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

when there were 194 legitimate issue and three of more dubious provenance.59 King Olav V was born in 1903 and died in 1991, after which the torch passed to obscure German princelings.60

Care must be taken to avoid uncertainty caused by selecting too many lives. “Property may be so limited as to make it unalienable during any number of lives, not exceeding that, to which testimony can be applied, to determine, when the survivor of them drops.”61 In Re Moore62 the period adopted was 21 years from the death of the last survivor of all people living at the testator’s death; this gift failed for uncertainty rather than for perpetuity.

4.Perpetuities reform

[18.14] The Law Commission Report on the Rule against Perpetuities and Excessive Accumulations63 proposes a new universal fixed period of 125 years for new gifts made after the new legislation. Research which guided the American uniform code64 concluded that 90 years was the average duration of a life-based period, and the Commission reckon that the maximum attainable under the current law is about 120 years.65 Statute will provide a single universal perpetuity period which could not be excluded or modified by the Act, and the maximum fixed period should be extended from 80 years to 125 years. Novel and welcome features are that it would no longer be necessary to incorporate the period expressly and it would not be possible to shorten it. The period should be long enough to allow any sensible gift to vest.

It is also proposed to allow a let-out for trustees operating existing Royal lives clauses. Apparently the survivorship of descendants of Queen Victoria is difficult to determine and many practitioners have taken to using an arbitrary number of years as the termination point of the trust.66 Trustees will be allowed to switch to the new 125year period whenever an existing instrument specifies an unascertainable group of lives in being.67

5.Life-based rules

[18.15] The Duke of Norfolk’s case (1681)68 provided the common law limit for the vesting of a gift. The period ran from the date of a lifetime gift or the date of death of a testamentary donor. The basic elements were (1) a period of a life or lives in being at the time that the gift takes effect, (2) a period of 21 years and (3) any relevant pregnancy. This forms the basis for the common law rule which applied to gifts made

59Re Warren’s WT (1961) 105 SJ 511, CA.

60Law Com CP 133 (1993), [4.6].

61Thellusson v. Woodford (1805) 11 Ves 112, 146, 32 ER 1030, Lord Eldon.

62[1901] 1 Ch 936.

63Law Com 251 (1998); P Sparkes (1998) 12 TLI 148; T Gallanis [2000] CLJ 284. The rule against excessive accumulations is to removed as a matter of deregulation: LCD CP 10 (2002).

64LW Waggoner [1982] CLJ 234, 235; Law Com 251 (1998), [8.11].

65Law Com 251 (1998), [8.2–8.13].

66At [8.4]; surely this is a clear breach of trust.

67Draft Bill cl 12.

68(1681) 3 Ch Cas 1, 22 ER 931.

19

OCCUPATION RIGHTS

Co-ownership occupation rights. Purpose trusts. The decision to sell. Rent and equitable accounting. Sale applications by creditors. Occupation orders. Matrimonial home rights and proprietary enforcement. Trust licences. Occupational licences. Equitable licences. Proprietary licences. Constructive trust doctrine.

[19.01] “Land law is . . . also a different ownership, unrecognised in the old books, a having by using, a possession by sharing”.1 The subject of this chapter is this new property,2 the value of being able to settle down in a house as a family home.

A. CO-OWNERS OCCUPYING UNDER TRUSTS OF LAND

1.Who is entitled to occupy?

[19.02] The Trusts of Land and Appointment of Trustees Act 1996 formalises the balance achieved by case law on trusts for sale, notably Bull v. Bull.3 A co-ownership trust is a simple trust,4 attaching to the land itself rather than the proceeds,5 a perception reinforced by conferring a statutory right of occupation until sale where the land is intended for occupation. A person claiming occupation must be entitled to possession, as opposed to the income, and for himself beneficially rather than as a sub-trustee or personal representative.6

2. When occupation rights arise

[19.03] Occupation rights arise7 if:

(1)the purposes of the trust include making the land available for occupation by the beneficiary;

1K Green (1993) 3 Fem LS 131, 156–157.

2CA Reich (1964) 73 Yale LJ 733; see above [6.12].

3[1955] 1 QB 234, CA.

4TLATA 1996 s 1 (express), sch 2 paras 3–4 (implied trusts).

