Экзамен зачет учебный год 2023 / Sparkes, A New Land Law

So, all joint tenants must act in a disposal.51 If A, B and C are trustees or personal representatives,52 a sale by A alone cannot pass legal title – and nor can A and B acting without C.53 Only the three acting in concert can pass title and overreach. The same rule applies when taking action at common law,54 to judgments for possession,55 and actions on joint covenants.56 However, a helpful act by one joint tenant can be called in aid by all the others.57 Application of these principles to the termination of periodic leases leads to a surprising result.58

3.Unity of possession

[12.14] The collective nature of the joint tenancy can also be characterised as a unity of possession.59 Where this is lost so part of the land belongs to one person exclusively, the land is held in two separate ownerships and there is said to be a partition.60

4.Agency

[12.15] The need for an act by all co-owners cannot be overcome by a power of attorney executed by one in favour of the others. In Walia v. Michael Naughton61 a transfer of land registered in three proprietors was executed by P, M, and M again (the second time as attorney for A). This was not a valid transfer and no title was shown on a sub-sale. Execution of a conveyance requires compliance with strict Trustee Act 1925 powers of delegation.62

D. TRUSTEES

1.General rules

[12.16] Trustees of land63 should number between two and four, except that a trust corporation can act alone. Thus an attempt to appoint five trustees in fact only appoints the first four named.64 Collectively trustees form a single continuing body,

51Lord Abergavenny’s case (1607) 6 Co Rep 78b, 77 ER 373.

52AEA 1925 s 2(2).

53Simpson v. Gutteridge (1816) 1 Madd 609, 616, 56 ER 224, Plumer V-C; Re Schär [1950] 2 All ER 1069 (disclaimer); Robson-Paul v. Farrugia (1969) 20 P & CR 820, CA (one joint tenant might grant or revoke a licence).

54Weston v. Keighley (1673) Cas temp Finch 82, 23 ER 44; Blackstone’s Commentaries vol 2, 175; Littleton’s Tenures, [311].

55Gill v. Lewis [1956] 2 QB 1, CA.

56Slingsby’s case (1587) 5 Co Rep 18b, 19a, 77 ER 77.

57Tooker’s case (1601) 2 Co Rep 66b, 76 ER 567.

58See below [25.17].

59Blackstone’s Commentaries vol 2, 182.

60Blackstone’s Commentaries vol 2, 185; see below [16.47].

61[1985] 1 WLR 1115; NS Price [1986] Conv 136; Green v. Whitehead [1930] 1 Ch 38, CA; Fountain Forestry v. Edwards [1975] Ch 1 (personal representatives); Watts v. Spence [1976] Ch 165; Malhotra v. Choudhury [1980] Ch 52; PW Smith [1980] Conv 191.

62TA 1925 s 25; Powers of Attorney Act 1971 s 9(2); T Delegation A 1999; see below at [14.44ff].

63Cheshire & Burn (16th ed), 889; Megarry & Wade (6th ed), [10.052-10.076].

64TA 1925 ss 34, 36, 37. No limits apply to charities or personalty settlements. Vacancies need not be filled.

but the identity of the individuals may change over the life of a trust, with deaths, retirements and new appointments. Statutory powers permit the replacement of dead trustees, retirements,65 additional appointments, and the removal of those unable to act.66 Purchasers must accept a statement of the ground on which an appointment is made and are protected against errors.67 Difficult cases can be solved by application to the Crown.68

Appointments are made by a person designated by the trust69 instrument, or otherwise by the continuing trustees, but if all have died the torch passes to the personal representatives of the last surviving trustee.70 A purchaser is entitled to deal with the people actually appointed, even if the trust instrument called for other appointments.71 A deed of appointment vests the legal estate in the new trustees.72

