The Law Commission - Amazon S3...The Secretary of the Law Commission is Mr. J. G. Gasson and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1 N 2BQ.

The Law Commission Working Paper No. 94

Trusts of Land

I

HER MAJESTY'S STATIONERY OFFICE

The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law.

The Law Commissioners are:

The Honourable Mr. Justice Beldam, Chairman Mr. Trevor M. Aldridge Mr. Brian Davenport Q.C. Prof. Julian Farrand Mrs. Brenda Hoggett

The Secretary of the Law Commission is Mr. J. G. Gasson and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1 N 2BQ.

This Working Paper, completed on 30 September 1985 is circulated for comment and criticism only.

It does not represent the final views of the Law Commission.

The Law Commission would be grateful for comments on this Working Paper before 30 June 1986.

All Correspondence should be addressed to:

Mrs. C. M. Hand Law Commission Conquest House 37-38 John Street Theobalds Road London WC1 N 2BQ

(Tel: 01-242 0861, ext 237)

The Law Commission Working Paper No. 94

Trusts of Land

LONDON HER MAJESTY'S STATIONERY OFFICE

0 Crown Copyright 1985 Firstpublished 1985

ISBN 0 11 730175 2

147-335-02

THE LAW COMMISSION

WORKING PAPER NO. 94

TRUSTS OF LAND

CONTENTS

Introduction

The present system

An outline of t h e problems

The interests which any system must t ake into account

Outline of proposals for reform

Proposal I

Proposal I1

Proposal I11

Proposal IV

Proposal V

Conclusion

Appendices

A. References B. Sta tu t e s C. Extracts f rom Law Reform

Commit tee , 23rd Report

Paragraphs

1.1 - 1.5 2.1 - 2.2 3.1 - 3.27

4.1 - 4.6

5.1

6.1 - 12.1

13.1 - 13.10

14.1

15.1 - 15.9

16.1 - 16.18

17.1

... 111

TRUSTS OF LAND

SUMMARY

In this Working Paper, t h e Law Commission examines, as pa r t

of its programme for t h e simplification of conveyancing, t h e law relating to t rusts of land. The paper presents five possible reforms: that the re should b e a new t rus t of land with a power of sale; t h a t all set t led land

should be converted into land held under t rusts for sale; t h a t t h e Set t led Land A c t should only apply if i t is expressed to so so; t h a t t he re should be a new form of co-ownership which does not involve a t rus t for sale; and a ser ies of miscelleanous minor reforms. The Law Commission

provisionally recommends t h e f i r s t of these, but t h e purpose of t h e paper

is to obtain t h e widest possible range of views on a l l of them.

iv

TRUSTS OF LAND

Introduction

1.1 Ever since t h e reforms of property law in the 1920's, t he re

have been suggestions as to how those reforms should themselves be

reformed.'

conveyancing and as a result of a recommendation of the Government's Commi t t ee on Conveyancing, t h e Law Commission has prepared this paper, which i t hopes will provide a focus for discussion of reform in t h e

a r e a of t rusts of land. The views expressed he re a r e not t he final views of t h e Law Cornmission. W e hope tha t t he re will be detailed and wide-

spread discussion both of our proposals and of any others t ha t may b e put forward.

As pa r t of i t s programme for t h e simplification of i

1.2 One of t h e notable features

of English land law i s t h e way in which a wide variety of different

interests can be c rea t ed in one piece of land, and those interests a r e

themselves t r ea t ed as property. Among t h e most usual interests which

hold interests in land together, and successive interests, where land is given to one person during his or her l i fe t ime and the rea f t e r t o another. A t present such interests a r e c rea t ed under t h e Set t led Land Ac t 1925 or

t h e Law of Property Ac t 1925, par t of which is concerned with t rusts for

sale. W e shall be looking both at t h e present s t ructures within which successive and concurrent interests a r e c rea t ed and at some other

possible s t ructures which might offer advantages over t h e present system.

