Land Law: Trusts of Land (Lecture #5)

When Does a Trust Arise?

  • where 2 or more people have legal and/or equitable title to the same land/property at the same time

  • e.g. a husband (H) and wife (W) purchase a property and legal title is transferred into both of their names by deed


Characteristics of a Trust

  • the essential characteristic of the trust is the separation of the title to property from the right to enjoy it for one’s own benefit.’ — Aruna Nair, Textbook on Land Law (19th edn, OUP 2023) 303.

  • law = trustee/s (legal title)

  • equity = beneficiary/ies (equitable title)

  • Trustee Act 1925, s 34(2)(a): the number of trustees … shall not in any case exceed four …

  • trustees may also be beneficiaries


The Trusts of Land & Appointment of Trustees Act 1996

  • The Trusts of Land and Appointment of Trustees Act (TLATA) 1996 - came into force 1 January 1997.

  • TLATA 1996, s 1:

  • (1) In this Act –
    (a) “trust of land” means any trust of property which consists of or
    includes land …

  • (2) The reference in subsection (1)(a) to a trust –

  • (a) is to any description of trust (whether express, implied, resulting or
    constructive), including a trust for sale and a bare trust …

Express Trusts

  • intention must be evidenced in writing

  • Law of Property Act (LPA) 1925, s 53(1)(b): a declaration of trust respecting any land or interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will

Implied Trusts

  • LPA 1925, s 53(2): … section [53(1)(b)] does not affect the creation or operation of resulting, implied or constructive trusts.


Resulting Trusts

  • ‘Resulting trusts are intrinsically concerned with the money contributions laid out in the purchase of an estate in land.’ — Kevin Gray & Susan F Gray, Elements of Land Law (5th edn, OUP 2009) 825

  • resulting trusts give effect to the contributor’s presumed intentions

Intention: Time - Curley v Parks [2004] 

  • “The resulting trust of a property purchased in the name of another…arises once and for all at the date of which the property is acquired.“

‘Purchase Money‘ Resulting Trusts 

  • Financial contributions referable to the acquisition of land/property:

  • Principally - direct cash contribution to the purchase price.

Dyer v Dyer (1788) 2 Cox Eq Cas 92 - Eyre CB:

  • [A] trust of a legal estate … results to the man who advances the purchase-money.

  • However - also:
    - Contribution to deposit or legal expenses - Burns v Burns [1984] Ch 317
    - Contribution of council tenant’s discount under the Housing Act 1985,
    s 126(1) - Springette v Defoe [1992] 2 FLR 388
    - Contribution of mortgage payments - Laskar v Laskar [2008] EWCA Civ
    347 (although - usually a constructive trust).


Resulting Trusts: Quantification of Shares 

  • contributors receive a proportionate equitable (beneficial) interest

  • e.g. title to the legal estate is transferred to A for £150,000

  • A provides £100,000 and B provides £50,000 of the purchase
    price

  • A resulting trust is presumed in favour of B on the basis of
    contribution

  • the qquitable entitlement is split like so: A  = 2/3   B = 1/3  

  • see: Springette v Defoe [1992] 2 FLR 388

Bull v Bull [1955]

  • The mother did contribute a substantial amount towards the house ... there was therefore ... a resulting trust in her favour. The son is of course the legal owner ... but the mother and son are ... equitable tenants in common. Each is entitled in equity to an undivided share in the house, the share being in proportion to his or her respective contribution. Each of them is entitled to the possession of the land and to the use and enjoyment of it in a proper manner. — Lord Denning (Court of Appeal)

Implied Trusts & ‘Domestic Context’ 

  • the modern preference for constructive trusts in the ‘domestic context

Stack v Dowden [2007] UKHL 17

  • “In law, “context is everything” and the domestic context is very different from the commercial world. An outcome which might seem just in a purely commercial
    transaction may appear highly unjust in a transaction between husband and wife or cohabitant and cohabitant. — Baroness Hale

Laskar v Laskar [2008]

  • property jointly purchased by a mother and daughter

  • quantification of the parties’ beneficial shares calculated on the basis of resulting trust principles as the property was purchased as an investment

Fowler v Barron [2008] 

  • “The legal technique that the court will use to ascertain whether both joint owners who had been co-habitees had a beneficial interest is that of the common intention constructive trust, rather than that of resulting trust.“ — Lady Justice Arden

The ‘Domestic’ Context

Adekunle v Ritchie [2007]

  • Baroness Hale [in Stack v Dowden] primarily had in mind cohabiting couples living together in either a platonic or sexual relationship; however she does not limit her approach to those cases. This case relates to a domestic relationship between mother and son and in my view is to be decided in accordance with the new approach. — Leeds County Court, HHJ Behrens

Constructive Trusts

  • A constructive trust … is created … whenever [A] has so conducted himself that it would inequitable to allow him to deny [B] a beneficial interest in his land. [A] will be held so to have conducted himself if by his words or conduct he has induced [B] to act to his/her own detriment in the reasonable belief that by so acting he was acquiring a
    beneficial interest in the land.

