Property – Co-ownership – Occupation rent – Appellant appealing against decision of court refusing claim for occupation rent – Whether occupying beneficiary under will liable to pay occupation rent for use and occupation of property during probate dispute – Whether occupier’s conduct justifying departure from default position that occupation rent not payable – Appeal dismissed
A property at 149 Corporation Road, Newport, South Wales was the family home of B and her husband (A). They lived there with their children, F, R, I and the third and fourth respondents. After the other children left, R continued to live at the property with his wife (the second respondent) and children and his parents.
A died in 2003 and B in 2006. F died in 2020. His estate was represented by the appellant. R died in May 2013 and the second respondent was his personal representative.
On A’s death, title to the property passed to B. Under B’s 2003 will, the property was bequeathed and devised to R absolutely. It was not until 2011 that the legal title to the property was registered in R’s name. The R family remained in occupation of the property throughout.
In 2014, the High Court made an order pronouncing against the 2003 will and in favour of B’s previous 1997 will which, as A predeceased her, left all her property absolutely and in equal shares to her children. The order also provided for liberty to apply for an account for use and occupation of the property. The first respondent was appointed to administer B’s estate.
The appellant brought a claim under CPR Part 8 for the sale of the property with vacant possession. That claim was settled in part on the terms that the second, third and fourth respondents purchase the property from B’s estate.
On 15 July 2021, the court dismissed the appellant’s claim for an order that the second respondent should account to the first respondent, as personal representative of B, for occupation of the property since her death. The appellant appealed.
Held: The appeal was dismissed.
(1) The default position at common law where one co-owner was in occupation and the other was not was that occupation rent was not payable. The position was the same in equity unless there was an ouster or a letting to a stranger for rent. The focus should be on the behaviour of the person in occupation. There ought to be some conduct by the occupying party, or at least some other feature of the case relating to the occupying party, to justify a court of equity concluding that it was appropriate or fair to depart from the default position and to order the occupying party to start paying rent. That approach was consistent with In re Pavlou [1993] 1 WLR 1046 and Chhokar v Chhokar [1984] FLR 313 in which a broader approach was adopted: Davis (as trustee in bankruptcy) v Jackson and another [2017] EWHC 698; [2017] PLSCS 92 approved. Jones (AE) v Jones (FW) [1977] 1 WLR 438 and Dennis v McDonald [1982] Fam 63 considered.
It followed that it could not be right, as a matter of principle, that the obligation to pay occupation rent should turn on the reasonableness or otherwise of the behaviour of the non-occupying party in not occupying the property. There might be all kinds of scenarios in which it was reasonable for a co-owner of property not to exercise his right of occupation, but it did not follow that that automatically provided justification for making the co-owner who was in occupation of that property pay him rent.
(2) In reliance on the decision in French (trustee in bankruptcy) v Barcham and another [2008] 3 EGLR 51, the appellant had argued that occupation rent should have been awarded because it was invariably awarded in the case of a trustee in bankruptcy, and the beneficiary’s position in the present case was analogous to that of a trustee in bankruptcy who did not enjoy a right to occupy property jointly owned by the bankrupt.
There was no doubt that the court was required to do broad justice between co-owners and to determine what would be fair. The position was no different where one co-owner had become bankrupt. His trustee in bankruptcy could not be in a better position. The fact that a trustee in bankruptcy could not reside in the property nor enjoy any financial benefit from it whilst the other co-owner was in occupation and the creditors could derive no benefit until the trustee exercised his remedies was not conclusive. Furthermore, it might not always be the case that the creditors should be compensated for any delay in obtaining an order for sale. In a rising market, they might benefit from that delay as a result of an increase in the value of the property. There was nothing to suggest that a co-owner or that person’s trustee in bankruptcy had to be blameworthy in relation to the delay before its effects could be taken into account: French v Barcham disapproved.
(3) The judge was exercising a broad equitable jurisdiction to do justice between co-owners having also taken the statutory provisions in the Trusts of Land and Appointment of Trustees Act 1996 into account. The issue before him was fact-sensitive and he was entitled to decide as he did. The Barcham case did not give rise to any kind of presumption. There was no special rule in bankruptcy cases; French v Barcham was best regarded as turning on its own particular facts and not as laying down any principle of wider application.
It followed that the judge had not erred in not taking the approach in the Barcham case. He was entitled to make the findings he did in relation to conduct, to evaluate those matters and exercise his discretion in the way he did in order to do broad justice. That included taking into account the increase in the capital value of F’s interest in the property and the amount he was paid for it.
At the end of the day, the question for the court was what fairness required on the facts of the individual case. In the present case, the judge took into account all relevant factors and concluded that justice and equity did not require a departure from the default position. He was entitled to do so, for the reasons he gave.
Clifford Darton QC (instructed by Berry Smith LLP) appeared for the appellant; John Sharples (instructed by Petersons Solicitors) appeared for the second, third and fourth respondents; The first respondent did not appear and was not represented.
Eileen O’Grady, barrister
