Fraud, Trusts and Equities

Extract

Mr. and Mrs. Collings were the unremarkable registered proprietors of their house, until they had the misfortune to deal with Mr. Lee. Lee purported to act for them in finding a purchaser for the house, and he found a Mr. Styles. Mr. and Mrs. Collings then executed a transfer of the house to Styles in consideration of £250,000, but “Styles” was simply an alias used by Lee, and no part of the £250,000 was ever paid to them. The net result, therefore, was that Lee fraudulently procured the transfer of the house from Mr. and Mrs. Collings to himself, for no consideration. Once registered as proprietor of the house, Lee mortgaged it to the Leeds Permanent Building Society and took the mortgage proceeds. Mr. and Mrs. Collings remained in actual occupation of the house throughout. When Lee’s fraud came to light, Mrs. Collings sought rectification of the register, to reinstate her as proprietor of the house free of the mortgage. (Her husband had died in the meantime, and she had acquired his rights by survivorship.) The Court of Appeal upheld her claim: Collings v. Lee [2001] 2 All E.R. 332.