(Chancery Division; HHJ Purle QC (sitting as a High Court judge); 18 November 2009)
The property had originally been jointly owned by the father and mother. Following the father's bankruptcy, an order for sale had been made in respect of the property, followed by a possession order, but neither had been enforced. Eventually, the father's trustee in bankruptcy had agreed to transfer the property to the daughter and son-in-law in return for £25,000, even though the property was worth much more than this, so that the mother and father could remain in occupation of the property. The daughter and son in law took out a mortgage on the property, and the mother and father paid them a regular sum to cover the mortgage repayments, eventually clearing the entire sum. After the mother died, the father remained in occupation. When the daughter divorced, the property was transferred into the daughter's sole name, and she re-mortgaged the property, producing for the mortgagees a tenancy agreement on which the father's signature had been forged. Following the daughter's bankruptcy, the mortgagees sought a possession order. The father resisted this, claiming that he was the beneficial owner of the property.
The property had been held by the daughter on constructive trust for the father and mother; once the loan repayments had been made, the daughter and son in law had been under an obligation to transfer the property to the father and mother. The daughter had had no intention of actually transferring property to father and mother, and had acted in breach of trust; she had acted dishonestly in transferring the property to her sole name and in mortgaging the property. The daughter was therefore not a purchaser acting in good faith. As a person with a beneficial interest in actual occupation, the father's interest had priority against both the daughter and the mortgagees. The property was to be transferred to the father.