## Facts

- The property was originally owned by a mother (D) and her late husband.
- Following her husband's death, D added her daughter as a joint tenant.
- The daughter secured a £30,000 loan from Abbey National Building Society by forging D's signature, using the property as security.
- The daughter defaulted on the mortgage.
- Abbey National Building Society sought a court order for sale of the property to recover the outstanding debt.
- The central question was whether the trust for sale's collateral purpose, specifically D's right to continue residing in the property, persisted despite the daughter's loss of beneficial interest and the fraudulent circumstances.

## Issues

1. Whether a collateral purpose, such as continued residence for D, persists after a beneficiary loses their beneficial interest.
2. Whether the trust for sale's primary duty to sell overrides any subsisting collateral purpose, particularly in the context of fraud and subsequent claims by a mortgagee.
3. Whether a collateral purpose can survive changes in beneficial ownership so as to restrict the trustees' power of sale.

## Decision

- The Court of Appeal dismissed Abbey National Building Society's application for an order of sale.
- It held that the collateral purpose—D’s continued right to occupy the property—survived despite the daughter's loss of beneficial interest and the fraudulent acts.
- The court found that the trust's original intent to provide a home for D constituted a continuing collateral purpose not negated by subsequent changes in ownership or beneficiary status.
- Reliance was placed on _Jones v Challenger_ to affirm that collateral purposes endure if intended by the trust's creation.
- The court distinguished _Re C_, noting that a collateral purpose limited to matrimonial homes may not persist in the same way.

## Legal Principles

- A trust for sale does not automatically extinguish a collateral purpose attached to the trust, such as provision of a home for a beneficiary.
- Collateral purposes can survive changes in beneficial ownership, subject to the trust's original intent.
- A collateral purpose may restrict trustees’ powers of sale where extinguishing it would unjustly impact a vulnerable beneficiary.
- Actual occupation may give rise to overriding interests capable of binding purchasers or mortgagees even if unregistered.
- Purchasers and lenders must investigate the presence of persons in actual occupation to avoid being bound by overriding interests.

## Conclusion

The decision established that a trust for sale does not necessarily nullify a collateral purpose such as a beneficiary's right of residence, regardless of changes in beneficial ownership or misconduct by co-beneficiaries. The intended collateral purpose of the trust remains central in determining restrictions on the trustee’s power of sale and the enforceability of overriding interests against mortgagees.


Abbey National Building Society v Moss [1993] 26 HLR 249