Topic 4 – Co-ownership and trusts of land

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Module: Property law 2023-24 Date: Sunday, 23 June 2024, 1:42 PM

Book: Topic 4 – Co-ownership and trusts of land

 Table of contents

Learning outcomes
Topic reading
Introduction
4.1 The two forms of co-ownership
4.2 The means by which co-ownership might arise
Lecture plus 1
Lecture plus 2
4.3 Distinction between joint tenancy and tenancy in common
Learning activity 1
4.4 Severance
Mini lecture 1
4.5 The 1925 and 1996 reforms
Learning activity 2
4.6 Rights of beneficiaries
Reflective activity 1
Sample examination question 1
Sample examination question 2
Sample examination question 3
Sample examination question 4
Sample examination question 5
Quick quiz 1
Am I ready to move on?
Further reading
 Learning outcomes

By the end of this topic and the relevant readings, you should be able to:

explain the distinction between a joint tenancy and a tenancy in common

describe the various modes of severance
recognise the situations in which a resulting trust or constructive trust may arise
explain the significance of the LPA 1925 and TLATA 1996 reforms relating to co-ownership and trusts of land
apply the above rules and principles to hypothetical situations.
 Topic reading

Core text
Dixon, Chapter 4 ‘Co-ownership’.
 Introduction

This topic deals with the situation that arises where two or more persons are entitled to the simultaneous enjoyment of land. Such situations occur frequently in everyday life (e.g. when a married or
unmarried couple purchase a home or when a person dies leaving their house to their children). For reasons we explore in Section 4.3, whenever land is co-owned it is held via a trust, and we need to
spend a few moments understanding this extremely important property holding device. The trust concept was introduced very briefly in Topic 2 (Section 2.2.1), when we considered the two axioms of
land law, and you should re-read that section before proceeding further.

At its heart a trust is centrally concerned with the division of ownership and is best understood by contrasting the concept with the absolute ownership with which you are more familiar.

Where property is owned absolutely the owner’s legal title includes the beneficial ownership and comprises the rights both to control the property and to enjoy it. There is simply one absolute title that
gives the owner all the rights one normally identifies with ownership which, while not literally absolute (e.g. a landowner cannot normally build without planning permission use their land in a tortious
manner), do include the right to control and enjoy insofar as the law allows. In contrast, under a trust, ownership is divided between the trustee (in whom the formal legal title is vested) and the
beneficiary (who holds a separate equitable interest). Under this model the formal legal title and beneficial ownership are separated with the former vested in the trustee, who controls the property but
cannot enjoy it, because the legal title now no longer includes the beneficial ownership, which adheres to the equitable interest, and therefore belongs to the beneficiary (or someone claiming under
the beneficiary).

It is important to understand the distinction between legal ownership and equitable ownership.

Distinction between legal ownership and

equitable ownership.

LAW → Trustee(s)
EQUITY → Beneficiaries

The scheme of the 1925 property legislation was to impose a statutory trust for sale in all cases of co-ownership. Although this was intended to simplify conveyancing, it gave rise to a number of legal
problems, not least because it was often inappropriate to apply to co-ownership principles (like the doctrine of conversion, now abolished) associated with express trusts for sale. However, since the
Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996) came into force, trusts for sale have been converted into trusts of land. Co-ownership now takes effect behind a trust of land. While
many LPA 1925 provisions governing co-ownership remain good law, TLATA 1996 has introduced important reforms in this field.
 4.1 The two forms of co-ownership

Co-ownership arises whenever two or more people are simultaneously entitled in possession to an interest in the same land. Although there were historically other methods of shared ownership (and
there arguably still are) the joint tenancy and the tenancy in common are the only forms of co-ownership that can exist in English private law today. The difference between the two is both conceptual
and substantive.

Under a joint tenancy, the joint tenants collectively own the whole and do not have individual interests. When one dies, their interest dies with them until, after the death of the penultimate joint tenant,
the co-ownership comes to an end and the survivor becomes the sole owner of the property. This is known as the right of survivorship and it follows that a joint tenant has no interest that can be left to
pass via a will because, by the time the will comes into effect, they have no interest to bequeath as their joint interest died with them. Thus, only the survivor has an interest at the end of the joint
tenancy on the death of the penultimate joint tenant, which they can leave by will. They are then the sole beneficial owner, whose interest will not die with them but survives to pass via their will or
under the rules of intestacy.

In contrast, under a tenancy in common each co-owner has a separate and defined share in the co-owned property. Such a share is intangible, but real, in the sense that the property has not been
physically divided (which is why such interests are often referred to as undivided shares) but represents a solely owned interest in part of the whole, which can be disposed of either during the lifetime
or on the death of the tenant in common. It is important to understand what is meant when we speak of the share under a tenancy in common being undivided. Tenants in common, like joint tenants,
have unity of possession (meaning that each co-owner has the right to possess the whole of the land alongside the other co-owners). Consequently, apart from under certain statutory provisions to be
considered later, if any co-occupier has the right to exclude another from part of the property this is incapable of being co-ownership, under either a joint tenancy or a tenancy in common, but is simply
two separate ‘ownerships’.

Two forms of co-ownership

Joint tenants Tenants in common

No individual interest Each individual has a

defined interest

Before proceeding, we will introduce another idea which will be important to your understanding of co-ownership, namely the concept of beneficial ownership, which signifies the person(s) with the
right to benefit from the property. For example, in the simplest form of ownership, where there is a single legal owner of property (e.g. a car or an estate in land, etc.), that person is said to have an
absolute title, including not just the formal legal title but also the beneficial interest. Such an owner can both manage the property (via their legal title) and enjoy it (as beneficial owner). In other words,
their absolute title comprises both the formal and beneficial interest, although it would be a mistake to consider these as two separate concepts as they are united within the absolute title.
In contrast to absolute ownership, consider once more the trust, an idea we introduced in Topic 2, where it was described as a mechanism based on the division of ownership into separate legal and
equitable titles, with the former vested in trustees who manage the property on behalf of beneficiaries who as equitable owners have the right to enjoy its fruits (see diagram above). In terms of
beneficial ownership, therefore, under a simple trust it is not the legal owner but the equitable owners who have the beneficial interest, which is why we refer to them as beneficiaries. The term
‘beneficial ownership’ is therefore often used as a synonym for the equitable interest behind a trust.
 4.2 The means by which co-ownership might arise

Core text

Dixon, Chapter 4 ‘Co-ownership’: Section 4.10.

The majority of homes in the United Kingdom are shared by two or more adults, and very often each will contribute directly (e.g. by paying the deposit or mortgage) or indirectly (e.g. by covering
ancillary costs – either financially or in kind – including running expenses, home improvements, childcare, etc.) to its value as both a home and an investment. In such situations the parties are best
advised to regulate their co-ownership by means of a formal express agreement. This should set out the rights and obligations of each in relation to the land and include an express declaration of trust,
which, as it comprises land, should fulfil the requirements of s.53(1)(b) LPA 1925 and be evidenced by signed writing.

Unfortunately, however, cohabitees often fail to formalise the basis on which such an important asset is to be held, often because couples rarely consider that their relationship might come to an end,
nor what will happen if it does. Where no express trust has been declared in accordance with s.53(1)(b) LPA 1925, co-ownership will often arise informally (even by conduct without the parties
realising the implications of their behaviour), usually under the provisions of s.53(2) LPA 1925, which exempts implied trusts from the formalities of an express trust. So, in addition to express trusts,
such equitable co-ownership may occur through the application of principles of resulting trusts, constructive trusts or (rarely) proprietary estoppel. See Topic 6 for the latter but bear in mind that the
relationship between constructive trusts and proprietary estoppel is an uncertain and difficult one which you will need to consider later, once you have assimilated the basics of both these separate but
interrelated doctrines.

A resulting trust arises (among other cases) when:

a person contributes directly towards the purchase of a home but does not have their name on the legal title (known as ‘purchase in the name of another’). In such a case there will be a
presumption that the contributor has a beneficial interest in the land behind a resulting trust.

A constructive trust arises (again, among other cases) when:

a person has contributed, directly or indirectly, to the purchase and/or establishment of a home but does not have their name on the legal title in circumstances where the court is willing to
recognise a common intention on the basis of that contribution and/or other evidence. This is known more specifically as a common intention constructive trust to differentiate it from the other
types of constructive trust.

Resulting and constructive trusts will be examined in greater detail later in this Topic, but it should be noted that there are important recent cases which indicate that the basis on which cohabitees’
rights in the home are calculated is evolving. There are also relevant recent reform proposals, which would introduce radical change if they become law – although there is currently no prospect of this
occurring.

When analysing a situation of co-ownership or answering a problem question, it is therefore necessary to discuss the legal and equitable positions relating to ownership separately, and it is helpful to
draw diagrams to represent the changing positions as the facts of the scenario develop. For example, if land is conveyed to A and B, in law they will take it as joint tenants. If B has paid two-thirds of
the purchase price and A one-third, then in equity A and B will (at least outside the residential context) be tenants in common (see Section 4.3.2 for why).

Legal and equitable positions relating to ownership

LAW → A+B Joint tenants

EQUITY → A(1/3) + B(2/3) Tenants in common
 Lecture plus 1

This Lecture Plus by Christian Daly was recorded in November 2020. It covers the basic ideas of co-ownership, including the idea of a trust, the distinction between joint tenancies and tenancies in
common, survivorship, and the different methods of severing an equitable joint tenancy.

Part II of the lecture goes into the concept of severance as a result of the unlawful killing, or the forfeiture rule. This provides rather more detail than is necessary for the present day course, which
merely requires you to be aware of the rule; see the Guide and the textbook.

Part III provides very valuable guidance on tackling co-ownership questions, and refers at the end to a model examination question supplied to students with the Lecture Plus. This can be found at the
end of the Feedback report, linked to below the lecture.

The law as stated and explained in this lecture is a full and accurate statement of the law as it is now, needing no updating.

Lecture

1:17:47

Download lecture | Download transcript | Download slides | Discussion forum feedback

This video lecture was part of the Lecture plus activity and was recorded in November 2020.
 Lecture plus 2

This Lecture Plus by David Thomas was recorded in February 2023. It covers ways that joint ownership of property may be implied by law, by means of resulting trusts and common intention
constructive trusts. The last part provides valuable guidance on tackling questions on these issues, and refers at the end to a model examination question supplied to students with the Lecture Plus. It
can be found at the end of the Feedback report, linked to below the lecture.

