Savage v Savage (2024) EWCA Civ 49
The purpose of this article is to draw attention to the approach adopted by the Court of Appeal in the recent case of Savage v Savage [2024] EWCA Civ 49 in respect of statutory interpretation relating to the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) generally and section 15(3) in particular.
As the Court of Appeal in Savage (Lord Justice Snowden delivering the judgment with which Lord Justices Phillips and Moylan agreed) pointed out, the appeal raised a question of interpretation of section 15(3) of the TOLATA [1]. The question was whether section 15(3) means that a court considering an application for an order under section 14 of TOLATA where there is a dispute between the beneficiaries of a trust of land, can only have regard to the circumstances and wishes of the majority of those beneficiaries (according to the value of their combined interests) and is not entitled to have regard to the circumstances and wishes of the minority [1].
The facts are briefly as follows: Frank Savage, the appellant and a minority beneficiary with his 3 siblings (“the siblings”) appealed to the Court of Appeal against an order made by HHJ Farquhar (“the Judge”) on 6 February 2023 in favour of the Respondent, Raymond Savage and the majority beneficiary (“the order”). The order was made in financial remedy proceedings between Raymond Savage (aged 72) and his ex-wife Vanessa Savage.
The order concerned the method of sale of 3 parcels of land at Pleasant Rise and Pleasant Rise Farm, Cuckmere Road, Alfriston, East Sussex (“the Properties”) [4]. The Properties included land upon which Frank ran a business involving a campsite, a tennis court and other facilities. The properties were held upon certain trusts for Raymond and the children of his late brother Roy, namely Frank, Elizabeth, Charlie and Harry (“the siblings”). Raymond had a two-thirds interest in the largest parcel of land, a three quarters interest in the second parcel of land, and a one-half interest in the smallest parcel of land. The remaining interests were held by the siblings [4].
The sale of the Properties was sought at the instigation of Vanessa, but the beneficiaries could not agree between themselves how a sale should take place.
District Judge Owen (“the District Judge”) presided over a two-day trial which included expert evidence as to a value and method of sale. On the 23 February 2022 the District Judge handed down an order giving Frank the right to buy out Raymond’s interest in the Properties before they were offered for sale on the open market for a price of £666,150 (less trial costs Raymond was ordered to pay Frank) [5].
The judgment of the District Judge indicated that in deciding to make that order he took account of the circumstances and wishes of Raymond as majority beneficiary by value, whom he recorded also owned a piece of neighbouring land and wished to see the Properties sold as a whole and “move on with his life” [6].
The District Judge also held that for reasons he set out in the judgment [36]-[41] he was not prevented by section 15(3) of TOLATA from having regard to the circumstances and wishes of the siblings as minority beneficiaries [7]. He recorded that the siblings supported Frank being given a right of pre-emption over the land from which he conducted his business.
The core of the District Judge’s reasoning in relation to section 15(3) of TOLATA was that the main discretion was conferred by section 14 and section 15 included only a non-exhaustive list of factors [9]. He determined that this indicated that although the court was obliged to take into account the factors in section 15, it was not to be governed by them alone. The District Judge referred to the observations of Briggs LJ (as he then was) in Bagum v Hafiz [2016] Ch 242 at [21] and [23]-[25] which are as follows: “21. By [section 14(2)] the court is given the widest discretion to make orders relating to the exercise by the trustees of any of their functions, having regard in particular to the non-exhaustive list of matters to which the court is to have regard, set out in section 15(1)(3)…. 23. More generally, I consider that the clear object and effect of sections 14 and 15 is to confer on the court a substantially wider discretion, exercised on the basis of wider considerations, than might be enjoyed by the trustees themselves, acting without either consent of their beneficiaries or an order of the court ……. this departs from the general rule of equity which requires the trustees single-mindedly to advance the interests of the beneficiaries as a class, without preferring some of them over others…24. None of this means of course, that the court will act unfairly, unjustly or capriciously as between beneficiaries in giving directions to trustees under section 14(2). It simply demonstrates that, in exercising its powers in circumstances where, necessarily, the beneficiaries will be in dispute with each other about what should be done with the trust property, the court is not rigidly constrained by those rules of equity which may, pursuant to section 6(6) constrain the trustees themselves….25. This is not surprising. In general, the use and disposal of land held on a trust of land (which applies to all kinds of co-ownership) will be determined by the unanimous consent and direction of the beneficiaries. This has been the position for many years: see Saunders v Vautier (1841) 4 Beav 115, which established that beneficiaries of full age and sound mind acting unanimously may direct how the trust property is to be dealt with. The court’s powers are there to enable the property to be dealt with justly and effectively when that basis of consent breaks down. That is why section 14(2) permits the court to relieve the trustees from obtaining consents, and why section 15(3) requires that court to have regard to (but not be bound by) the wishes of a majority of the beneficiaries in the event of a dispute between them”. [9, Snowden LJ’s emphasis].