5S 3. Contrast a trust for sale where the beneficial interest was realised in the proceeds of sale.

6S 22(3).

7S 12(1)–(2); DG Barnsley [1998] CLJ 123 (strong criticism). Formerly a beneficiary occupied as licensee: Grace v. Taylor [1998] 4 All ER 17, CA. Now it is as an incident of beneficial entitlement.

(2)the purposes of the trust include making land available for occupation by a class of which he is a member; or

(3)the trustees decide that it is available for occupation.

Trustees may prevent occupation by deciding that the land is either unavailable or unsuitable for occupation. However, the courts have an overriding discretion.8

3.Multiple occupiers

[19.04] Trustees may select between multiple potential occupiers9 if the trust gives beneficial interests in possession to a number of named individuals or creates a class from which the trustees may select who is to benefit. Where two or more people entitled to a right of occupation, the trustees may exclude or restrict the entitlement of some, but not of all. In making a choice, they are required to act reasonably, considering the settlor’s intention, the purposes for which the land is held, and the circumstances and wishes of other entitled beneficiaries.10 There is a duty to be even handed between the various beneficiaries.11 Reasonable conditions can be imposed, such as a requirement to pay outgoings, to assume an obligation, or to pay an excluded beneficiary.12 A beneficiary already in occupation can only be excluded in favour of another against his wishes by a court order.13

4.The court

[19.05] Any decision made by the trustees is subject to the supervision of the court, with powers in the Trusts of Land Act 199614 which now governs all court proceedings. Those entitled to apply to the court are the trustees and any other person interested in the trust land. A beneficiary can apply to control the trustees in the exercise of any of their functions. In particular the court might order sale, override any consent provision, ignore the result of a consultation process, declare the beneficial interests, or deal with the proceeds of sale.15 The court has a discretion but should take into account certain factors:16 the settlor’s intentions, the purposes for which the property is held, any express direction for sale, the welfare of any minor who may expect to use it as home, the interests of any secured creditor, and the wishes of any adult beneficiary.17

Case law under the 1925 legislation18 established the broad principles of the so called “purpose trust” but it differs in important details from the 1996 scheme.

8See below at [19.05].

9TLATA 1996 s12(1)–(2); DG Barnsley [1998] CLJ 123 (strong criticism).

10TLATA 1996 s 13(1)–(2).

11Rodway v. Landy [2001] EWCA Civ 471, [2001] Ch 703, [33], Peter Gibson LJ.

12TLATA 1996 s 13(3)–(6); CJ Whitehouse (1997) 113 LQR 211 (tax).

13S 13(7).

14TLATA 1996 s 14. County courts have unlimited jurisdiction, including District Judges: Practice Direction [1999] 3 All ER 192.

15TLATA 1996 s 17(2).

16S 15.

17S 15(2)–(3).

18LPA 1925 s 30.

5.Partition

[19.06] Land held in a trust for beneficial co-owners can be apportioned, that is split by physical division into two or more parts. This power was established by Rodway v. Landy.19 The Vitason Clinic in Sevenoaks was held in common by two doctors in partnership. When the joint practice broke down, one of the doctors wanted sale but the other counterclaimed for partition, into a right hand side and left hand side, an outcome supported by the trustees and the other beneficiary. Powers which extended to the exclusion of a beneficiary or restriction of occupation by any beneficiary, obviously also allowed the court to evict a co-owner from one of two adjoining houses.20 Physical division was thus approved.

6.Trusts for division

[19.07] A trust for division cannot be created directly, since a power to postpone sale is imposed automatically,21 but the practical effect can be achieved by creating a trust of which the purpose is division, which succeeds in excluding rights of occupation and consultation rights.22

B. OLD CO-OWNERSHIP PURPOSE TRUSTS

1.The history of occupation rights

[19.08] Before 1926 sharing of land was generally undertaken as a legal co-ownership and a necessary ingredient of the unity of possession enjoyed between co-owners was co-equal23 rights of occupation. It was not necessary to formulate occupation rights between people who were simply joint owners.24

This simple position had to be re-established in 1996 by statue. The reforms of 1925 had cast doubt on whether entitlement to occupation followed from holding a beneficial interest under a statutory trust for sale imposed on co-ownership.25 Beneficial coownership attached to the proceeds of a sale, an application of conversion doctrine,26 and this did not necessarily imply any right to live in the property itself. After a tussle it came to be recognised that the trust for sale was a pure conveyancing device and that a trust to allow occupation pending sale could arise where land was acquired with the object of providing a home. This purpose trust pushed aside the principle of conversion. It was greatly developed and articulated in the context of matrimonial homes and the homes of cohabitants. The Trusts of Land Act 1996 continues to differentiate trusts where occupation was intended and those genuinely intended to lead to sale.