The law as stated and explained in this lecture is a full and accurate statement of the law as it is now. In addition, the

Lecture

42:57

Download lecture | Download transcript | Download slides | Discussion forum feedback

This video lecture was part of the Lecture plus activity and was recorded in February 2023.
 4.3 Distinction between joint tenancy and tenancy in common

Core text

Dixon, Chapter 4 ‘Co-ownership’: Sections 4.1–4.7 and Section 4.11.

Although there were historically other methods of shared ownership of land, the joint tenancy and the tenancy in common are the only significant forms of co-ownership today and it is the right of
survivorship that is the most significant difference (see Dunbar v Plant [1998] Ch 412). We have already discussed this but, to recap, it means that on the death of each joint tenant, their interest in the
land dies with them until only one of the original co-owners remains, who then holds the land as sole owner.

By contrast, on the death of a tenant in common their ‘undivided share’ passes under their will or intestacy; survivorship does not apply to tenancy in common.

In equity it is possible to co-own land via either (or both) a joint tenancy or tenancy in common. At law it is only permitted to do so via a joint tenancy. The reason for what sounds, initially, like a strange
rule is purely practical. Before 1925, land could be co-owned legally via either a tenancy in common or a joint tenancy (as personalty still can be co-owned today). As you will see below, under a
tenancy in common there is no unity of title, which means that the tenants in common could have different documentary titles. As anyone who has ever bought a house will know, investigating title is
an expensive and time-consuming business and thus, in a bid to speed up conveyancing, the 1925 legislation limited legal co-ownership to joint tenancies (meaning there was only one legal title to
investigate) and also limited the maximum number of legal joint owners to four (Trustee Act 1925), to further reduce the complication of dealing with the legal title (see ss.34 and 36 LPA 1925).

Thus, if a legal title is conveyed to more than four co-owners or as a tenancy in common it will simply take effect as a legal joint tenancy limited to no more than the first four legal owners named in the
conveyance (s.34 LPA 1925). Although this makes dealing with the legal title much simpler, it lacks flexibility. After all, there might be more than four people with an interest in the property or, because
they do not want to be bound by the right of survivorship, the co-owners might not wish their interest to be held via a joint tenancy. To simplify conveyancing but to maintain such flexibility, the 1925
legislation (as interpreted at least) consequently played a simple but neat little trick by imposing a trust whenever land was co-owned. This squared the circle of simplifying dealings with the legal title
(by imposing limits on how it might be held) but maintaining flexibility with regard to the beneficial interest (by allowing the equitable interest to be held under a joint tenancy and/or a tenancy in
common with no limit to the number of beneficial owners).

4.3.1 The four ‘unities’

It is therefore particularly important to know whether co-owners hold as joint tenants or as tenants in common. To determine this, three questions need to be asked:

Are the four unities present? If not, there cannot be a joint tenancy. There must be unity of title, time, interest and possession:
1. Unity of title requires that all co-owners derive their interests from the same document or act.
2. Unity of time requires that the interests of all co-owners vest in them at the same time.
3. Unity of interest requires that all co-owners have the same interest in the land (e.g. freehold estate).
4. Unity of possession requires that each co-owner is as much entitled to possession of the land as any other co-owner.

As we have already seen, unity of possession is also an essential element of tenancy in common. Therefore a co-owner who is not in occupation is generally not entitled to claim an occupation rent
from a co-owner in occupation, although the matter is now governed by ss.12 and 13 TLATA 1996, which contain some exceptions to this general rule (see below).

So, only if all four unities are present can there be a joint tenancy, but a tenancy in common requires only unity of possession to be shown.

1. Are there any words of severance in the grant indicating that the tenants were to take as tenants in common (e.g. ‘X and Y in equal shares’)?
2. Is the situation one where equity presumes a tenancy in common?

The principle of joint tenancy makes sense if you think about it as similar to a marriage.
In the Christian marriage ceremony, traditionally, there was an important moment in front of God when two people (husband and wife) became ‘one flesh’. That is, two people are treated as being one
person in front of God. A joint tenancy is similar in the sense that two or more cohabitants acquire unified rights because their rights come into existence at the same time, with the same rights, in
relation to the same title and into possession at once. Their rights are indivisible unless they go through the process of severance, just as a married couple are treated as being indivisible unless they
divorce or one of them dies.

In answering problem questions in this area it is important to identify (i) whether there is a joint tenancy, and, if so, (ii) whether severance has taken place.

4.3.2 The acquisition of equitable interests in the home

The law relating to the acquisition of equitable interests in the home (often referred to as ‘trusts of homes’) – that is, situations in which there is cohabitation of property and those cohabitants are
contesting whether they have rights in the property and the size and nature of their rights – is one of the most interesting areas of land law. The subject matter of the cases is easy to understand: there
are relationship breakdowns, cohabitants resisting mortgage lenders who wish to take possession of property and other situations in which claimants argue that it is ‘unconscionable’ for them to be
denied some property rights in a home.

There are many cases in this area and they tend to disagree with one another. Therefore, the approach that is taken here is to begin with the important decision of the Supreme Court (that in Jones v
Kernott [2011] UKSC 53) as the centrepiece. That judgment does not overrule any cases and therefore understanding the trends in those earlier cases will remain significant in discussing the likely
future application of Jones v Kernott.

The Supreme Court in Jones v Kernott attempted to explain the earlier decision of the House of Lords in Stack v Dowden [2007] UKHL 17. The approach set out in a joint judgment of Lady Hale and
Lord Walker in Jones v Kernott is the most coherent approach in this area. It is suggested that that is the approach you should use as the structure for answering problem questions in this area:

1. If the property is registered in the name of one person, presume that that person is the sole equitable owner; whereas, if the property is registered in the name of more than one person,
presume that those people are equitable co-owners of the property.
2. Those presumptions can be rebutted by identifying a different common intention of the parties. This common intention should be ‘inferred’ from the circumstances, but done so ‘objectively’. The
concept of ‘common intention’ was debated intensely in the earlier case law, and that earlier case law remains important.
3. If the quest for the common intention produces no answer, then the court may do what is ‘fair’ in the circumstances.

Therefore, the important message to take from this three-part layout is the following: in answering a problem question you will have to identify the parties’ common intention, which you will do by
looking at all of the earlier case law on ‘common intention’. If that search for a common intention is inconclusive then you can ask what is ‘fair’.

4.3.3 The current law

In Jones v Kernott the Supreme Court restated and clarified the familiar principles of Stack v Dowden and confirmed the approach taken in Oxley v Hiscock [2004] EWCA Civ 546. However, there was
less unanimity between the Supreme Court judges on when common intention should be inferred or imputed, or whether fairness is the key issue – for a unanimous judgment, there is a lot of
disagreement, with the judges reaching their decision by completely different routes! The core principles as Lady Hale and Lord Walker see them are stated in para.51 of the judgment:

In summary, therefore, the following are the principles applicable in a case such as this, where a family home is bought in the joint names of a cohabiting couple who are both
responsible for any mortgage, but without any express declaration of their beneficial interests.

(1) The starting point is that equity follows the law and they are joint tenants both in law and in equity.

(2) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed the
common intention that their respective shares would change.

(3) Their common intention is to be deduced objectively from their conduct: ‘the relevant intention of each party is the intention which was reasonably understood by the other party
to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention
which he did not communicate to the other party’ (Lord Diplock in Gissing v Gissing [1971] AC 886, 906). Examples of the sort of evidence which might be relevant to drawing such
inferences are given in Stack v Dowden, at para 69.
 (4) In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by
direct evidence or by inference what their actual intention was as to the shares in which they would own the property, ‘the answer is that each is entitled to that share which the
court considers fair having regard to the whole course of of dealing between them in relation to the property’: Chadwick LJ in Oxley v Hiscock [2005] Fam 211, para 69. In our
judgment, ‘the whole course of dealing…in relation to the property’ should be given a broad meaning, enabling a similar range of factors to be taken into account as may be
relevant to ascertaining the parties’ actual intentions.

(5) Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either
intended (as in case (3)) or fair (as in case (4)).
Both Stack v Dowden and Jones v Kernott involved a title that was in joint legal names. The issue in each case was therefore restricted to quantifying shares in a property in which they both had an
interest, via their joint legal title.

Lloyds Bank plc v Rosset [1991] 1 AC 107, on the other hand, was more complex as the property was not in joint legal names and thus Mrs Rosset had first to show she had acquired an interest
before any quantification could take place. The House of Lords held that (in the absence of any express common intention) she could only acquire such an interest if she made direct financial
contributions to the purchase price or the mortgage instalments. Following Stack v Dowden there was some academic debate as to whether or not the House of Lords’ reasoning in the case was
applicable to such ‘acquisition’ cases, with some commentators arguing that the much narrower approach in Rosset remained the applicable authority when the home was not in joint legal names
despite Baroness Hale’s comments in Stack that Lord Bridge’s speech in Rosset was outdated.

Admittedly, within a few weeks of Stack, in Abbott v Abbott [2007] UKPC 53, the Privy Council had appeared to apply its principles to a case where the legal title was not in joint names. However, on
this occasion acquisition was not in question, as the legal owner had already conceded that his wife had a beneficial interest, and thus the judgment was only concerned with quantification. The case
involved an appeal from Antigua and Barbuda (where there are no provisions, as in this jurisdiction, to reassign property interests on divorce). The family home was in the sole name of the husband
and the trial judge awarded a 50:50 split; this was overturned by the Court of Appeal on the basis that the wife had failed to satisfy Lord Bridge’s criteria in Rosset. The Court of Appeal found that the
wife was entitled only to the small share represented by her actual financial contributions to the mortgage. The Privy Council restored the trial judge’s award, with Baroness Hale reiterating that Lord
Bridge’s approach in Rosset was outdated. Applying Stack, a holistic view of the facts should be taken in modern times; common intention could be inferred where there was a direct or indirect
contribution to the acquisition of the land. Of course, this is going beyond the ratio of Stack, which relates to the quantification of shares, not their establishment, but it does appear clear that a more
flexible approach is now taken than that found in Rosset.

