Regular updates on relevant case law and legislation - October 2008

CHAPTER 10 THE TRUSTS OF LAND AND APPOINTMENT OF TRUSTEES ACT 1996

Section 15 Matters relevant in determining applications under section 14 (page 212)

French v Barcham [2008] EWHC 1505 (Ch); [2008] 28 EG 112 (CS) looked at the question of occupation rent again when one party is not in occupation. Mr Barcham was bankrupt and his beneficial share in the house had vested in his trustee in bankruptcy. His trustee in bankruptcy was claiming an occupation rent from Mrs Barcham who had remained in the house.

The right to occupy under section 12 of the Trusts of Land and Appointment of Trustees Act 1996 is subject to section 13, in particular section 13(6) as follows:

6) Where the entitlement of any beneficiary to occupy land under section 12 has been excluded or restricted, the conditions which may be imposed on any other beneficiary under subsection (3) include, in particular, conditions requiring him to —

(a) make payments by way of compensation to the beneficiary whose entitlement has been excluded or restricted, or

(b) forgo any payment or other benefit to which he would otherwise be entitled under the trust so as to benefit that beneficiary.

There was a problem using this section in the case though. Section 13 of the Trusts of Land and Appointment of Trustees Act 1996 could not be used to claim compensation because the person claiming had to have a statutory right of occupation under section 12. A trustee in bankruptcy was not a beneficiary entitled to occupy the land under section 12 of the Trusts of Land and Appointment of Trustees Act 1996 and therefore he was not entitled to any compensation under section 13(6). In Stack v Dowden (2007) Baroness Hale had also said that the principles in sections 12 – 15 of the Trusts of Land and Appointment of Trustees Act 1996 should be used to determine compensation rather than the principles of equitable accounting. In the case Mr Justice Blackburne held that the Trusts of Land and Appointment of Trustees Act 1996 should be used when both parties had a right of occupation. If they didn’t, as here, the court could still use its equitable jurisdiction to charge an occupation rent from the occupying party. Accordingly, Mrs Barcham’s half share of the proceeds of sale was reduced by a sum equal to one half of the property's letting value since Mr Barcham's bankruptcy. Even though the amount Mrs Barcham would receive would now be modest, Mr Justice Blackburne did not view such considerations as material.

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