On 16 May 2025 the Court of Appeal handed down judgment in Awolowo v Awolowo and Linksave Ventures [2025] EWCA Civ 641. You can access a copy of the judgment here.
The case may be of interest on several fronts. Firstly, as noted by Alexander Chandler KC, it is a rare example of findings of fact at first instance being overturned on appeal. It also demonstrates the procedural complexity that can arise with concurrent civil litigation (charging order) and related proceedings in a foreign jurisdiction (registration of a loan in Nigeria). Finally, it is a useful illustration of the power of adverse inferences being deployed in financial remedies litigation, even when such inferences are sought by the party initially ‘carrying’ the burden of proof.
Facts
- The parties married in Nigeria in 2004 and separated in 2015. They had four children
- The family home in London was purchased in 2009 for £1.35 million. It was purchased in the husband’s sole name without a mortgage. Following separation, the wife registered a ‘matrimonial rights’ notice pursuant to FLA 1996
- Within his Form E the husband stated the family home was valued at £1.8 million but it was subject to a loan of £1.6million in favour of his brother’s company. The husband alleged the loan of £1.6 million from his brother was used to purchase the family home in 2009 and he disclosed a loan agreement. That loan agreement provided that no interest was payable and there was no repayment schedule attached to it
- The husband issued divorce proceedings in Nigeria in February 2007. The wife filed her own petition in this jurisdiction in August 2017, but she withdrew her divorce petition and instead made an application for financial relief following an overseas divorce under Part III of MPFA 1984. The company owned by husband’s brother intervened in the Part III proceedings
- The wife applied in this jurisdiction for the loan to be set aside under section 23 of MFPA 1984 (the equivalent of section 37 MCA 1973 for overseas divorce). The wife’s case was that the loan was a sham and ordinarily in the first instance it would be the wife who needed to discharge the burden of proof
- In 2019 the intervenor registered a charge over the family home in the Nigerian courts which provided for payment of the loan in 4 instalments over the following 12 months. The husband stated that he could not afford the repayments but would consent to an order for sale
- The intervenor sought to register the Nigerian judgment in the English High Court and thereafter applied for a charging order. Master Easterman made an interim charging order but adjourned making it final before the wife’s Part III application was determined
First instance decision
- The matter was heard by Her Honour Judge Vincent sitting as a Deputy High Court judge pursuant to section 9
- At trial the wife argued that loan agreement was created with the intention to defeat her financial claims and consequently should be set aside, or that the agreement was a sham
- The husband and the intervenors relied upon the loan agreement and the May 2019 charge registered in the Nigerian courts. They also argued if the wife wanted to set aside the judgment registered in Nigeria, then she ought to apply to set aside in the Nigerian courts
- Although the wife was able to establish “reasonable grounds for suspicion”, the court found she had not established the loan agreement was a sham. It would appear HHJ Vincent reached that conclusion due to the absence of documentary evidence produced by the wife
Court of Appeal
- Moylan LJ gave the leading judgment in allowing the wife’s appeal and remitted the matter for rehearing
- In respect of the settlement registered in Nigeria, the Court of Appeal overturned HHJ Vincent’s finding as the Nigerian courts had not “scrutinised” or “judged the debt to be legitimate” [33]. There was no adjudication in respect of the validity of the debt at all
- In respect of documentation, the Court of Appeal emphasised that the husband and the intervenor failed to produce documentation that should have been available, specifically company accounts and other documents which would corroborate the loan [100 – 103]
- Adverse inferences should have been drawn against them which affected the credibility of their evidence. It was said that HHJ Vincent had “inverted the position and took the absence of such evidence against the wife…” [102]
- In respect of the burden of proof, the Court of Appeal hypothetically questioned: “Was it for the wife to prove that there was no such debt or was it for the intervenor and the husband that there was such a debt?”
- Moylan LJ agreed, albeit perhaps only provisionally, with the submissions made by the wife’s counsel that the burden of proof was on the husband and the intervenor. However, the judgment goes on to say “this will, therefore, be an additional matter which will need to be addressed at the rehearing below” [108]
Practical application
- Although the matter has been remitted for determination at a rehearing, the judgment is useful illustration of deploying adverse inferences. It is also a useful reminder that just because a loan has been registered at court does not mean the legitimacy of the debt in question. However, each case is likely to turn on its own facts in respect of the latter observation
- The judgment also reiterates the need to not accept documents at face value without other corroborating documentary evidence. Here, the intervenor and the husband were able to produce a number of documents (loan agreement, Nigerian Court registration deed etc) which supported the claim
- Despite those documents being available before HHJ Vincent, the Court of Appeal pointed out that those documents should have been corroborated by other evidence (business accounts showing the loan to the husband, bank statements showing contemporaneous payments
- Loan agreements between a spouse and third-party family members are relatively common in financial remedies litigation, not least since the judgment of HHJ Hess in P v Q [2022]
- If such documents are disclosed by the other side, practitioners can question if there are other underlying corroborative documents, particularly where such documents should be readily available
- On the other hand, if advising a client such as the husband and/or brother in Awolow, advice they may need to obtain and disclose other corroborative documents is likely to be required
Although Moylan LJ seemed to agree with the wife that the burden of proof rests on the husband and brother, it will be interesting to see how this issue is addressed at the rehearing