The scope of this paper is wide.

people wish t o c r e a t e a r e concurrent interests, where two or more people

1.3 This paper does not follow t h e usual Law Commission pat tern of set t ing ou t t h e existing law in detail. T h e law on set t led land and on t rusts for sale is more than adequately deal t with in existing legal writings. The following paragraphs contain a brief account of t h e present

I See Appendix A for a l ist of books and ar t ic les consulted.

1

system, but while we s t i l l explain particular points when necessary to the

discussion, for a general account of t h e law we refer t h e reader to t h e standard tex tbooks2 Some sections of s t a tu t e s referred to in the

discussion a r e set out in full at Appendix B.

Historical aspects

1.4 In considering possible re forms of this a r ea of law i t i s

important not to lose sight of t h e reasons why t h e law is in i ts present form. This is not t h e place for a lengthy historical a c ~ o u n t . ~ However,

t he re a r e cer ta in problems which the present legislation a t t empted to deal with and i t is necessary to note these, to ensure t h a t any reform does

not inadvertently give rise to them again.

1.5 The wish to t i e up one's property for more than one generation has always been a common one. However, i t became apparent in the nineteenth century t h a t set t lements were causing major difficulties. If t h e interest in land were spli t between the tenant for l ife and

remaindermen, then i t was sometimes ex t remely difficult for any pa r t of t h e land to be sold or otherwise deal t with. This had serious implications for t h e economic use and development of land. The solution adopted in

t h e nineteenth century, and followed in t h e Set t led Land Act 1925, was to give increased powers of disposition and management to t h e tenant for

life. His position was fur ther strengthened by t h e Law of Proper ty Act

1925, when t h e future interests of t he remaindermen were made equi table only, and t h e tenant for l ife was given power to convey t h e legal f e e

simple in the land. I t is important t h a t any reform should retain t h e

advantage of t h e present system, t h a t t he re is always someone who can

deal with the land.

2 Megarry and Wade, The Law of Real Property, 5th ed., 1984; pp. 311-464, Cheshire & Burn's Modern Law of Real Property, 13th ed., 1982, pp. 165-357.

3 For a brief historical account see Cheshire and Burn, ibid, pp. 69-80. For more detai l see Simpson, An Introduction to t h e History of t h e Land Law.

2

The Present System

2.1 A t present t he re a r e t w o possible ways of creat ing successive

interests in land, and one of creat ing concurrent interests. Where

successive interests a r e concerned, whichever system is used, t he beneficial interests of t h e l i fe t enan t and t h e remainderman a r e equitable

only.’ The difference between t h e two systems lies principally in how t h e legal estate is held and who has t h e powers of management. Where successive interests a r e c rea t ed under t h e Set t led Land A c t 1925, t h e t enan t for l i fe has a beneficial l i fe interest . However, for t h e purposes

of dealing with t h e land h e also holds t h e legal estate? H e has wide powers of management. A purchaser will b e able to acquire a legal f e e

simple absolute f rom t h e tenant for l ife f r e e f rom t h e equitable interests c r ea t ed by t h e se t t l emen t provided tha t t h e purchaser pays t h e purchase

money t o at least two t rustees o r t o a t rust Corporation. Where successive interests a r e c rea t ed behind a t rust for sale, t h e legal estate is held by t h e trustees, and generally it is they who have t h e powers of management. A purchaser will b e able t o acquire t h e legal estate f r ee

from t h e equi table interest f rom t h e t rustees by paying t h e purchase money to t h e trustees.

2.2 Concurrent interests in land usually exis t behind a t rust for

sale.6 T h e only permit ted concurrent interest in t h e legal estate is a joint tenancy. Legal tenancies in common were abolished by s.34 of t h e

Law of Property A c t 1925. Therefore t h e e f f e c t of a conveyance t o two or more people as beneficial joint t enan t s is t h a t they hold t h e legal

estate as joint t enan t s on t rus t for sale, for themselves as beneficial joint

4

5

Law of Property Ac t 1925, s.1.

