trust of land/mortgages

implications of trusts of land

• may not be visible on register, so increased priority dispute

• trust visible - legal title vested in 2+ trustees

• trust not visible but imposed - legal title vested in 1 trustee

• in priority dispute, interests under trust override if coupled with actual occupation and are discoverable

• if overreaching applies, trumps overriding

trust of land

automatically applied anytime piece of land co-owned by 2 people. imposed by tlata

changes in social reality leading to tlata

• expansion of residential ownership

• growth of family home

• growth in cohabitation

• majority of trusts for sale not directed towards sale but retention of land

(previously equity viewed interests of beneficiaries as interests in potential sale and money resulting)

s6(1) tlata

trustee of land has all powers of absolute owner (incl management and disposition.

also have to exercise function as trustees

s6(2) tlata

special power to terminate trusts and convey land to beneficiaries on trust fot them regardless of consent

s7(1)-(3) tlata

special power to partition trust land between beneficiaries subject to consent

s9(1) tlata

power to delegate exercise of functions to any/more of the beneficiaries

s14(1)-(2) tlata

sets out basis for how disagreements between trustees is solved (as powers exercised unanimously)

s6(5) tlata

trustees obliged to have regard to the rights of beneficiaries

s6(6) tlata

powers should not be exercised in contravention of any rule/equity

s6(9) tlata

trustees subject to duty of care when exercising powers

s11 tlata

duty to consult beneficiaries when exercising functions relating to land so far as practicable (also duty to give effect to wishes of beneficiaries so far as consistent with general interest of trust)

s8(1)(-(2) tlata

when trust expressly created, trustees powers may be excluded or restricted (incl power of sale)

rights of beneficiaries

s11 - right to be consulted

s12 - right to occupy

s19-21 - right to appoint/remove trustees (unanimously)

s14 - right to apply for court order

restrictions on right to occupy

• if land unsuitable/unavailable for occupation

• if land held as investment/there is express duty to sell on the trustees

• right to opccupy subject to s13 tlata

chan pui chun v leung kam ho

suitability of land meaning requires consideration of ‘personal characteristics, circumstances and requirements of the particular beneficiary’

restrictions to right to occupy under s13

13(1) - trustees can exclude/restrict right of beneficiaries but at least 1 qualifying beneficiary must be allowed to occupy

13(2) - exclusion must not be unreasonable and restriction must not be to unreasonable extent

13(3) - trustees can impose reasonable connditions on beneficiaries in occupatin

s13(4) - in exercising powers, trustees must consider intentions of person creating trust, purpose for land held, circumstances/wishes of each beneficiary

13(5) - t can require b to pay expenses in respect of land/assume other obligation related

13(6) - b in occupation may be required to pay compensation to those excluded from occupation

13(7) - t cant exercise powers to exclude anyone in occupation unless given persons consent/court approval

occupation rent

trustees powers to require compensation triggered only where b’s right to occupy is excluded/restricted

tlata s15(1)

factors considered in disputes

a. intentions of person'/s who created trust

b. purpose for which property held

c. welfare of any minor occupying land as home

d. interests of any secured creditor of any beneficiary

disputes between co-owners

use of tlata s15 factors

white v white

s15 list not exhaustive and there is no weighting of factors - judges do ‘as they think fit’

disputes between co-owners and secured creditors

use s15 factors, but law com says - ‘they are simply designed to indicate some of the more important factors to which the courts should have regard

mortgage corporation v shaire

mortgage executed by both parties who had beneficial interest in home through 1 party forging the others signature and mc applied order of possession and sale.

court refused to automatically order sale and postponed based on balance of s’s rights with creditors

example of s15 factors being applied, incl intentions of creditor but also s

pre tlata right to occupy

idea that beneficiaries held no interest in land, just proceeds so couldnt claim right to occupy.

however, practically, courts recognised right to occupy to beenficiaries, but overall nature uncertain

occupation rent pre tlata

applied in any case where occupation rent necessary to do justice/equity between parties

disputes between co owners pre tlata

strict approach - sale should be ordered unless trustees unanimously exercise power to postpone (re mayo)

however, more leniently, sale not ordered if collateral purpose could still be achieved by trust

in presence of children, sale not ordered unless alt accommodation could be provided

disputes between co owners and secured creditors pre tlata

considered under s3- lpa 1925

lloyds bank v byrne - re citro rule applied where sale ordered unless exceptional circumstances

pre-tlata had significant bias in favour of creditors