Thus, despite Abbott, either because the case did not consider acquisition or because as a Privy Council decision it was only of persuasive and not binding authority, some continued to argue that
Rosset remained the applicable authority when the legal title was in a single name, notwithstanding Baroness Hale’s forthright comments. However, the Court of Appeal rejected such arguments in
Geary v Rankine [2012] EWCA Civ 555. The case involved a property in the name of one trustee but the court made clear that Stack, rather than Rosset, was the relevant authority. Additionally, the
decision in O’Kelly v Davies [2014] EWCA Civ 1606 accepted the broader arguments from Stack to establish a beneficial interest. Despite the absence of binding authority on the point, this appears to
settle the argument as to whether Rosset should be followed in such cases. Obviously, where the legal title is in a single name the non-legal owner first has to show they have acquired an interest
before it can be quantified under Stack. The Court of Appeal consequently held there was a two-stage test in which the claimant first had to show a common intention that they should acquire an
interest and then a common intention as to what that interest should be. Although the common intention as to acquisition could only be deduced from express words or inferences, the Court of Appeal
was willing to allow the size of the share to be imputed in the absence of express words or inferences concerning quantification.

It is ironic that even the ‘new’ approach in the law since Abbott v Abbott [2007] UKPC 7 still means that in cases like Oxley v Hiscock [2004] EWCA Civ 546 and Stack and Jones v Kernott the
equitable interest in the property was divided in shares that equated to the parties’ respective cash contributions. What is different is that in those last two cases it was the female litigants who were the
larger earners in their relationships than their male partners.

Clearly the restrictive approach in Rosset is now history, with Stack going some way to address the legitimate expectations of those who make a non-financial contribution to the family home (usually
the women in terms of childcare and home making) and who could rarely, absent a direct financial contribution or an express arrangement, come within the terms of Rosset. However, the price paid is
a high one, with Baroness Hale’s holistic approach importing a large degree of uncertainty into the law. Each case is likely to turn on its own particular facts (and, dare one say it, each judge’s
particular view as to what is and is not significant), making it very difficult for solicitors to advise clients of their position; a point implicitly recognised in Baroness Hale’s judgment where, as a former
Law Commissioner, she calls for legislative intervention in this field.

It is indeed not just the courts who are pressing for change on this issue. Law Com 307 31 July 2007, ‘Cohabitation: the financial consequences of relationship breakdown’, found that the current law
is a patchwork of principles which is ‘complex, uncertain, expensive to rely on and, as it was not designed for family circumstances, often gives rise to outcomes that are unjust’. While not
recommending that cohabitees should have access to the same remedies as married couples, the Law Commission proposes that where an unmarried couple have cohabited for a set number of
years (precise number to be agreed later) or had a child together, and have not expressly agreed that the new scheme would not apply to them, then new principles should apply to the allocation of
their property on dissolution of the relationship. It would be necessary for a claimant to show that they had suffered an economic disadvantage by making contributions to the relationship. A court
would then have discretion to grant appropriate financial relief, while having regard to the needs of any dependent children.

The proposals’ limitations should be noted; however, they would not apply where the cohabitants are not a couple, or where a third party is involved in the facts (as in Rosset itself). Thus, even if the
proposed new scheme did become law, some cases would still have to be decided under whatever version of the Stack principles then applies.

4.3.4 Understanding the old case law on ‘common intention’

Let us recap. In the wake of Jones v Kernott and Stack, the presumptions can be rebutted if the parties’ common intention can be shown to be something different from the presumption. Significantly,
the parties’ common intention is to be identified objectively from the circumstances – that means, you must look at the circumstances and decide what the parties must have meant their common
intention to be if they did not consciously form such a common intention. The problem that remains is this: what do we mean by ‘common intention’? The answer is to be found by looking at the old
case law on the meaning of that expression.

Hudson (see Further reading) suggests that there are five divisions in the case law on ‘common intention’ before Stack and Jones v Kernott in the following form:

1. The narrow form ‘common intention constructive trust’ identified in Rosset identifies that two forms of rights in the home are acquired on the basis of:
a. an agreement, arrangement or understanding between the parties, involving some detriment, created before the acquisition of the property, as to the parties’ rights in the property, or
b. a contribution to the purchase price of property or to the mortgage instalments (such that it is ‘at least extremely doubtful whether anything less will do’).
This approach seemingly permits no other means of acquiring rights in the property than these two.

2. The ‘balance sheet approach’ in which resulting trust thinking is used to focus solely on cash contributions (e.g. Springette v Defoe (1992) 24 HLR 552; Huntingford v Hobbs [1993] 1 FLR 736)
where the claimant acquires property rights in the home in proportion to the size of their cash contribution to the purchase price of the property. This approach takes into account no non-financial
contributions to the property. The Court of Appeal in O’Neill v Holland [2020] EWCA Civ 1583 endorses the importance of detrimental reliance in establishing a constructive trust in sole
ownership cases (a view Lewison LJ echoes, obiter, in Hudson v Hathway [2022] EWCA Civ 1648) and illustrates how detriment need not be financial but might, as was the case for the
claimant, O’Neill, involve the loss of a chance to acquire a property interest.
3. The ‘family assets approach’ in which the court ‘undertakes a survey of the entire course of dealing between the parties’ (including non-financial contributions to the home, and payments to
things other than the purchase price or the mortgage), and therefore is not limited to financial contributions. In relation to long-standing marriages, this approach has held a wife’s contribution to
utility bills, occasional mortgage payments and to bringing up the children, keeping the home and finding occasional work when the family needed money, to be sufficient to acquire one-half of
the equitable interest in the home (as in Midland Bank v Cooke [1995] 4 All ER 562). This is the antithesis of the first two approaches because it will take into account everything done between
the parties.
4. The ‘unconscionability approach’ in which courts identify circumstances in which it would be unconscionable for the claimant to be denied some rights in the property (e.g. Jennings v Rice [2002]
EWCA Civ 159; Cox v Jones [2004] EWHC 1486 (Ch)). This is, broadly speaking, the approach used in Australia. It seems to have faded away in England and Wales in recent years because it
has not been mentioned in recent cases. On this basis, the claimant caring for an old woman for several years for little or no pay, in the expectation seemingly that her house would be left to the
claimant, might lead to an award of £200,000 to compensate the claimant for their detriment (as in Jennings v Rice).
5. Proprietary estoppel (considered in greater detail in Topic 6) will award rights when there has been a representation (or assurance, or understanding, or an impression that the defendant knew
the claimant was forming) on which the claimant relied to their detriment. This doctrine is ‘remedial’ in the sense that the court can award whatever it considers appropriate, ranging from an
award of the entire freehold (Re Basham [1986] 1 WLR 1498) through to mere compensation (Jennings v Rice) or a combination of property rights and financial compensation (Gillett v Holt
[2001] Ch 210). This fifth doctrine is not based on common intention and was not referred to in Jones v Kernott, although it was affirmed by the House of Lords in Thorner v Major [2009] UKHL
18.

Answering a problem question in this area

When answering a problem concerning the issue of whether or not a person has an equitable interest in a home, the following approach is suggested. (You are welcome to take another approach if
you prefer it on your reading of the cases. This suggested approach draws one line through the various cases.) It is based on the joint judgment of Lady Hale and Lord Walker (which is very similar
indeed to the summary provided by Lord Kerr) in Jones v Kernott:

1. First, apply the presumptions in Jones v Kernott: single ownership of the legal title presumes single ownership of the equitable interest, whereas multiple ownership of the legal title presumes
multiple ownership of the equitable interest.
 2. Second, recognise that the presumptions can be rebutted (i.e. ignored) if the parties’ common intention can be shown to be something other than the presumption. So, apply the various different
approaches to common intention to the facts. Your goal is to demonstrate that you know each different approach is likely to produce a different outcome:
i. Apply the (unpopular but clear) test in Rosset (i.e. have the parties formed the necessary agreement, arrangement or understanding, or has the claimant contributed to the purchase price
or to the mortgage instalments?) Mere contributions to supervising construction work or to utility bills will not matter on this account.
ii. Apply the balance sheet approach, remembering that the majority of the House of Lords in Stack and the Supreme Court in Jones v Kernott refused to follow resulting trust thinking in the
future.
iii. Apply the family assets approach in Midland Bank v Cooke by undertaking a survey of the entire course of dealing between the parties, including the length of their relationship (where a
long-term marriage would seem to justify allocation of large rights in the property), contributions to day-to-day familial expenses, bringing up children as a couple, and so forth. This would
justify dividing the property 50:50 between a married couple when resisting a mortgagee’s repossession claim (as in Cooke).
iv. Apply the unconscionability approach to prevent the claimant being treated unconscionably. This may justify a wide range of outcomes.
v. Apply proprietary estoppel principles.
3. Third, if the common intention analysis is inconclusive, you may rely on doing what is ‘fair’ between the parties.

It may be that the five-fold approach to common intention has too many cases in it for you to discuss in the time allotted in the examination. In that case, you could omit the balance sheet and
unconscionability approaches (being the approaches that are least often followed in the case law). You might also be instructed in a problem question to omit proprietary estoppel: this is because
proprietary estoppel is covered in a different Topic of the online guide and because the examiners are aware of how much time you have to write your answers. Consequently, you need only focus on
the first and third approaches in detail, bringing in comment on the others as you wish.

In terms of an essay, it would be possible to use these different categories of approach to common intention and the model set out in Jones v Kernott as the structure for an essay, together with the
reading set out in this Topic of the online guide. Alternatively, you could follow the different judgments in Stack and consider the strengths and weaknesses of the judgments of Lady Hale, Lord
Hoffmann (with his ambulatory constructive trust) and Lord Neuberger (whose dissenting judgment considered the use of a resulting trust adapted for the equity of the parties’ subsequent situations),
and then show how Jones v Kernott tried to solve those problems. Alternatively again, you could discuss any of the academic discussions of the law in this area which are set out in the assigned
reading.

Which type of trust is used

Jones v Kernott operates on the basis of ‘constructive trust’, albeit that the principles in relation to the home are different from other forms of constructive trust in the general law. An express trust over
the land would trump this constructive trust, as in Pankhania v Chandegra [2012] EWCA Civ 1438. It is also to be assumed that proprietary estoppel continues to be potentially significant in relation to
ownership of the home (and land generally) even though it is not mentioned in Jones v Kernott. Some commentators have taken the approach that there is a difference between whether or not rights
are acquired in the home in the first place, and the size of that equitable interest in the home. It is not always so clear that the judges take the same approach.

