Family Court finds trust deed in mother’s favour a sham in financial remedy dispute

A district judge in Salisbury held on 19 March 2026 that a backdated trust deed benefiting a wife's mother was a sham, while a deed benefiting her father was valid, in a divorce financial remedy claim.

Background

In KI v SI [2026] EWFC 73 (B), District Judge Peter Hatvany sat in the Salisbury Financial Remedies Court. The judgment is dated 19 March 2026, after a preliminary issue hearing on 20 to 22 January 2026. The judge refers to the parties as H (husband), W (wife), IF (the wife's father) and JF (the wife's mother). Both parents intervened.

The wife bought one parcel of farmland with a former partner in 2013. In 2014 she contracted to buy a second parcel. Her father paid the deposit and rent until completion in February 2016, and provided the purchase money. Two home-made trust deeds followed: one with her mother dated 16 February 2016 (DT1) and one with her father dated 17 February 2016 (DT2). Both were backdated. The second parcel was transferred into the joint names of the husband and wife in September 2021. The couple married in 2018 and separated in November 2022. Both parcels are due to be sold to a developer for £737,383.80 and £1,248,636.57.

The question

The husband said the mother's deed was a sham, so she held no beneficial interest. The wife and her mother said it was valid and that the wife's interests had passed to the mother. The father claimed a beneficial interest in the second parcel.

The decision

The judge held DT1 failed and was a sham. He found DT2 valid despite the backdating. After repayment to the father of £57,500, the father has a 40% share and the husband and wife 30% each of the remainder of the second parcel. The option and extension fees paid to the wife will have to be taken into account.

The reasoning

The judge relied on the test that, for documents to be a sham, all the parties must share an intention that they will not create the rights and obligations they appear to create. He noted that it is the trust documentation that may be a sham, not the trust as such.

On DT1, he found it was not shown to predate DT2, was inconsistent with the 2021 transfer form in which the wife declared the land held on trust for herself and her husband as joint tenants, and was supported by no valid consideration. He found the wife's relationship with her mother distant in 2016, and that she later acted as though she were the sole beneficial owner. He considered it more likely that DT1 was signed much later, when the relationship between the wife and husband started to break down, to defeat the husband's and father's claim. He also held that the written evidence of one witness to DT1 on when it was signed could not be relied on, and that the witness was not truly independent.

On DT2, he relied on the clear understanding of the parties at the time, the father providing the purchase money and the conveyancing solicitors' contemporaneous notes. He added that, even if DT2 were invalid, the father would have had a common intention constructive trust or resulting trust.

Sources

• KI (Applicant husband) v SI (Respondent wife) (Sham trusts and intervenor proceedings in financial remedy claims) [2026] EWFC 73 (B), 19 March 2026: https://caselaw.nationalarchives.gov.uk/ewfc/b/2026/73