2.Beneficiary control

[12.17] A taster of beneficiary control, no more, was introduced in 1996.73 It applies only where all beneficiaries are ascertained and are of full age and capacity,74 so that acting collectively they would be entitled to terminate the trust.75 Re Brockbank76 decided that the beneficiaries had no power to control appointments of trustees, but this is reversed by part II of the 1996 Act which permits the beneficiaries to sack an existing trustee.77 Beneficiaries may also nominate a proper78 person for appointment as a trustee79 if there is no one with an express power of appointment.80 Directions must be given in writing to the trustees81 – either jointly or by all beneficiaries separately nominating the same trustee82 – and are revocable until implemented.83 A trustee must retire when directed to do so, provided that enough trustees are left to satisfy the statutory rules about numbers, but he may insist upon an adequate indemnity against tax and similar liabilities.84 Similar rights of beneficiary control apply after a trustee becomes incapable, if there is no one able and willing to exercise a

65S 39. Retirement may not reduce the trustees to one: Adam & Co International T v. Theodore Goddard [2000] Times March 17th, Evans-Lombe J.

66TA 1925 s 36; grounds are absence from the UK exceeding 12 months, refusal or unfitness to act, incapacity, infancy, or dissolution of a trust corporation.

67S 38.

68S 41.

69Re Walker & Hughes C (1883) 24 Ch D 698; but note Re Wheeler & De Rochow [1896] 1 Ch 315; Re Sichel’s S [1916] 1 Ch 358.

70TA 1925 s 36; Re Stoneham’s ST [1953] Ch 59.

71LPA 1925 s 24(1) as amended.

72TA 1925 s 40; DLRR 2003 r 162(2).

73TLATA 1996 part II, ss 19–21. Existing trusts are included, unless excluded by a deed executed by the surviving creator(s); application of Part II to new trusts can also be excluded: s 21(5)–(7).

74TLATA 1996 s 19(1)(b).

75Saunders v. Vautier (1841) Cr & Ph 240, 41 ER 482.

76[1948] Ch 206, Vaisey J.

77TLATA 1996 s 19(2)(a).

78S 21(4).

79S 19(2)(b).

80S 19(1)(a).

81Or the personal representative of a last survivor: s 19(2)(b).

82S 21(1)–(2).

83S 21(1).

84S 19(2)–(4).

power of replacement; the beneficiaries may direct a replacement by giving a direction to the incapable trustee’s receiver, attorney, or Mental Health Act 1983 minder.85

When a trustee is appointed it must be formal, at least in writing.86 Appointments are invariably made by deed to take advantage of vesting provisions, since an appointment or retirement by deed will vest the estate in the new body of trustees automatically.87 If the trust property is a lease which requires the consent of the landlord to an assignment, this consent should be obtained before the deed of appointment is executed.88

E. SURVIVORSHIP

1.Identity and devolution by survivorship

[12.18] Joint tenancy is ideally suited to the holding of legal title, since its characteristic is survivorship. If one trustee dies, the legal estate passes automatically to the remaining trustees. The current state of the legal title is easily determined from official certification of the death.89

The numbers can be replenished by appointments, and this should be done to prevent the number of trustees falling to one. If this is not done the land will eventually stand in the name of a single trustee. On the death of that sole surviving trustee, the land will pass to his personal representatives.90 If the last trustee leaves a will naming executors who prove the will, those executors will be legal estate owners who may themselves act as trustees,91 or who may select replacements.92 Executors of executors may claim by a chain of representation.93 Otherwise administrators will have to be appointed, and the Public Trustee holds the land in the interim.94

2.Corporations as legal joint tenants

[12.19] The old common law felt a difficulty about allowing a human to be a joint tenant with a corporation, which has perpetual succession and cannot die. In a contest of longevity the company would survive a mortal human and claim the property. But in relationship to a trusteeship it does not much matter who is trustee and using a company avoids repeated vestings as human trustees die or retire. For this reason the common law impediment to a co-ownership between a natural person and a trust

85S 20.

86TA 1925 s 36.

87S 40(1)–(2).

88S 40(4).

89Problems of commorientes arise if death is certified on the same date; the younger is presumed to survive the elder; see below [16.09].

90AEA 1925 ss 1–3.

91TA 1925 s 18(2)

92TA 1925 s 36(1)(b); Re Shafto’s T (1885) 29 Ch D 247; unless there is an express power: Re Routledge’s T [1909] 1 Ch 280.

