*but didn’t ask because… if you were that interested in Chancery work you wouldn’t have become a family lawyer
'I’m a common-law wife' (No, you’re not)1. A classic trope of the horror movie is the unexpected return from the dead of something terrifying. Hence, at the end of Friday the 13th, the seemingly dead serial-killer Jason suddenly emerges from a lake to drag the heroine underwater.
2. Family lawyers may experience a similar sensation when, having sold or destroyed their land law and equity textbooks, trust law is dragged up in one of the following applications:
(a) A ‘cohabitee’ dispute under TOLATA;
(b) A dual claim involving Schedule 1 to the Children Act and TOLATA;
(c) An application within a financial remedy claim for an interim sale1
(d) An intervenor claim (see TL v ML  1 FLR 1263 at , ).
3. This creates problems:
(a) trust law is difficult. The concepts can seem esoteric2
and it is difficult to reconcile the case law3
(b) the law is misunderstood by most lay clients: the belief in the (entirely non-existent) rights of a common-law spouse is widespread4
(c) Regardless of the familial relationship of the parties, a TOLATA claim is (at least currently5
) ‘Chancery business’. The governing rules in a TOLATA claim are CPR – although these may not necessarily apply in an intervenor claim (Goldstone
 1 FLR 1926 at );
4. In many ways, a TOLATA claim is the mirror image of ancillary relief:
(a) the claimant faces a burden of proof (cf. quasi-inquisitorial function of a judge in AR6
(b) the claim must be particularised at the outset (cf. the often meaninglessly bland contents of a typical concise schedule of issues), and
(c) the outcome is binary with the losing party normally paying the winning party’s costs (cf. FPR Pt. 28.3): a well-pitched without prejudice offer is critical. Stakes are high.
5. So, why do it? There is a lot of it about – especially with intervenor claims, where parties come from communities with a tradition of shared ownership. The contrast between TOLATA and financial remedy work is stimulating and becoming comfortable with TOLATA is broadening and increasingly useful. It also frequently involves encountering Chancery barristers – which can be like the Pilgrim Fathers meeting the Native Americans for the first time: one struggles to have any idea what the other is talking about.
6. This paper is a canter through three main topics:
(1) Overview of the law;
(2) Overview of the procedure;
(3) TOLATA and Schedule 1.
(1) Overview of the law
Court powers7. Attached at Appendix 1 is a comparative table of the court’s powers (a) in ‘ancillary relief’7, (b) under Schedule 1 and (c) under TOLATA.
8. Under TOLATA, the court’s powers are generally quite narrow: it can order a sale of a property, declare the parties beneficial shares in the property, and make orders by way of an account/compensatory orders.
9. Fundamentally, the jurisdiction is subjective and declaratory (i.e. declaring what did the parties intend) as opposed to objective and discretionary (what seems fair to the court).
A short summary of the substantive law 10. Scenario A: The parties are legal co-owners, and have completed an express declaration of trust in signed writing in accordance with Section 53(1)(b) of the LPA 1925 (e.g. ticking the box on the Form TR1 to confirm the owners hold on trust as joint tenants or tenants in common in equal or other shares):
– Such a declaration will be conclusive unless grounds to rectify/rescind on basis of fraud, mistake etc;
– Meaning that where such an express declaration exists, there is ‘no room’ for the court to consider whether a constructive trust may arise;
See Goodman v Gallant  1 FLR 513 at 517, 523 and the recent CA decision in Pankhania v Chandegra  3 FCR 16 which confirms that the law in this area has not changed because of Stack v Dowden etc.
A declaration that the parties hold the property as joint tenants creates a beneficial joint tenancy which on severance creates a tenancy in common in equal shares8
– Even though the main issue may be concluded (which may be a hard pill to swallow where one party has paid the main part of the deposit etc), there still may be triable issues over the timing of sale, compensatory payments (where one party has paid for improvements, mortgage, generally post-separation), and, critically, where there is a minor child, a Schedule 1 claim may be vital.
11. Scenario B: The parties are legal co-owners but did not enter into an express declaration of trust (alternatively, that there is no signed declaration of trust) – or, alternatively, they entered into a declaration of trust confirming they held the property in ‘unequal shares’:
– See the majority decision of House of Lords (4:1) in Stack v Dowden  2 AC 432, as summarised by the Supreme Court in Jones v Kernott  3 WLR 1121 at :
(a) Joint legal ownership = presumed equal beneficial ownership (i.e. 50/50);
(b) This may be displaced by showing the parties had a different common intention when they acquired the home or they later formed a common intention that their shares would change – upon which they relied to their detriment (i.e. constructive trust principles)
(c) Per Stack, a court will not normally depart from 50/50 (i.e. it is a ‘heavy burden’ to disprove). However, the case law does not support this – why are the facts of Stack for example so unusual?
(d) Common intention will be deduced objectively from their conduct, taking a broad view of the co-owners’ dealings with one another (i.e. not restricted to financial arrangements). Context is everything.
12. Scenario C: The parties are joint legal owners jointly but as an investment and not as their home:
– Traditional resulting trust approach may apply instead of common intention/Stack presumptions: see Laskar v Laskar  2 FLR 589; i.e. ownership in shares commensurate with the parties’ financial contributions.
13. Scenario D: One party is the sole legal owner
– Normally, the court will approach issues of beneficial ownership on a constructive trust basis (Abbott v Abbott  1 FLR 1451 at );
The essential components are (1) a common intention (which may be express or implied)9
, (2) that the claimant acted to her detriment in reliance10
of that common understanding, and that it would be unconscionable to deny the claimant’s interest;
– Detrimental reliance is very much a necessary component: Curran v Collins  EWCA Civ 404 at , ;
Claims frequently turn on the meaning of words – which may be ambiguous and/ or do not necessarily connote ownership ('our home'11
, 'you’ll have a roof over your head'12
, 'this’ll benefit us both'13
– While it is possible that the common intention arises after the purchase the court will be ‘slow to infer’ from conduct alone (i.e. without clear evidence of discussion): James v Thomas  1 FLR 1598 at .
