Order for Sale: Purchase by a Co-Owner or Sale on the Open Market – Stuck Between a Rock House and a Hard Place

Many claims under the Trust of Land and Appointment of Trustees Act 1996 (“the Act”) seek an order for sale of the property in question, however it may be the case that the claimant does not want the property to be sold, but instead to retain it as a sole owner, effectively removing a co-owner (or co-owners) from the title. The nature of the Court’s powers in such a scenario were revisited in Chaston and another v Chaston [2018] EWHC 1672 (Ch).

The Facts

The parties to the dispute were three of four siblings, being the children of Sybil and John Chaston. Mr and Mrs Chaston had left their property, Rock House, Newport, Wales (“Rock House”), ultimately, to their four children, Christopher, Robert, Judith and Jane. Prior to the proceedings commencing, Robert, the Respondent to the appeal, had purchased Jane’s interest by agreement and thus owned 50% of Rock House, whilst Christopher (the First Appellant) and Judith (the Second Appellant) each retained their 25% shares respectively.

At first instance the District Judge had determined that Rock House should be sold to the Respondent at a price to be determined by a valuation exercise. The Appellants appealed on the basis that, whilst they accepted that the Property should be sold, such a sale should take place by way of a sale on the open market.

The Appellant’s appealed separately and raised a number of independent issues. The First Appellant argued (i) there was no power under section 14 of the Act to direct the sale to one of the beneficiaries as the Property was unoccupied and the beneficiaries had not created the trust, (ii) the Judge was wrong to take into account an earlier agreement between all four siblings that the Respondent would purchase the Property at a price agreed between them, (iii) the Judge had not taken into account the wishes of the beneficiaries, and (iv) any incidental benefits accruing to the trust by reason of the sale to the Respondent had to be weighed against the benefits of a sale on the open market.

In response to the points raised by the First Appellant the Court found (i) there is nothing in this point; (ii) the agreement reached between the parties was relevant, not only because it was an aspect of the wishes of the beneficiaries but also because it raised an equity in favour of the Respondent; (iii) there was nothing in this point; and (iv) whilst it is correct that such a balance had to be struck, it is a matter for the court to strike that balance and it is not open to challenge on appeal simply on the basis that another judge may reach a different conclusion. As such the First Appellant’s appeal was dismissed.

The Second Appellant appealed on the basis that (a) as a trustee as well as a beneficiary she was bound to obtain the best price for the Property, which could only be obtained from an open market sale, (b) the Property was in a unique location and thus the market price could not be adequately ascertained by valuation.

In respect of the grounds raised by the Second Appellant the Court determined that (a) it is not the case that a trustee is bound to obtain the best possible price but instead the best price reasonably obtainable in the circumstances (Buttle v Saunders [1950] 2 All ER 193). Moreover the decision to sell the Property is being taken by the Court, not by the beneficiaries, thus the trustees cannot be in breach of their duties by selling at the direction of the court; and (b) the Court was unable to go behind the District Judge’s decision, there having been no proper basis for challenging the District Judge’s finding. As such the Second Appellant’s appeal was also dismissed.

Guidance

In addition to the Court’s power to order that a property is sold on the open market, whilst the Court cannot order that a party’s beneficial interest in a property is transferred to a co-owner, providing it follows the guidance set down in Bagum v Hafiz [2015] EWCA Civ 801, the Court can order that a property is sold to one of the existing owners.