93AEA 1925 s 7; PF Smith [1977] Conv 423.

94LP (MP) A 1994 s 14, amending AEA 1925 s 9. Between 1971 and July 1995 title was held by the President of the Family Division.

corporation95 had to be removed, a trick effected by the unlikely sounding but much used Bodies Corporate (Joint Tenancy) Act 1899.96

3.Contemporaneous deaths

[12.20] Deaths in quick succession give rise to difficulty in establishing the correct sequence, facts needed to apply survivorship correctly. Floods and shipwrecks were the old hazards, now joined by car crashes, plane disasters and bombings. Section 184 of the Law of Property Act 192597 presumes that deaths occur in the order of seniority if the sequence of deaths is uncertain, so that a younger joint tenant is deemed to have survived the older.98 The section applies where persons “have died in circumstances rendering it uncertain which of them survived the other or others”, including deaths in an unknown sequence and also instantaneous deaths. In Hickman v. Peacey five people were killed when a bomb demolished their house in Chelsea at the height of the Battle of Britain,99 and it was held that the estate of the youngest joint tenant took all. The presumption can be excluded by definite evidence of the actual sequence of deaths.100

4.Severance by killing

[12.21] Trusteeship can pass by survivorship even if one trustee kills another,101 though a forfeiture will occur to prevent beneficial inheritance.102

F. CO-PROPRIETORS OF REGISTERED LAND

[12.22] Co-ownership of registered titles is simplicity itself since the register shows only legal title and the registrar polices the curtain to keep beneficial entitlement off the register.103 Joint proprietors are limited to four. If the land is accidentally registered in more than four names it is presumably the first four who are proprietors.104 The register has no need to state that the proprietors are legal joint tenants, since that is the only form of co-ownership that can reach the register. Existence of a trust may

95Law Guarantee & Trust Society v. Bank of England (1890) 24 QBD 406.

96S 1(1); Re Thompson’s ST [1905] 1 Ch 229. On dissolution of a corporation a “survivorship” passes its property to the other joint tenants: s 1(2); the Act also applies beneficially, see below [16.06].

97Pre-1926 law was based on the need to prove a case: Hickman v. Peacey [1945] AC 304, 321, Lord Macmillan; Wing v. Angrave (1860) 8 HLC 183, 11 ER 397; Re Phené’s T (1870) LR 5 Ch App 139; Re Aldersey [1905] 2 Ch 181; Re Lindop [1942] Ch 377.

98The rule does not operate on intestacy between a person and his or her spouse: AEA 1925 s 46(3). Otherwise if a married couple were killed together in a crash the family of whichever spouse happened to be younger would inherit all excluding completely the family of the elder spouse.

99[1945] AC 304, 337, Lord Porter, 325, Lord Macmillan, 343, Lord Simonds.

100Re Bate [1947] 2 All ER 418; RE Megarry (1947) 63 LQR 423; Re Rowland [1963] Ch 1, CA; Re Pringle [1946] Ch 124.

101Re K [1985] Ch 85, 100F–H, Vinelott J.

102See below [16.10ff].

103LRA 2002 s 78.

104If these are not the same as the first four on the transfer there may be a case for alteration or rectification of the register: see above [11.38], [11.48].

13

TRUSTS OF LAND

Flegg. Forms of trusts of land. Overreaching. Curtain. Restrictions. Consent trusts and restriction on powers. Delegations. Interests overreached. Power-based overreaching. Defective overreaching.

A. INTRODUCTION

[13.01] City of London BS v. Flegg1 confirmed that trustees are able to pass title to the land without the approval of the beneficiaries and, very likely, against their wishes. The case was decided in 1988 when there was a statutory trust for sale, but its effect is duplicated for post-1996 trusts of land. The scheme of the Law of Property Act 1925 is to enable a buyer to take a transfer without any reference to the equitable interests of the beneficiaries, the land being discharged from the beneficial interests which are transferred to the proceeds of sale.2 This is the process known as overreaching which is explained in detail in this chapter. The trust of land is a conveyancing device designed to ensure that an overreaching sale is possible.