Common Intention Constructive Trusts 

  • common intention (express or inferred) + detriment = constructive trust

Express Common Intention Constructive Trusts: Lloyds Bank plc. v Rosset [1991] 1 AC 107

  • “The first and fundamental question which must always be resolved is
    whether … there has at any time prior to acquisition, or exceptionally at
    some later date, been any agreement, arrangement or understanding
    reached between them that the property is to be shared beneficially. The
    finding of an agreement to share in this sense can only, I think, be based
    on evidence of express discussions between the [parties], however
    imperfectly remembered and however imprecise their terms may have
    been.“ — Lord Bridge

Express Common Intention 

Eves v Eves [1975] 1 WLR 1338

  • “The defendant clearly led the plaintiff to believe that she was to have some undefined interest in the property, and that her name was only omitted from the conveyance because of her age“ — Brightman J

Grant v Edwards [1986] Ch 638

  • There is another and rarer class of case … where, although there has been no writing, the parties have orally declared themselves in such a way as to make their common intention plain. The defendant told the plaintiff that her name was not going onto the title because it would cause some prejudice in the matrimonial proceedings between her and her husband. … these facts appear to me to raise a clear inference that there was an understanding between the plaintiff and the defendant, or a common intention, that the plaintiff was to have some sort of proprietary interest in the house… — Nourse LJ

Detriment

  • Financial or non-financial

Eves v Eves [1975] 1 WLR 1338

Beneficial Intrests Under a Trust: Registered Title 

  • interest protected by entry

  • entry of a restriction (LRA 2002, ss 40-44) in the proprietorship register.
    LRA 2002:

  • s 40(1) A restriction is an entry in the register regulating the circumstances in
    which a disposition of a registered estate or charge may be the subject
    of an entry in the register.

  • s 42(1) The registrar may enter a restriction if it appears to him that it is
    necessary or desirable to do so for the purpose of –

  • (b) securing that interests which are capable of being overreached on a
    disposition of a registered estate or charge are overreached ...

  • N.B: may be overriding if combined with ‘actual occupation’ - LRA 2002, sch 3, para 2: Interests of Persons in Actual Occupation

Powers of Trustees

  • TLATA 1996, s 6: General powers of trustees

  • (1) For the purposes of exercising their functions as trustees, the trustees of land have in relation to the land subject to the trust all the powers of an absolute owner.

  • (5) In exercising the powers conferred by this section trustees shall have regard to the rights of the beneficiaries.

  • (9) The duty of care under section 1 of the Trustee Act 2000 applies to trustees of land when exercising the powers conferred by this section.

  • Trustee Act 2000

  • s 1(1) … a trustee … must exercise such care and skill as is reasonable
    in the circumstances.


Beneficiaries’ Right to Consultation

  • TLATA 1996, s 11: Consultation with beneficiaries

  • (1) The trustees of land shall in the exercise of any function relating to land subject to the trust –

  • (a) so far as practicable, consult the beneficiaries of full age and beneficially entitled to an interest in possession in the land, and

  • (b) so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or (in case of dispute) of the majority (according to the value of their combined interests).


Beneficiaries’ Statutory Right of Occupation

  • TLATA 1996, s 12: The right to occupy

  • (1) A beneficiary who is beneficially entitled to an interest in possession in land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at the time –

  • (a) the purposes of the trust include making the land available for his occupation … or

  • (b) the land is held by the trustees so as to be so available. TLATA 1996, s 13: Exclusion and restriction of right to occupy

  • s 13(1) Where two or more beneficiaries are entitled under section 12 to occupy the land, the trustees of land may exclude or restrict the entitlement of any one or more (but not all) of them.

  • NB: Trustees must act ‘reasonably’ (TLATA 1996, s 13(2))


TLATA 1996, s 14

  • Section 14: Applications for order

  • (1) Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.

  • (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 person’s interest in property
    subject to the trust, as the court thinks fit.

  • TLATA 1996, s 14 - replaces and repeals LPA 1925, s 30


TLATA 1996, s 15

  • Section 15: Matters relevant in determining applications

  • (1) The matters to which the court is to have regard in determining an application for an order under section 14 include –

  • (a) the intentions of the person or persons (if any) who created the trust,

  • (b) the purposes for which the property subject to the trust is held,

  • (c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and

  • (d) the interests of any secured creditor of any beneficiary


TLATA 1996, s 15(3)

  • In the case of any ... application … the matters to which the court is to
    have regard also include the circumstances and wishes of any
    beneficiaries of full age and entitled to an interest in possession in
    property subject to the trust or (in case of dispute) of the majority
    (according to the value of their combined interests).