19[2001] EWCA Civ 471, [2001] Ch 703.

20At [33], Peter Gibson LJ.

21TLATA 1996 s 4(1).

22Ss 8(2), 11, 12(1)(a).

23Whether the beneficial ownership is equal or unequal.

24R Cocks [1984] Conv 198, 206.

25LPA 1925 ss 34–36, as originally enacted.

26See above [15.02].

2.Trusts to prevent development

[19.09] Purpose trusts were developed as a justification for refusing to order sale, though this was only relevant where a challenge was made before completion of an overreaching sale.27 The theoretical duty to sell was pushed aside by having regard to the purpose for which the property was initially purchased. Section 14 of the Trusts of Land Act 1996 is drafted to reflect the purpose trust case law though there is no longer any presumption in favour of sale.28

Re Buchanan-Wollaston’s Conveyance29 was the seminal case. Four people (A to D) each owned a house near the sea at Lowestoft. Collectively they bought a piece of vacant land between their houses and the sea with the object of keeping it free from development, a purpose recited in an express trust deed which required any sale to be agreed by all parties.30 B had bought out A’s interest and sold his house, so that he now wanted the cliff-top plot sold in order to realise his share of its development value. C refused to agree to the sale, a decision supported by the executors of D, who had succeeded to his share. One trustee for sale could ordinarily compel sale, but the court refused to oblige. Development could be prevented and the view preserved, as the original buyers intended, only by blocking a sale, at least in the circumstances as they stood at the time of the court hearing: things might change when all the original parties were dead or had all assigned their interests.31 Buchanan-Wollaston is a case between parties who were not associated with each other,32 so pure property law principles would still be applied today.

3.Residential purposes

[19.10] Bull v. Bull33 extended the purpose trust to trusts to provide a home. A son bought a house with his mother in 1949 in order to share it as a home, the son taking the legal estate in his sole name. His mother made a smaller, but significant contribution to the purchase price, so as to create an implied beneficial tenancy in common in the proceeds under a trust for sale. When the son married in 1953, his wife came to share the house, and it was agreed that the mother should have the use of two rooms. Relations between the two women soon deteriorated and the son served notice to quit on his mother and sued for possession. The son had the misfortune to come before a Court of Appeal including Denning LJ, a judge scarcely likely to destroy the security of a home on the basis of an arbitrary theory like conversion, but the court was in fact unanimous in its ruling that the mother could stay.

27City of London Building Society v. Flegg [1988] AC 54, HL.

28TLATA 1996 s 15(1)(a)–(b); S Baughen [1996] Fam Law 736; W Massey (1997) 141 SJ 1158.

29[1939] Ch 738, CA; H Potter (1939) 55 LQR 178, 348 (“may prove to be important”!); (1938) 3 Conv (NS) 328, 439.

30Unanimity was required for sale of the north land; a vote was required for the south land, but no vote had been held.

31Re Hyde’s Conveyance (1952) 102 LJ 58 (purchase of land for business of company); Miller v. Lakefield Estates [1989] 1 EGLR 212, CA.

32FLA 1996 s 62.

33[1955] 1 QB 234, CA; HR Gray (1955) 18 MLR 408 (criticism); GA Forrest [1955] CLJ 155; GA Forrest (1956) 19 MLR 312; H Forrest [1978] Conv 194, 203–5.