This i s not so if h e i s a n infant, o r in some o the r way incapacitated, when the re are complex provisions as t o who should exercise t h e powers of the t enan t fo r life.

Law of Property A c t 1925, ss.34-36. Where land is set t led under t h e Set t led Land A c t 1925 and the re a r e joint tenants fo r life, t he re will be no t rus t for sale.

6

3

tenants, and t h e effect of a conveyance to two or more people as tenants in common is t h a t they too hold t h e legal estate as joint tenants on t rus t

for sale, but for themselves a s tenants in common.

An Outl ine of t h e Problems

3. I Before looking at proposals for reform i t is clearly important to establish what problems exist. The following paragraphs describe

problems which have become apparent through t h e case law or have been discussed in t h e academic l i terature. I t may well be t h a t we have failed to identify all the problems, and we would be very glad to hear of others. Quite apar t from t h e specific problems, i t is now sixty years since there

was last substantial legislation in this a rea , and as many of t h e provisions

then were consolidating ones, much of t h e law da tes back a hundred years or more. That alone, of course, is not an argument for change, but i t is an

argument for a re-examination of t h e law, not least because t h e social c i rcumstances surrounding property ownership have changed greatly in t h e last forty years. I t is only t h e problems tha t a r e discussed here. Possible

solutions a r e considered la te r in t h e paper.

A. Dual system

3.2 The following problems a r e those t h a t a r i se because, at present, successive in te res t s in land can be c rea ted e i ther as se t t led land under t h e Sett led Land A c t 1925 or as interests behind a t rus t for sale. I t

has of ten been suggested t h a t a dual system is unnecessary and t h a t one system for successive in te res t s would be sufficient. Originally t h e two

systems performed d i f fe ren t functions? The s t r i c t sett lement, using combinations of l i fe in te res t s and entailed in te res t s (which before 1926

could exist as legal estates), was intended to keep land within t h e ownership of a particular family. In many cases t h e tenant for l i fe would

occupy t h e land. The t rus t for sale was used e i ther where a sa le was

7 For a full historical account see Simpson, An Introduction to t h e History of t h e Land Law, 1961 pp. 188-194, 218-224.

4

actually intended, or where t h e land concerned was intended to be an

investment, to be bought and sold as market conditions demanded, t h e tenant for l ife being paid t h e income from it. By t h e mid-19th century i t

was apparent t h a t s t r ic t se t t lements caused difficulty in tha t , if t h e

se t t lement was not well drafted, t h e powers of the tenant for l i fe were too limited t o enable t h e land t o be managed properly, and however t h e

se t t lement was drafted, sa le of t h e land was extremely difficult as no person had t h e power to convey t h e fee simple. A series of reforming s ta tu tes culminating in t h e Sett led Land Act 1925 increased t h e powers of t h e tenant for l ife and ensured t h a t there was also some person able to convey t h e fee simple in the land. A t t h e same t ime t h e Law of Property Act 1925, s.1 prevented l ife interests from existing as legal estates, so t h a t a l l se t t lements had to t a k e effect behind a trust . The effect of these

reforms has been t o remove many of t h e differences between t h e two

systems of sett lement. In either system the land can be sold and t h e s t r i c t se t t lement is no longer an e f fec t ive method of keeping land in t h e family. The remaining differences cent re on who makes t h e decisions

with respect to t h e land. I t is arguable t h a t t h e differences a r e not sufficient to justify the continuing exis tence of two systems.

3.3 The legislation is so phrased t h a t when successive interests a r e created, a t rus t for sale must b e

expressly adopted (except where imposed by statute); otherwise t h e

Se t t led Land Act will apply. This means t h a t where trusts of land a r e c rea ted without proper advice i t is a lmost cer ta in t h a t t h e land will be sett led. This is most likely to occur where wills are, as of ten happens drawn up without advice. In some cases this will be what t h e tes ta tor

would have wanted, but in many cases it will not be and additional expense for t h e beneficiaries may result because additional documents

and a different form of probate a r e required. If an inadvertent se t t lement is c rea ted by will and t h e executors do not realise this,

problems may be caused for purchasers (see below).