Summary
Co-owners at law are joint tenants. Co-ownership in equity can take the form of joint tenancy or tenancy in common, and may be created expressly or impliedly. A person may become a co-owner in
equity by making contributions to the property sufficient to trigger either a resulting trust or a constructive trust. The extent of such a co-owner’s interest may not be directly proportionate to their
contributions, and courts have recently relaxed the criteria upon which such interests are calculated.

Within the scope of this topic, there are three principal areas for assessment in the examination:

1. A problem question asking you to apply case law (such as Stack v Dowden [2007] UKHL and Jones v Kernott [2011] UKSC 53) to a factual scenario where two or more people are contesting
their respective rights in their home.
2. An essay asking you to analyse the case law both leading up to and after Jones v Kernott by reference to the approach taken in the essay title.
3. An essay combining the material in the second question with proprietary estoppel (as discussed in Topic 6).

Study task 1

Read Stack v Dowden [2007] UKHL 17 and note the relevant facts and decision, including how the House of Lords views the cases mentioned earlier in this Topic. Also read the executive
summary of the Law Commission recommendations in Law Com 307 .
 1. How should Lord Bridge’s judgment in Rosset now be viewed?
2. To what extent would the Law Commission recommendations be a radical reform?
3. How similar are the Law Commission recommendations to the approach taken by the House of Lords in Stack v Dowden?
4. How does Lord Neuberger’s approach in Stack differ from that of the majority?

Study task 2

1. Explain what is meant by joint tenancy and tenancy in common. What is the difference between them?
2. How can a person whose name is not on the legal title to land acquire a beneficial interest?
3. What is common intention and how is it significant in co-ownership?
4. What are the ‘four unities’ needed to establish joint tenancy?
5. When does co-ownership arise via a resulting trust?
6. What kinds of contributions will trigger a constructive trust?
7. How have the principles as to quantification of shares of cohabitees in their home changed recently?
Learning activity 1
 4.4 Severance

Core text

Dixon, Chapter 4 ‘Co-ownership’: Section 4.11 ‘Severance’.

Severance is the process by which a joint tenancy in equity can be converted into a tenancy in common, to avoid the operation of survivorship. As only a joint tenancy is permissible at law, one cannot
sever the legal title (s.36 LPA 1925). If there are more than two co-owners in equity, severance will operate to give a tenancy in common only to the severing party; the others will remain joint tenants.
So, if A, B and C are joint tenants at law, holding for themselves as joint tenants in equity, then A severs, the result is as shown in the diagram below. Please note, when severing, the share any party
acquires is calculated directly by reference to the number of joint tenants (any of whom is entitled to an equal share of the joint tenancy on severance) and not according to the parties’ original
contributions. So, for example, if on purchase A had contributed 40 per cent to the initial purchase, and B and C had each contributed 30 per cent, if A severed he could get 33.3 per cent (100 per cent
divided by three).

The position in law and in equity before A

severs the joint tenancy

LAW → A+B+C
EQUITY → A+B+C

The position in law and in equity after A severs

the joint tenancy

LAW → A+B+C
B+C as joint tenants of 2/3
EQUITY →
A as tenant in common of 1/3

Under s.36(2) LPA 1925 a joint tenancy in equity can be severed in writing or by such other means as would sever a joint tenancy in personalty (as discussed below under Williams v Hensman (1861)
70 ER 862). The writing is a unilateral act by which one joint tenant gives notice to all the other joint tenants. The writing is not required to be signed and it does not need to take any special form. Its
content must, however, show sufficient intention to sever the joint tenancy immediately; see Burgess v Rawnsley [1975] Ch 429 and Gore and Snell v Carpenter (1990) 60 P&CR 456. There are a
wealth of cases, some contradictory, on how to evince this intention. Compare, for example, Harris v Goddard [1983] 1 WLR 1203 and Re Draper’s Conveyance [1969] 1 Ch 486.

As well as displaying the necessary intention, the writing must be served properly on all the other joint tenants (ss.36 and 196 LPA 1925). For service, s.196 requires that it is either sent (correctly
addressed – see Quigley v Masterson [2011] EWCH 2529), or otherwise left at the joint tenant’s last known place of abode or business. In EON UK plc v Gilesports Ltd [2012] EWHC 2172 Arnold J did
not regard an email to be a valid form of notice for the purposes of s.196(3) (but there it was in the different context of a notice given to a landlord by the tenant rather than for the purpose of effecting
severance under s.36). It is not necessary that the notice is actually read by the joint tenants, as it is deemed to be served the moment it arrives (not when posted, as in the postal rules). It was
consequently held by Neuberger J (as he then was) in Kinch v Bullard [1999] 1 WLR 423 that the subsequent destruction of the notice to prevent the other joint tenant(s) reading it did not prevent the
severance taking place, although obiter it was further suggested that the party who destroyed the notice (or more accurately their estate) would be estopped from relying upon the hidden severance to
their advantage if they in fact predeceased the other joint tenant(s). Although it is clear that a s.36 notice cannot be withdrawn after it has been effectively served, can it be withdrawn before service is
effected and, if so, how? These are moot points (see Kinch v Bullard [1999] 1 WLR 423). Where the notice is sent by registered post, it makes no difference to the notice being effectively delivered,
and therefore constituting severance, that the sender signs for it on delivery; see s.196(4) LPA 1925 and Re 88 Berkeley Road [1971] (Ch) 648. A notice sent by registered post is deemed to have
arrived on the day it would have done in the normal course of posting unless returned undelivered: see Fantini v Scrutton [2020] EWHC 1552 Ch.

In Williams v Hensman (1861) 70 ER 862 Page Wood VC identified four common law forms of severance in equity.

1. A further unilateral act of severance is possible via ‘acting on your share’. This involves the joint tenant doing some irrevocable act of alienation and is slightly contradictory as, despite not having
a share, they acquire one by acting on a share they do not yet have. This includes complete alienation, such as transferring one’s beneficial interest to another, by satisfying the requirements of
s.53(1)(c) LPA 1925 or agreeing to do so under a specifically enforceable contract that complies with s.2 Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989). It may also be
partial alienation by mortgaging or charging one’s beneficial interest. Similarly, if a person is declared bankrupt this will automatically sever their joint tenancy as all the bankrupt’s assets
(including any interests under a joint tenancy) automatically vest in the trustee in bankruptcy at that point.
2. Mutual agreement (see Burgess v Rawnsley [1975] Ch 429). An agreement to make mutual wills, to sever or to deal with the land in a manner which implies severance, will all form severance
by mutual agreement. Note that although a valid contract concerning land requires writing under s.2 LP(MP)A 1989, Burgess v Rawnsley concerns the intention of the parties and not the issue
of formalities, and so severance can occur even though the agreement which causes the severance is unenforceable in its own right due to lack of formality. Although mutual agreement sounds
tautological it is not, for the agreement has to include all the joint tenants, not just some of them.
3. Course of dealing (otherwise known as mutual conduct). A course of dealing is sufficient to indicate a common intention that one or more tenants should be regarded as having an undivided
share. Like mutual agreement, the course of dealing has to be mutual and involve all the joint tenants rather than just some of them (hence the alternative title). See Gore and Snell v Carpenter.
4. Homicide, although obviously this is rare. See Re K [1985] Ch 85. This unusual form of severance operates because a joint tenant who kills another joint tenant will not be allowed to profit from
their crime, and so survivorship must not operate.

Severance cannot be by will (Re Caines [1978] 1 WLR 540) and must be inter vivos because by the time the will comes into operation any interest under a joint tenancy will already have disappeared
under the doctrine of survivorship. It was stated in Gould v Kemp [1834] 2 My & K 304 that the right of survivorship takes precedence over testamentary dispositions.

Changes to the beneficial ownership will not alter the legal ownership. You cannot sever a joint tenancy at law: the only way this will change is if a legal joint tenant dies, when they then automatically
disappear from the legal title under the doctrine of survivorship.

Summary
While a legal joint tenancy cannot be severed, an equitable joint tenancy may be severed in a variety of ways, and thus converted into a tenancy in common. The most important of these methods are
actions that destroy one of the four ‘unities’ described in 5.3.1 above. Severance can also come about by notice in writing of an intention to sever immediately, provided it is communicated.

Study task 3

X and Y are beneficial joint tenants. X writes to Y offering to sell his interest for £5,000. Y replies that she would like to buy X’s interest, but that she can only pay £4,000. Is the joint tenancy
severed? Explain.

Show feedback

See Harris v Goddard [1983] 1 WLR 1203 and Burgess v Rawnsley [1975] Ch 429. A written notice indicating that a joint tenant wishes to end the joint tenancy immediately will sever; is this
requirement satisfied by either of the letters? Or, informal negotiations indicating a common intention that the joint tenancy should be regarded as severed would be effective; can such an
agreement be inferred on the present facts? A sale would of course have severed the joint tenancy.
 Mini lecture 1

08:32

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 4.5 The 1925 and 1996 reforms

Core text

Dixon, Chapter 4 ‘Co-ownership’: Sections 4.4–4.9.

4.5.1 Trusts for sale: a brief overview

After 1925, to simplify conveyancing (but maintain flexibility), a trust was imposed whenever land was co-owned. Between 1925 and the beginning of 1997 this was achieved by imposing ‘an
immediate binding trust for sale’ to form the statutory framework within which co-ownership operated.

