An elderly couple, John and Joan Jones, live at 13 Acacia Avenue, which is in their joint names.

Each has granted an enduring power of attorney (EPA) to the other - or, more sensibly still, they have made the powers joint and several and granted them to one another and to a third party, perhaps an adult child or perhaps the family solicitor.In the course of time, sadly, John Jones becomes mentally incapable and his EPA is duly registered.

The couple cannot go on living at 13 Acacia Avenue, so it is put on the market and a buyer is found.

But when the buyer's solicitor learns that one of the owners is represented by someone who acts under a registered EPA he or she throws up his or her hands in horror and says that title cannot be made in that way.

Is the solicitor right?The problem arises because beneficial co-ownership of land inevitably involves trusteeship.

The legal owners hold the property on trust for sale but if, as is usual, they are the same people as the beneficial owners, the trust may be considered (and would certainly be treated by laypeople) as more theoretical than real.

Trusts of this kind, which may conveniently be call ed 'co-ownership trusts', are to be distinguished from trusts which everyone would recognise as such - family trusts with successive interests and perhaps with wide discretionary powers, for example, or charitable trusts or trusts of pension funds - which for convenience we may call 'full trusts'.Before the Enduring Powers of Attorney Act 1985, the only general power possessed by trustees to delegate their functions was the one given by s.25 of the Trustee Act 1925, allowing them to grant a power of attorney lasting only for 12 months and subject to conditions designed to protect the beneficiaries.

When it left the Law Commission, the Bill which became the 1985 Act had nothing to say about trusteeship functions except to make it clear that a power under s.25 could not be an enduring power - with the result that such functions were outside the scope of an EPA.Although this was surely the right policy to adopt in regard to full trusts, it was perhaps, at first sight, a little hard on the trustees of mere co-ownership trusts.

As the law then stood, however, there was a strong argument that co-owners could authorise dealings with their land, without recourse to s.25, merely by delegating their rights as beneficial owners.

If that were so, such dealings would fall within the scope of an ordinary general power of attorney and within that of a general EPA.But then came Walia v Michael Naughton Ltd [1985] 1 WLR 1115, in which this argument was advanced only to be rejected.

By this time the Bill was being piloted through Parliament under the aegis of the Lord Chancellor's Department, and it decided that it should be amended.

In introducing the amendment Lord Hailsham, then the Lord Chancellor, said (Hansard (Lords) 24 June 1985, cols 548-9):'Most married couples nowadays hold the matrimonial home upon trust for sale, so that the inability of the attorney under an enduring power to dispose of trust property would have widespread effect and reduce the efficacy of the scheme contained in the Bill.'The amendment in question now appears as s.3(3) of the 1985 Act: 'Subject to any conditions or restrictions contained in the instrument [conferring the power], an attorney under an enduring power, whether general or limited, may (without obtaining any consent) execute or exercise all or any of the trusts, powers or discretions vested in the donor as trustee and may (without the concurrence of any other person) give a valid receipt for capital money paid.'Lord Hailsham said of this provision: 'I think I can fairly describe it as a rather technical amendment.' In fact, of course, it was anything but that.The first point to note about s.3(3) is that it goes far beyond the situation with which it sets out to deal and applies not only to co-ownership trusts but to full trusts of every description.

In doing so it dispenses with a number of rules which would otherwise apply (both under s.25 of the Trustee Act and under the general law) for the protection of the trust beneficiaries.

The attorney becomes a permanent trustee whose appointment bypasses both the statutory requirement that such appointments should be made by all the trustees jointly and any express requirement in the trust instrument that they be made by the settlor or other identified person.Few would doubt that the s.3(3) regime is both necessary and justifiable for co-ownership trusts, and the objections summarised in the preceding paragraph would largely disappear if it were confined to trusts of this kind.

In my contribution to Butterworths' Wills, Probate and Administration Service I have put forward, for incorporation in EPAs, a restriction designed to narrow its scope to trusts comprising nothing but a dwelling in which the donor is beneficially interested: 'This power shall not extend to any trusts powers or discretions vested in me as trustee of any trust save one which comprises only a freehold or leasehold dwelling (and any land enjoyed with it) in which I have for the time being a beneficial interest under a trust for sale.'The view that s.3(3) applies too widely has been echoed recently by the Law Commission in its report, 'The law of trusts: delegation by individual trustees' (1994) Law Com No.220.

Under its recommendations the s.3(3) regime would apply only to land in which the donor-trustee had a beneficial interest, but the land would not need to be a dwelling and would not need to be the only asset in the trust.

Curious results might be produced.