Priority given to se t t led land.

5

3.4 Definition of t rus t for sale. Inadvertent se t t lements may

ar i se not through failure to decide which is required but through failure to c r e a t e a valid t rus t for sale. The definition of a t rus t for sa le as an immediate binding t rus t for sale has been criticised.l As a definition i t

i s poor because i t defines a thing as a particular kind of t h a t thing. The word "binding" has caused particular problems because a t rus t should be

binding anyway and t h e cour t s have considered t h a t i t must mean

something other than t h e t rus tees being under a duty to sell. 9

3.5 In other cases, se t t led land has been crea ted inadvertently because a right of residence has been conferred on

a person for his or her lifetime. I t is not entirely clear t h a t t h e

conferment of such a right was intended to be sufficient to bring the land

within t h e Se t t led Land Act. The technical question to be decided was whether land "stands for t h e t ime being limited in t rus t for any persons by way of succession"." However t h e cour t s have made i t clear t h a t they

will t r e a t such land as se t t led land especially if there is no other way to pro tec t t h e rights of t h e l i fe resident." Giving such a person a l l t h e

powers of disposition and management of a tenant for l ife has been much

criticised. There should be some provision for giving rights of residence during a person's l i fe t ime which do not cause technical complications.

This problem is discussed fur ther below

Rights of residence.

12 .

8

9

10

11

12

Law of Property Act 1925, ~.205(11(xxix), and see Megarry and Wade, The Law of Real Property, 5th ed., 1984, pp. 386-388.

R e Parker's Se t t led Es ta tes [I9281 Ch. 247, R e R der and Steadman's Cont rac t 119271 2 Ch. 62, R e Norton [192* Beamount Se t t led Es ta tes [19371 2 All E.R. 353, R e Sharpe's Deed of Release E19391 Ch. 51.

Sett led Land A c t 1925, s.l(l).

R e Duce and Boots Cash Chemists (Southern) L t d [1937] Ch.642, Bannister v. Bannister L194812 All E.R. 133, Binions v. Evans [1972] Ch. 359. -- See para. 16.16.

6

B. Making good t i t l e

3.6 If a purchaser of land subject to a t rus t for sa le fails to comply with t h e provisions of s.27 of t h e Law of Property Act 1925, which

s t a t e s t h a t t h e purchase price must be paid t o a t least two trustees (or a t rus t corporation) t h e conveyance will not be void, although interests

under t h e t rus t for sale will not be overreached. If a purchaser of se t t led

land fails to comply with t h e provisions of s.18 of t h e Sett led Land A c t 1925, t h e conveyance will be void except in so far as i t binds t h e

beneficial interest of t h e tenant for life. In some circumstances a purchaser may be protected by s.110 of t h e Se t t led Land Act , which is discussed in t h e following paragraph. I t is questionable whether i t is

necessary for t h e position of a purchaser to vary in this way.

3.7 The drafting of s.110 of t h e Sett led Land Act 1925 has led to t h e suggestion t h a t i t fails to give purchasers enough protection and t h a t they may have to examine t h e t rus t instrument themselves, contrary to t h e general principles of t h e Se t t led Land Act 1925. This is probably a

theoretical problem rather than a practical one. A real problem t h a t has arisen is t h e relationship between s.110 and s.18 of the Act. Section 110

is meant t o give some protection to a purchaser if he buys in good faith, but under s.18, if land is se t t led land, then any unauthorised disposition is void. I t is not cer ta in which prevails, nor is i t clear whether s.110 offers any protection where t h e purchaser does not know t h a t he is dealing with

t h e tenant for life. 13

3.8 Where se t t led land is c rea ted by will (particularly a home- made one) i t is easy for t h e executors not to realise this and they may, for example, ves t t h e land in trustees rather than in t h e tenant for life. I t

may then be difficult for e i ther t h e tenant for l ife or t h e t rus tees or their

successors to make a good t i t l e to a la te r purchaser. I 4

13 Compare Weston v. Henshaw [I9501 Ch. 510 with R e Morgan's Lease 119721 C h r -

14 As, for example, in R e Duce and Boots Cash Chemists (Southern) - Ltd [1937] Ch. 642.

7

3.9 There is no formal provision for t h e terminat ion of a t rus t for sale. This means t h a t purchasers of land which has been subject to a t rus t for sale may be put in t h e position of having to investigate the t rus t s in order to ascertain that t h e t rus t for sale has ended. 15