4.5.2 Difficulties with the pre-1996 position

A trust for sale essentially gave the trustees of the land a duty to sell it and a power to postpone the sale. To modern eyes, this might seem a curious land-holding mechanism. It was, however,
particularly well-suited to situations where land was treated primarily as an investment to be bought and sold because it ensured that the owners could liquidate their assets unless they unanimously
agreed not to do so. In 1925, when land was owned by a small minority of investors and most families lived in rented accommodation, this made absolute sense. However, it became increasingly
problematic after the Second World War when an increasing number of families bought their own homes. Whereas the primary importance of land to an investor is its exchange value in the
marketplace, the same is not true of an owner-occupier, who is primarily interested in its use value as somewhere to live. Thus, a land-holding device that included an implicit dynamic towards sale
was ill-suited to providing the stability a family required, particularly in light of the rising divorce rates and the breakdown of family life that occurred during the post-war period, where co-owners were
likely to disagree as to whether the land should be retained or sold. Increasingly, the changed context of the trust became a very artificial way of looking at most land ownership since the equitable
interests behind the trust attached to the proceeds of sale rather than to the land itself, with the help of overreaching. The consent of named persons could be required for a sale and this was
sometimes used to make the exercise of the duty of sale difficult. Since the duty to sell was paramount, if one trustee wanted a sale then they could impose their decision on the other(s). Section 30
LPA 1925 gave a discretion to the courts in deciding whether a sale should be imposed in spite of contrary wishes and a great deal of case law was generated on the issue of how a court should
balance competing desires of beneficiaries to sell the land or reside on it. The courts sought to deal with this issue by gradually developing the secondary or collateral purpose test where, despite the
primary purpose of a trust for sale being (by definition) sale, they were prepared to postpone sale where the secondary purpose (e.g. providing a home for children) could still be attained.

There was also (until 1955) a denial that beneficiaries had any right to occupy the land held on trust for sale. Change came with Lord Denning’s judgment in Bull v Bull [1955] 1 QB 234 where he held
that a beneficiary did have the right to occupy the land; this has been almost universally accepted since. The main problem with the trust for sale’s application to land law was that its premise was
simply incompatible with the nature of family trusts of land: a duty to sell, the doctrine of conversion and the initial denial of a beneficiary’s right to occupy the land are not a good fit with the reality of
the situation where land provides a home and people care about more than its value as a financial asset.

4.5.3 Trusts of Land and Appointment of Trustees Act 1996

Introduction and background
According to s.1 TLATA 1996, ‘trust of land’ means ‘…any trust of property which consists of or includes land…’, whether express, implied, resulting or constructive, and whether created before or after
the Act itself came into force. There is an exception, worthy of only a brief mention here (no more because it is outside the syllabus), for existing strict settlements that had been created under the
Settled Land Act 1925. Essentially, such settlements create a series of beneficial interests in favour of a succession of persons – successive rather than the concurrent interests we find in co-
ownership. So, if S transferred his fee simple in land to A for life, then to B in fee simple, this will be a settlement. Historically, settlements were used particularly by the wealthy and the aristocracy in
order to keep land in the ownership of one family for a very long time, preventing its fragmentation. In 1925 there were several key reforms introduced to deter the creation of long-lasting settlements
and, in any event, they have increasingly become less relevant to land holding in England and Wales. In any event, since the 1996 Act, all trusts for sale of land (and all post-1996 settlements) are
converted into ‘trusts of land’. Trustees of land have broader powers than those previously enjoyed by trustees for sale under ss.28 and 29 LPA 1925 (ss.6–9 TLATA 1996), including the power to
delegate any of their powers to beneficiaries of full age beneficially entitled to possession.
As far as co-owned land is concerned, TLATA 1996 replaced the statutory trust for sale with the trust of land, a land holding device that was neutral as between sale and retention. Purchasers could
still choose to create a trust for sale but even those now came within the machinery of the trust of land (as did the statutory trusts for sale that had been imposed automatically prior to 1996). Strictly
speaking it is thus no longer necessary to ponder the secondary or collateral purpose of a trust of land as such trusts have no primary purpose. However, as you will see in Section 4.6, the collateral
purpose case law is still relevant as it played an important role in the framing of s.15 which non-exhaustively lists the issues that the court must consider when deciding whether to order the sale or
retention of the land after an application by an interested party for an order under s.14.

4.5.4 Trustees’ powers and duties

The TLATA 1996 provisions are important, not least because, as previously mentioned, a trust of land is any trust whose property is, or includes, land (s.1(1)(a)). It may be created formally or
informally and so may be express, resulting or constructive (s.1(2)(a)). The legal estate is vested in ‘trustees of land’. The trustees are under no duty to sell the land; rather, they have a power of sale.
They may sell or retain it (ss.4 and 5). As, unlike trustees of pre-1997 trusts for sale, they are not under a duty to sell the land, the doctrine of conversion (whereby the interest of a beneficiary under a
trust for sale was regarded as an interest in personal property) is abolished by s.3 TLATA 1996. However, where sale occurs then the overreaching machinery originally provided for trusts for sale by
ss.2 and 27(2) of the LPA 1925 (whereby, on payment of the purchase money to two trustees or a trust corporation, the interests of the beneficiaries are overreached) is retained for trusts of land
imposed by the 1996 Act.

The trustees of a trust of land have all the powers of an absolute owner (s.6(1) and (2)). They may convey the land to the beneficiaries (s.6(1)) and they may delegate any of their functions to the
beneficiaries (s.9), provided the beneficiaries are of full age and entitled in possession. Provisions requiring the consent of any person before dealing with the land are valid, except in charitable and
ecclesiastical trusts (ss.8 and 10). As under the previous law (in s.26(3) LPA 1925), the trustees must consult the beneficiaries in the exercise of their functions and give effect to their wishes (s.11).
Ostensibly, this is an important restriction upon the powers of trustees of land but it can, however, be excluded in an express trust and it is important to appreciate how it is stated in qualified terms.
Trustees are only required to consult ‘so far as is practicable’ and should give effect to the wishes of the majority by value of the beneficiaries but only insofar as they are consistent with the general
interests of the trust.

Study task 4

To what extent have the powers and duties of trustees of land been changed by TLATA 1996?
Learning activity 2
 4.6 Rights of beneficiaries

Core text

Dixon, Chapter 4 ‘Co-ownership’: Sections 4.4–4.10.

Beneficiaries of a trust of land have the right to occupy trust land, although this right may be restricted or excluded, in which case compensation may be payable (ss.12 and 13 TLATA 1996). The
House of Lords had to apply these sections for the first time in Stack v Dowden [2007] UKHL 17 in the context of occupation rents, and (having read the case for Activity 4.1) you should be familiar
with how the judges dealt with the TLATA 1996 issues in that case, including Lord Neuberger in his dissent. It seems TLATA may not apply to a claim by a co-owner’s trustee in bankruptcy for
occupation rent from another co-owner; but, equally, it is not settled when/if such a claim can or should fall within the traditional equitable accounting principles: French v Barcham [2008] EWHC 1501
and Davis v Jackson [2017] EWCH 698 [49]–[70].

The rules relating to consents and consultation are similar to those that applied to trusts for sale under s.26 LPA 1925. By contrast ss.14 and 15 of TLATA 1996, which provide for applications to the
court for an order relating to the exercise of the trustees’ functions and set out the matters to be considered by the court in determining such an application, go much further than s.30 LPA 1925.

4.6.1 Disputes as to whether property held under a trust of land should be sold or retained
Introduction
The case law before TLATA 1996 took a very particular view of the circumstances in which the trustees in a trust for sale could delay a sale. Ordinarily, a sale would always be ordered to protect
creditors – whether creditors in an insolvency or mortgage creditors (i.e. a bank). No other category of person seemed to have this protected position. This made it very difficult for persons in
occupation of a home to resist trustees who wanted to sell the property, especially if there were creditors, because the court would nearly always order that the property should be sold.

The provisions of TLATA 1996 regarding disputes as to sale

When there are disputes between the beneficiaries of a trust, or between trustees and some or all of the beneficiaries, then it is open to the parties to petition the court for an order as to how they
should proceed. In many cases, one or more of the co-owner beneficiaries will want either to force or to prevent a sale of the land. Before TLATA 1996 it had already become recognised, largely
through judicial creativity around s.30 LPA 1925, that, where land was bought for the purpose of providing a home to be occupied by the beneficiaries, sale could be postponed in order to allow such
occupation to continue even though that was inimical to the duty to sell inherent in the trust for sale. The courts were doing what they could to remould legislation that had been drafted for a different
social context of co-ownership to apply to its growing use for the family home. Section 30 has been replaced by the important provisions of ss.14 and 15 of TLATA 1996. It allows a trustee, or any
person with an interest in the land (including a beneficiary or secured creditor), to apply to the court for an order relating to the exercise by the trustees of any of their functions. The scope of any order
that the court is entitled to make is set out in s.14(2):

…the court may make any such order—

(a) relating to the exercise by the trustees of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with
the exercise of any of their functions), or

(b) declaring the nature or extent of a person’s interest in property subject to the trust, as the court thinks fit.

Clearly, then, this creates a broadly based jurisdiction that empowers the court to make any order it sees fit. Applications made under s.14 divide into two main types: disputes where no one is
bankrupt; and disputes consequent upon bankruptcy, and very different results may occur between one type of case and the other.

TLATA disputes not involving bankruptcy

Section 15 sets out the matters to be considered by the court in hearing applications where no bankruptcy has occurred.
The principal question is: what are the matters that the courts must take into account when exercising their powers under s.14? In this regard, s.15(1) sets out four factors that must be considered:

(a) the intentions of the person or persons (if any) who created the trust,

(b) the purposes for which the property subject to the trust is held,

(c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and

(d) the interests of any secured creditor of any beneficiary.

Therefore, the first factor mentioned in s.15(1)(a) that the court must consider is the settlor’s intention in creating the trust of land (or, if there is more than one settlor, then it is their common intention
that matters, see Arden LJ White v White [2003] EWCA Civ 924 at para.22). Where the trust is not created expressly – as is likely to be the case – establishing the intention may prove difficult. It is
likely that this is where the court may turn to the second consideration listed in s.15 – the current purpose for which the trust is held. Here the court may look to the objective (or objectives) for which
the property was held. These may either be set out in the trust or agreed by the parties informally. Thus, a trust that was created for the purpose of providing a home for the beneficiaries would be
likely to preserve the home primarily (where possible), whereas a trust created for investment profit would be more likely to envision a sale. Clearly s.15(1)’s first two factors – intention and purpose –
may overlap, although the second factor may be open to a wider application and accommodate the possibility that the original purpose may have changed over time, provided any such change has
been agreed by the parties (per Arden LJ in White v White). So, what starts out as a matrimonial home may have become (with the arrival of children) a family home by the time of the TLATA
proceedings: First National Bank v Achampong [2003] EWCA 487. The third factor s.15(1) mentions is the ‘welfare’ of any children (or grandchildren Achampong) who occupy the property as their
home. Given that children ordinarily do not contribute financially to the acquisition of property, and given that children cannot own property or enter into loan contracts, the case law under s.30 LPA
1925 had tended to overlook their interests (assuming that they will go wherever their parents go). Section 15(1)(c) gives the position of children legal status for the first time. However, it is the welfare
of the children that is important and not simply their presence in the property: Edwards v Lloyds TSB [2004] EWHC 1745. The court will therefore be looking for evidence of any adverse impact that
ordering a sale would have on them: National Bank v Achampong [2003] EWCA 487. Fourth, s.15(1)(d) recognises the interests of any secured creditor, who could be a mortgagee (i.e. a bank lending
money on a mortgage) or a business creditor who has a property right granted to them over the property. As we shall see from the following discussion, ordinarily courts will give prominence to the
needs of the creditors. Finally, the list in s.15 is not exhaustive, courts can look to any other factor relevant to the circumstances in each particular case.

