Stapleton, R (on the application of) v Revenue & Customs Prosecution Office

In determining beneficial ownership, the court must assess the parties’ arrangements or understandings, supported by the evidence as a whole. A claimant may establish an equitable share in property despite unequal contributions to purchase or mortgage payments where the parties intended that share.

Adverse inferences from a missing witness depend on all the circumstances. They require some evidential basis for the inference and may be weakened or eliminated by a credible explanation for the absence. The failure to call corroborative witnesses does not automatically undermine otherwise credible evidence.

Suspicion alone cannot establish dishonesty or beneficial ownership by another. Serious allegations require a sufficient factual foundation.

The claimant applied to establish that Wharncliffe belonged to her and was not beneficially owned by her father, whose assets were subject to a restraint order connected with a confiscation order arising from VAT fraud.

RCPO alleged that the claimant’s purchase of Wharncliffe was a sham and that the purchase funds represented proceeds from Silver Lane, which RCPO said was beneficially owned by her father. The central issues were the claimant’s beneficial interest in Silver Lane, the source of the purchase money for Wharncliffe, the significance of absent witnesses, and the consequences for the restraint order.

1. The application succeeded. The court refused RCPO’s declaration and discharged the restraint over Wharncliffe. RCPO undertook to remove the restriction from the title, subject to the agreed arrangements concerning any appeal.
2. The claimant had contributed her own money to the purchase of Silver Lane. The evidence therefore did not establish that all the sale proceeds belonged to her father. The family arrangement, the register and mortgage, and the surrounding circumstances established an intended half share. The claimant’s entitlement was not defeated by uncertainty about the precise amount or regularity of her mortgage contributions. The court applied the approach in Oxley v Hiscock [2004] EWCA Civ 546, identifying the parties’ arrangements or understandings as the first and fundamental question (paras [24]–[35], [41]–[42]).
3. The court distinguished between a party’s failure to give evidence and a party’s failure to call a supporting witness. Adverse inferences may be drawn only where the circumstances justify them, there is some evidence capable of supporting the inference, and no satisfactory explanation for the absence exists. The court declined to treat these matters as rigid principles detached from the circumstances of the case (paras [36]–[40]).
4. The claimant’s evidence was credible. The fact that her father used the sale proceeds suspiciously did not establish that she participated in his affairs or held Wharncliffe on trust for him. Suspicion alone was insufficient; a factual foundation for dishonesty was required (paras [43]–[47]).
5. The claimant was awarded her costs on the standard basis. The court refused indemnity costs because, viewed overall, parts of the case remained insufficiently straightforward, although the serious allegations had not been proved (paras [99]–[104]). Permission to appeal was refused by the trial judge on the basis that the decision was factual and depended on witness credibility. The restraint was to remain pending any application to the Court of Appeal, but was to be discharged after 21 days unless the Court of Appeal made a further order (paras [121]–[127], [180]–[201]).

First-instance decision. No prior appellate decision is stated in the judgment.