TLATA - Revision Notes PDF

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TLATA – Revision Notes 

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Any trust of property which consists of includes land is a trust of land according to s.1 TLATA. This is a very broad definition – the Act governs a wide variety of interests/relationships. TLATA 1996 replaced the old trust for sale regime. o This had been much criticised as unfit for modern conceptions of property, because it was fundamentally a conveyancing device – the focus was on sale (under TLATA, the s.4 power to postpone sale is important, more so than it was under trusts of land). o It conceived of land as a monetary interest, locked up in an asset, failing to appreciate the social value that land has to its beneficial owners. It tried to provide that overreaching would occur, but ultimately having your beneficial interest changed into money isn’t what people wanted. Trusts for sale can still be expressly created, but this is rare. Neuberger J in Mortgage Corp v Shaire noted that the trust for sale was now ‘obsolete’, because they are all also trusts of land – TLATA acted retrospectively. Remember that wherever we have co-ownership, we have a trust, and wherever we have a trust comprising of land, we have a trust of land. In the absence of an express declaration of trust, equity follows the law to create an equitable joint tenancy, and s.36(1) LPA implies a trust accordingly, which is a trust of land.

What does TLATA do?  Defines the rights and duties of trustees and beneficiaries under trusts of land  Incorporates intended to protect purchasers of co-owned land – overreaching, presumption in favour of the purchaser etc. o Note that s.44 LRA requires a compulsory restriction to be placed on the register where there are 2+ registered proprietors – this is to ensure overreaching occurs.  Outlines the mechanism for appointment and retirement of trustees.  Provides a machinery for settling disputes in relation to land.  Abolishes the equitable doctrine of conversion, which was a legal fiction conceiving of beneficial interests as interests in personalty rather than property. The statutory duty of care:  Imposed by s.1 Trustee Act 2000. The duty applies, according to Sched 1, when: exercising the power under s.8 to acquire land, when exercising any

other power to acquire land, and when exercising any power in relation to land acquired under a power mention in the previous two categories. o Note that the duty does not apply with regards to a decisions whether to use a power, only in actually exercising the power. o If they profess to have a certain professional skill, they are held to the standard of the reasonable person with that skill.

Functions of the trustee: General powers – s.6 (always start here):  s.6(1) – has the power to deal with the land with the full powers of an owner.  s.6(2) – if the beneficiaries are all sui juris and absolutely entitled, the trustee can convey legal title to them, even if they don’t want it  s.6(3) – they can purchase land anywhere in England and Wales, by way of investment, or occupation by a beneficiary, or any other reason  s.6(5) – in exercising powers, regard must be had to the rights of beneficiaries. This includes obtaining the best price reasonably obtainable for the land, and not selling at an undervalue (George v McDonald).  s.6(6) – powers must not be exercised contrary to any other rule of law. o Note that the powers of the trustees must be exercised collectively/unanimously, or not at all. Power to partition – s.7:  Where the relevant beneficiaries are sui juris, the trustee can partition the land and transfer each trustee his relevant share. If the trustee is a minor, the share is held on trust.  Note that doing this destroys co-ownership, and the land is held as separate parcels.  The beneficiaries must consent  Atkinson v Atkinson – example of partitioning. Beneficiaries couldn’t agree about anything, so they partitioned. Delegation of functions – s.9:  This is done by power of attorney. The trustees collectively delegate their powers to a beneficiary of full age etc. The delegation can be revoked by any one of them.  The trustee’s duty of care applied in relation to deciding whether or not to delegate, and also in keeping an eye on the delegate. If the trustees fail to exercise reasonable care in supervision, they will be liable for the delegate’s wrongs (but not otherwise).  Delegation ends where a new trustee is appointed or where the beneficiary ceases to be beneficially entitled.

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There is a rebuttable presumption that the delegated person has the power to exercise the control he does – this protects third parties dealing with the delegate

Control of the right to occupy – s.12:  Limited control. Discussed later in relation to the right to occupy.

Rights of the beneficiary 

TLATA represented the empowerment of the beneficiary and democratisation of the trust, by conferring rights on the beneficiary.

Right to insist on consents – s.10:  Can require certain people (usually one of beneficiaries) to consent before the trustee exercises his functions.  Where there are more than 2 named people on the consents list, getting any 2 of their consent will do. Children have parents/guardians consent for them.  This right is actually vested in the author of the trust, but generally operated in favour of the beneficiaries. Right to be consulted – s.11:  A right to be consulted and their wishes taken account of. But that doesn’t require the trustee to follow their wishes.  Conceived of as a duty to listen by the trustee with a privilege to say no. Right to occupy/use – s.12:  This wasn’t a thing before TLATA because of the doctrine of conversion. Lord Oliver in City of London BS v Flegg says that the right to occupy is really just an alternative to receiving rent, which all beneficiaries have a right to.  Applies to beneficiaries with an interest in possession.  The right doesn’t apply where the land is unavailable/unsuitable: o Chan Pui Chun v Leung Kam Ho – imprisoned husband trying to argue the house was unsuitable for his wife due to its size. CoA rejected this, largely on the fact that if it had been suitable for them when they were together, it would be suitable with him in prison. The court said that regard should be had for the general nature of the property, but also the personal circumstances and requirements of the beneficiary. Where the property is vastly disproportionate to needs, it will be unsuitable.  s.13 allows the trustee to reasonable exclude/restrict one of more the beneficiaries’ right to occupy (but not all of them). In doing this, he must not

