Kenneth Thomas v Deborah Porter

An appellate court may intervene in a case-management decision where the lower court applied the wrong approach, failed to consider relevant prejudice, or acted with serious procedural irregularity. Excluding an alternative loan claim pleaded in a reply was erroneous where the opposing party knew of the claim, had addressed the alleged gift in the pleadings and evidence, and suffered no substantial prejudice. Nevertheless, an appeal should not result in a retrial unless the procedural error caused injustice and there is a real prospect of a different outcome. Where positive findings that money was advanced as a gift are fully supported by the evidence, those findings may answer both proprietary and personal repayment claims. Unmarried cohabitation does not create a presumption of advancement; money paid is prima facie repayable unless the payee proves a gift or other basis negating legal repayment.

The appeal arose from the dismissal of a claim concerning money paid by the appellant towards the respondent’s mortgage. The appellant principally claimed a beneficial interest in the property, but also pleaded in his Reply that the payment was alternatively a loan repayable on demand or supported a claim in subrogation.

The first-instance judge excluded the loan and subrogation claims on pleading and particularisation grounds after hearing the evidence, and dismissed the proprietary claim on the basis that the money was a gift. Permission to appeal was confined to the exclusion of the loan claim, repayment and related evidence. The central questions were whether the exclusion was wrong or procedurally unfair, and, if so, whether it caused an injustice requiring a different order or remission.

1. Appeal dismissed. The first-instance judge was wrong, or acted with a serious procedural irregularity, in excluding the loan claim without adequately considering the relative prejudice to the parties. The defence that the payment was a gift applied equally to the proprietary and personal claims. The respondent had known of the loan case since the Reply, and her pleadings and evidence addressed whether the payment was a gift and whether repayment was legally required.
2. The error did not cause injustice. The relevant evidence had been heard, and the findings made on the proprietary claim were positive findings that the payment was a gift. The references to repayment in the will and messages represented, at most, a moral obligation and did not create a legal obligation to repay. Those findings answered the loan and subrogation claims as well as the proprietary claim.
3. In the absence of a presumption of advancement, money paid by one person to another is prima facie repayable. Unmarried cohabitation does not create such a presumption. The payee therefore bears the burden of proving that the money was a gift or that no legal obligation to repay arose. The court concluded that the first-instance findings would have produced the same result even if that burden had been expressly applied.
4. An appellate court must respect factual findings and evaluations by the trial judge, particularly where they depend on oral evidence and contemporaneous documents. A procedural error does not ordinarily justify remission unless the decision was unjust and there is a real prospect that the outcome would have been different. There was no such prospect here, and a retrial would merely repeat matters already determined.
5. The proprietary claim was therefore rejected, the loan and subrogation claims would also have failed, and the appeal was dismissed without remission.

• High Court (King's Bench Division): appeal from the judgment of HH Judge Shetty dated 24 August 2021. The appeal was dismissed.
• Permission stage: Mr Justice Ritchie granted permission on 23 July 2022 in relation to exclusion of the loan claim, repayment and related evidence. The permission did not extend to reopening the proprietary claim.