Free Law Essays - In 1980 Victor became the registered proprietor of Mandalay, which comprised a house with a heated conservatory, a tiny cottage and a large garden. Since 1985 Victor's sister, Samantha, a landscape gardener, has also lived in Mandalay because she had become ill and needed Victor's support.
During 1995 Samantha landscaped part of the garden, adding statues, lawns and flower beds. In 1996 Victor traveled to Russia and met and fell in love with Ekatarina. Ekatarina, divorced with two young children, was persuaded by Victor to give up her highly paid job in St. Pertersberg and to uproot her children to move to Mandalay. Ekatrina and her children lived in the cottage which, Victor told her, was now hers. At that time it was almost derelict and so Ekatrina put much time and effort into renovating it. She did much of the work herself. Victor and Ekatrina did not marry.
In 2002 Victor, unbeknownst to Samantha, wrote her a letter (which has recently been found among Victor's papers) saying that from the date of the letter he held half of Mandalay on trust for Samantha. In November 2003, Victor granted a ten year lease of the large heated conservatory to another sister, Tania, in which she now grows apricots and peaches as part of her business.
Last month Victor sold Mandalay, House, cottage and garden to Patrice who did his own conveyancing. Patrice had visited Mandalay before the purchase. During the visit he had seen Tania tending her plants in the conservatory but did not see Samantha or Ekatrina. Her children, now adult, live in Russia. Patrice had assumed that Tania was a gardener. Patrice is about to move in and has now realised that Samantha is living in the house, that Tania is not a gardener and that Ekatarina is living in the cottage. Victor has disappeared with the money.
1) Advise Patrice as to whether he is bound by any interests:
In order to determine if any person has any equitable or legal rights over Mandalay, the house or cottage one has to consider if it is capable of being an equitable or legal interest. The different interests are; Samantha’s trust over half of Mandalay and her right to occupy Mandalay; Ekatarina’s ownership of the cottage; and Tania’s lease of the conservatory. To determine if there is a legal or equitable interest one has to refer to the LPA 1925. 1(1)(a) is that for there to be a legal interest it has to be an estate in fee simple absolute in possession. The second consideration is under 1(2) which identify only those interests which can be legal interest, which includes ownership, lease, easements and so forth. In this case the legal interests would be the 10 year lease and the gift of the house to Ekatarina. The problem with the legal interest in respect to Ekatarina is that the gift was incomplete, because Victor failed to comply with the Law of Property Act 1925 section 53(b) and 53(c) for existing equitable interests in land whereby; “a declaration of trust respecting any land or interest therein must be manifested and proved by writing signed by the person who is able to declare such trust or by his will (LPA 1925 53(b)). In doing so this means that the legal interest fails in respect to the ownership of the cottage; however this does not end the rights of Ekatarina because it is possible for her to use a series of case law surrounding the matrimonial home trust and occupier’s rights. Although she is not married she lived in common law marriage with Victor there are possible cause of actions where Patrice will be subject to the interest of Ekatarina, which will be discussed later. In respect to the lease, which is again is a legal interest; the body of law that surrounds the enforceability of these rights is in the LPA 1925 and the LRA 2002. Prior to October 2003 a lease less that 10 years is an overriding interest and need not to be registered; however after November 2003 this is not the case therefore the lease needs to be registered. This causes problems for Tania, because her legal lease should have been registered as an interest if it were to have overriding status, which means that because it was made after November 2003 it does not bind Patrice. There are some added problems because as an occupier she may have rights over Patrice, which again will be discussed later.
The final scenario is Samantha’s trust over half of Mandalay, which is ruled by the law of equity. As Victor not indicating a trustee, one would assume that he is the trustee and as he had the deeds/registration to the land he has created a valid trust that complies with section 53 of the LPA. Therefore there is an equitable interest that Patrice may be bound by, especially in relation to the sale under TOLATA. The key change made by TOLATA was to ensure that trustees consulted all full age beneficiaries in any function that would affect the trust of land, i.e. the beneficiary would have to comply with the wishes of the beneficiary or in the case of multiple beneficiaries the majority of the beneficiaries. These wishes have to be within the general interests and originator’s intention of the bequest; therefore the trustee(s) now have to balance the structure of the original trust and the beneficiary’s interests in land. This therefore creates a further check and balance on the power of the trustee; however creates a more complex situation for a trustee to deal with. The settlor may counter the wishes of the beneficiary by excluding this duty when setting up a trust in land, as per Section 11(2)(a). This is very important because prior to the enactment of TOLATA the doctrine of conversion applied where the interests of the beneficiaries were thus automatically interests in the proceeds of the land and not in the land itself, this doctrine was confirmed in the City of London Building Society v Flegg. In the case of Irani Finance Ltd v Singh it was the held that the purpose of a trust that is being sold is to transfer the proceeds of the sale to the beneficiaries; however what if it is the case that the beneficiaries have had a long history in the land and do not want to sell it; rather the beneficiaries want to maintain it? Therefore giving no power over the trust property, as long as the trustee is doing what is in the best interests of the trust, i.e. it is better financially to sell the property and only emotional attachment creates a situation whereby the beneficiaries want to keep it. This problem with conversion was discussed in the case of Williams & Glyn’s Bank Ltd v Boland which was specifically dealing with the interests of the spouse in the familial home, where it was held that it was unreal that the partner who helped to buy the house but only beneficial in name should be regarded as only having an interest in the proceeds of the sale and not an interest in the land. TOLATA followed this reasoning in respect to land and abolished this doctrine and gave beneficiaries more rights in respect to their interest in the land; as well as enforcing the trustee to respect these obligations. In respect to obtaining the consent of the beneficiaries is necessary under TOLATA before the land can be sold, which is a turn around in respect to earlier law where there was no duty to get the beneficiaries’ consent as set in the case of Booth v Ellard. Therefore Patrice will be bound to the rights of Samantha because of the valid trust; as she was not consented to. As registered land Samantha would not be able to enforce these rights prior to TOLATA, but the answer may be different if it were registered because of the notion of notice. Yet, as the sale has gone ahead, it is highly likely that Samantha would have to enforce her rights to gain the money from Victor rather than Patrice. Therefore she would have stronger rights if she can show that she has occupier’s rights.