C. Control by beneficiaries

3.10 In general t h e beneficiaries of a t rus t of land a r e t rea ted no

differently f rom t h e beneficiaries of a t rus t of any other kind of property. This may, itself, be t h e cause of some problems. Land is not like most

other kinds of property; each piece is, in principle, unique, and, more importantly, i t may be t h e place where t h e beneficiaries live, or want to live in the future. Questions of control over t h e land a r e therefore particularly important.

3.1 I I t is impossible

for a remainderman to prevent the sa le of t h e land, unless there is lack of good fa i th on t h e par t of t h e tenant for life. This leaves t h e

remainderman in a very weak position because t h e land may have already been sold before he becomes aware of the tenant for life's intention to sell.

Those enti t led to se t t led land in remainder.

16

3.12 The t rus tees of land held on a s ta tu tory t rus t for sale'' have a duty to consult t h e beneficiaries." There is no

such duty where express t rus t s for sale a r e concerned. Even as regards

s ta tu tory t rus t s t h e provision i s weak. I t only applies "so fa r as i s

Duty to consult.

15

16

17

18

Except where joint t enants were holding on t rus t for themselves and there is only one survivor, Law of Property (Joint Tenants) Act 1964.

See, for example, England v. Public Trustee (1967) 112 S.J. 70.

See para. 2.2.

Law of Property Act 1925, s.26. (3) substituted by t h e Law of Property (Amendment) A c t 1926, Sched.

8

practicable." The t rustees only have t o give e f f e c t to the wishes of t h e beneficiaries "so fa r as consistent with t h e general interest of t h e trust"

and a purchaser is not a f fec ted by t h e trustees' failure to carry out or comply with t h e result of any consultation.

3.13 I t has been suggested t h a t t h e power to delegate

t h e management of land to a tenant for life of land held on t rust for sale is inadequate. If the power to delegate is not exercised, t h e tenant for

l i fe is l e f t with no control, which, may be unsatisfactory if t h e t rust for sale is being used as a subst i tute for set t led land. If t h e power is

exercised, ownership and management a r e separated which may be undesirable. The t rus tees re ta in t h e legal interest. If t h e tenant for life is not in possession, h e may not be able t o bring a n act ion in his own name to protect t h e reversion of any property leased. As h e is not t h e

covenantee, h e cannot sue on t h e covenants in t h e lease. I t may be t h a t these difficulties do not cause problems in pract ice as t h e t rustees always

take appropriate action, but, in theory at least, they do exist. W e would be interested to hear from those with practical experience of this area. In addition it has been said,19 "Psychologically in the management of a

country estate this duty to act in t h e name of another seems unsound".

Whether th i s is t r u e today seems less likely. Ownership and management are commonly separated, for example, in limited companies and we doubt

t h a t there is any general issue of principle a t stake. Making t rustees delegate cer ta in powers in cer ta in situations would minimise t h e

difference between t h e two systems.

Delegation.

3.14 In set t led land it is not possible t o make t h e sale of t h e land or t h e exercise of other powers subject to t h e

consent of some other person,20 for example, a remainderman. Making

Sale subject to consent.

19 Pot te r , S t r ic t Se t t lement and Trust for Sale, (1944) 8 Conv. (N.S.) 147, 157.

Sett led Land A c t 1925, s.106. 20

9

t h e consent of a beneficiary necessary for the sale of land held on t rus t

f o r sa le does not seem to have caused any problems and a similar provision could be made for se t t led land.

D.

