or which might have belonged to one of his companies. Although he acknowledged in answer to a question from me that the cash belonged to the business; there was no evidence of any proper accounting for that cash. When I enquired how he thought the defendant was paying for the extravagant lifestyle about which he complained, he said that it was from a salary from Coldco, or from the cash generated by his businesses which he left at her disposal.

The claimant was unable to explain orally how any agreement to the effect that he remained beneficial owner of 53ER or 3EGA would have prevented HMRC or any other creditor making a claim to the Sheffield Properties if he retained beneficial ownership of them.

Unless it is inherently probable or supported by some documentary material I am not prepared to accept the claimant’s evidence, which had every hallmark of being constructed as the claim proceeded for the purpose of best serving his case that he should be entitled to the beneficial ownership of the Sheffield Properties and the Turkish Bank Account.

3ER was a commercial property bought in October 2013 at a time when the claimant and defendant were living together in the Sheffield Flat with their two young children. A deliberate choice was made that it be registered in the sole name of the defendant. 3EGA was a residential property bought in December 2014 in the defendant’s sole name at a time when the claimant and the defendant were living together in the Sheffield Flat, and bought with the intention that the claimant, the defendant and their children would move to live there as a family. The Turkish Trust Account was opened in the defendant’s sole name in 2014.

I consider that the claimant’s evidence that he and the defendant reached an agreement or formed a common intention that the claimant would be the beneficial owner or that the defendant would be a trustee of either of the Sheffield Properties at or about the time of their purchase or later is problematic for these reasons:

I do not accept that the claimant has demonstrated on the balance of probabilities that there was an oral declaration of trust or an arrangement or agreement or that any common intention was formed that 53ER or 3EGA or the Turkish Trust Account would be held by the defendant for the claimant as sole beneficial owner. Even if I were satisfied that the claimant had the relevant intention at any stage, I do not consider that the claimant’s evidence enables me to conclude that the claimant could have reasonably understood from anything the defendant did or said that she had such an intention.

Insofar as the claimant might seek to distinguish the case of 53ER, because it was not a domestic property, and rely on a resulting trust analysis, I do not consider that, having regard to his evidence which made no distinction between the Sheffield Properties so far as any agreement or arrangement went, I should accept that 53ER was distinguishable in that way.

The evidence of any detrimental reliance in the form of payment for refurbishment of 3EGA is extremely sparse. There is an invoice for some £31,000 for installation of windows at 3EGA addressed to the claimant in the bundle. There is also an email from the contractor who claims to have done work at 3EGA dated 20 December 2022. It is clear from its content the terms of the email were influenced by the claimant as there are various reference in it to matters which the author must have been told by the claimant.. No mention is made of an amount paid for the works. The claimant’s witness statement refers to a refurbishment cost of £1.2m, whereas the pleading refers to £700,000. The claimant’s explanation in cross examination that the larger figure includes the smaller is sophistry. Even if monies were expended, the source of those monies as between the claimant and companies from which the monies were derived is far from clear.

The evidence of detrimental reliance in connection with 53ER is limited to the claimant’s bare assertion that he spent £400,000 on it thus increasing its value. His answer to my question why there was no evidence of this expenditure was that he did not keep records.

I have explained my reservations about the reliability of the claimant’s evidence. There is no documentary evidence of expenditure on 53ER and the single invoice relating to 3EGA totals only some £31,000. The provenance of any funds used to pay for refurbishment of either of the Sheffield Properties is obscure. Were it necessary to my decision to decide whether the claimant had shown detrimental reliance on an agreement that he was the beneficial owner, I would be unable to conclude on the balance of probabilities that the claimant had established any relevant detrimental reliance in relation to 3EGA and 53ER.

Accordingly the claimant has failed to displace the presumption that the defendant who was the sole legal owner was also the sole beneficial owner of 53ER and 3EGA. That remained the position until at least the dates of the statutory declarations.

So far as concerns the Turkish Trust Account I understand that the detrimental reliance the claimant relies on is the continuing funding of the account with cash sums. Given the difficulties with the evidence about the source of the cash I am doubtful that any such detrimental reliance can be established.

Ms Powers submitted that the statutory declarations drafted by Mr Khan went rather further than was necessarily consistent with the defendant’s letters written in August 2023. which said nothing about the past and were only about a present intention to transfer or return ownership of property to the claimant. She said that the court could not know the circumstances of the transfers and should reject them as unreliable.

The evidence of Mr Khan about the statutory declarations was not challenged. At the summary judgment hearing in October 2023 the defendant contended through her solicitors that the statutory declarations were in some way open to challenge, but she never pleaded her case to that effect. Again, although the defendant agreed an issue for disclosure about how the statutory declarations came into being, no disclosure was ever given which would have cast doubt on Mr Khan’s account.

By their terms the statutory declarations comprise declarations that the Sheffield Properties were purchased with money provided by the claimant and that the defendant holds them on trust for him and that he at all times retained 100% beneficial ownership of each property. For the present and the future it seems to me that the statutory declaration in respect of 3EGA is effective as a declaration of trust.

I would have been minded to reach a similar declaration in the case of 53ER. However, following circulation of my draft judgment counsel drew my attention to the OCE for 53ER in the supplemental trial bundle which showed that it was sold by the defendant on 13 June 2023. My attention had not been drawn to the date of the sale or that it was before the date of the statutory declaration in respect of 53ER during the course of the trial.

In my judgment neither statutory declaration can be construed to have retrospective effect. It would only be if I had found that there was an earlier oral declaration of trust or common intention constructive trust, which I have not, that the statutory declarations might have been prayed in aid as evidence of such earlier oral declaration of trust.

By the time, therefore, that the statutory declaration in respect of 53ER was signed the defendant no longer had any entitlement to declare a trust of any interest in that property.

No positive case of illegality was advanced by the IPs. In circumstances where the claimant is, on his case, seeking to undo and remedy what might be termed the illegal activities and where he has purchased the rights to his claims from his trustees in bankruptcy it would not be appropriate for the court to allow any illegality to disentitle him to any remedy to which he might otherwise be entitled.

The claimant has failed to satisfy the burden of proof that is on him in relation to the ownership of the Turkish Trust Account. It would not, in any event, be appropriate in the absence of the defendant to make such a declaration that the Turkish Trust Account belonged to him in circumstances where the claimant’s pleaded case seeks relief in relation to the Turkish Company Account and where the relief sought is damages for breach of trust or fraud. Accordingly I will make no declaration in relation to the Turkish Trust Account.

The claimant has failed to satisfy the burden of proof that is on him in relation to the ownership of 53ER and cannot rely on a statutory declaration made by the defendant after she had sold that property.

I will however make a declaration that claimant is and has since 11 August 2023 been the sole beneficial owner of 3EGA. That declaration is not intended to affect the position of MTF as holder of a charge over 3EGA pre-dating its effective date or the position of the IPs whose charge over the defendant’s beneficial interest also pre-dates the effective date.