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KEEPING IT IN THE FAMILY!

Solicitors in London

KEEPING IT IN THE FAMILY!

News article published on: 22nd July 2019

The Trusts Of Land And Appointment Of Trustees Act 1996 Since Bagum V Hafiz And Hai [2015]

This case was discussed in much detail in https://osborneslaw.com/osbornes-successful-in-landmark-court-of-appeal-decision-regarding-the-trust-of-land.

The Claimant became the sole registered proprietor of a residential property following her husband’s death. Her husband had acquired the property from the local authority under the right to buy legislation. The Defendants were the Claimant’s children, each of whom had made a financial contribution to the purchase. Each of the children were married and lived with their respective families in the property with their Claimant mother.  The Claimant and the Defendants entered into a Declaration of Trust under which the property was held on a trust for land for the three of them in equal shares absolutely.

Subsequently, the Second Defendant moved out of the property as relations between the Second Defendant’s wife and the First Defendant broken down.

Trust of Land and Appointment of Trustees

The Claimant issued proceedings seeking an order from the court under section 14 of the Trust of Land and Appointment of Trustees Act 1996 (TOLATA) that the Second Defendant sell and transfer his one third beneficial interest in the property to the First Defendant. At first instance, the judge held that the court had no jurisdiction to make such an order. The judge made an order that the property was to be sold and the Second Defendant have the opportunity to purchase it failing which the property was to be sold on the open market.

The decision was appealed to the Court of Appeal where Briggs LJ held that the judge was right to decide that the court had no discretion under section 14 of TOLATA to make such an order however he went on to say that the object of section 14 and 15 of TOLATA was to confer on the court a substantially wider discretion which would be exercised on the basis of wider considerations. It was concluded that the judge had rightly considered the interest of the Claimant and the First Defendant and their families and their continued occupation and the interest of the Second Defendant in obtaining payment representing the property value of his interest.

A farming partnership between siblings

This case has been followed and applied in a number of cases and more recently in the case of Kingsley v Kingsley [2019]. This case involved the termination of a farming partnership on the death of one of the two sibling partners. The partnership between a brother and sister had for nearly 40 years operated from the family farm. The brother passed away and his interest passed to the widow who wished to sell the farm on the open market. The sister resisted the order as he wanted to continue the farming business and wanted an opportunity to acquire her brother’s interest so that she could do so.

Co-owners of property

The court, following Bagum v Hafiz, accepted he had jurisdiction to make the order and made an order giving the sister two months to purchase her brother’s share. There were a number of factors the judge took into account namely:

  • That an expert was able to value the farm with sufficient certainty to allow a judge to be satisfied that the brother’s widow would receive a proper value for her share.
  • The purpose of the trust which the court determined was to run a family farm
  • He also determined that the widow’s interest was purely financial.

It appears the Bagum case has allowed co-owners when being forced to sell a property to retain property historically owned by a family within the family.

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