If, for example, the donor of an EPA were a trustee of a very large trust which happened to include one small piece of land, and the trustee happened to have a remote contingent interest in a small share of the trust fund, the EPA would delegate his or her trustee functions in relation to the land but not in relation to the other trust assets.Although the terms of this recommendation may arouse mixed feelings, three other recommendations seem to deserve unqualified support.

First, that the s.3(3) regime should be subject to contrary intention expressed either in the EPA or in the trust instrument of the trust in question.

Secondly, that it should no longer override the statutory rules which require a minimum of two trustees to act.

And, thirdly, that the regime should apply to ordinary general powers of attorney as well as to EPAs: there is no logical distinction between the two for present purposes and, once its scope is settled, there is no reason why the special regime should not apply to both.Early implementation of these recommendations is by no means assured.

Although, in November 1994, the Lord Chancellor's Department announced the government's intention to implement some of the Law Commission's reports, this particular one was not among those mentioned.It has been assumed up to now that s.3(3) has the meaning which it purports to have, and nothing has emerged so far to explain the reaction of the solicitor acting for the purchaser of 13 Acacia Avenue.

However, there is a strange paradox here because doubts have been expressed as to whether s.3(3) is effective in a range of cases which include the very one with which it set out to deal.

This is because of s.22(2) of the Law of Property Act 1925, which provides: 'If land held on trust for sale is vested, either solely or jointly with any other person or persons, in a person who is incapable, by reason of mental disorder, of exercising his functions as trustee, a new trustee shall be appointed in place of that person, or he shall be otherwise discharged from the trust, before the legal estate is dealt with under the trust for sale or under the powers vested in the trustees for sale.'It seems that those responsible for s.3(3) were unaware of s.22(2) and, whatever else may be in doubt, it is clear that the two enactments cannot stand together.

My view is that the courts would regard s.3(3) as having exempted from s.22(2) those cases in which an EPA had been granted.

A Law Society statement (see [1988] Gazette, 18 May, 4) does not support this optimistic view, however, and goes so far as to give warning of possible negligence claims against solicitors who act on it.Two events have o ccurred since the publication of the statement which strengthen the optimists' case.

The first is the decision in Pepper v Hart [1993] AC 593: it is thought that the combination of s.3(3) and s.22(2) produces an ambiguity or obscurity sufficient to permit a reference to Hansard and thus to the very clear statements of Lord Hailsham mentioned above.

The second is the publication of the Law Commission's report: although it recommends clarification, its assumption clearly is that s.3(3) prevails over s.22(2).All this is not a mere storm in a teacup.

At first sight it may not seem to matter very much whether John Jones' trusteeship functions are exercisable by his attorneys or not.

If they are not (or if the purchaser's solicitor maintains that they are not) then a simple solution surely lies in s.36 of the Trustee Act 1925, under which a mentally incapable trustee may be replaced.

But there is, unfortunately, a sting in the section's tail: subs (9) provides that if the trustee has a beneficial interest in possession under the trust he or she may not be replaced without leave of the court.

(There is an exception for cases where the trust instrument nominates the settlor or some other person as the appointor of new trustees, but this is not likely to be of help here.)So the problem is a real one.

Its existence might even lead solicitors to wonder whether an elderly co-owner who contemplates granting an EPA should be advised not only to grant the power but also to step down from the trusteeship at once in favour of some younger person who is less likely to become incapable.

This is not the kind of decision to be forced on a person in this situation.In the case of co-ownership trusts, almost everything will nearly always turn on the attitude of the Land Registry.

If, in our example, it would refuse to register a transfer executed by Joan Jones in her capacity as trustee and by John Jones' attorney or attorneys (who might be or include her), then for all practical purposes the transaction is stymied whatever the law might be.

If, on the other hand, the registry would be willing to register such a transfer then the fact, coupled with the very strong arguments which can now be advanced in favour of what has been called the optimistic view, would surely be considered conclusive even by the timorous solicitor whom we have supposed to act for the purchaser.A letter to the registry proved productive.

The registry's helpful reply expresses the clear and unequivocal view that s.3(3) prevails over s.22(2).

The letter ends: 'As you imply, there is as yet no decided case in which the point has been considered.

However, I think it unlikely that, if there were to be such a case, the decision would uphold s.22(2) as against s.3(3).

In the meantime, the registry will continue to assume that (subject of course to anything to the contrary in the instrument creating the power of attorney) attorneys under enduring powers are able to act in place of the donor in relation to his or her functions as trustee of co-ownership land.'The context makes it quite clear that this assumption continues to apply even where the donor has become mentally incapable.