This was orthodox in terms of the earlier equity. Life tenants under trusts for sale had no automatic right to occupy,34 but there was a judicial discretion. Equitable entitlement under a trust for sale was a proper case to allow possession against suitable undertakings, unless some reason existed to justify withholding possession.35 Rights of equitable tenants in common had not been defined, pre-Bull, but their position was if anything stronger than a beneficiary for life because equitable entitlement will usually be coupled with a share of the legal estate.36 Imposition of the statutory trust in 1925 was designed to facilitate conveyancing and was not intended to prejudice the substantive rights of the co-owners,37 so much so that the statutory trust was subject to all powers and provisions needed to give effect to the rights of those interested in the land.38

Jones v. Jones39 was a case like Bull v. Bull where the issue was whether to order sale. A father bought a house for his son’s family with the aid of a contribution of one quarter of the price from the son. Following the father’s death the step-mother sought sale, but she was unsuccessful since the father had promised his son a home for life and sale should not be ordered to defeat that promised right. In Harris v. Harris40 it was held that an express trust to provide a home for father and son continued so long as either of them wished to stay. Beneficial co-owners are now associated parties, whose disputes are resolved by application for an occupation order.41

4.Matrimonial homes – old property law principles

[19.11] It was a short step from Bull v. Bull to full protection of residence rights in family homes, preventing sale while a house is still needed to provide accommodation. Case-law principles have been superseded by statutory jurisdictions where the couple are married,42 or are unmarried parents,43 though these build on purpose trust principles. Sale was first sought between spouses under ordinary co-ownership rules44 in Jones v. Challenger (1961).45 A matrimonial purpose prevented sale during the continuance of the marriage, but the purpose was held to end on divorce, so that a duty to sell reasserted itself on divorce. In Rawlings v. Rawlings46 the end point was moved forward to the breakdown of the marriage, that is at the time of separation.47 The

34Re Stamford and Warrington [1925] Ch 162.

35Re Wythes [1893] 2 Ch 369, 374, Kekewich J; Re Bagot’s Settlement [1894] 1 Ch 177; Re Newen [1894] 2 Ch 297.

36Re Stamford and Warrington [1925] Ch 162, 171, Russell J.

37Hammersmith & Fulham LBC v. Monk [1992] 1 AC 478, 493D–E, Lord Browne-Wilkinson; Re Warren [1932] 1 Ch 42, 47, Maughan J; Bull v. Bull [1955] 1 QB 234, CA.

38LPA 1925 s 35(1), now repealed.

39[1977] 1 WLR 438; J Alder (1978) 41 MLR 208.

40(1996) 72 P & CR 408, CA.

41See below [19.30].

42Williams v. Williams [1976] Ch 278, 285D, Lord Denning MR.

43Children Act 1989 sch 1.

44LPA 1925 s 30. This was an improvement on the Married Women’s Property Act 1882 s 17, even after its amendment in 1896 to allow sale.

45[1961] 1 QB 176, CA; DG Valentine (1960) 23 MLR 703; SJ Bailey [1960] CLJ 167.

46[1964] P 398, CA; JC Hall [1964] CLJ 210; RE Megarry (1964) 80 LQR 477; (1964) 80 LQR 31; Crawley BC v. Ure [1996] QB 13, 27, Hobhouse LJ.

47Resurrected by a resumption of cohabitation: Chhokar v. Chhokar [1984] FLR 313, CA.

unfortunate implication that the matrimonial home should be sold before the financial details of a divorce settlement were finalised, has been avoided by transferring jurisdiction to the Family Division and requiring all aspects of a matrimonial breakdown to be settled in one set of proceedings.48 Cases like this would now call for an occupation order.49

Sale was deferred while a house was providing a home for dependent children, since this is one of the objects of buying a matrimonial home.50 The period of deferral might be until the youngest child reached 16, or longer while any child remained in education which might be disrupted by sale of the family home. In Williams v. Williams the youngest son was 12 and still at school and Lord Denning MR insisted that steps should be taken to preserve the property as a home for the remaining spouse and children.51 When the dependency ended, a fresh application could be made for sale.

5.Co-habitants – property law principles

[19.12] Purpose trust principles also protected cohabitants who set up home together,52 though today these associated parties will need to seek an occupation order.53 Separation was usually the trigger for a demand for sale,54 as in Bernard v. Josephs,55 where a woman forced out of the home by her male partner’s violence was able to force a sale: preservation of the house as a home for one of two cohabitees singly was not an object of the trust. A short period should be allowed to give time to find alternative accommodation.56 There is no reason to attempt to repair the relationship, and no power to weigh the conduct of the parties.57 Longer postponement required proof that it was inequitable for one party to want to realise his interest.58 Relevant factors were the financial position of the parties, the size of the accommodation, and the housing needs of the other parties.