Quantification of interest14. Where the court finds that the legal owner holds a property on constructive trust for a non-legal owner (or where the parties are co-owners without an express declaration), the issue arises as to quantification:
– If it is not possible for the court to ascertain by (i) direct evidence or (ii) by inference, their actual intentions as to how the home would be held, '…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': Chadwick LJ in Oxley v Hiscock  Fam 211 .
– Somewhat controversially, in Jones v Kernott the Supreme Court held that such an intention (fair shares) could be imputed to the co-owners even where there was no evidence to support an inference to that effect. [NB The court may only consider imputation at the stage of quantifying interests; not the primary stage of establishing whether a party has an interest or whether there has been a change of intention: Barnes v Phillips  2 FLR 1292).
15. Scenario E: Proprietary estoppel
– Sometimes pleaded alongside (or instead of) constructive trust;
– The leading case of Thorner v Majors  2 FLR 405, i.e. the relevant assurance should be ‘clear enough’, depending on the context where the parties subjective understanding of what they agreed was admissible.
– Where an estoppel arises, the court’s powers are wider in terms of satisfying the equity and can, in some cases, include provision for a lump sum payment or even a transfer of ownership.
Intervenor claims16. Most TOLATA claims involve parties in opposition to each other (i.e. C seeks an order against D).
17. Most intervenor claims involve three parties, two of whom are supportive (i.e. IV and H agree that the family home is owned by IV; W disagrees), where the opposing party may have no direct evidence of the discussions between the other two. What to do? See Arif v Anwar  1 FLR 359 at  where Norris J underlines the need for ‘clear evidence that has survived appropriate scrutiny’ and ‘…it is especially important to remember that the general policy of the law is that interests in land should be formally recorded…’.
Engaged couples18. Where the parties were engaged, don’t overlook the Law Reform (Miscellaneous Provisions) Act 1970 – a very short statute that contained four provisions: (1) abolished actions for seduction; (2) abolished breach of contract for breaking off an engagement; (3) inserted a rebuttable presumption that an engagement ring is a gift; and (4) applied any rules relating to rights of a husband or wife including s 37 of the Matrimonial Proceedings and Property Act 1970, whereby the court can take into account any contribution made in money or money’s worth in acquiring a beneficial interest (Dibble v Pfluger  1 FLR 659).
Compensatory payments/ equitable accounting 19. Beyond the issue of beneficial shares, many claims involve an issue of compensation/ equitable accounting for payments one co-owner has made, typically after the purpose of the trust has been brought to an end, which may be for the payment of an ‘occupation rent’. To some extent, this is the equivalent of a dispute over chattels.
20. This must be undertaken with the statute (TOLATA s 12–15) in mind: Murphy v Gooch  2 FLR 934 (although this did not create an exhaustive regime: Re Barcham  1 All ER 145). Where one party is in breach of specific arrangements to pay for various items, compensatory payments are possible (Young v Laurentani  2 FLR 1211). However, an account may be refused where disproportionate (see Laskar v Laskar).
21. There are few hard rules in equitable accounting. The exercise is intensely ‘fact sensitive’, and will depend on the court’s examination of evidence, principally the parties’ intentions (Wilcox v Tait  2 FLR 871 at ). In the ordinary cohabitation case, the court may infer that the parties did not intend to account to each other whilst living together (so that issues of compensation only arse post-separation). Whether this inference is drawn will depend on the facts.
(2) Overview of procedure
Comparative procedure22. Appendix 2 is a short overview of comparative procedure of ancillary relief, Schedule 1 and TOLATA.
The eternal question: Part 7 or Part 8?23. What’s the difference?
(a) Part 7: i.e. involving a claim form on Form N1 and particulars of claim. i.e. pleadings (now ‘statements of case’)
(b) Part 8: is the ‘alternative procedure’ where the claim doesn’t involve a substantial dispute of fact, there is no need for particulars of claim/ defence/ reply (thereby saving some expense, delay and the need to repeat the words 'further or alternatively' in every paragraph). The claim is on Form N208 and is supported by a witness statement will suffice with the claim form on N208.
24. There remains a debate as to which should normally be used. Some take the view that a TOLATA claim must start with Part 8 (see CPR Pt. 64.2 and 64.3, and CPR PD 64A § 1). However, most practitioners (inc. John Wilson QC) take the view that it is a simple matter of applying CPR Pt. 8.2: if there is a substantial issue of fact (and there normally is) use Part 7; if not (for example, where there is an express declaration of trust setting out the ownership shares, and the only issue is timing of sale,) Part 8 should suffice.
25. Try to avoid the hybrid that sometimes occurs when family lawyers to TOLATA: Part 7½, where the claim is issued with particulars of claim and a witness statement.
Tracking26. After the parties have filed their directions questionnaires, TOLATA claims are allocated, generally to the multi-track, but may be allocated to the fast track, e.g. where the monetary value of the claim is less than £25,000 (CPR Pt. 26.6(4)). The main differences of allocating to the fast track are as follows;
(a) Appropriate for more straightforward cases which do not involve a substantial number of documents;
(b) On allocation, the court will give case management directions including provision for disclosure (including the possibility that there be no disclosure14
), without attendance;
(c) Shorter timetable to trial than multi-track (30 weeks from directions to trial15
(d) Trials typically last no longer than a day, before a district judge, with costs summarily assessed at the end;
(e) No costs budgeting.
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