On appeal, the Judge disagreed with the District Judge’s legal analysis of section 15(3) but upheld his conclusion on the expert valuation evidence.
On the meaning of section 15(3) the Judge held that because there was a dispute been the beneficiaries, section 15(3) precluded the court from having regard to the circumstances and wishes of the siblings (as minority beneficiaries) and the only wishes and circumstances that could be taken into account were those of Raymond, as majority beneficiary by value.
The core of the Judge’s reasoning [12] was that: (1) the principal rule in statutory interpretation is the presumption that the grammatical meaning of an enactment is the meaning intended by the legislator. In considering section 15(3) it sets out two apparently separate options: “the wishes of any beneficiaries….or (in the case of dispute) of the majority”. It does not state that the court can take into account both the views of the minority and the majority as could have easily been stated. It also does not state that the court should weigh the views of one up against the other and (2) the wording of this particular sub-section can only make grammatical sense if the court can only take one of the considerations into account and (3) this is akin to the maxim “Expressio unius est exclusio alterius” which means that the express mention of one thing excludes all others and (4) the Judge then determined that he was satisfied that the wording of section 15(3) must mean that once the parties are in dispute then the only wishes and circumstances that can be taken into account are those of the majority beneficiary and those of the minor beneficiaries cannot be considered ‘through the back door’ of taking them into account as one of the other factors [12].
The Judge accordingly set aside the order of the District Judge and made an order for sale of the Trust Properties on the open market without Frank having any right of pre-emption [13].
Frank was given permission for a second appeal against the Judge’s legal conclusions in relation to section 15(3) by Lady Justice King. Franks’ appeal was supported by his siblings and Vanessa (who did not play any active role in the appeal) and opposed by Raymond [14]. There was no cross-appeal against the Judge’s decision in relation to the valuation evidence.
The Court of Appeal (Snowden LJ) held that:
- The Judge had misinterpreted section 15(3) of TOLATA and misapplied it to the facts of the case [48]. Accordingly, the order of the District Judge was restored on the basis of the District Judge taking into account all the relevant circumstances and reaching a decision which appeared to the court to be both sensible and well within the reasonable ambit of his discretion under section 14 [48];
- Considered the wording of sections 14 and 15 of TOLATA in detail [2]; and
- Gave clear guidance in relation to statutory interpretation generally and sections 14 and 15 of TOLATA in particular [15-47].
In considering the role of the courts in interpreting a statute, Snowden LJ referred to the case of Secretary of State for the Environment etc, ex parte Spath Holme Limited [2001] 2 AC 349 (“Spath Holme”) at 396, “Statutory interpretation is an exercise which requires the court to identify the meaning borne by the words in question in the particular context. The task is often said to be to ascertain the intention of Parliament expressed in the language under consideration” [15].