Most, if not all, of these factors in s.15(1) were taken into account by the courts in determining applications under the old s.30 LPA 1925 and the question arises as to the extent to which cases decided
under s.30 are still relevant (such as Jones v Challenger [1961] 1 QB 176, Re Evers’ Trust [1980] 1 WLR 1327 and Re Citro [1991] Ch 142). There is a balancing act to be conducted by the court
between these four potentially contradictory considerations and any additional factors the court identifies as relevant. The legislation is silent about the ranking to be given to them and on how they
should be weighed when the court exercises its discretion. The factors do not seem to have been listed in any particular order and they have been applied flexibly and pragmatically. Each dispute is
determined on a case-by-case basis but the body of accumulated case law can be looked at to shed light on how the factors in s.15 should be understood. Recent cases have certainly expanded the
interpretation of s.15. In T he Mortgage Corporation v Shaire [2001] Ch 743, it was shown that the post-1997 scheme is dramatically different in relation to the rights of beneficiaries versus those of
creditors. A matrimonial home was held in joint names by Mr and Mrs Shaire. Mr Shaire was deemed to have charged his beneficial interest to secure his business debts (as a result of forging his
wife’s signature on a purported mortgage of their joint legal interest, which obviously had no effect on her beneficial interest). The Mortgage Corporation sought an order for sale with vacant
possession when the debts were unpaid so that they could claim his beneficial interest (but not hers of course). Applying s.15, the court held that the mortgagee’s interest was only one of the four
factors that the court had to consider and that there was a wider discretion in favour of families under s.15 than under the prior law. Nothing in the facts indicated that the mortgagee’s interest should
take priority over, for example, those of resident children and Neuberger J commented that pre-TLATA 1996 cases should no longer be regarded as decisive. His decision also highlighted how the
breadth of the power in s.14 means that the court is not confined to either ordering or refusing sale. Rather, it can use its jurisdiction to craft a creative resolution that responds to the particular
circumstances of the parties’ dispute. In Shaire this led to Neuberger J being willing to convert Mortgage Corporation’s interest into a loan if Mrs Shaire agreed to repay the interest on the loan,
otherwise he would order a sale of the house. Although Peter Gibson LJ in Bank of Ireland Home Mortgages v Bell [2001] 2 FLR recognised the increased scope offered by s.15, he also emphasised
the orthodox approach that a ‘powerful consideration is whether the creditor is receiving proper recompense for being kept out of his money…’. With the Bells’ house being worth less than the debt
owed to the bank (a debt that was continuing to grow) and a son nearing adulthood, the Court of Appeal decided it would be unfair to refuse the Bank of Ireland’s application for sale.

Therefore, although there is no presumption under s.15 to make an order in favour of the creditors of any beneficiary, it is still the case, as noted by the Court of Appeal in Bell, that their voice will
normally prevail. (Interestingly, this priority is even evident in the nuanced order made in Shaire.) In effect, the prioritisation of creditors’ interests may result in the demotion of family considerations
such as the welfare of children. The court may sometimes be persuaded, but it seems exceptionally, to strike a different balance between the competing considerations of family and creditors by
postponing sale, as in Edwards v Lloyds TSB [2004] EWHC 1745, until the youngest child has reached the age of majority. In that case, ordering an immediate sale in favour of the creditors would
have left insufficient money for the mother and children to afford to buy an adequate replacement home. But the interests of the family have not always been preferred over that of the secured
creditors (Achampong); and presumably the anxiety that creditors should not be kept waiting for money tied up in what is, in reality, their share of the property will always be difficult to counteract.
Arguably, there are policy reasons why this is the case (as the credit system requires secured lenders to feel confident that they can realise their security if the debtor fails to repay their debt) but there
is also a very simple practical explanation. If a creditor is unsuccessful under s.15, after making an application under s.14, he can of course proceed to make the beneficiary bankrupt at which point
the court’s discretion under s.14 is no longer governed by s.15 but by s.335A Insolvency Act 1986.

TLATA disputes involving bankruptcy

Where a co-owner becomes bankrupt, his interest in the house passes to his trustee in bankruptcy, whose job it is to sell the bankrupt’s assets, including his interest as co-owner in the house, so that
the creditors can recoup at least some of what they are owed. The other co-owners are unlikely to want a sale to occur, especially if the property is their family home. Before TLATA 1996, cases like
Re Citro [1991] Ch 142 decided under s.30 LPA 1925 had taken the position that the interests of insolvency creditors would be given priority over the interests of other people. In Re Citro, it was
therefore no answer to an application for sale on behalf of the bankrupt’s creditors that the loss of the home that was the subject of the trust would require the family to leave the area in which they
lived and to uproot their children from their schooling. It was held that a sale of the property would not be refused unless the circumstances were exceptional and that this form of hardship was, in the
maudlin and yet lyrical view of the court, merely one of the melancholy features of life. As Nourse LJ put it in Re Citro:

What then are exceptional circumstances? As the cases show, it is not uncommon for a wife with young children to be faced with eviction in circumstances where the realisation of
her beneficial interest will not produce enough to buy a comparable house in the same neighbourhood or indeed elsewhere. And, if she has to move elsewhere, there may be
problems over schooling and so forth. Such circumstances, while engendering a natural sympathy in all who hear of them, cannot be described as exceptional. They are the
melancholy consequences of debt and improvidence with which every civilized society has been familiar.

The sense one might take from this passage is that this area of law is miserable and that the law is not going to do anything to relieve that misery for people faced with the prospect of losing their
homes to insolvency creditors.

The first situation in which an application for an order for sale under s.30 LPA 1925 was denied was that in Re Holliday [1981] 2 WLR 996, a case in which the bankrupt had gone into bankruptcy on
his own petition to rid himself of his creditors and one in which the debt was so small in comparison to the sale value of the house that there was thought to be no hardship to the creditors in waiting for
the bankrupt’s three children to reach school-leaving age before ordering a sale. However, that hardship will be caused to the children or to the family in general as a result of a sale in favour of a
trustee in bankruptcy is considered, as mentioned in the preceding paragraphs, to be merely one of the ‘melancholy vicissitudes of life’ (i.e. one of the sad parts of life).

Nowadays, applications by a trustee in bankruptcy for an order of sale under s.14 TLATA 1996 is governed by s.335A Insolvency Act 1986. The court’s powers are as follows (s.335A(2)):

On such an application the court shall make such order as it thinks just and reasonable having regard to—

(a) the interests of the bankrupt’s creditors;

(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt [or the bankrupt’s spouse or civil partner or
former spouse or former civil partner]–

(i) the conduct of the [spouse, civil partner, former spouse or former civil partner], so far as contributing to the bankruptcy,

(ii) the needs and financial resources of the [spouse, civil partner, former spouse or former civil partner], and

(iii) the needs of any children; and

(c) all the circumstances of the case other than the needs of the bankrupt.

Harrington v Bennett [2000] BPIR 630 noted five particular features of s.335A Insolvency Act 1986:

1. Where the application is made more than one year after the vesting of the bankrupt’s property in the trustee, the interests of creditors are paramount.
2. The court can only ignore the creditors’ interests in exceptional circumstances.
3. The categories of exceptional circumstances are not closed, with the result that it is open to the judge to decide what may constitute exceptional circumstances in future cases.
4. The term ‘exceptional circumstances’ indicates circumstances ‘outside the usual melancholy consequences of debt or improvidence’,
5. The fact that the sale proceeds may be used entirely to discharge the expenses of the trustee in bankruptcy is not an exceptional circumstance.
Therefore, by the time of Harrington we can see that we have returned to the position in Citro because the interests of the creditors are found to be ‘paramount’. In regard to a sale application a trustee
in bankruptcy makes in the first year following bankruptcy, the court must balance the factors listed in s.335A, a subtly but (importantly) different set of criteria than those found in s.15 of TLATA. In
exercising its discretion over whether or not to order a sale, it considers such things as the needs and resources of others living in the bankrupt’s house such as spouses/civil partners and children;
and, perhaps controversially, any conduct by a spouse/civil partner that contributed to the bankruptcy. The court is not, however, allowed to consider the bankrupt’s needs, be they financial, medical or
psychological and no matter how serious: Everitt v Budhram [2009] EWHC 1219 (Ch). In sale applications, particularly where there are children, it is likely that an order of sale will rarely be made.

Then, after a year’s grace, preference is given to the secured creditors, save where ‘exceptional’ circumstances can be found – meaning something beyond the range of distressing circumstances
typically associated with bankruptcy (Re Bremner [1999] 1 FLR 912). The courts have set the bar high, requiring exceptional circumstances to be severe and unusual if they are to stave off an order of
sale after one year has expired – such as, in Claughton v Charalambous [1999] 1 FLR 740 (Ch), the combination of serious illness, reduced mobility and a need to stay put in a specially adapted
home. The cases also make it clear that a finding of exceptionality will usually delay an order of sale rather than postpone it indefinitely: Re Raval [1998] 1 FLR 740 (Ch) (one year to find suitable
alternative accommodation for a spouse whose paranoid schizophrenia might be aggravated by an immediate move); and see Grant v Baker [2016] EWHC 1782 (Ch). The restrictive approach the
courts take to ‘exceptional circumstances’ has been invoked several times, so far unsuccessfully, in claims that s.335A falls foul of the Human Rights Act 1998 (Article 8’s right to respect for private
and family life and the home): see Bacra v Mears [2004] EWHC 2170 (Ch) at para.40; and Ford v Alexander [2012] EWHC 266 (Ch) at para. 49.