Overreaching may only occur if the purchase money is paid to two trustees.3 Williams & Glyn’s Bank v. Boland (1981)4 concerned a mortgage by a single trustee, who was not therefore able to overreach, and so the House of Lords held that the beneficiary retained priority against the lender who had failed to overreach him. In registered land this happens where the beneficiary is in occupation of the land since the beneficiary then has an overriding interest.5 The whole problem of one-trustee trusts is the subject of a subsequent chapter.6 This re-opened the question of whether Boland did7 or did not8 apply when two trustees effected a sale. City of London BS v. Flegg decided that the occupiers are not protected since a sale by two trustees overreaches.

A property known as Bleak House9 was bought jointly by a young couple (the Maxwell-Browns) and by the wife’s parents (the Fleggs). The parents put in £18,000

1[1988] AC 54, HL.

2At 78H–79A, Lord Oliver.

3LPA 1925 s 27(2).

4[1981] AC 487, HL.

5LRA 2002 sch 3 para 2, re-enacting LRA 1925 s 70(1)(g).

6See below [15].

7C Sydenham [1980] Conv 427.

8Boland [1979] Ch 312, 321D, 330C, Lord Denning MR, 334C, Ormrod LJ; JE Martin [1980] Conv 361, [1981] Conv 219; WT Murphy (1979) 42 MLR 567; S Freeman (1980) 43 MLR 692, 695; AM Prichard [1980]

Conv 458.

9Dickens’ novel recounts the interminable litigation in an imaginary Chancery suit of Jarndynce v.

Jarndynce.

or so in cash,10 leaving the younger couple to borrow £20,000 in order to finance the purchase. However the property was transferred only to the names of the younger couple, the parents keeping off the title to avoid liability to repay the loan. As a result, legal title was registered in the names of the two Maxwell-Browns on a trust for all four contributors.11 Later the mortgage that had been used to fund the initial acquisition of the house was paid off and the younger couple remortgaged the property to secure a much larger loan from the City of London Building Society. Which was the more fundamental principle – overreaching or the protection of occupation?12 The Court of Appeal ruled in favour of the occupation of the Fleggs13 but, after universal academic execration,14 that decision was unanimously reversed by the Lords. Their occupation rights had indeed been overreached.15 Possible complexities explored later in this chapter should not obscure the essential simplicity of the decision. Two trustees effected what appeared to the lenders to be a proper mortgage, so that the rights of the beneficiaries were swept off the title and transferred to the mortgage money. The Fleggs could not enforce their rights against the lenders.16

B. FORMS OF TRUSTS OF LAND

[13.02] Trusts of land17 were introduced by the Trusts of Land and Appointment of Trustees Act 1996,18 which came into force on January 1st 199719 to implement Law Commission proposals20 intended to “make new provision about trusts of land”,21 and to extend overreaching to bare trusts.22 Management of trust property was subject to major reform, but here scrutiny is restricted to the reforms dealing with the institutional framework, that is the conveyancing mechanisms adopted for trusts. Old overreaching mechanisms have been purged and purified so that the pre-existing law is restated more clearly without any real substantive change.

10For resulting and constructive trusts from contribution see below [17].

11A statutory trust for sale; it would now be an implied ( statutory) trust of land; see below [16.03].

12See below [15.32ff].

13[1986] Ch 605, CA.

14DJ Hayton [1986] Conv 131; WJ Swadling [1986] Conv 379; PV Baker (1986) 102 LQR 349; C Harpum [1986] CLJ 212; RJ Smith (1986) 49 MLR 519; MP Thompson (1986) 6 LS 140.

15[1988] AC 54; RJ Smith (1987) 103 LQR 520; C Harpum [1986] CLJ 392; WJ Swadling [1987] Conv 451; MP Thompson [1988] Conv 108; S Gardner (1988) 51 MLR 365.

16At 83H–84A, Lord Oliver. The Fleggs were interested in the equity of redemption ( the land subject to the mortgage) and could have recovered the house had they been able to pay off the mortgage.

