Trusts – Sale of land – Trusts of Land and Appointment of Trustees Act 1996 – Cottage on farm registered in names of defendant son and deceased mother – Claimant executors of deceased applying for order for sale of property – Whether defendant entitled to interest in property greater than quarter share of beneficial interest vested by deed of assignment and declaration of trust – Whether interests of residuary estate best served by inclusion of property in sale of farm – Application granted
A property known as 4, Higher Berry Court Cottages, Donhead St Mary, Shaftesbury, was registered in the names of M and the defendant (her son). Following M’s death in 2015, the defendant was the sole owner of the legal estate in the cottage by virtue of the doctrine of survivorship. The claimants were the executors of M’s estate. The cottage formed part of a large group of properties at a farm which had originally been acquired by M’s husband. Following his death, the farm had passed to M.
In 2008, M had settled much of the farm on trust for herself, her five children and their families (the 2008 settlement). The cottage was not part of the property subject to the 2008 settlement. In July 2013, the cottage was registered in M’s sole name and, in January 2014, M and the defendant entered into a deed of assignment and declaration of trust. Under the 2014 deed, the beneficial interest in the cottage was vested in M and the defendant in shares of 75% and 25% respectively. The claimants contended that M’s 75% share of the beneficial interest was currently vested in them, as executors of her estate.
By an agreement on 19 July 2013, the then owners of the various properties comprising the farm entered into a pre-emption agreement with R under which the owners granted a right of pre-emption to R in respect of the farm for a period of 20 years from 19 July 2013. The trustees of the 2008 settlement and the claimants subsequently agreed on a sale of the farm to R outside the terms of the pre-emption agreement. The properties referred to as “the farm” included the cottage. Therefore, before for the sale of the farm to R could proceed, the defendant had to join in the sale, as the owner of the legal title to the cottage. However, he was not willing to do so. Accordingly, the claimants applied, under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for the sale of the cottage.
Held: The application was granted.
(1) The claimants had not been correctly identified as co-owners of the legal estate in the cottage. The legal title to the cottage was vested in the defendant alone, following M’s death. Moreover, the claimants were not making their application under section 14 of the 1996 Act as the trustees of the cottage but as owners of part of the beneficial interest in the cottage. In any event, an application under section 14 could be made by a trustee of land or any person who had an interest in land subject to a trust of land. In considering whether the cottage should be sold, the court would proceed on the basis that the ownership of the beneficial interest in the cottage was that the defendant owned a 25% share of the beneficial interest in the cottage pursuant to the 2014 deed; and the claimants owned a 75% share of the beneficial interest in the cottage, in their capacity as trustees of the residuary estate, on the discretionary trusts established by M’s will.
(2) Section 15(3) of the 1996 Act applied with the consequence that the matters to which regard should be had included the circumstances and wishes of any beneficiaries of full age and entitled to an interest in possession in the cottage. The matters specified in section 15 were not exhaustive and consideration had to be given to the other matters relied on by the parties, for and against the making of an order for the sale of the cottage. In the case of the cottage, the beneficiaries were the claimants in their capacity as executors and trustees of the residuary estate and the defendant. That did not necessarily mean that the court had to give effect to the wishes of the claimants. The majority of the beneficial interest in the cottage was owned by the claimants. The circumstances and wishes of the claimants were that the cottage be sold, as part of the R sale, and section 15(3) provided that those wishes and circumstances prevailed over those of the defendant, in terms of matters to which the court was to have regard. The defendant had not been able to identify any basis on which he could claim to be entitled to an interest in the cottage any greater than the quarter share of the beneficial interest vested in him by the 2014 deed. Equally, no basis had been identified upon which it could be said that the claimants were not entitled, in the exercise of their discretion, to decide that the interests of the residuary estate were best served by the inclusion of the cottage in the R sale. Further, the existence of the pre-emption agreement and a deed of adherence meant that the cottage was not readily available for a sale on the open market. If it was assumed that the sale of the cottage was otherwise the appropriate course, the logical route was to include it within the R sale, with a view to securing the best value for the cottage. Standing back, and taking into account all the evidence and arguments of the parties, the balance came down clearly in favour of an order for the sale of the cottage. In the exercise of its discretion under section 14, the court would make that order: Mortgage Corporation v Shaire [2000] 3 EGLR 131 considered.
Simon Williams (instructed by Wilsons Solicitors LLP) appeared for the claimants; the defendant appeared in person.
Eileen O’Grady, barrister
Click here to read a transcript of Baxter and others v Stancomb
