Fraudulent Intent Negated Trust
The daughter claimant sought possession of business premises from her father who held them under leases. He claimed an order that the property was held in trust for him. The judge that at the time the properties were conveyed, the father had been fearful of a potential substantial liability and it had been done to protect the property against those creditors.
Held: Equity will not permit a transferor of property by way of gift in order to perpetrate a fraud to pray in aid the existence of that illegal purpose in order to rebut a presumption of advancement. ‘the leases ‘were shams as between father and daughter’. The daughter ‘should at most be his nominee and effectively the lease should be available to be used only if required in order to deceive’. He made the grants to the daughter ‘with the intention that if it served his interest he should treat the grants as gifts, but if it did not he would claim that the grant was subject to his beneficial interest.’ The transfers were carried out ‘with the object of defrauding the respective mortgagees of their security’. There had been no voluntary withdrawal from the transaction. To recover the property the father needed to rely upon the agreement which set up the trust. That agreement provided that the trust should be concealed from creditors and the Inland Revenue. The result is that the father cannot dispute the effect of the transfers of the property without relying upon his illegality. The property must lie where it rests. ‘
Judges:
Lord Justice Aldous, Mance LJ
Citations:
[2002] EWCA Civ 1095, [2002] BPIR 1057, [2002] 6 ITELR 270
Links:
Jurisdiction:
England and Wales
Citing:
See Also – Collier v Kramer CA 1-Apr-2004
Appeal from a refusal to allow an amendment to join further parties to an action by Mr Michael Collier against solicitors . .
Cited – Snell v Unity Finance Company Ltd CA 1964
The court must not permit itself to be the instrument by which an illegal contract is enforced. Points such as to illegality should be taken by the court irrespective of the wishes of the parties; and if not taken by the judge at trial, should be . .
Cited – Tinker v Tinker CA 1970
The husband bought a business in Cornwall and a house for his family. At first he intended to buy the house in his own name, but was advised that if the venture failed, the house could be taken by his creditors as part of his business assets. It was . .
Cited – Muckleston v Brown 8-May-1801
‘Let the estate lie where it falls.’ . .
Cited – Tinsley v Milligan HL 28-Jun-1993
Two women parties used funds generated by a joint business venture to buy a house in which they lived together. It was vested in the sole name of the plaintiff but on the understanding that they were joint beneficial owners. The purpose of the . .
Cited – Tribe v Tribe CA 26-Jul-1995
Illegal intent alone rebutted presumption
The plaintiff held 499 of the 500 issued shares of a company. In 1986 he wished to retire and transferred 30 shares to his son, one of four children, who was to take over the business. In 1988 he was worried about a bill for dilapidations, and, to . .
Cited – Snook v London and West Riding Investments Ltd CA 1967
Sham requires common intent to create other result
The court considered a claim by a hire-purchase company for the return of a vehicle. The bailee said the agreement was a sham.
Held: The word ‘sham’ should only be used to describe an act or document where the parties have a common intention . .
Cited – A G Securities v Vaughan; Antoniades v Villiers and Bridger HL 10-Nov-1988
In Antoniades, the two tenants occupied an attic, living together. Each had at the same time signed identical agreements purporting to create licences. The landlord had reserved to himself the right to occupy the property and to allow others to . .
Mentioned – Holman v Johnson 5-Jul-1775
ex turpi causa non oritur actio
A claim was made for the price of goods which the plaintiff sold to the defendant in Dunkirk, knowing that the defendant’s purpose was to smuggle the goods into England. The plaintiff was met with a defence of illegality.
Held: The defence . .
Cited – Chettiar v Chettiar PC 14-Feb-1962
(Malaya) A father, in registering shares in the names of his children, had transferred the beneficial interest in those shares to them. Many years later the father had treated the shares as his own. The question arose as to whether this fact . .
Cited – Gissing v Gissing HL 7-Jul-1970
Evidence Needed to Share Benefical Inerests
The family home had been purchased during the marriage in the name of the husband only. The wife asserted that she had a beneficial interest in it.
Held: The principles apply to any case where a beneficial interest in land is claimed by a . .
Cited – Lowson v Coombes CA 26-Nov-1998
A house was purchased by an unmarried couple to live together, but conveyed into the female partner’s sole name. Her partner was still married, and she feared that on his death his wife would inherit.
Held: ‘the case being one of illegality, I . .
Cited by:
Cited – Lavelle v Lavelle and others CA 11-Feb-2004
Property had been purchased in the name of of the appellant by her father. She appealed a finding that the presumption of advancement had been rebutted.
Held: The appeal failed. The presumption against advancement had been rebutted on the . .
Cited – Lavelle v Lavelle and others CA 11-Feb-2004
Property had been purchased in the name of of the appellant by her father. She appealed a finding that the presumption of advancement had been rebutted.
Held: The appeal failed. The presumption against advancement had been rebutted on the . .
See Also – Collier v Kramer CA 1-Apr-2004
Appeal from a refusal to allow an amendment to join further parties to an action by Mr Michael Collier against solicitors . .
Cited – SQ v RQ and Another FD 31-Jul-2008
The home in which the family had lived was held in the name of a brother. Each party claimed that it was held in trust for them. Chancery proceedings had been consolidated into these ancillary relief applications. The home had been in the husband’s . .
Cited – Patel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Lists of cited by and citing cases may be incomplete.
Equity, Trusts
Leading Case
Updated: 13 May 2022; Ref: scu.175225