4.6.2 Summary: co-ownership and TLATA 1996

TLATA 1996 has radically changed the rules under which land is held on trust. It is important to understand, and be able to apply, the powers of trustees and rights of beneficiaries under the statute.
Trustees no longer have a duty to sell the land, and beneficiaries’ rights may have been strengthened by s.15.

TLATA 1996 created an important set of reforms. The law had previously used a concept of a ‘trust for sale’, which presumed that any co-owned land held on trust was intended for sale. This made it
very difficult to explain how such land could be occupied as a home because the trustees were expected to sell that land. TLATA 1996 replaced the old ‘trust for sale’ with the new ‘trust of land’. The
trust of land provisions explained how the beneficiaries of a trust of land could occupy the trust property as a home without assuming that it was intended to be sold.

Importantly, TLATA 1996 (in ss.14 and 15) set out the issues that the courts are required to take into account when deciding whether a property should be sold or whether it should be kept as a home.
The courts are required to take into account the needs of any insolvency or mortgage creditors, as well as the rights of any children in occupation of the property. The case law had previously
prioritised the rights of creditors over all other people, except in very limited circumstances. The power of the secured creditor’s voice continues to be heard loud and clear in disputes over sale dealt
with under TLATA. Consequently, the provisions as to the sale of the home that comprises the trust property are important in considering the nature of the law and in analysing the circumstances that
the courts will take into account when considering the sale of the property. Everything changes when sale is sought by a co-owner’s trustee in bankruptcy. Thus, if the trustee in bankruptcy makes an
application under s.14 it is important to realise that s.15 is no longer operative and the court is required to apply the subtly (but importantly) different criteria under s.335A Insolvency Act 1986.

Study task 5

1. How are the rights of co-owner beneficiaries different under a trust of land from under a trust for sale?
2. To what extent do the interests of occupying beneficiaries of a trust of land take priority over the interests of secured creditors of the beneficiary?
 Reflective activity 1

Reflect on the following questions:

Explain:

1. What is meant by joint tenancy and tenancy in common?

2. What is the difference between them?
3. What are the four unities?

Write your answer in the Topic 4 – Reflective activity 1.

Topic 4 – Reflective activity 1

 Sample examination question 1

Question
Ted and Sylvia were an unmarried couple who bought a disused farmhouse together in August 2018 for £250,000. In 2018, Ted was a struggling playwright aged 30, whereas Sylvia was a successful
poet, aged 25, with one very successful book of poems already published. This difference in their professional fortunes was a source of tension in their relationship.

The purchase was funded as to £25,000 by way of a gift from Sylvia’s parents and the remainder by way of mortgage from Mammoth Bank, which was taken out in Ted’s sole name. The legal title in
the property was registered in Ted’s sole name. Ted told Sylvia that putting the house in his name was ‘a legal formality that will be sorted out if we get married in the future’. As the couple stood on the
doorstep on the day that they moved into the house, Sylvia said: ‘I don’t care about the law: I think of this as being our home together, darling.’

The vendor of the house worked at the company which published Sylvia’s work. Therefore, Sylvia had been able to acquire a reduction in the price of the property by £10,000 to the sale price of
£250,000.

The house was a large farmhouse outside Exeter. The couple intended to have a big family together. Ted told Sylvia that she must stay at home to supervise the extensive renovation works which
were being done on the property while he flew to Los Angeles for two months to try to make some money there. Ted had not earned any money in the 12 months leading up to this.

In fact, all of the mortgage repayments were made from the profits from Sylvia’s first book during 2018 and 2019. Sylvia supervised the builders and did a reasonable amount of cosmetic work around
the house herself. She was also very stressed about Ted’s continued absence. Consequently, she missed her deadline for the delivery of her second book of poems to her publishers. In the meantime,
Ted had managed to sell a screenplay to a Hollywood film studio while flying backwards and forwards between Exeter and Los Angeles. As a result of this sale of the screenplay, Sylvia and Ted were
able to share the cost of the renovation, in the amount of £50,000, equally between them. The value of the property increased by £150,000 as a result of the renovations.

On the evening when the building work was finally finished in August 2019, Sylvia said: ‘I have put a lot of work and money into this property, but I am slightly worried that it’s all in your name’. Ted
replied: ‘Don’t bother me with all that now. We will be rich now that I am such a big success.’ The next day, Sylvia created a will which passed all of her rights in the house to her sister, Kitty.

Secretly, Ted had begun an affair with a famous Hollywood actress. When Sylvia found out about the affair she fell into a deep depression and committed suicide last month.

Advise Kitty as to Sylvia’s rights in the property at the time of her death.

Tutor guidance
You need to find a way to navigate the extensive facts of the question and the many cases in the area. These pointers may help but there is no one right way to do this.

You could begin with the legal ownership of the property. Here we are told that it is in Ted’s sole name. There is a presumption that he therefore owns the equitable interest; Sylvia must establish that
there is a common intention that that is not the case (Jones v Kernott). What might serve to do this?

The starting point for such a question is the leading cases of Stack v Dowden and Jones v Kernott. Older cases may help but should be treated with caution.
The Guide offers four different approaches from the cases, not including proprietary estoppel (do notworry about that unless you are not already familiar with it – you will learn about it in a later
topic). You may wish to follow that analysis.
As so often, some of the facts in the question may remind you of specific cases. It is a good idea to touch on these in your answer, although the result in this case may be different.

➕ Feedback
Issues in relation to addressing this problem: we shall consider this problem on the basis of the decisions in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 and the case law
leading up to them. The decision of the Supreme Court in Jones v Kernott has explained Stack v Dowden and the principles to be followed in the terms set out here, in the joint judgment of Lord
Walker and Lady Hale, at paragraph [51], as set out above, principally:

…(2) [The] presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed
the common intention that their respective shares would change.

(3) Their common intention is to be deduced objectively from their conduct…

(4) …where…it is not possible to ascertain by direct evidence or by inference what their actual intention was…‘the answer is that each is entitled to that share which the court
considers fair having regard to the whole course of dealing between them in relation to the property’…

(5) …Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended (as in case (3)) or fair (as in
case (4)).

Following that structure, the legal title is placed in Ted’s sole name, which raises a presumption that Ted is the sole owner. However, there is evidence to suggest that Sylvia is intended to have
separate rights. First, Sylvia made all of the repayments on the house and therefore it would be unconscionable to deny her any rights in the house; second, Ted bullied Sylvia and therefore placing
the house in his name may have been done as a result of bullying; third, she made a will that treated her share separately from that of Ted. Therefore, there are good reasons for supposing that
their intentions were different from the record on the legal title.

This section follows the order of the cases as they are discussed above:

2. Following the authorities on common intention, we could start with Lloyds Bank plc v Rosset [1991] 1 AC 107.
a. Under Rosset, it is not clear that there was any agreement, arrangement or understanding that was not procured by bullying.
b. As to common intention by conduct, we must look at the fact that Sylvia contributed all of the cash and therefore she should acquire all of the equitable interest. Interestingly, it was
contributions to the purchase price or the mortgage which would count, and therefore it is unclear whether on a literal reading of Rosset Ted’s contribution to the renovation works
should count years later.
3. The balance sheet cases would allow Sylvia to take into account her acquisition of a discount on the purchase price on resulting trust principles (e.g. Cox v Jones [2004] EWHC 1486 (Ch);
although Evans v Hayward [1995] 2 FLR 511 would not have taken into account mere haggling).
4. The family assets case of Midland Bank v Cooke [1995] 4 All ER 562 asked that we look at the ‘entire course of dealing between the parties’, which might assist Ted here because it would
consider the fact that the things said between the couple at the outset suggested that the house was to be held jointly between them. However, there was no unconscionable pressure or lying
in those cases (as there had been in Eves v Eves [1975] 1 WLR 1338 when a common intention was not found as a result).
5. It is unclear here when a representation could be said to have been made that would support a proprietary estoppel analysis.

If this analysis is inconclusive, then Jones v Kernott suggests that the court could look at ‘fairness’. It might be said to be ‘fair’ here for Sylvia to have acquired the majority of the rights in the home
as a result of her larger cash contribution to the purchase and also her half contribution to the renovation works, and to take into account the history of bullying between them. Consequently, it could
be said that the majority of the equitable interest should be treated as having been severed from any joint tenancy as a result of being left on trust for Kitty, save for a portion represented by Ted’s
cash contribution to the renovations. Thus, Kitty should inherit Sylvia’s share and be entitled to sell the house (accounting to Ted in cash for his contribution to the property (possibly accounting for
the increase in value caused by the renovations)). More controversially, Kitty could argue to be entitled to evict Ted from the property (save for accounting to him in cash for his contribution to the
renovation works) so that she could move into the property herself if she wished (an approach which would accord with the flexibility shown in the estoppel case of Stallion v Albert Stallion [2009]
EWHC 1950 (Ch)).
 Sample examination question 2

Question
‘The case law relating to the ownership of the home continues to exist in a state of some confusion. Different courts have set out very different models of the parties’ rights. The result is that it is
impossible for litigants to know their rights before they go to court. It would be preferable for there to be legislation in this area. It would be worth having a little injustice at the edges if the main
principles could be made clearer.’

Discuss.

Tutor guidance
Read the question carefully and make sure you address it in your answer.
It is generally best to have a view on the essay title, to be arguing for or against it. Such an argument will allow you to put the case law in context and will give shape to your essay.
But of course you must consider the opposite argument as well and give reasons for rejecting it.
Start with Jones v Kernott, the Supreme Court’s most recent survey and attempt to bring clarity to the area. Has it succeeded, or is the quotation on the question correct? You will need to look at
the cases to find an answer.

➕ Feedback
In writing an essay it is important to have a point: that is, you must have a thesis that you are seeking to prove or to disprove. In advancing that thesis, you must employ an analysis of the decided
case law or statute (as appropriate) as well as any academic commentary to which you have been referred in the textbook. Simply setting out a description of the law will not gain you a good mark
in itself. Rather, the marks are earned by demonstrating how an analysis of that law impacts on your thesis.