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act unreasonably, and in exercising this discretion he should have regard for factors in s.13(4): o The intentions of the creators of the trust o The purpose for which the land is held – must include ‘making the land available’ for occupation – s.12(1)(a). o The circumstances and wishes of the beneficiaries entitled to occupy under s.12. s.13(3) allows the trustee to require payment of rent etc. to the ousted beneficiaries. This is fair, since they’re not getting what they’re entitled to. s.13(7) says that any person in possession should be allowed to continue in their possession, except by consent or court order. The power of exclusion stuff often goes to the court (because the trustees and beneficiaries are often the same people): o Murphy v Gooch – affirmed the rule in stated in Stack v Dowden in relation to past occupation. Introduces the concept of constructive exclusion – a mother and daughter moved out of the family home when the relationship with the husband broke down. It was found that he was constructively excluding her and that she was entitled to charge a rent to him, since they were tenants in common in equal shares. o Amin v Amin – family dispute. Exclusion from a family manor house; threats and unpleasantness could amount to exclusion – Warren J said it doesn’t have to be exclusively physical exclusion. There were other properties involves as well, but TLATA did not apply in respect to them, so equitable principles could be used. Warren J also highlighted the fact that the exclusion must be by the trustees – and it must be all of the trustees, as a body. o French v Barcham – highlights the point that s.13 will only operate where the excluded party has a right to occupy. In this case, one of the parties was bankrupt; the trustee in bankruptcy does not have a statutory duty to occupy. The non-bankrupt occupier will normally have to pay rent. S.13 does not apply, so there is equitable jurisdiction to order compensation.

Judicial resolution of disputes (ss.14-15) 

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Court can resolve pretty much any sort of dispute over one of the trustee’s powers or beneficiary’s rights – s.14. s.17 allows trustees of anyone with an interest in the proceeds of the sale of the land to apply. The beneficiary can obviously apply. The court award any order that it ‘thinks fit’ Note that where the dispute is over occupation, regard must be had for the wishes and circumstances of all beneficiaries entitled to occupy.

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Note that the case last from before TLATA is still relevant, but should be treated with some caution since the regime lent in favour of sale. s.15 provides a list of (non-exhaustive and non-weighted) factors they ought to consider: o Intentions of the person who created the trust  Barclay v Barclay – testator left a home for sale and division between beneficiaries, but one of them had previously lived there and wished to continue occupation. The court found this selfish and ordered the sale.  Closely linked to the purposes for which the property is held on trust. o The purposes for which the property is held on trust  Stott v Ratcliffe – elderly couple bought a house together to live in until they died. When one died, their personal representative sought to sell the house. The CoA refused to order sale – the very purpose of the purchase was to provide a house for both of them – purpose of the trust.  Courts tend to refuse sale of family homes, since they are almost always created to provide a home for joint occupation by family members. Only in cases of insolvency will it be likely that the court will order sale, or where there has been irretrievable breakdown of the relationship and there are no minor children (White v White).  Re Buchanan-Wollaston’s Conveyance – 4 people owned properties by the sea. They bought a piece of land to ensure their sea-view would not be spoiled. When one sold, he sought the court to direct the others to sell the land with him. The court refused; it would not grant an order for sale where the underlying contractual purpose/obligation subsisted. o Welfare of any minor who occupies of may be expected to occupy  Re Evers’ Trust – Ormrod LJ refused to endorse a sale which would have effectively allowed the man to evict his wife and their children. The point of the sale was to provide indefinite accommodation for them. o The interest of any secured creditor of any beneficiary The decision is at the discretion of the court – the court decides whose voice prevails at equity (Chokar). Kerr LJ in Bernard v Josephs rightly noted that where sale is ordered, neither party can occupy, and this leads to an increased burden on social housing much of the time – not desirable. On the whole, TLATA is indifferent as to sale or retention of the land, unlike the old regime which preferred sale.

Applications for sale bought on behalf of creditors:

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This highlights the tension between use and exchange value. The creditor wants to unlock his security/interest.

