How satisfactorily does the law resolve property disputes

When a land is occupied by co-orders there always ought to be, some form of dispute and these disputes are resolved under land law in accordance with a set of rules and regulations. Co-ownership is concerned with arrangement between two or more people in respect of an ownership of a property or a company. When considering disputes between co-owners there are always two-dimensional solutions to the problem, on in law and the other in equity.

There are two forms of co-ownership, tenancy in common and joint tenants. Under a joint tenancy, co-owners are considered as a sole entity owning the property collectively but not individually, which in effect plays significant role in the ius accrescendi(1). Whereas, under a tenancies in common, the co-owners own the property in separate shares. Ius accrescendi does not serve any application under tenancy in common.

Occupational disputes between co-owners vary in accordance with the type of co-ownership whether be a joint tenancy or a tenancy in common. Also, remedies vary accordingly as tenancy in common only exist in equity and a joint tenancy in law. Consequently, this raised many problems particularly in relation to where a tenant in common had difficulty in asserting a right of occupation without a legal ownership of land. In the case of Bull v. Bull [1955](2) which concerned a claim by a son for a possession of a property brought jointly by the defendant and the claimant but only registered under the name of the claimant, the claim was unsuccessful as the defendant was a beneficial tenant in common and a legal tenant in common prior to 1926 but also because she was in actual occupation hence her rights were regarded equals to to the rights of a legal tenant in common prior to1926. Case of Bull was approved in the case of William and Glyn’s Bank Ltd v. Boland [1981](3).

Currently, “a legal joint tenancy in common is now no longer possible, it is prevented”(4) by the Law of Property Act (LPA) 1925 sections 1(6) and 36(2). Furthermore, section 14 of the LPA 1925 provides that Part I of the Act:--

“shall not prejudicially affect the interest of any person in actual occupation of the land to which he may be entitled in right of such possession or occupation.”

However, section 14 had its limitation since the protection was only given to people in actual occupation. In effect, this meant that if a person was not in actual occupation s/he could not challenge possession. Furthermore, the purpose of trust played a huge role in establishing the occupational rights of the beneficiaries. In the case of Barclay v. Barclay(5) the purpose of the trust was that the bungalow will be sold and the proceeds divided between five beneficiaries. Barclay was distinguished from Bull on the basis that the purpose of the trust was that the bungalow should be sold. Although, the beneficiary was in actual occupation but the purpose of the trust was not for the provision of a home for the beneficiaries, thus the beneficiary had no right against the owner of the legal title to remain in the bungalow.
Current development in statutory law governing co-ownership has brought in the Trust of the Land and Appointment of Trustees Act 1996. This Act was implemented in an aim to provide rights to beneficiaries to occupy the property. Under the Act, beneficiaries have a right to occupy but furthermore the rights can be modified or excluded by way of stipulation of the circumstances. The section of the Act is applicable to situations where the beneficiary is not a legal co-owner Section 12 confers rights on beneficial co-owners to occupy land: ----

  1. “S.12(1) A beneficiary who is beneficially entitled to an interest in land in possession land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at that time-
  2. the purpose of the trust includes making the land available for his occupation (or for the occupation of beneficiaries of a class which he is a member or of beneficiaries in general), or
    (b) the land is held by trustees to be so available.

S.12 (2) Subsection (1) does not confer on a beneficiary a right to occupy land if it is either unavailable or unsuitable for occupation by him.
S.12 (3) This section is subject to section 13.”

In effect, what this section focuses to signify is that the beneficiary must regard the purpose of the trust at the time the beneficiary attempts to exercise his right to possess and not the time of the creation. Practically, section 12 permits occupation of the property in question by a beneficiary unless section 12(2) applies only if the property is unavailable or unsuitable for occupation.

Section 12(2) intends to cover satiations where the property in question is occupied by tenant/s under a tenancy agreement rendering the property unavailable for occupation by the beneficiary. Second situation is more difficulty to determine because it concerns the suitability of the property for the occupation by the beneficiary, for example where sharing of the occupation is not suitably feasibly by beneficiaries and other co-owners.

Further restrictions arise under section 12(3), which subjects section 12 to section 13. Section 13(1) confers a right on the trustee to restrict the right of the beneficiary to occupation. However, when exercising this right the trustee must act rationally and his/her right is only available where, there are two or more beneficiaries and the trustee only intends to restrict one or more but not all the beneficiaries. Additionally, under section 13(2) a trustee may impose reasonable condition on the occupation of the beneficiary. In particular, cases, courts tend to use section 13(2) to sanction a physical partition of the property between the beneficiaries and trustees that are entitled to occupy the premises. In the case of Rodway v. Landy [2001](6) the court sanctioned the physical partition of a jointly owned surgery between each doctor occupying a separate part of the surgery.

Unanimity is always required between trustees where they attempt to restrict a beneficiary from occupation. This unanimity is necessary to preserve the interest of trustees whom are also beneficiaries and require protection from restrictions from other legal owners.

When the court considers the reasonableness of the trustee in the course of restricting beneficiaries, the trustee must pay respect to certain criteria under section 13(4):---

the intension of the person who created the trust;

  1. the purpose for which the land is held;
  2. the circumstances and wishes of each of the beneficiaries entitled to occupy the land under section 12.

When constructing these three criteria, there is a confliction between criteria (a) and (b) as the former criteria considers the time of creation as the beneficiary not within the contemplation of the person creating the trust. Whereas, the latter criteria is concerned with the present purpose of the trust. Combining these together, there may be a conflict between the two but this area is still subject to expansion.

