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Paper Topic:

UK LAND LAW problem question

Introduction

Although John holds the legal title to the Fairview Cottage in his name alone , he holds it upon constructive trust for both himself and Mary Moreover , the Cottage is matrimonial property and if disposed of by John will be subject to Mary 's beneficial interest in the property . These barriers can negatively impact the value of the title John passes to a bona fide purchaser witht the result that it may become impossible for him to sell the property without Mary 's consent . The discussion that follows examines the legal issues

and difficulties for both John and Mary and advises Mary accordingly

Mary 's interest in the matrimonial home at Fairview Cottage is equitable in nature for two reasons . Her strongest claim arises out of the fact that she provided one half of the purchase price and her interest therein will be determined by the equitable principles applicable to constructive trusts . Secondly , Mary is an occupier of the Cottage and as such has a registrable intereset under the Land Registration Act

Constructive Trusts

Constructive trusts are implied by the courts in circumstances where it is equitable to do so . Relevant factors for the courts to consider are not only the parties ' conduct but their comon intention . For the purpose of this discussion Mary 's provision of half of the purchase price and the common intention to purchase Fairview as a fanily home are relevant factors of which a common intention can be derived . It makes very little difference that John holds the fee simple title to the property . In the case of Gissing v Gissing . [1971] AC 886 Lord Diplock 's explanation as to how constructive trusts arise makes this position very clear . Accordin to Lord Diplock a constructive trust is

.created by a transaction between the trustee and the cestui que trust in connection with the acquisition by the trustee of a legal estate in land , whenever the trustee has so conducted himself that it would be inequitable to allow him to deny to the cestui que trust a beneficial interest in the land acquired . And he will be held to have so conducted himself if by his words or conduct he has induced the cestui que trust to act to his own detriment in the reasonable belief that by so acting he was acquiring a beneficial interest in the land

This statement becomes relevant if John insists on vetoing Mary 's desire to remain in the home on the strength of his holding absolute title The facts of the case suggest that Mary had every reason to believe that by providing one half of the purchase price she was acquiring a beneficial interest in the Cottage . It would be entirely unconscionable for John to disregard Mary 's expectations and the resulting interests she expected to acquire as a result of her contribution to the purchase of the matrimonial home

Gissing v Gissing involved a situation similar to Mary and Johns . In the Gissing case the husband held the legal title to the property . Lord Diplock was of the opinion that in such a case the court had to determine whether or not the husband held the property on tursts for both himself and the wife . There are a number or ways to make this determination and one of the ways which is relevant to the case for discussion is the contributions of the spouses toward the purchase price of the property . Moreover , a mere intention to purchase the home for both parties in equal shares would give rise to a constructive trust

In Springette v Defoe [1992] 2 FLR 388 Lord Steyn explained that even if it is impossible to discern the parties common intention by reference to communications between them regarding the division of beneficial interests in equal shares there is another way that the court can determine the parties common intention . The courts must then look to other evidence that explain or imply how the parties intended for the property to be divided . It will generally be inferred that the parties intended that the beneficial interest in the property is to be divided in a manner consistent with each party 's respective contributions Lord Justice Chadwick explained that

.the court must do its best to discover from the conduct of the parties whether any inference can reasonably be drawn as to the probable common understanding about the amount of their respective shares upon which each must have acted in doing what each did

The authorities have been consistent in the approach taken in repsect of the law relating to the imposition of constructive and implied trust and this approach was ennunciated very clearly by Dillion LJ in Walker v Hall . Dillion LJ emphasised that the evolution of the law of trusts has been such that much emphasis is placed on the sums contributed by each person for the purchase price of the property . This is the starting point for determining the respective interests of the contributing parties and is the basic doctrine of the resulting trust

With these equitable principles in mind , John 's desire to sell the Cottage will be inconsistent with the common intention of both parties when they purchased the property . Moreover , if he sells the property the proceeds of sale will be divided equally between himself and Mary and he will in all likelihood not be in a position to purchase a home in London that is big enough to house the entire family

The fact that Mary and John are married further fortifies Mary 's position with regard to the sale of the matrimonial property . By virtue of Section 37 of the Matrimonial Causes Act 1970 when a spouse makes a significant contribution or even a significant improvement to matrimonial property that spouse will be taken to have acquired a beneficial interests in the property unless the parties have agreed otherwise . Sections 24 and 25 of the Matrimonial Causes Act 1973 contain similar provisions

The fact that it can be clearly established that John holds the Fairview Cottage upon constructive trust for both himself and Mary brings the property and the suggested sale of the property under the jurisdiction of the Trusts of Land and Appointment of Trustees Act 1996 . Section 3 of the 1996 abrogates the doctrine of conversion which dictated that the beneficiaries to trust porperty merely had a benefit under the proceeds of sale of the property . Section 3 confers upon the beneficiary an interest in the property itself and not merely the proceeds of sale

By virtue of Section 11 of the Trusts of Land and Appointment of Trustees Act 1996 John as trustee of the Fairview property has a duty to consult with Mary and to obtain her approval as beneficiary for the sale of the property . He is required to heed her wishes provided her wishes are consistent with the purpose of the trust . Obviously Mary 's intention to remain occupation of the Matrimonial home is consistent with the purpose for which the property was purchased . In the event of a dispute , the majority (determined with reference to their quantified interests ) will prevail . Since both parties contribute equal shares toward the purchase price there is no majority unless the court considers that John 's absolute title tips the balance . Moreover , Mary 's desire to remain in the matrimonial home despite the costs and onerous task John encounters in commuting to London on a daily basis may be viewed as unreasonable under Section 13 of the 1996 Act