3.15 Complexity. Perhaps t h e grea tes t difficulty of t h e Sett led Land Act 1925 is i t s sheer complexity. Three different aspects will serve

to il lustrate this.

Specific Se t t led Land Act problems

(i) The Act always requires t h e use of at leas t two documents, t h e vesting deed which vests t h e legal estate in t h e tenant for l i fe (or whoever is entit led to exercise

his powers) and t h e t rus t instrument which declares t h e trusts.” If land is acquired a f t e r t h e se t t lement has

been created, a subsidiary vesting deed must be executed vesting t h e land in t h e tenant for l ife (or whoever is enti t led to exercise his powers).22 Hence where there

a r e f requent purchases of land for a se t t lement , t h e r e

may be a considerable number of vesting deeds. There a r e no equivalent provisions for t rus t s for sale. The

deed which vests t h e land in t rus tees for sale may also dec lare t h e trusts, or t h e r e may be two separa te

documents where t h a t i s convenient. 23

(ii) The Sett led Land Act 1925 does not only provide for t h e

s t ra ightforward se t t lement of a life in te res t followed by

in te res t s in remainder. I t also covers a wide range of

conditional interests and determinable fees, and land

21

22 Ibid., s.10.

23

Se t t led Land Act 1925 ss. 4, 5.

Law of Property Act 1925, s.27(1): t h e purchaser is not concerned with t h e trusts.

10

conveyed to infants. Here, there is no tenant for l ife in

t h e proper sense and t h e Act has to make e labora te provisions giving certain people all the powers of t h e

tenant for life. 24

(iii) Because t h e Act applies in certain c i rcumstances

without this being appreciated by t h e sett lor, i t can happen t h a t no t rus tees a r e appointed by him. Thus a simple g i f t of land t o X for life remainder to Y crea tes

a se t t lement and i t is necessary for t rus tees t o be appointed. Again this necessitates complex provisions

as to who a r e to be t h e t rus tees where none a r e appointed. 25

3.16 I t has been suggested t h a t there is an

inherent conflict involved in t h e position of t h e tenant for life. The legal estate and all t h e powers of dealing with i t a r e vested in him and under

s.16 of t h e Sett led Land Act 1925 he is a trustee. Yet he is, at t h e same time, t h e principal beneficiary. While i t is quite usual for a t rus tee to be

a beneficiary, given t h e lack of any other restraints on t h e tenant 's

powers, t h e conflict may become real. I t seems t h a t where there is a conflict of interests, t h e tenant for l i fe is not t rea ted like an ordinary trustee. I t has been held t h a t t h e court will not intervene if t h e tenant for l i fe allows t h e estate to become derelict , but only if there is evidence t h a t he has refused to exercise his powers.26 Thus t h e remaindermen

may inherit an e s t a t e much diminished in value and have no remedy. Similarly t h e interests of t h e remaindermen may b e adversely a f fec ted by

a sale of t h e se t t led land at a low price. Again, they may have no

Conflict of interest .

24

25

26

Set t led Land Act 1925, ss.20-24.

Se t t led Land Act 1925, ss. 30-34.

R e Thornhill's Set t lement [1941] Ch. 24.

11

ef fec t ive remedy27 as they may not discover t h e sa le until years a f t e r i t took place and, even if they could establish a breach of trust , the tenant for l ife may be dead and his e s t a t e not worth suing. While i t is clear t h a t

t h e courts, recognising t h e risks arising from conflicts of interest , usually

make t h e purchase of trust property by a t rus tee virtually impossible,28 in one case where t h e tenant for l ife purchased t h e sett led land without t h e proper procedure being adopted, t h e sa le was simply allowed to stand. 29

E.

