Bank of Scotland plc v (1) Forrester (2) Forrester  EWHC 2036 (Ch)
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
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.
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