Occupiers and matrimonial home rights may be the only right that these three parties can enforce as the following discussion will illustrate. Williams & Glyn’s Bank Ltd v Boland is a case where the use of overriding interests came to light. This is the traditional situation of matrimonial home ownership, where the husband was the sole proprietor; however the wife had made substantial contributions to the home, which means that through equity create a resulting trust in the favour of the wife. This case supports the case of Ekatarina and Samantha who made substantial improvements to the property. However the confusion of overriding interests have tried to bring notice back into the equation which the LPA 1925 and the LRA 1925 were introduced to eliminate, as Lord Wilberforce indicates in the Boland Case, where the only kind of notice recognised is notice on the registry. However, it is not always so simple for occupiers under 70(1)(g), as in the case of Abbey National Building Society v Cann where the property was bought with the intention that Cann’s mother would live there; however Mr. Cann stated it was for sole occupation and registered a charge for a loan prior to his mother’s occupation, i.e. she was away on holiday and would take occupation as soon as she got back. However the initial intention of Mr. Cann was evident as he moved her furniture and carpets prior to the completion of the charge. However the court held there was no occupier’s right as Cann’s mother was not in actual occupation until after the completion, as her holiday ended then. Another case that illustrates the problems with overriding interests is the case of Chhokar v Chhokar, in which a husband and a wife contributed to the purchase price of their family home. The couple went to India in 1978 and the husband deserted his wife and returned home, whereby he sold the home where the cash proceeds were delivered into his hands and he paid off his debts and returned back to India. His wife who was seven months pregnant returned home a few weeks later than her husband to find the locks changed and when she entered the home was ejected by the then owner Mr Parmar, but some of her furniture was still there. The court held that the wife was still in actual occupation and Mr Parmar has the conveyance of the house subject to Mrs Chhokar’s overriding interest; holding half the interest in trust to her benefit. The LRA 2002 cleared occupier’s rights up and caused this confusion to be cleared up. Schedule 1 deals with overriding interests that will remain to be binding, which includes actual occupation. Therefore it seems that problems discussed are still very real; however Schedule 3 deals with the limitations on certain overriding interests listed in Schedule 1 and one of these are the actual occupation interests. The limitations that are most important to this discussion on the interest succeeding are in respect to those where inquiry has been made and that individual has failed to disclose; and those individuals who are not in obvious occupation on careful inspection. Therefore this would cause significant problems with the cases of Chhokar, Cheshire Homes and Tizard because at the point of sale and enquiry there was no obvious proof of actual occupation. This is because actual occupation can be any inkling of another party residing under careful consideration, which includes furniture and clothes or just the tools of the trade onsite. In the case of Tania Patrice should have made more careful enquiry and talked to her when he saw her, in her case under the case law of Cheshire Homes that see would have enforceable occupier’s rights. In the case of Ekatarina and Samantha he should have had some knowledge if he had investigated correctly because they are women in a man’s home. Therefore bath products, clothes etc should have indicated that they were living in the home, this is especially so in respect to Chhokar. Therefore in addition to the clarifying of the LRA 2002 and the more persuasive case law of Chhokar, Cheshire Homes and Tizard Patrice’s enquiries were insufficient therefore would be bound by the three women’s occupier’s rights.
In addition Ekatarina may be able to enforce her matrimonial home rights as she has improved the property, as per the case of William & Glynn’s Bank v Boland. This case law can be used to protect similar rights for Samantha, who also made considerable improvements to the property. Therefore additional resulting trusts would be made in the favour of the two parties; however as the money has been paid these parties will have to either enforce against Victor or Patrice for the funds; whereby if they sue Patrice he then would have to sue Victor. It is only their occupier’s rights that may allow them to remain in the home and then Patrice would again have to sue Victor.
2) How would your answer differ, in respect of Samantha's interest/s only, if title to Mandalay had been unregistered when Patrice purchased it:
If the land had been unregistered it introduces the concept of notice and for the trust in half the land, which is similar to the concepts introduced in the LRA 2002. The concept of notice in this case is constructive notice; whereby Patrice should have made reasonable enquires into whether there was actual occupation and whether a trust in the land was held because he was doing his own conveyancing. As Victor was the trustee this means that Patrice should have asked him, in respect to the occupation and the possibility that a resulting trust would have occurred from the improvements certain actions should have been taken by Patrice. The first is to make more than one trip, as well as looking for items that were out of place for a man’s home. Something should have been obvious and following the cases of Chhokar actual occupation would be held. Hence since the introduction of TOLATA and LRA 2002 the answer would be the same for the current situation of registered land and non-registered land, because of the re-introduction of the concept of notice.
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