Our website is set to allow the use of cookies. For more information and to change settings click here. If you are happy with cookies please click "Continue" or simply continue browsing. Continue.

Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

Guildhall Chambers , 03 MAR 2015

Bank of Scotland plc v (1) Forrester (2) Forrester [2014] EWHC 2036 (Ch)

Bank of Scotland plc v (1) Forrester (2) Forrester [2014] EWHC 2036 (Ch)
(Chancery Division, Mr Simon Monty QC (sitting as a deputy judge of the High Court), 20 June 2014)


A father was able to demonstrate the existence of an agreement pursuant to which he held 100% of the beneficial interest in a property even though the legal interest was owned by his son.

The Second Defendant (‘IF’) had owned a property since 1964. In 1994 a bankruptcy order was made against him and a trustee in bankruptcy was appointed. In 1998 the trustee obtained an order for possession of the property, which he enforced the following year. The First Defendant (‘NF’) (the Second Defendant’s son) purchased the property from the trustee, having obtained a mortgage. IF remained in occupation and made payments to NF.

NF remortgaged the property to the Claimant (‘the Bank’), but defaulted. The Bank sought possession. IF asserted that after the trustee enforced the order for possession, he and NF agreed that the property would be transferred to NF to enable him to get the first mortgage, IF would then pay his son sufficient to cover the mortgage repayments, and the beneficial interest would remain with the father.

The son (NF) denied any such agreement, stating that he had acquired the beneficial interest, and that his father had paid him rent. Under a settlement agreement, the Bank’s claim against NF was subject to an agreement with the father that, unless the son defeated his claim, a possession order would not be sought, but the father would become responsible to the Claimant for part of the mortgage debt.

The court had to determine ‘two simple questions’. The first was whether the father held a beneficial interest in the property. The second was if so, what the size of that beneficial interest was.

The court accepted IF’s evidence and refused the application. On NF’s case his father would have sacrificed substantial equity for no apparent gain. Instead, the court found that there had been an express agreement between IF and NF that whilst NF was to hold the legal interest in the Property, the beneficial interest was to remain with IF. In the absence of an express agreement, the court found that there had been a shared common intention that IF was to retain one hundred per cent of the beneficial interest in the property.
Guildhall Chambers
Individual Voluntary Arrangements

Individual Voluntary Arrangements

"This is the ultimate statement of where the law on IVAs is to be found in our great common law...

Available in Insolvency Law Online
Bankruptcy and Personal Insolvency Reports

Bankruptcy and Personal Insolvency Reports

"BPIR is an excellent series, of interest to both corporate and personal insolvency lawyers,...

More Info from £166.00
Available in Insolvency Law Online
Subscribe to our newsletters