Property rights

An application under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996) may be made by a trustee of land, or a beneficiary with an interest in property subject to a trust of land. The court has a broad discretionary range of powers to make orders regarding the exercise of the trustees’ functions, or to the nature and extent of beneficiaries’ interests, including a sale or postponement of sale.

TOLATA 1996, s 15 requires the court to consider:

  1. the intention of the trust creator or creators

  2. the purposes for which the property subject to the trust is held

  3. the welfare of any minor, and

  4. the interests of any secured creditor

See Practice Note: Eligibility to apply under TOLATA 1996. The following Precedent letter may be sent by practitioners to their clients: Cohabitant claims under the Trusts of Land and Appointment of Trustees Act 1996—client guide.

Case law

Beneficial interests are determined and declared under established principles of trust law. The leading case regarding cohabitant disputes is Stack v Dowden [2007] UKHL 17, [2007]

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High Court judgment demonstrates usefulness of section 423 of the Insolvency Act 1986 in Schedule 1 claims (Re P (A Child) (Financial Provision))

Family analysis: In this Schedule 1 case the mother received, for her son’s benefit: a housing fund of nearly £1m (the property to be held on trust); child maintenance (including ‘HECSA’/carer’s allowance) until completion of his first degree; and lump sums in respect of his capital needs and her own substantial liabilities (chiefly relating to her unpaid legal fees). The father (whose resources could be measured in the ‘tens of millions of pounds’) had sought to prejudice the mother’s claims via transferring his valuable shares to family members, who then transferred the same into a trust structure (settled under Czech law). A further onwards transfer was then made of the trust’s assets into a Liechtenstein foundation. Inferences were drawn by the court in respect of the level of the father’s wealth, and specifically as to the value of the transferred shares. Detailed findings were made against him in respect of the identified transactions, which had been the focus of the mother’s section 423 application. Although a section 423(2) order was not actually made, the application was adjourned pending the father’s compliance with the award, with security in the sum of £600,000 also ordered, alongside a continuation of the freezing orders made earlier in the proceedings. David Wilkinson, solicitor at Slater Heelis, considers the issues.

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