In order to constitute a sham, there must be a common intention that the rights and obligations created by the documentary evidence are different from the actual rights and obligations contemplated by the parties to the transaction. As Lord Diplock said in Snook v. London & West Riding Investments Ltd., [1967] 1 All E.R. 518 at 528. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” 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. One thing I think, however, is clear in legal principle, morality and the authorities…that for acts or documents to be a “sham”, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a “shammer” affect the rights of a party whom he deceived.
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