With respect to conditional occupation envisaged under section 13, a beneficiary may be restricted from some divisions of the property or may occupy the property in accordance with the attached conditions of occupation. However, any condition must be reasonable and it can include conditions of payment for any outstanding amounts.

Section 13(7) does not confer a right on the trustee to restrict the occupation of a beneficiary already in actual occupation unless the beneficiary consents or the trustee obtains courts approval for possession and excludes the beneficiary.

Disputes in relation to co-ownership not necessarily arise in relation to occupation but also to the sale of the property. With sale disputes there are always two factors, firstly whether the land should be sold or not and secondly, whether its capital value distributed among the beneficial owners. There are both case law and statutory law governing this area to assist courts to reach a firm decision in such a cases.

Section 14 of the Act make provisions to any person whom are trustees of land or those with an interest in land may lodge an application for an order from the court to grant possession. Prior to any decision by the court, the court fill consider the following matters as prescribed under section 15 of the Act: ---

  1. the intensions of the person or the person who created the trust: -- this criteria is primarily reflects the case law governing the co-ownership. 
  2. the purposes for which the property subject to the trust is held;
  3. the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as he is home; and
  4. the interests of any secured creditor of any beneficiary.”

In the case of Dear v. Robinson(7) section 15(2) (3) was considered in the lights of the circumstances and wishes of the beneficiaries mainly the majority of them, having regards to the size of their interest. In addition, courts tend to consider the intention of the person or the persons who created the trust and the purpose of the trust in which the property is held. In effect what this means is that, if an express trust for sale exist then it will coherently indicate an intention to sell and an application for sale would be successful in court under the statutory system.

In the event that courts have to determine whether to grant the sale of the trust property is dependent upon the underlining purpose of the trust. If the trust was created as a to provide a home but if that purpose no longer exist due to the circumstances of the co-owners then it is likely that sale will be ordered by the court.

There are many situations that arise in relation to the sale of land, and how the court should exercise their discretion to apply the law in considering the purpose of the trust and the circumstances in question (8). In cases concerning the welfare of miners in co-owner disputes, court tend to consider the purpose of the trust is many cases it is likely to be for matrimonial purpose furthermore the court will consider whether young children are involved and whether the purpose of the trust has extinguished or not by way of divorce as in the case of Re Evers’ Trust (9) where sale was postponed indefinitely with liberty for either party to apply for sale in the future.

However, this is no longer necessary as under section 15(3) of the 1996 Act, regard is given to the welfare of children this means that judges role is relaxed in determining to order or refuse to order a sale of the property as demonstrated in the case of TSB Bank plc v. Marshall(10) but the case of Bank of Ireland HM Ltd v. Bell(11) establish that less weight is given to the welfare of children as they grow older.

In the event that court refuse to grant sale and excludes one co-owner from the property then section 13 (6)(a) of the 1996 Act provides that the excluded co-owner should be compensated for his/her exclusion which may include the payment of rent by the occupying co-owner.

In cases concerning insolvency a trustee in bankruptcy has a right under section 14 of the 1996 Act to petition the court for the sale of the property, in this type of cases courts usually order the sale of the property. Whereas in cases involving a claim under section 335(A0 of the Insolvency Act 1986 the court must weigh the interest of the creditor against all other circumstances. In the case of F v. F(12) which concerned a claim under the Insolvency Act 1986, court order the postponement of the sale for 10 years.

However, where an application is made under IA the criteria set in section 15 of the 1996 Act will not apply so the defendant seeking a postponement of the sale must show other exceptional circumstances to prevent the immediate sale of the property. Each case is decided on its own merits but an argument that family will be destructed by force sale is unlikely to be regarded unless the children or the spouse of the bankrupt suffers from an illness or a disability. 

In conclusion, it is evident that where there are occupational disputes between co-owners law appears to be fairly just and reasonable in resolving matters in a rational context. Whereas in matters involving insolvency the courts and the law favours the trustee in bankruptcy and disregard arguments relating to family destruction unless a serious illness or disability is proved as an exceptional circumstances. This barrier in the legal system prejudices the needs of other co-owners who have to suffer the consequences of bankrupt co-owners.

BIBLIOGRAPHY

  • Gray and Gray Elements of Land Law 2nd Edt 2003 Butterworths
  • Thomas, M Blackstone’s Statues on Property Law 2005-2006 13th Edt Oxford University Press
  • Thompson M P, Modern Land Law 2003 2nd Edt Oxford University Press
  • Footnotes
    • 1Right to Survivorship. 
    • 2 [1955] 1 Q.B. 234
    • 3 [1981] A.C. 487 at 507 per Lord Wilberforce
    • 4 Thompson M P, Modern Land Law 2003 2nd Edt Oxford University Press p302
    • 5 [1970] 2 Q.B 677
    • 6 [2001] Ch. 703
    • 7 [2001] E.W.C.A Civ 1543
    • 8 Bank of Ireland Home Mortgages v. Bell [2001] 1 FLR 809
    • 9 [1980] 1 W.L.R. 1327
    • 10 [1998] 3 E.G.L.R. 100
    • 11[2001]1 F.L.R. 809 at 816 per Peter Gibson L.J
    • 12(S Intervening) (Financial Provision: Bankruptcy: Reviewable disposition) Family Division, [2002] EWHC 2814 (Fam), [2003] 1 FLR 911, 29 November 2002

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