By a trustee in bankruptcy:  Will inevitably apply for sale, because it’s the only substantial piece of capital left. The trustee has 3 years from the date of bankruptcy to apply for sale – he is an ‘interested person’ under s.14(1).  s.15(1) factors for consideration are explicitly disapplied here, and the court is directed to the Insolvency Act 1986 s.335A(3), and an order is made which the court thinks is just and reasonable. The reality is that there is a very strong presumption in favour of sale here. The presumption can be rebutted in exceptional circumstances (although note that rebutting the presumption successfully just moves you back to s.15 and you still might lose): o Re Holliday – mother living with 3 young children allowed sale postponed for 5 years. But this was before the Insolvency Act and probably wouldn’t be decided like this again. o Re Citro – Nourse LJ refuses to accept that housing difficulties and disruption to young children is exceptional. They are mere ‘melancholy consequences of debt and improvidence’. o Claughton v Charlambrows – the house was special modified for the disabled person’s needs. They also had a reduced life expectancy. This was held exceptional and sale was postponed.  Note that this raises Art 8 and Art 1 Protocol 1 questions, although the court seem to believe that the balancing test in place is proportionate.  The equity of exoneration may allow a co-owner, in a situation where the charge was made jointly but only to secure the debts of one, to request that the creditor only be allowed to have control over the debtor’s share. However, if it was for both of their benefit then the claim won’t work.  The Insolvency Act was meant to ease the tension between getting money back and ensuring long term protection of the family home. It has failed. Other jurisdictions have homestead legislation, which allows you to register a property as a family home and then effectively prevents it being affected by bankruptcy etc. – New Zealand. By other creditors:  We’re not talking bankruptcy, so s.15(1) still applies.  Neuberger J in Mortgage Corp v Shaire said he thought Parliament had intended that the new regime would relax the approach and encourage protection of the family home. But it has arguably failed in that respect, as the court’s are still very aware of the fact that the creditor has a strong interest in the property – seen in Achampong.

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Bank of Ireland v Bell – wife had a 10% equitable interest in house. Her husband left her and stopped paying the mortgage, causing debt to amount to £300,000. She had a son. But Sir Christopher Staughton ordered sale, noting that the bank was as much a beneficiary in the house as she was. This shows a general lack of sympathy by the regime. As if it wasn’t bad enough…the CoA decision in Bank of Baroda v Dhillon suggests that where sale is effected through a court order, the purchaser will take free of any overriding interest – this would seem to undermine basic principles of land law. Other decision under the regime, one harsh and one slightly fairer: o Edwards v Bank of Scotland – wife forged husband’s signature. Court asked whether bank was receiving proper recompense. He was 77 and the court said he would have enough money to find another place to live. o Edwards v Lloyds TSB – wife had been deported. The court made a postponed order for sale. H had forged her signature, his company went bust and he fled. She had 4 minor children and could not afford to buy another house. Postponed until youngest child reached adulthood.

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Governed by Part II TLATA. Under s.19 the beneficiaries provided that are sui juris and together absolutely beneficially entitled, can request a trustee to retire from the trust and/or appoint a specified person(s) trustee. Note that this only applied if there is no named person in the instrument. The beneficiaries must be in agreement. S.20 allows for the beneficiaries (sui juris etc.) to replace a trustee who has become incapable of acting as a trustee by virtue of mental disorder. A bare beneficiary can effectively deal with the land as he wants, including having the trustee transfer title to him.

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Allows a purchaser to take free of beneficial interests, and for those interests to be converted into money. It provides ‘an absolute priority’, including over overriding interests (Lord Oliver, City of London BS v Flegg). It sweeps the equities off the land and into the proceeds of the disposition. Statutory preconditions for overreaching are laid down in s.2(i)(ii) LPA: o Trust of land o Interest must be capable of being overreached (some rights are never affected like leases, options, easements…).

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o Payment of capital monies to two or more trustees, or a trust corporation, or a sole personal representative (s.27(2) LPA).  Note that overreaching doesn’t occur where no capital money arises e.g. to secure debts (State Bank of India v Sood). Overreaching raises Art 1 Protocol 1 and Art 8 questions. But the courts have insisted that it doesn’t breach human rights – NatWest v Malhan.

When there is a sole trustee in registered land:  Overreaching has not occurred – s.27(2) LPA  A beneficial interest cannot be protected by a notice – s.33. It can be protected by a restriction, but if it had been it would be been seen by the purchaser and we wouldn’t be in this situation.  Is the interest overriding? This is really the best you can hope for. Remember the rule in Hogdson v Marks that the purchaser needs to make enquiries about the interests of those in actual occupation…he can’t rely on the untrue ipse dixit of the seller. Sole trustee in unregistered land:  Overreaching won’t occur.  Could the interest have been registered as a land charge? S.198 LPA or s.2 LCA.  Does the interest override on first registration? LRA, Sch 1 Para 2?

Termination of trusts of land    

Transfer of the legal estate with overreaching defeating the interests. Conveyance by trustee to bare beneficiary Partition under s.7(1) Land becomes held by one person – occurs either by release or operation of survivorship. The remaining joint tenant can act as an absolute owner....