Cohabitants cannot insist on sale while the property is providing a home for dependent children.59 In Re Ever’s Trust60 the man was refused sale of a property occupied by his ex-partner and their child of four. He had not shown a need to realise the

48Rawlings v. Rawlings [1964] P 398; Bedson v. Bedson [1965] 2 QB 666, 680; Appleton v. Appleton [1965]

1WLR 25; Williams v. Williams [1976] Ch 278, 286, Lord Denning MR.

49For a case between husband, wife and wife’s sister see Laird v. Laird [1999] 1 FLR 791, CA.

50Rawlings v. Rawlings [1964] P 398, 418, Salmon LJ.

51[1976] Ch 278, 285G; MW Bryan (1977) 93 LQR 176; Rawlings v. Rawlings [1964] P 398, 419, Salmon

LJ.

52Bedson v. Bedson [1965] 2 QB 666, 678, Lord Denning MR; Re Evers’ T [1980] 1 WLR 1327, CA; Bernard v. Josephs [1982] Ch 391, 402A Griffiths LJ; Turton v. Turton [1988] Ch 542, CA; Re Citro [1991] Ch 142, 147, Nourse LJ.

53See below [19.30ff].

54Jones v. Challenger [1961] 1 QB 176, 183, Devlin LJ; Turton v. Turton [1988] Ch 542, 554C, Kerr LJ.

55[1982] Ch 391, CA; JM Thomson (1982) 98 LQR 517; K Gray [1983] CLJ 30; Jackson v. Jackson [1971] 1 WLR 1539, CA (sale ordered).

56Four months in Bernard v. Josephs.

57Dennis v. McDonald [1982] Fam 63, 68A–D, Purchas J at first instance; contrast Bedson v. Bedson [1965] 2 QB 666 (wife).

58Jones v. Challenger [1961] 1 QB 176, 183, Devlin LJ; Rawlings v. Rawlings [1964] P 398, 420, Salmon LJ; Bedson v. Bedson [1965] 2 QB 666, 678, Lord Denning MR; Oke v. Rideout [1998] CLYB 4876.

59Williams v. Williams [1976] Ch 278, CA; Rawlings v. Rawlings [1964] P 398, 419 Salmon LJ; TSB Bank

v.Marshall [1998] 3 EGLR 100, Ct Ct.

60[1980] 1 WLR 1327, CA.

property and sale would be very awkward for the mother. The same principle was applied in Dennis v. McDonald61 where three children were living with the man. The ejected partner was free to reapply when the children reached 16 though deferral generally continued throughout periods of full time education.

6.Adult children

[19.13] It is possible for a purpose trust to arise in favour of adult children.62

7.Trusts for division

[19.14] Under pre-1997 trusts for sale a land owner could impose a duty to sell without a power of postponement where he wanted his land sold and the proceeds divided, for example to pay debts or to divide land between the children of a testator. For example, in Barclay v. Barclay63 a father left his bungalow on trust for sale because he wanted the value of the house divided between his five sons and daughters-in-law after his death. Wills frequently created express testamentary trusts for sale, and if the duty to sell was not balanced by a power to postpone sale,64 the trustees were under an immediate duty to sell. In Re Atkins WT65 trustees of a farm were directed to sell when the testator’s stepson ceased to work the farm, and to divide the net proceeds equally among the beneficiaries living at the date of sale. Prompt sale was clearly intended, rather than postponement. Statute has created division trusts on intestacy66 and for the administration of the estate of a deceased person by personal representatives.67

C. CO-OWNERSHIP: THE DECISION TO SELL

1.Unanimous trustees

[19.15] Beneficial co-owners stand to lose their home if the trustees decide on sale, since rights of occupation are equitable and overreachable if sale is made by two or more trustees.68 Consultation is required, so it may be a breach of trust to sell without considering the wishes of the beneficiaries, but a purchaser is unaffected.69

2.Divided trustees under a trust of land

[19.16] Trusts of land are usually “simple” trusts which leave the trustees free to decide either to sell the land or to hold it. Their power of sale is subject to any express

61[1982] Fam 63, 68C, Purchas J at first instance. Property adjustment is now possible; see below at

[24.18].