17Chapelle’s Land Law (5th ed) ch 8; Cheshire & Burn (16th ed) ch 10; Goo’s Sourcebook (3rd ed) ch 13; Gravells LL – Text (2nd ed) ch 4; Gray’s Elements (3rd ed), 878–904; Maudsley & Burn LL – Cases (7th ed) ch 4; Megarry & Wade (6th ed), [8.123ff].

18PH Kenny [1996] Conv 77; R Wallington [1996] NLJ 959; AJ Oakley [1996] Conv 401; N Hopkins [1996] Conv 411; LN Clements (1998) 61 MLR 56.

19SI 1996/2974; hence “pre-1997” and “post-1996”.

20Law Com 181 (1989); A Pottage (1989) 52 MLR 683; RJ Smith [1990] Conv 12.

21Preamble.

22Law Com 188 (1989) (remaining parts now dropped); S Gardner (1988) 104 LQR 367.

1.Definition

[13.03] Terminology is utilitarian in the Law Commission style: a trust of land is any trust of property consisting of or including land.23 It makes no difference whether the trust was created formally or informally, and whether it is implied, resulting, or constructive.24 The legislation is much too widely drawn and may now even catch a constructive trust imposed to make a burden bind a purchaser who expressly accepts the obligation.25 The legal estate is vested in “trustees of land.”26 Most pre-1997 trusts were trusts for sale,27 and these have been incorporated into the trusts of land scheme with no functional change. By phasing out strict settlements and bare trusts, the Act creates a single conveyancing machinery,28 including all post 1996 trusts and most old ones which are converted to the new format.29 Only earlier strict settlements stand outside the new scheme.30

Trusts of money or company shares are usually simple trusts in which the trustees are under no obligation to sell.31 They are free to retain the shares until it becomes appropriate to switch investments. It was an old dream to match trusts of land to trusts of shares, and so to facilitate a settlement of the paintings and other valuable contents of a house on the same trusts as the house itself, an opportunity missed in 192532 but the difficulty evaporates under the scheme of the 1996 Act. Legal title must be vested in the trustees, so that if the land is registered it is the trustees who should appear as proprietors. Trusts are created by transferring legal title to T1 and T2 on trust for named beneficiaries.33 A power of sale is conferred on the trustees by statute,34 but they have no duty to sell. Until they choose to do so, the beneficiaries have rights in the land itself. This form of trust corresponds with clients’ natural expectations. Thus:

Creator Trustees

Beneficiaries

Figure 13-1 A trust of land

23TLATA 1996 s 1(1)(a).

24S 1(2)(a).

25Lloyd v. Dugdale [2001] EWCA Civ 1754, [2002] 2 P & CR 13 at 167, [55], Peter Gibson LJ; see below

[19.79ff].

26S 1(1)(b). TA 2000 s 16 makes it possible to have a trust in which legal title is vested in a nominee of the trustees.

27See below [14.02].

28An old idea: H Potter (1943) 8 Conv (NS) 147; GA Grove (1961) 24 MLR 123.

29TLATA 1996 ss 1(1)(a), 1(3), 2.

30Pre-1997 trusts are considered below [14.01ff].

31E Scammell (1957) 10 CLP 152, 162.

32C Sweet (1908) 24 LQR 26; JE Hogg (1908) 24 LQR 290; A Underhill (1935) 51 LQR 221, 227; S Anderson, Lawyers and the Making of English Land Law 1832–1940 (Clarendon Press, 1992), 67.

33Until that occurs the trust is said to be incompletely constituted, and is not generally enforceable: see standard equity texts.

34TLATA 1996 s 6.

The top line of the diagram represents legal title passing from the creator of the trust (often called a settlor) to the trustees while the lower line represents the separation of the beneficial interest from the legal title, that is the equitable interests of the beneficiaries.