3.17 Co-ownership. The Law of Property Act 1925 imposes a s ta tu tory t rus t for sa le wherever land i s conveyed to co-owners - whether in equity they a r e joint t enants or tenants in common.30 Thus, wherever

a couple buy a house, they become t rus tees for sale of i t although a sale is probably not what they intend. In 1925, owner-occupation of dwellings was f a r less usual, than nowadays, and where i t did exist, i t was less likely t h a t a house would be purchased in joint names.’l The co-ownership

envisaged by t h e Law of Property A c t would have arisen in a different

context, where, for example, property was le f t to children in equal shares. In such a case, a sale at some s tage was likely. A s f a r as co-ownership is concerned, a system devised for one set of social c i rcumstances is being

used for very different circumstances.

Trust for sale - specific problems

3.18 The doctrine of conversion. The doctrine of conversion states t h a t where land is held on t rus t for sale, t h e in te res t s of t h e beneficiaries a r e deemed to be in te res t s in t h e proceeds of sale, even before before t h e

27

28

29

30

31

England v. Public Trustee (1967) 112 5.3.70.

P e t t i t t , Equity and t h e Law of Trusts, 5th ed., 1984,pp 374-376.

R e Pennant’s Will Trusts [1970] Ch. 75.

Law of Property Act 1925, ss.34, 36.

Co-ownership arises when two or more people ren t property, as would have been more usual in 1925, but most of t h e problems seem to occur when t h e co-owners own t h e fee simple or a long lease.

12

land has been sold. The doctrine developed during t h e 18th century.32 In

t h e early cases, t h e na ture of t h e beneficial interests was in question

because t h e law of inheritance differed depending on whether property was real or personal. The doctrine of conversion meant t h a t land held on t rus t for sale devolved as personalty. When reform of land law was being

considered, i t was t h e doctrine of conversion t h a t made t h e t rus t for sale a useful tool in t h e simplification of conveyancing: since t h e interests were not in t h e land anyway, i t was easy to provide t h a t a purchaser

should take f r e e of them.33 Now, however, t h e doctrine of conversion

causes problems. To say t h a t a person with an equitable joint tenancy or an equitable tenancy in common has no interest in t h e house but only an interest in t h e proceeds of sale, when no sale is contemplated, is wholly artificial. The cour t s have refused to allow t h e doctrine of conversion to opera te fully in some cases.34 The position therefore now is t h a t t h e

doctrine of conversion applies for some purposes but not for others,

depending on t h e particular circumstances. This is clearly unsatisfactory.

3.19 Powers conferred by 5.30 of t h e Law of Property Act 1925. Problems have arisen with s.30 of t h e Law of Property Act 1925 as t o who

can apply, under t h e section t h e ex ten t of t h e powers of t h e court and t h e fac tors to be taken into account in exercising t h e court's discretion. On

t h e face of it, t h e section only enables an application to be made if t h e t rus tee is refusing t o sell. However t h e cour t s have found ways of

protecting beneficiaries who wish to prevent a sale.35 I t also appears

32

33

34

35

Lightwood, 'Trusts for Sale,' (1927) 3 C.L.J.59.

See Fourth Report of t h e Acquisition and Valuation of Land Commit tee , Cmd. 424, 1919, especially Appendix IV P a r t I, t h e Memorandum by B.L. Cherry.

e.g. Williams & Glyn's Bank v. Boland [I9811 A.C. 487.

See, e.g. Bull v. Bull 119551 1 Q.B. 234.

13

t h a t a t rus tee who has no beneficial interest in t h e land may be unable to apply, so t h a t t h e section does not provide a remedy where t h e t rus tees

cannot agree to a sale. 36

3.20 While t h e cour t is given power to make such order as i t thinks

fi t , i t is not cer ta in whether this extends to ordering one co-owner who has sole occupation to pay a n occupation ren t to t h e o ther who is not in

o c ~ u p a t i o n . ~ ~ I t is probably desirable t h a t they should have power to do so, as th is provides a possible solution to t h e problem t h a t where a sale is

refused because of t h e wishes of one co-owner, t h e other is deprived of a valuable financial asset.