62TSB Bank v. Marshall [1998] 3 EGLR 100, Ct Ct.

63[1970] 2 QB 677, CA; FR Crane (1970) 34 Conv (NS) 344; MJ Prichard [1971] CLJ 44; PV Baker (1970) 86 LQR 443; Nickisson v. Cockill (1863) 3 De G J & Sm 622, 46 ER 778; Re Ball [1930] WN 111.

64This point no longer holds good since TLATA 1996 s 6 implies a power of sale, see above [13.43].

65[1974] 1 WLR 761; Re Rooke’s WT [1953] Ch 716.

66AEA 1925 s 47, as amended by TLATA 1996 sch 2 para 5.

67LPA 1925 s 33, as amended by TLATA 1996 s 18; R Mitchell [1999] Conv 84.

68City of London Building Society v. Flegg [1988] AC 54, HL; see above [13].

69See above [19.18].

restriction in the trust document.70 Since an even balance is struck between sale and postponement, indecision will point to retention. Any one trustee can in practice block a sale by declining to execute the transfer until ordered to do so by the court.

3.Divided trustees under a trust for sale

[19.17] A decision to postpone sale involves the exercise of a discretion. The court will not override a proper decision,71 either to proceed with a sale72 or to retain as in Re Steed’s WT:73 a settlor had created a protective trust to guard against the bankruptcy of Steed but the court refused to order sale in defiance of an honest exercise of the trustees’ discretion to postpone sale.

If a trust of land includes a duty of sale on the trustees, a power of postponement is imposed by statute whatever the trust deed says.74 The same applies to a trust created before 1997 which is now fitted into the trust of land scheme.75 Further the balance of power established by the trust is important because of the rule requiring unanimity among the trustees before a power is exercised. Of the three trustees for sale in Re Mayo,76 two wished to retain the house while one wanted it sold, but the decision was for sale because the one dissident trustee precluded a discretionary decision to postpone. This shows the basic balance between a trust to sell and a power of postponement.

4.Consultation

[19.18] Consultation is the most important check on trustees of land. It applies to all post-1996 trusts of land unless excluded by a provision of an express trust.77 Trusts imposed before 1997 will also require consultation if the trust was imposed by statute,78 or where, as was done occasionally, an express trust adopted the principle of consultation.79 Otherwise they will become subject to the new consultation requirements unless the requirement was excluded by execution of an irrevocable deed during a transitional period of one year.80 A disclaimer can be executed by the creator of the trust (or those living and capable) or by a beneficiary to the extent of his interest.81

70TLATA 1996 ss 6(1), 8.

71Re Norrington (1879) 13 Ch D 654, 659, Bacon V-C; Re Boston’s WT [1956] Ch 395. As to decisions not taken in good faith see: Re Blake (1885) 29 Ch D 913, 917 Cotton LJ; Norrington at 659.

72Re Crips (1906) 95 LT 865, 867, Kekewich J; Re Johnson [1915] 1 Ch 435; distinguished in Re White’s S [1930] 1 Ch 179.

73[1960] Ch 407, 418–419, CA; Re Horsnaill [1909] 1 Ch 631.

74S 4(2).

75This included a trust to “sell or retain land”: LPA 1925 s 25(4). For pre-1997 postponement see P Sparkes NLL (1st ed), 321–322.

76[1943] Ch 302 (co-ownership of life interests under a settlement, no purpose trust); Re Roth (1896) 74 LT 50; Re Hilton [1909] 2 Ch 548.

77TLATA 1996 s 11(2)(a). Exclusion is not possible in a trust implied by statute.

78LPA 1925 s 26(3), as substituted by LP (Amendment) A 1926 s 7, sch.

79As in Re Buchanan-Wollaston’s Conveyance [1939] Ch 738, CA.

80TLATA 1996 s 11(3)–(5)(a); ie during 1997.

81S 11(4); in practice a beneficiary of age could disclaim at any time.