Here, clearly, you must consider the decision of the Supreme Court in Jones v Kernott. That judgment is really a commentary (and slight correction) on the judgments of the House of Lords in Stack
v Dowden, except for the introduction of ‘fairness’. This case was considered in detail in the assigned reading. This essay gives you enormous scope to take whichever approach to the subject you
wish. The assumption in the title is that there was something wrong with the approach taken in the Supreme Court: you should decide whether you want to be similarly critical, or whether you think
that Jones v Kernott marks an improvement over Stack v Dowden (especially now that it has forgotten the assumption that everything will be sorted out by the TR1 Land Registry form). The
judgment delivered jointly by Lord Walker and Lady Hale divides between common intention and fairness.

The idea of common intention emerged originally in the speeches of Lord Diplock in Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886, and has been contested in every following
decision as to its precise meaning and scope (e.g. Lloyds Bank plc v Rosset, Grant v Edwards [1986] Ch 638, Midland Bank v Cooke, Oxley v Hiscock [2004] EWCA Civ 546, etc.). You could
probably consider the model established in each of those cases (as discussed in the reading in detail) and examine their strengths and weaknesses, before culminating with Kernott and asking
whether you think the Supreme Court should have acted differently. By examining all of these cases you could adopt the ‘dispassionate scientist’ approach (as set out in the advice on essay writing
in the Introduction to this online guide) by simply explaining the differences between the various judges in the many cases, instead of choosing which one of them you prefer. This is a subject in
which explaining the differences between the cases well could be sufficient to achieve a first-class mark, especially if you address the precise question you are asked in the essay title.
 Sample examination question 3

Question
In 2018, Mr Norton, who had three sons studying in London, decided to buy a flat for them to live in. He paid the whole of the purchase price, and the flat was registered in their names (Mark, Luke
and John) as beneficial joint tenants. In 2020 Mark got married, moved out and sold his interest in the flat to John. In 2021 Luke wrote to John offering to sell his interest in the flat to John. John
accepted the offer in principle but they had still not agreed a price when Luke was killed in a climbing accident. Luke left his estate to Mark and John equally.

Dispute has now arisen between Mr Norton, Mark and John as to:

i. who owns the flat,

ii. who is entitled to occupy the flat, and
iii. whether the flat should be sold.

Discuss.

Tutor guidance
There is no substitute in this sort of question for a careful, stage by stage analysis, considering both the legal and the equitable interests at each stage.

What is the situation in 2018? Who is the legal and who the equitable owners? Is the doctrine of resulting trusts relevant?
What is the effect of the sale in 2020?
What is the effect of the incomplete negotiations between Luke and John?
What is the final ownership of the flat, both legal and equitable?

Depending on your answers to these questions, TLATA 1996 may be relevant to your answers to questions (ii) and (iii).

➕ Feedback
Take care at the outset to consider the effect of the 2018 conveyance. Only once the scene has been set does it make sense to go chronologically through the various events that follow. The flat is
conveyed to the three brothers as beneficial joint tenants. Any presumption of a resulting trust in Mr Norton’s favour is rebutted by clear evidence that he intended the flat as a gift to his sons. A trust
arises and the brothers hold the legal estate on trust for themselves as joint tenants in equity. The events of 2020 and 2021 require a discussion of severance. Clearly Mark has severed his joint
tenancy, but what are the effects of the severance? (Mark remains a trustee and the beneficial interest is held by John and Luke jointly (two-thirds) and John as tenant-in-common (one third).) Did
Luke sever his joint tenancy by mutual agreement or course of conduct? If not, the right of survivorship operates on his death and Mark and John hold the legal estate on trust for John absolutely. If
Luke did sever, Mark and John hold the legal estate for themselves as tenants-in-common (one sixth/five sixths); in this case the TLATA 1996 provisions regarding occupation and sale would have
to be considered.
 Sample examination question 4

Question
Herbert and Wilma were married in 2004. They bought a house, Hersanmyne, for £200,000, of which £150,000 was contributed by Wilma’s mother, Martha, who was to live with them in Hersanmyne.
The house was conveyed to Herbert and Wilma on trust for themselves and Martha as joint tenants. Herbert and Wilma had a son, Sam, in 2007 and a daughter, Dawn, in 2010. In 2013 Herbert left
Hersanmyne and has never returned. In 2014 Martha sent a letter to Herbert saying that she wished to have her share in the house repaid so that she could provide during her lifetime for Wilma and
the grandchildren. Herbert ignored the letter. Martha died in 2015, leaving all her property to Wilma.

Herbert owned a business which failed in 2021, and he has debts of £30,000. His creditors are now pressing for payment and threatening bankruptcy proceedings. His only asset is his interest in
Hersanmyne, now worth £50,000.

Wilma wishes to remain in Hersanmyne. She has no capital other than her interest in the house but she has enough income to run the house and maintain herself and the children.

Advise Wilma.

➕ Feedback
Issues to consider: what was the effect of the 2014 conveyance? Note that, in spite of the unequal contributions to the purchase price, it was the intention of the parties that they should hold the
house as beneficial joint tenants: see Goodman v Gallant [1986] Fam 106.

So Herbert and Wilma held the legal estate on a trust for sale (today taking effect as a trust for land under TLATA 1996) for themselves and Martha as joint tenants. Did Martha’s letter operate to
sever her joint tenancy? Section 36(2) LPA 1925 ‘notice in writing’? The effect of Martha’s death will depend on whether severance occurred or not. Consider both possibilities. How is the beneficial
interest in the house held now? Can Herbert force a sale of the house? Consider ss.14 and 15 TLATA 1996. The principles laid down in the cases on s.30 LPA 1925 continue to have some
relevance and may therefore have some value in your discussion. If the house is sold, how will the proceeds of sale be divided?
 Sample examination question 5

Question
In 2015 Nick and his girlfriend, Ann, bought a small house for £300,000. Nick contributed £280,000 and Ann contributed £20,000, a gift from her mother, Jean. The house was registered in Nick’s sole
name. Nick was an unsuccessful musician, but Ann had a well-paid job and paid most of the household expenses. In 2018 Ann gave birth to a son, Charlie. In 2019 Nick and Ann invited Jean to come
and live with them. Jean provided £30,000 to have an extra bedroom and bathroom added to the house for her use. In 2021, while Jean, Ann and Charlie were away on holiday, Nick mortgaged the
house to the Midtown Bank. He has recently defaulted on his mortgage repayments and the bank is seeking possession of the house with a view to selling it.

Advise Jean and Ann. If the house were sold, how would the proceeds of sale be divided?

➕ Feedback
There are several key issues to be considered; make sure not to miss any of them.

As Nick was the sole legal owner of the house, the first issue was whether either Ann or Jean could rely on equity (resulting/constructive trust or proprietary estoppel) to claim an interest in their
favour. There is an immense of body of case law here. Ann would probably argue for a constructive trust (Oxley v Hiscock [2004] EWCA Civ 546 and Stack v Dowden [2007] UKHL 17 would be
relevant here), while Jean would attempt to rely on estoppel. The second issue is one of priority (i.e. would the bank take subject to the interests of Ann and Jean, if any?) and requires you to
consider whether their interests might override the mortgage by virtue of para.2 of Schedule 3 LRA 2002.

Finally, you should consider TLATA 1996 and analyse the extent to which the court has exercised its s.14 discretion in favour of secured creditors. The division of the proceeds of sale would depend
on conclusions reached on the earlier issues.
 Quick quiz 1

Which statutory provision can be relied on for the creation of an implied trust in land?

 s. 53(2) LPA 1925

 s.1 TLATA 1996

 s.53(1)(b) LPA 1925


 Am I ready to move on?

You are ready to move on to the next topic if, without referring to the module guide or text book, you can answer the following questions:

What is the difference between a joint tenancy and a tenancy in common?

What are the different ways in which a joint tenancy may be severed?
What are the conditions for a resulting trust to arise?
What are the conditions for a constructive trust to arise?
How did the 1925 reforms change the law relating to co-ownership and trusts of land?
How did TLATA 1996 change the law relating to co-ownership and trusts of land?
 Further reading

Bogusz and Sexton, Chapter 7 ‘Trust of land’: Sections 7.5–7.13.

Bogusz and Sexton, Chapter 8 ‘Co-ownership of land – the basic principles’, especially Sections 8.1 –8.12.
Bogusz and Sexton, Chapter 9 ‘Co-ownership – the resolution of disputes’.
Bridge, S. ‘The property rights of cohabitants – where do we go from here?’ (2002) Fam Law 743.
Clements, L.M. ‘The changing face of trusts: the Trusts of Land and Appointment of Trustees Act’ (1998) 61 MLR 56.
Crown, B.C. ‘Severance of a joint tenancy of land by partial alienation’ (2001) 117 LQR 477.
Dixon, M. ‘The never-ending story – co-ownership after Stack v Dowden’ (2007) Conv 456.
Dixon, M. ‘To sell or not to sell: that is the question. The irony of the Trusts of Land and Appointment of Trustees Act 1996’ (2011) 70 CLJ 579.
Gardner, S. ‘Family property today’ (2008) 124 LQR 422.
Hopkins, N. ‘The Trusts of Land and Appointment of Trustees Act 1996’ (1996) Conv 411–31.
Hudson, A. Principles of equity and trusts. (Abingdon: Routledge, 2021) second edition [ISBN 9780367611996], Chapter 15 ‘Trusts of homes’.
Pascoe, S. ‘Section 15 of the Trusts of Land and Appointment of Trustees Act 1996 – a change in the law? (2000) Conv 315.
Pawlowski, M. ‘Ordering the sale of the family home’ (2007) 71 Conv 78.
Probert, R. ‘Sharing homes – a long awaited paper’ (2002) Fam Law 834.
Smith, Chapter 11 ‘The family home’ (available in VLeBooks).
Smith, Chapter 15 ‘Joint tenancy and tenancy in common’, Parts 2 ‘Severance of the joint tenancy’ and 3 ‘Do we need both the joint tenancy and the tenancy in common?' (available in
VLeBooks).
Smith, Chapter 16 ‘Trusts of land’, Part 3 ‘Management of the land’: Section A ‘Sale’ (available in VLeBooks).
Tee, L. ‘Severance revisited’ (1995) Conv 105.