Trusts – Joint ownership – Occupation rent – Constructive ouster – Appellant and respondent jointly owning property – Appellant leaving property and joint tenancy severed – Respondent seeking order for sale of property – Appellant claiming occupation rent to reflect respondent’s exclusive occupation of property – Recorder holding occupation rent not payable because appellant’s legal rights of occupation not denied c Appellant appealing – Whether recorder erring in law – Appeal allowed
A property known as 3 Chestnut Road, Eaglescliffe, Stockton-on-Tees was jointly owned by the appellant and the respondent who were at one point in a relationship and the carers of the respondent’s grandson. The property was originally in the sole ownership of the appellant and subject to a mortgage. The relationship between the parties deteriorated and the appellant left the property around 2006. The joint tenancy was severed in October 2016.
The respondent sought an order for sale of the property and ancillary orders under the Trusts of Land and Appointment of Trustees Act 1996. The appellant served a defence and counterclaim resisting sale of the property, arguing that it should be preserved for the benefit of the grandson. She applied for an occupation order under section 33 of the Family Law Act 1996.
The appellant also claimed an occupation rent to reflect the respondent’s exclusive occupation of the property to reflect her exclusion from such date as the court determined, to the date of judgment. The claim was based on a “constructive ouster” of the appellant from the property, giving rise to a credit of about £45,000 by way of occupation rent to be brought into the account in her favour.
The recorder made an order for the sale of the property but refused to make an order for occupation rent, or compensation, under section 13(6) of the 1996 Act. He found that the purpose of the trust was to provide a family home for the parties and their grandson, and held that an occupation rent was not payable because the respondent had not denied the appellant’s legal rights of occupation.
The appellant appealed. The question was whether the recorder erred in law in rejecting her occupation rent claim.
Held: The appeal was allowed.
(1) Section 12 of 1996 Act conferred on beneficiaries entitled to an interest in possession a right to occupy land available for their occupation. It was designed to confer on trustees power to regulate and set the terms for future occupation of trust land. Section 13(1) gave the trustees the power to exclude or restrict that entitlement, but under section 13(2) that power had to be exercised reasonably. The trustees also had power under section 13(3) to impose conditions upon the occupier. Those included, under section 13(6), paying compensation to a person whose right to occupy had been excluded or restricted. Section 14 conferred power on the court on application by trustees or others interested to make such orders as it thought fit: (a) relating to any of the trustees’ functions (which included their functions under section 13); and (b) to declare the nature or extent of a person’s interest in property subject to the trust. It was under the latter of those two powers that the statutory jurisdiction was conferred on the court to take accounts between co-owners: Stack v Dowden [2007] UKHL 17 applied.
(2) Under the previous equitable doctrine, the court was concerned only with considerations relevant to achieving a just result between the parties. Statute now governed. Section 15 of the 1996 Act required the court in determining all applications for an order under section 14 to include amongst the other matters to which it had regard: in all cases (so far as applicable) the four matters referred to by Baroness Hale in Stack v Dowden; in the case of applications relating to the exercise by trustees of the powers conferred by section 13, the circumstances and wishes of each of the beneficiaries who was (or apart from any previous exercise by the trustees would be) entitled to occupy the land under section 12; and in case of any other application (other than one relating to the conveyance of land to beneficiaries absolutely entitled) the circumstances and wishes of any beneficiaries of full age entitled to an interest in possession: Murphy v Gooch [2007] EWCA Civ 693 applied.
The wider ambit of relevant considerations meant that the task of the court was now not merely to do justice between the parties, but to do justice between the parties with due regard to the relevant statutory considerations and in particular (where applicable) the welfare of the minor, the interests of secured creditors and the circumstances and wishes of the beneficiaries specified.
(3) It was clear from a consideration of the entirety of the recorder’s reasons for refusing the claim for occupation rent that he considered a single issue to be determinative. That was the requirement of the appellant to prove as a condition of making a claim under 1996 Act that she had been excluded by the respondent from enjoying legal rights to occupation of the property. That was an error. The recorder also considered that that required her to prove something like a landlord’s lockout which was also plainly a legal error.
Applying that limited test, the recorder found that the appellant had not been excluded and, in the alternative, the appellant had not proven on the balance of probabilities that she had been so excluded by the respondent at any time. She had chosen not to be in occupation of her own premises and the reason for that was a matter entirely for her.
There was a clear and material misdirection of law which infected the recorder’s entire approach to the occupation rent issue. The law was clear that under the 1996 Act a court might order credit for an occupation rent if it was just to do so, whether or not there was any proof of ouster. It was well-established law which bound the court that ouster was not a condition precedent and in any event it could be established on a constructive basis.
The test which the recorder should have applied was whether it was just in all the circumstances to order credit for an occupation rent and having regard to the statutory factors. That was the ultimate question and it was not addressed by the recorder. It followed that the recorder’s decision on the occupation rent issue could not stand. The issue of occupation rent and costs of the claim would be freshly determined by a different judge.
Chris Hegarty (instructed by Mortons Law, of Sunderland) appeared for the appellant; Collette Price (instructed by Punch Robson Solicitors, of Stockton-On-Tees) appeared for the respondent.
Eileen O’Grady, barrister
