Introduction
This article provides an overview of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) proceedings. The Legislation replaced and simplified aspects of existing laws, particularly in the areas of trusts of land and co-ownership of property.
Jurisdiction & Powers of the Court
As set out in section 23 of TOLATA, these proceedings are governed by the Civil Procedure Rules and the County Court has concurrent jurisdiction with the High Court.
The Court’s powers are covered under sections 14 and 15 of the Act. In essence, the Court can determine the ownershipr apportionment thereof) of property as well as determine who can remain in occupation of the property. The Court also has the power to make any order relating to the exercise by trustees of their functions as trustees, and may for example order a sale of the trust property.
TOLATA does not however provide the Court with the power to i) vary the co-ownership ii) adjust the proportions that each person owns or iii) order one party to sell or transfer their share of the property to the other or that one party is to purchase the interest of the other party.
Matters relevant in determining Applications
Section 15 of TOLATA provides that the Court is to have regard to various matters when determining an application for an order under section 14. Under section 15 (1), the court is to have regard to:
- The intentions of the person or persons (if any) who created the trust;
- The purposes for which the property subject to the trust is held;
- The welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home; and
- The interests of any secured creditor of any beneficiary.
In applying these considerations, the Court invariably will be faced with two broad types of TOLATA claims, resulting trusts and constructive trusts.
Resulting trusts may be formed where the non-owner contributed towards the purchase price except when this contribution is made strictly by way of a gift. Constructive Trusts are typically formed on the basis of common intention shared between the parties that the non-owner will benefit from shared ownership in some form and has acted to their detriment.
A Court can also assess the property rights of a party in these proceedings through proprietary estoppel, typically where a party has relied on promises of shared ownership and has acted to their detriment as a result of this.
Procedure
The application can be made either by a person who is a co-owner of the property or a person who has a beneficial interest in a property. Less commonly, applications can also be made by personal representatives of a beneficiary, trustees in bankruptcy, judgment creditors with charging orders secured against the subject property and receivers.
Pre-action letter & ADR
It is advisable that a party wishing to advance a TOLATA claim should start with exploring alternative dispute resolution (ADR) routes. This may be a time and cost-effective way to reach a mutually agreed outcome outside of the courts, often through mediation. Reaching an agreement through alternative dispute resolution (ADR) allows the parties to retain greater control over the final outcome, including decisions on property retention and apportionment, rather than being bound by a court-ordered sale and division of proceeds.
Commencement of Legal Proceedings
If the parties are unable to reach a resolution through ADR, then the Court process will need to be invoked. Typically, an application may be brought by using either the Part 7 or Part 8 procedure under the Civil Procedure Rules. Generally depending on which Part is used, the process will be as follows:
- Part 8 Claims – The Application is firstly made to the Court. CPR 8.1 (2) (a) provides a claimant may use Part 8 where he seeks the court’s decision on a question which is unlikely to involve a substantial dispute of fact. After the claim is issued with the claim form and the witness statement, the Defendant then responds to this Witness Statement. The matter thereafter can then be listed for a case management hearing(s) and thereafter a Trial to determine the issues.
- Part 7 Claims – The application is made in ‘the usual way’ by filing and service of the Claim Form and Particulars of Claim. The Defendant must then respond by way of Defence and can also make a counterclaim against the Claimant at this stage. The Court then allocates the matter to a track (in TOLATA applications, allocation is usually to the multitrack.) The court will also make directions for the parties to file directions questionnaires and confirm the draft directions sought. There will also be disclosure at this stage. The case will be listed for a Costs and Case Management Conference (CCMC) where the judge will consider the timetabling and costs budgeting to trial and will amend or approve the parties’ budgets. After the CCMC, there may be a pre-trial review although this is not always required. Thereafter, the Trial of the matter takes place where the Judge will read all evidence submitted by the parties, hear the oral evidence from the witnesses as well as submissions from Counsel before giving judgment as to the outcome of the claim.
In Part 7 matters, properly pleaded and particularised statements of case will greatly streamline the issues in difficult cases. In Part 8 matters the claim form and witness statement can be a relatively swift way to dispose of a straightforward dispute. Therefore, in practice, it is important that the right procedure is be adopted when issuing the TOLATA claim.
Costs
TOLATA claims are naturally legally and procedurally complex as the strict civil costs regime and rules with respect to without prejudice offers apply. CPR 44 applies and the general rule is that costs follow the event i.e. the losing party will be paying not only its costs but also a proportion of the costs of the other party. Therefore, it is important that TOLATA claims are precise and clearly set out to ensure the highest chances of success.
Parties are encouraged to make realistic without prejudice offers at the earliest opportunity. It may be advantageous to make a Part 36 offer in a TOLATA claim. An advantage of making this offer is to potentially insulate the party against a costs order. This may provide that party with a more favourable costs order than what would otherwise have been available had the offer not been made.
Summary
To conclude, in a TOLATA claim, judges often adopt a “broad brush” approach when determining the issues involved. Based on the specific facts of the case, this may involve considering legal principles such as resulting and constructive trusts, as well as Proprietary Estoppel. Once the Judge has reached a decision on the issues in dispute, they will proceed to issue a judgment, including directions on costs and the timeframe for compliance, thereby bringing finality to the dispute.
TOLATA Applications are a complex area of law. If you have any questions relating to this topic do not hesitate to get in touch with our Clerks.
****Disclaimer: The information contained herein is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.
Resources
Trusts of Land and Appointment of Trustees Act 1996
The Civil Procedure Rules 1998
