Key point
- Collateral purpose of a trust for sale can subsist even when one beneficiary loses his beneficial interest
Facts
- D and her husband purchased a house in joint names
- Following the husband’s death, D made her daughter a joint tenant
- The daughter applied to the bank (C) to borrow £30,000 on the security of the house by forging her mother’s signature
- The bank sought an order of sale when D’s daughter defaulted
Held (Court of Appeal)
- The order of sale was rejected
- The collateral purpose that D should continue living in the house was still subsisting
Peter Gibson LJ
Collateral interest was subsisting
- Jones v Challenger shows that where the collateral purpose is subsisting, a trust for sale will not defeat that purpose even when an original party to the purpose assigned his share
- The collateral purpose that D shall continue to live in the property did not come to an end due to her daughter losing her beneficial interest: p. 257
Distinguishing Re Citro
- It only establishes that a collateral purpose to provide a matrimonial home will not subsist when one of the parties loses his share
- It does not purport to apply where a different collateral purpose continues to subsist even when one of the parties loses his share: p. 258