In any event both Mary and John are at liberty to make an application to the court for an permitting or vetoing the sale of the property . Under Section 13 of the 1996 , in determining the appropriate the court is required to take into consideration the intentions of the parties at the time of purchasing the property , the purposes for the purchase and the circumstnaces and wishes of each ' of the beneficiaries . Under Section 15 of the Trusts of Land and Appointment of Trustees Act 1996 the court will take similar factors into consideratin with respect to an application by either John or Mary under Section 12 or 13 and will also take into consideration the welfare of any minor who may occupy the trust property as his home

In all the circumstances it would appear that although Mary 's interest in the property is clearly undisputed , her stand against John 's desire to relocate the family is entirely unreasonable . John wants to sell the home for the sole purpose of purchasing another home nearer to his job which currently involves a long and costly commute . It would be in the best interest of the entire family in terms of costs and time apart to accommodate John 's wishes . In all the circumstances it is unlikely that an application by Mary under the Trusts of Land and Appointment of Trustees Act 1996 will get her the that she desires

Overriding Interests of Occupiers under the Land Registration Act 2002

Under the Land Registration Act 2002 , Mary 's right to occupation may be impacted in the event John goes ahead with the sale of the property with or without a court . The 2002 Act reverses the decision in Ferrishurst Ltd v Wallcite Ltd [1999] 05 EG 161 which previously held that a purchaser takes title subject to the interest of an occupant whether the interest is registered or not . The consequences of the 2002 Act are that actual occupation does not guarantee the existence of any right , but a mere warning

Mary 's right to occupy Fairview Cottage , which is registered land will not be viewed as an overriding or overreaching interest in any subsequent sale by John if

1 ) The prospective purchaser makes enquiries and Mary fails to inform the purchaser of her interests in the porperty or

2 ) Mary 's actual occupation is not evident upon an inspection of the property

and she was not aware of her interest at the time of purchase

This part of Section 71 of the 2002 Act replaces and alters the provision of the Land Registration Act 1925 Section 70 (1 (g ) in respect of the interests and rights of occupiers of land . What the 2002 Act does is make a distinction between discoverable interests and undiscoverable interests . The Land Registration Act 1925 made no such distinction and protected the interests and rights of occupiers . Since Mary and the children occupy the Fairview Cottage their occupation can be readily discovered by virtue of an inspection of the premises . It would therefore appear that John will not be able to sell the home subject to vacant possession unless he obtains a court under the Trusts of Land and Appointment of Trustees Act 1996

Conclusion

There is no doubt that Mary has an equitable interest in the property by virtue of the equitible principles of constructive trust . Moreover she can make it impossible for John to sell the property since he might not be able to give up vacant possession under the Land Registration Act 2002 . However , if John applied to the courts for an to sell the home he is likely to succeed since he only wants to purchase a home nearer his job to avoid the long daily commute . Mary 's insistence on remianing in the Fairview home is entirely unreasonable , since it threatens to separate the children unnecessarily from their father Since neither John nor Mary subscribe to divorce or judicial seperations , Mary should reconsider her position . The long commute could eventually negatively impact John 's job performance and could cause tensions in the home . These possibilities alone should be enough to persuade Mary that selling the home and relocating to London is in the best interest of the entire family

Works Cited

Gissing v Gissing . [1971] AC 886

Land Registration Act 2002

Matrimonial Causes Act 1970

Matrimonial Causes Act 1973

Smith , Roger (2006 ) Property Law : Cases and Material . London : Longman

Springette v Defoe [1992] 2 FLR 388

Stack v Dowden [2005] EWCA 857 HYPERLINK "http /www .familylawweek .co .uk /library .asp ?i 892 http /www .familylawweek .co .uk /library .asp ?i 892 Viewed November 13 2007

Trusts of Land and Appointment of Trustees Act 1996

Walker v Hall FLR 126

Smith , Roger (2006 ) Property Law : Cases and Material . London Longman . Part II Chapter 4

Gissing v Gissing . [1971] AC 886

Gissing v Gissing . [1971] AC 886

Springette v Defoe [1992] 2 FLR 388 at

.395

Stack v Dowden [2005] EWCA 857 HYPERLINK "http /www .familylawweek .co .uk /library .asp ?i 892 http /www .familylawweek .co .uk /library .asp ?i 892 Viewed November 13 2007

Walker v Hall FLR 126 at

133

Matrimonial Causes Act 1970

Matrimonial Causes Act 1973

Trusts of Land and Appointment of Trustees Act 1996 , Section 3

Trusts of Land and Appointment of Trustees Act 1996 Section 11

Trusts of Land and Appointment of Trustees Act 1996 Section 11 (1

Trusts of Land and Appointment of Trustees Act 1996 Section 13

Trusts of Land and Appointment of Trustees Act 1996 Section 15

Trusts of Land and Appointment of Trustees Act 1996 Section 13

Trusts of Land and Appointment of Trustees Act 1996 Section 15 (c

Ferrishurst Ltd v Wallcite Ltd [1999] 05 EG 161

Land Registration Act 2002 Section 71

Land Registration Act 1925 Section 70 (1 (g ...

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