2.Trusts for sale

[13.04] Trusts for sale were the normal form of trust used for holding land before the 1996 reforms. The land is vested in trustees who have a duty to sell the land. To take a simplified unregistered form of trust:

to T1 and T2 in fee simple on trust to sell the property and to hold the proceeds of sale or the net rents and profits until sale on trust for X for life, with remainder to Y absolutely.35

(1) Pre-1997 trusts for sale

[13.05] The simple and workable structure of the trust for sale was used in preference to the more complex strict settlement machinery in 99.9% of trusts involving land between 1925 and 1996.36 Most trusts for sale were express, but statute imposed a trust for sale on co-ownership and in many other cases. In most cases it was not intended that the land should be sold immediately. Harold Potter observed,37 long ago, how difficult it was to explain this mechanism to clients, who generally wanted to make a trust of the land itself. Strictly speaking the beneficiary did not have rights in the land itself, but only an interest in the proceeds raised by selling the land. This was the so-called doctrine of conversion: because there was a duty to sell, the beneficiaries’ interests were converted to the money secured by sale. Fortunately conversion doctrine was first modified and then the 1996 Act abolished it.38 However, the price of ducking out of a settlement before 1997 was to accept a theoretical duty of immediate sale. In practice the obligation to sell was not a great inconvenience because it was balanced by a power to postpone sale, and so long as the trustees chose to exercise their right to delay sale, the trust was a perfectly viable means of holding land. The real price was an uncalled for complexity.

(2) Post-1996 trusts for sale

[13.06] Trusts for sale continue after 1996 as trusts of land, but with all their distinctive characteristics stripped away. There is little practical distinction between a trust for sale and a simple trust. It would be eccentric and inappropriate today to create a trust for sale of a house intended for occupation – a “simple” trust is better suited to this job. Trusts for sale retain utility where land is intended as an investment, to

35LPA 1925 s 35 (now repealed); “net” here means subject to the payment of expenses.

36This figure is based on applications for land registry restrictions, but it understates the popularity of trusts for sale because it excludes the most numerous case of beneficial joint tenancy which did not require any restriction.

37(1928) 44 LQR 227.

38Pre-1997 trusts are explained below [14.01ff].

create a monetary income for the beneficiaries, and also where sale is genuinely intended. Suppose a parent dies, intending that the family home be sold and the proceeds split between all his children equally. A trust for sale is tailor-made to achieve this wish, the conveyancing machinery ensures that the land can be sold free of the beneficial interests and imposition of the duty to sell makes clear that beneficiaries are not intended to have occupation rights.39

The 1996 Act formalises the position established by the old case-law about the nature of the beneficial interests, which take effect in the land itself,40 and are no longer regarded as personal property.41 Power to postpone sale is implied automatically,42 whether or not it is appropriate.

3.Bare trusts and “strict settlements”

[13.07] Two special cases, which called for special conveyancing procedures when created before 1997, now create straightforward trusts of land. These are:

(1)Bare trusts – where a single adult beneficiary is absolutely entitled to the land:

To T1 and T2 on trust for an adult B absolutely;43

(2)Former strict settlements – where there was a succession of beneficial interests but no trust for sale, for example:

to T1 and T2 on trust for A for life, remainder to B in fee simple;44 or to A for life, remainder to B in fee simple.

If created today each is subsumed within the overarching category of trusts of land.

C. OVERREACHING

1.Sales which override and those which overreach

[13.08] John Aubrey equates “overreaching” with trickery in this passage:

“At the Innes of Court they do not learn the Rules of Justice . . . but instead . . . the art of wrangling and ill aquation, overreaching and oppression.”

This old-fashioned sense is now obsolete. Today overreaching is the process by which an interest (particularly a beneficial interest under a trust) is removed from the land on sale and transferred to the proceeds of sale. The first element is the overriding force of the sale and the second is the overreaching element. The second concept is much older than 1925, though the label was attached to it at that time, largely by accident.45

39See below [19.03].

40TLATA 1996 s 3.

41TLATA 1996 s 3(1); the section applies retrospectively except where a testator died before 1997: ss 3(2)–(3), 26; but see: PH Pettit (1997) 113 LQR 207; R Town (1998) 142 SJ 378.

42TLATA 1996 s 4(1).

43See below [14.06].

44See below [14.10].

45JM Lightwood (1927) 3 CLJ 59, 64–69; S Bailey (1944) 8 CLJ 36; C Harpum [1990] CLJ 277, 287–304.