Snowden LJ held that the Judge was correct in carrying out this exercise, there is a presumption – or, more accurately, a starting point – that Parliament intended the words used to have their grammatical meaning [16] and referred to Lord Nicholls in Spath Holme at 397 [16] as follows: “an appropriate starting point is that the language is to be taken to bear its ordinary meaning in the general context of the statute”.
However, Snowden LJ pointed out that as Lord Nicholls’ dictum itself indicates, even when considering the grammatical meaning of the words, the words should not be considered in isolation [17] and the court must have regard not only to the way in which the words are used in the statutory provision but also to the relevant context in which they are used. In this exercise, the relevant context includes the structure and contents of the part of the statute in which the relevant provision appears as well as the statute as a whole. However, it is not limited to such matters [18]. The relevant context can also include the historical background against which the statute came to be passed and its legislative purpose. Those matters may be apparent from the wording of the remainder of the statute itself, which must be the primary focus. In addition, but subject to some limitations, reference can also be made to secondary materials such as Law Commission reports and Explanatory Notes [18].
Snowden LJ [19] further indicated that these principles and the relationship between giving effect to the words of a statute and reference to secondary materials, were explained by Lord Hodge in the majority judgement of R v Secretary of State for the Home Department ex parte O [2022] UKSC 3 and after quoting Lord Nicholls’ dictum from Spath Holme at 396, Lord Hodge continued, “29. Words and passages in a statue derive their meaning from their context…..30. External aids to interpretation therefore must play a secondary role”.
In dealing with the use of so-called “cannons of interpretation” such as the “expression unius” maxim, Snowden LJ remarked that it is important to bear in mind that such cannons are merely interpretative tools that reflect the use of language generally and hence should not be applied rigidly [20]. As regards the expression unius maxim itself, Snowden LJ, determined that it is clear that this is not an absolute rule and should not be applied where there is some reason, other than the intention to exclude certain things, for mentioning some but not others. So, if it appears that particular items were singled out for mention merely as examples, there is no room for the maxim to apply [21].
The Court of Appeal in its analysis [22-47] held as follows: (1) the starting point must be the provisions of section 14 of TOLATA under which the court is given a broad discretion to make whatever order in relation to the 2 matters mentioned in section 14(2) as the court thinks fit [22] and (2) Section 15(1) sets out a list of factors, which are not intended to be exhaustive and (3) section 15(3) adopts the same approach as section 15(1) [26] and (4) consistently with the structure of section 15 as a whole, there is nothing in the wording or structure of section 15(3) that expressly or by implication prevents the courts from taking factors other than those listed into account [29] and (5) accordingly Snowden LJ did not agree with the Judge’s view that as a matter of linguistics the only meaning of section 15(3) that makes grammatical sense is if in the case of a dispute the court ‘can only take’ one of the matters into account and (6) Snowden LJ held further that section 15(3) does not expressly or by implication, exclude the circumstances and wishes of the minority of beneficiaries by value from being taken into account by the court. It simply does not include these matters in the list that must be considered [30] and (7) Snowden LJ found that the Judge was wrong to conclude that having been excluded through the front door by section 15(3), the wishes (and circumstances) of the minority beneficiaries cannot be considered ‘through the back door’ of taking them into account as one of the other factors, on the basis that is not what section 15(3) is designed to do [31] and (8) the Judge’s recourse to the linguistic cannon of expression unius was not found to be correct given that the purpose of section 15 was not to set out an exhaustive list of factors that the court is permitted to take into account and the maxim cannot operate to exclude any items not specifically mentioned from those that the court is permitted to take into account [32] and (9) Snowden LJ remarked that the Court of Appeal’s conclusions were supported and put beyond doubt when consideration is given to the secondary materials such as the work of the Law Commission in its 1985 Working Paper (No 94) entitled “Trusts of Land” and its 1989 Report (No 181) entitled “Transfer of Land, Trusts of Land” [34-47].
In conclusion, the Court of Appeal’s approach in the Savage case is a useful reminder of the correct approach to be adopted in respect of statutory interpretation generally and section 15(3) of TOLATA in particular.
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