Trusting in a statute

District judge Peter Jolly takes a look at the Trusts of Land and Appointment of Trustees Act 1996 and its practical use.

What a mouthful...District judge Peter Jolly takes a look at the Trusts of Land and Appointment of Trustees Act 1996 and its practical use.

What a mouthful the title Trusts of Land and Appointment of Trustees Act (TLATA)1996 is.

Could not the draftsperson have come up with a catchier name?At least the name on the front cover of the Act describes what you find on the inside.

This statute should not exclusively be the preserve of Chancery lawyers: there are a number of familiar situations revealing its use for civil and family lawyers alike.

I want to focus on these, but first the basics.

The statutory frameworkThose who qualified more than five years ago may remember not just that there was a Law of Property Act in 1925 (LPA), creating the mechanism of jointly owned property being held on trust for sale but that section 30 enabled a trustee, or joint owner, to apply to the court for an order for sale.

With the 1996 Act, that provision disappeared, and instead we have trusts of land.

Out of the window went section 30 LPA and it was replaced with section 14 TLATA.

Do not forget all about section 30: old authorities may need to be explained or distinguished, particularly as under the former regime a sale would not be ordered if it defeated the purpose of the trust.

Section 14 TLATA(1) Any person who is a trustee of land or has an interest in a property subject to a trust of land may make an application to the court(2) On an application for an order under this section the court may make any such order: (a) relating to the exercise by the trustees of any of their functions or;(b) declaring the nature or extent of a persons interest in property subject to the trust, as the court thinks fit.This section does not authorise the appointment or removal of trustees.

While section 14 carries a wide discretion (as the court thinks fit), the courts powers seem to be restricted to the land only, which would include fixtures, but exclude chattels.

A claimant seeking to have a land dispute resolved under section 14 cannot add on a claim for relief in relation to the car and the dining room table as well.

Relevant matters These are set out in section 15.

The list is non-exhaustive and includes the intention of the creator of the trust; the purposes for which the land subject to the trust is held; the welfare of any minor occupying, or who might reasonably be expected to occupy the land as his home; and the interests of any secured creditor of any beneficiary.

The circumstances and wishes of beneficiaries are covered in section 15(2) and (3) situations.

These set wider parameters than did section 30.The section 15 criteria do not apply to applications by a trustee in bankruptcy, and the specialist provisions of section 335A of the Insolvency Act 1986 are invoked in that event [see [2000] Gazette, 26 October, 46].

Section 14 in practiceHere are three situations tailor-made for section 14:l Partners buy a home for themselves.

The relationship breaks down, and one moves out.

Both are probably trustees, have an interest in the home, and can apply.

One doubtlessly would seek the sale of the property to realise his interest in it.

The trust deed setting out their respective interests is absent, silent or inadequate on the point, and the court will be asked to invoke section14(2)(b) to identify the respective shares as well as considering the question of sale.

Any schedule 1 Children Act 1989 application would normally only cover the residential parents occupation of the home during the childrens minority.l Husband and wife buy a house.

One of their parents is widowed or divorced, and they use some of the grandmothers money to construct an annex.

Husband and wife split up.

Although the grandmother may intervene in the divorce ancillary relief proceedings, her claim under section 14 strictly will need to be determined before the court knows how much is available between the spouses.

And what if there is a dispute as to grandmothers share, contributions post-dating the trust deed, or the proceeds will not buy another house in that area?l Mother and father buy student son a flat for his university days.

Their financial circumstances have changed and they need to realise their investment.

Son wants to stay put.

The flat may even have been bought in his name to give him a record with mortgage lenders and for fiscal reasons.

CreditorsA spouses trustee in bankruptcy is not the only creditor who may seek to liquidate his interest against the wishes of the other spouse.

Formerly, a creditor with a charging order on one partys equitable interest only could not use CCR Order 31(4) or RSC Order 88 (Midland Bank plc v Pike [1988] 2 All ER 434), and was forced to apply under section 30 LPA to achieve a sale of the whole property.

Such a creditor now qualifies under section 14.

In Bank of Ireland v Bell and another [2000] All ER (D) 2105 the bank was an equitable chargee and brought possession proceedings.

The wife had challenged that she had signed the joint mortgage to the bank and the trial judge held that the mortgage operated only as an equitable charge.

He then went on to consider sections 14 and 15 TLATA, the wife being a beneficiary.

On the facts of this case, the judge refused a sale, but was overturned on this point on appeal.

The Court of Appeal there considered Mortgage Corporation v Silkin and Shaire [2000] 2 FCR 222 [see [2000] Gazette, 26 October, 46].

ProcedureIn Bell, section 14 was tacked on to other proceedings.

Looking at a free-standing section 14 application is where it gets tricky.

First, select your court.

The trustee in bankruptcy should issue in the bankruptcy court.

Anyone else will think of the local county court.

Under the 1991 jurisdiction order (SI 91/724) as amended (SI 96/3141), the county court has full jurisdiction notwithstanding the basic equity limit of 30,000.

If you choose the High Court, remember that chancery hearings can take place at only a few Chancery District Registries.There appears no reference to TLATA in the Civil Procedure Rules 1998 (CPR) PD8B.

Although the court may need to determine the extent of a partys interest in the land, the better view is that TLATA claims are suited to the alternative procedure under CPR part 8 but CPR part 7 may still be used.

See CPR rule 8.2 for the contents of the claim form, and CPR rule 8.5 means that any written evidence on which the claimant intends to rely must be filed and served right at the start.

It is unrealistic to expect that evidence covering every possible contingency is filed on day one, but do attempt to meet the spirit behind the rule.

Address each of the points in section 15 TLATA, and also deal with valuation.

Other trustees and beneficiaries should be defendants.

Who else occupies the property? If a sale with vacant possession is required, refer the matter to the court to consider party status, or merely notification (c.f.

CCR Ord.

7 r.15A).

Look at PD8 for further assistance generally.Any defendant wishing to adduce evidence must file it with his acknowledgment, and as a steer can rarely be given earlier, the matter is listed for directions at that stage.

District judges welcome draft directions.

Any challenge to the use of the part 8 procedure must come with the acknowledgment, but that apart, parts 15, 16 and 26 do not apply, and the case remains as deemed allocated to the multi-track.

Which judge?I suggest that usually a district judge should try an appropriate case but deal with this at directions.

If there are parallel proceedings already afoot, the court will need to know of them at an early stage, effectively to case-manage.

While it is the duty of the court to manage cases, the parties must help the court further the overriding objective.District judge Peter Jolly sits at Portsmouth Combined Court Centre