KI v SI (Sham Trusts and Intervenor Proceedings in Financial Remedy Claims) [2026] EWFC 73 (B)

Judgment date: 19 March 2026

https://caselaw.nationalarchives.gov.uk/ewfc/b/2026/73

Judgment of District Judge Hatvany at a preliminary issue hearing concerning the determination of whether purported trust deeds in favour of intervenors within financial remedy claims were shams.

Background and chronology

• On 7 October 2013 W and her former partner, Mr N, purchased Farmland 1 and the transfer was registered in their joint names. In that year, W’s parents divorced acrimoniously.
• On 4 April 2014 W entered into a contract to purchase Farmland 2. W’s father paid the deposit and rent until completion on 16 February 2016. The property was bought by W using monies provided by the father.
• A home-made trust deed backdated to 16 February was made between W and W’s Mother (DT1). This related to both Farmland 1 and 2. The actual date of execution was unknown.
• In April 2016, a home-made trust deed between W and her father was signed (DT2), backdated to 17 February 2016. This related to Farmland 2.
• H and W commenced a relationship in 2015/2016, became engaged in 2017 and married in April 2018. The parties had two children, born in 2017 and 2020.
• On 2 September 2021 Farmland 2 was transferred into the joint names of W and H. The parties separated in November 2022 and divorce proceedings began in 2024.

H sought a declaration that DT1 was a sham and that W’s mother had no interest in Farmlands 1 or 2 whose beneficial owners were W and Mr N in equal shares; and a declaration that W and her father held their beneficial interests in Farmland 2 upon the terms set out in DT2. W’s father agreed. W and her mother opposed this and sought to uphold DT1.

A sale of the farmlands to a developer was due to complete imminently for substantial sums.

Findings on DT1

The judge found that W and her mother had been estranged from one another in 2016 /2017 and did not resume a relationship until 2020. The judge therefore found it to be unlikely that the purported DT1 trust in favour of mother was created before DT2.

The DT1 trust deed was found to be void and a sham. Per the judgment of Diplock LJ in Snook v London & West Riding Investments Ltd [1967] 2 QB 786 a sham exists where there are acts done or documents executed by the parties:

‘which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.’

Per the judgment of Birss J (as he then was) in JSC Bank v Pugachev [2017] EWHC 2426, ‘to find that a document is a sham, the focus is on the intentions of the relevant parties’. The test is subjective, with it having been found in the present case that the mother never sought to challenge the view held by W that W retained the beneficial interest.

Here, DT1 did not reflect the true intentions of the parties, and was found to more likely have been executed to defeat H and the father’s claim. It was inconsistent with:

• W continuing to act throughout as the beneficial owner, unchallenged by her mother.
• Her father having already acquired a beneficial interest in Farmland 2.
• The transfer to the joint names of H and W.
• The mother having provided no valid consideration for a beneficial interest in the land.

Farmland 1 was therefore held by W and Mr N in equal shares.

Findings on DT2

Having considered s 53 LPA 1925, and notwithstanding that the DT2 trust deed to the father was backdated, the judge was satisfied that the statutory requirements were complied with.

The DT2 trust arose in circumstances of a joint venture enforced by constructive trust as ‘Pallant v Morgan [1953] Ch 43 equity’, based on common intention. The DT2 deed was fully contemplated and supported by contemporaneous notes. W made no mention to her conveyancing solicitors of undue pressure and the notes evidenced agreement to a trust declaration with him to receive purchase monies and a 50% share of the balance of the proceeds on sale (later he agreed to reduce this to 40%). The evidence of W and her mother was tainted by their profoundly negative view of the father, yet at the time of execution in 2016 W and the father had a good relationship and there was no pressure on W to sign DT2. Moreover, W had not mentioned DT1 in any of the documentation contemporaneous with the execution of the DT2 trust.

DT2 was therefore valid, but the father would have been able to demonstrate a beneficial interest by way of resulting trust even if the DT2 trust had been found to be invalid.

Costs

The matter was listed for a consideration of costs, with the preliminary view that W and her mother should pay H’s and the father’s costs to be summarily assessed.

This judgment has not been certified as citeable pursuant to the Practice Note (Citation of Cases: Restrictions and Rules) [2001] 1 WLR 1001.