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Tribe v Tribe [1995] 3 WLR 913   Court of Appeal
 
David Tribe sought a declaration that he held the whole beneficial interest in 459 shares in a company. The shares were registered in the name of his son, Kim Tribe. David had run a family business in a chain of shops selling women's clothing in Wales. He incorporated the business as a company in 1970. In 1998 David transferred his shares in the company to Kim. The transfer was stated to be for consideration of £78,030, although no money was intended to nor was in fact exchanged. The transfer was duly registered. The purpose of the transfer was to defeat David's creditor. The creditor being the Landlord of two of the shops which had claimed substantial sums for repairs. In the event David negotiated out of the liability without the need to rely on the  fact that he no longer held shares. As the transfer was for no consideration, this would normally give rise to a resulting trust, however, since the transfer was from a father to son this raises the presumption of advancement. To defeat this presumption David would need to produce evidence that a gift was not intended. His evidence for this is the purpose of the transfer was to defeat the creditors, however following Tinsley v Milligan an illegal purpose can not be relied on to rebut the presumption of advancement. The question for the court here is whether he could rely on the illegal purpose where that illegal purpose although intended, was never actually carried out.
 
Held:
 
The father could rely on the illegal purpose which had not been put into effect. He was therefore entitled to the beneficial interest and to have the legal title transferred to him.
 
Millett LJ:
 

    In my opinion the following propositions represent the present state of the law:

    (1) Title to property passes both at law and in equity even if the transfer is made for an illegal purpose. The fact that title has passed to the transferee does not preclude the transferor from bringing an action for restitution.

    (2) The transferor's action will fail if it would be illegal for him to retain any interest in the property.

    (3) Subject to (2) the transferor can recover the property if he can do so without relying on the illegal purpose. This will normally be the case where the property was transferred without consideration in circumstances where the transferor can rely on an express declaration of trust or a resulting trust in his favour.

    (4) It will almost invariably be so where the illegal purpose has not been carried out. It may be otherwise where the illegal purpose has been carried out and the transferee can rely on the transferor's conduct as inconsistent with his retention of a beneficial interest.

    (5) The transferor can lead evidence of the illegal purpose whenever it is necessary for him to do so provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly carried into effect. It will be necessary for him to do so (i) if he brings an action at law or (ii) if he brings proceedings in equity and needs to rebut the presumption of advancement.

    (6) The only way in which a man can protect his property from his creditors is by divesting himself of all beneficial interest in it. Evidence that he transferred the property in order to protect it from his creditors, therefore, does nothing by itself to rebut the presumption of advancement; it reinforces it. To rebut the presumption it is necessary to show that he intended to retain a beneficial interest and conceal it from his creditors.

    (7) The Court should not conclude that this was his intention without compelling circumstantial evidence to this effect. The identity of the transferee and the circumstances in which the transfer was made would be highly relevant. It is unlikely that the Court would reach such a conclusion where the transfer was made in the absence of an imminent and perceived threat from known creditors.

     

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