The Continuing Relevance of the LPA 1925, s 30 Case Law

  • Section 15: Matters relevant in determining applications

  • (3) In the case of any ... application … the matters to which the court is to have regard also include the circumstances and wishes of any beneficiaries of full age and entitled to an interest in possession in property subject to the trust or (in case of dispute) of the majority (according to the value of their combined interests).

TLATA 1996, s 15

  • s 15(1)(a) the intentions of the person or persons (if any) who created the trust.

  • The settlor’s intentions.

  • Usually under an express trust.

  • s 15(1)(b) the purposes for which the property subject to the trust is held.

  • Incorporates the collateral purpose doctrine i.e. the underlying
    purpose of the trust.



Section 15(1)(b)

Harris v Harris (1996) 72 P & CR 408

  • Court of Appeal - Waite LJ:
    The judge was entitled … to examine the whole course of dealing between
    the various parties concerned in this family history … in the process of
    drawing a proper inference as to what was the underlying or collateral
    purpose of the trust

TSB Bank plc v Marshall [1998] 3 EGLR 100

  • Judge Wroath: The … defendants’ case is that the intention … was to provide a home for the children. They argue that that is the collateral purpose which continues, notwithstanding that all the children are now of full age, as long as any of them continue to live there… I am satisfied that there is no collateral purpose in this case, and the fact that one or more adult children continue to live in the house is not a consideration I must have regard to in deciding whether there should be an order for sale.

Jones v Challenger [1960] WLR 695

  • [W]here property is acquired by husband and wife for the purpose of
    providing a matrimonial home, neither party has the right to demand
    the sale [of the property] while that purpose still existed; that might
    defeat the object behind the trust ...
    ... but with the end of the marriage that purpose was dissolved

Rawlings v Rawlings [1964] 3 WLR 294

  • If there were young children the position would be different. One of
    the purposes of the trust would no doubt have been to provide a
    home for them, and whilst that purpose still existed a sale would not
    generally be ordered. But when those children are grown up and the
    marriage is dead, the purposes of the trust have failed.


Section 15(1)(c)

  • s 15(1)(c) the welfare of any minor who occupies or might reasonably be
    expected to occupy any land subject to the trust as his home.

Re Evers’ Trust [1980] 1 WLR 1327

  • Court of Appeal - Ormrod LJ: The underlying purpose of the trust was … to provide a home for all five of them for the indefinite future. Unfortunately the relationship …broke down … in circumstances of great bitterness. In the present case … in the existing circumstances, it would be wrong to order a sale ... It may not be appropriate to order a sale when the child reaches 16 years … or it may become appropriate much sooner, for example on the mother’s remarriage, or on it becoming financially possible for her to buy the father out.

Williams (J.W.) v Williams (M.A.) [1976] Ch 278

  • The modern view … is to have regard to the needs of the family as a
    whole before a sale is ordered. We have here the wife and four sons still in the house. The youngest son is only 13 years of age and still at school. It would not be proper at this stage to order the sale of the house unless it were shown that alternative accommodation could be provided

White v White [2003] EWCA Civ 924

  • [I]t must be implicit in the judgment [at first instance] that the basis of judge’s [decision] … was the clear finding that an order for sale would not preclude the father from down-sizing to a … property in the same locality, enabling the girls to stay at the same school.

Section 15(1)(d)

  • s 15(1)(d) the interests of any secured creditor of any beneficiary.

Mortgage Corporation v Shaire [2001] 3 WLR 639

  • Neuberger J: [W]hile the interest of a chargee is one of the four specified factors to be taken into account under section 15(1)(d), there is no suggestion that it is to be given any more importance than [any of the other factors under s 15]. [F]or Mrs Shaire to have to leave her home of nearly a quarter of a century would be a real and significant hardship but not an enormous one. She would have a substantial sum that she could put towards a smaller home. For TMC [the mortgagee] to be locked into a quarter of the equity in a property would be a significant disadvantage .

Edwards v Lloyds TSB [2004] EWHC 1745

  • Park J: In the circumstances I do not want to order an immediate sale, because I believe that that would be unacceptably severe in its consequences upon Mrs Edwards and her children. But equally I believe that I should make some order which, admittedly later rather than sooner, should enable the bank to recover its debt with accrued interest upon it.


TLATA 1996, s 15

  • s 15(1) The matters to which the court is to have regard in determining an application for an order under section 14 include …

White v White [2003] EWCA Civ 924 - Arden J:

  • The judge is to have regard to certain specified factors as set out in section 15(1). The Act does not say what weight is to be given to those factors. Nor does it say that the specified factors are exhaustive of all the circumstances which the judge must consider.

TLATA 1996, s 15: Additional Factors

  • Bank of Ireland Home Mortgages Ltd v Bell [2001] 2 FLR 809 - Peter Gibson LJ: [T]he judge referred to Mrs Bell’s poor health. At the time of the trial she was facing an operation. I accept that the judge could properly have regard to this ... [as] a reason for postponing sale.