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(Chancery Division; HHJ David Cooke; 15 July 2010)
Following the divorce of the parents, a dispute ensued about the arrangements made under a consent order and other arrangements made by the father to conceal his assets from a commercial damages claim. The property was registered in the father's name; however he stated in an affidavit in damages proceedings that his son was the beneficial owner of the property in the question.
The question arose as to whether the property was held on trust for the child as the sole beneficial owner. The father had declared a trust under which the entire beneficial interest in the property was vested in his son. In addition, under the ancillary relief consent order, the property was also registered in mother's name. The question then arose whether it was part held on trust for the father.
Held that even if the mother had agreed in advance to hold the assets for the father under the guise of a consent order, the agreement would not have been effective to ensure that the father retained a beneficial interest. It could not be open to parties to litigation to agree in advance with each other that they would procure an order from the court, but that the order would not in fact produce the legal effect it would ordinarily do.
When the order took effect, the entire beneficial interest was vested in mother. Nothing to stop the parties from subsequently making an arrangement to vary the beneficial interests, provided it was effective on ordinary principles. However, the parties could not make an enforceable contract prior to the making of the court order that they would subsequently enter into a further transaction to undo its effect as this was unenforceable as contrary to public policy.
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