Although the Act makes a series of useful changes, most of us find difficulties with law reform by scissors and paste amendment.
The Law of Property Act 1925 is so scarred by fiddly amendments that it is unreadable.
Is it not possible to re-write it in language which is more accessible?Power to the county courtsThe unlimited jurisdiction which county courts enjoyed under s 30 of the 1925 Act is continued for the new Act by an amended High Court and County Court Jurisdiction Order 1991.Trusts for sale -- out: conversion -- outPart 1 deals with trusts of land.
Since January 1 1997, some favourite passages in land law have passe d into history.
Out go (nearly) trusts for sale and the doctrine of conversion which treated land held in trust as if it were money.
Strict settlements and entails are now impossible to create, even accidentally.
Pre-1997 strict settlements are excluded by s 1 which defines the trusts for sale, with one exception.
It is irrelevant whether the trust is express, implied, resulting, constructive or bare.
The trust can be of personalty.
The trick of converting a trust for sale into a trust of land is performed by means of s 4, removing the trustees' duty to sell.
The trustees have an implied power indefinitely to postpone the sale, at their discretion, whenever the trust was created and despite any contrary provision.
Before 1997, if trustees refused to sell land, any interested person could apply to the court for an order directing a sale of the land under s 30 of the 1925 Act.
Most parties to s 30 applications had lived together until their final different of opinion.
Another interested person who often applied for an order for sale was the trustee in bankruptcy of one of the joint owners or one of their creditors seeking to enforce a charging order.PrinciplesWhile s 14 of the new Act replaces s 30, the court's powers are not greatly enlarged.
The court has a power to declare the nature and extent of a person's interest in the trust property.
But like s 30 before it, s 14 will disappoint many practitioners because it fails to express any principles for declaring the interest.
The firm but flexible principles of equitable accounting will continue to apply.
The lives of Goodman v Gallant [1986] 2 WLR 236, Pettit v Pettit [1962] 3 WLR 919 and Lloyds Bank v Rosset [1991] AC 107 will continue to develop.The court is given a checklist of matters to take into account when it exercises its powers under s 14 and that is provided by s 15 which is new.
Included are the intention of the person who created the trust, the welfare of any minor who occupies the property and the interests of any secured creditor.
In Jones v Challenger [1960] 1 All ER 785 the court sought to avoid the s 30 bias towards the sale of the trust property.
The court asked: 'Why did the trustees buy the house?' The answer was: 'To provide a home for their children.' The court refused to order a sale.
That would have defeated the purpose of the trust.
By removing the duty to sell, s 14 removes the fiction of the collateral purpose to the trust.InsolvencyThe Insolvency Act 1986 is amended: s 15(4) inserts s 335A into the Act of 1986.
The new provision only applies to a dwelling.
The factors to be taken into account include the needs of the spouse and of any children.
But caution.
It is provided that one year after the land vests in the trustee, a presumption arises that the interests of the trustee outweigh all other considerations, unless the circumstances of the case are exceptional.
The dilemma facing creditors which remains is whether to apply to enforce a charging order under s 14 or to make the debtor bankrupt with a view to the trustee enforcing a sale one year on.The Act and ancillary reliefHave you revamped your matrimonial ancillary relief precedents? If you must, you can still include an express trust for sale although s 4 now implies a power to postpone sale in all new trusts.
Eschew references to any statutory trust for sale or to the Act of 1925.
And recite the intentions of the party putting the property into trust and the purpose for which the property is to be held so that there is readily available material for the court to be able to take into account under s 15 of the new Act should trust proceedings arise.
You might even impress your district judge with a draft ancillary relief consent order which shows you have read the new Act -- or, at least, 'Benchmarks'!
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