Abbey National v Moss [1993]

Court: Court of Appeal

Facts: In Abbey National Plc v Moss [1993] 26 HLR 249, the case involved a house jointly purchased by the defendant and her husband. Following the husband’s death, the defendant made her daughter a joint tenant of the property. Unbeknownst to the defendant, the daughter forged her mother's signature to secure a £30,000 loan from the bank using the house as collateral. When the daughter defaulted on the loan, the bank sought an order of sale for the property.

Held: The Court of Appeal rejected the bank's order for sale, concluding that the collateral purpose for which the property was held—specifically, the defendant's continued right to live in the house—was still subsisting.

Key Judicial Statements: Peter Gibson LJ articulated that the case draws upon the principle established in Jones v Challenger [1961], which indicates that a trust for sale will not defeat a collateral purpose if that purpose remains active, even when an original party to that purpose assigns their share. He stated that the collateral purpose allowing the defendant to continue living in the property did not cease to exist merely because her daughter lost her beneficial interest in it. In distinguishing Re Citro [1991], Peter Gibson LJ clarified that this earlier case only establishes that a collateral purpose to provide a matrimonial home will not persist when one party loses their share. He emphasized that Abbey National Plc v Moss dealt with a different collateral purpose, which continued to exist even after one party’s loss of their interest.

💡 Leveluplaw: underscores the significance of identifying the specific collateral purpose of a trust for sale, illustrating that such a purpose can remain intact despite changes in beneficial interests among the parties involved. The ruling highlights that the presence of a continuing collateral purpose is critical in determining the validity of an order for sale, reinforcing the principle that the trust's original aims should not be undermined by changes in ownership interests