3.21 A considerable amount of case law exists as to how t h e discretion should b e exercised. Generally t h e cour t will look at t h e purpose for which t h e t rus t was c rea ted , and see whether t h e purpose sti l l

exists.38 Particular difficult ies have arisen as to t h e weight to b e given to t h e children's interests,39 and where one co-owner i s bankrupt. 40

3.22 Occupation right. I t is not clear whether a tenancy in

common confers on beneficiaries as against t rus tees a right to occupy t h e

land. 41

36

37

38

39

40

41

S e e Law Reform Commit tee , 23rd Report, para. 3.63.

See further para. 8.10.

R e Buchanan-Wollaston's Conveyance 119391 Ch. 738, E v. E [1955] I Q.B. 234, Barclay v. Barclay L197012 Q.B. 677.

Compare Rawlin s v. Rawlings[l964] P. 398, 419 and Burke v. Burke [1974] 1 W.L.R. 5 6 3 , 1067.

R e Holliday Cl9811 Ch. 405, R e Lowrie [1981] 3 All E.R. 353, and see n. 113.

I t was accepted in v. [1955] 1 Q.B. 234 t h a t they did have a right of occupation but this has been criticised. See Crane (1955) -19 Conv. (N.S.) 146. In Williams & Clyns Bank v. 9 119811 A.C. 487 Lord Wilberforce noted Denning L A ' S view in Bull v. _. Bull with approval.

14

3.23 I t has been suggested t h a t a

tenancy in common cannot be c rea ted informally by, e.g. financial contributions, because s.34(1) of t h e Law of Property Act s ta tes tha t

undivided shares can only be c rea ted "as provided by t h e Sett led Land Act 1925 o r as hereinafter mentioned". The Sett led Land Act 1925, s.36(4)

states t h a t undivided shares can only be c rea ted under a t rus t instrument or under t h e Law of Property Act 1925. This means tha t only expressly

c rea ted or statutorily imposed undivided shares can exist. However, t h e

courts seem to have accepted t h e exis tence of informally created tenancies in common behind a t rus t for sale.42 The position could be

clarified by s ta tu te .

Creat ion of tenancy in common.

3.24 The inclusion of a reference in s.36(2) of the Law

of Property Act 1925 t o severing by methods which, before 1926, would

have severed a joint tenancy of personal e s t a t e has been a source of some confusion, and, as t i m e goes by, i t is increasingly undesirable t o have t o

refer to pre-1926 law. A more detailed discussion of t h e problems of

severance will be found at para. 16.11.

Severance.

3.25 Ascertaining the equitable interests. A question which has

come before t h e courts on more than one occasion arises when a house has been purchased in joint names and t h e purchasers have failed t o make

an express declaration a s t o t h e na ture or ex ten t of t h e beneficial interests. I t is then l e f t t o t h e cour t s to investigate this, perhaps years

a f t e r t h e conveyance took place. The principles involved in making such decisions a r e by no means clear. This problem is considered further at para. 16.5.

42 See further para. 6.5.

I5

F. Powers of trustees

3.26 The Law Reform Commit tee has already discussed some

problems relating t o t h e powers of trustees of land and of t h e tenant for life.43 These a r e discussed below in t h e contex t of our f i f th proposal.

Two further problems which should be mentioned are:-

(i) Power to mortgage. Where land is held by co-owners, t h e r e is generally a t rus t for sale. Trustees for sa le have t h e

powers of a tenant for l i fe under t h e Se t t led Land Act. As such, they cannot raise t h e initial purchase price by

mortgage.44 This probably does not mat te r often, because t h e co-owners as beneficiaries a r e unlikely to object, and mortgagees do not in practice do so. However, i t i s one more illustration of t h e difficulties caused by using a n inappropriate

s t ruc ture for co-ownership.

(ii) Power to appoint attorney. Since co-owners a r e t rus tees for sale, if t h e r e a r e only two co-owners (as is usually

t h e case) one cannot appoint t h e other as his o r her

attorney.45 This causes inconvenience and expense, as a third party must be involved. In addition t rus tees should use a special t rus tee form of a t torney ra ther than t h e general one,

and failure to use the right form may delay o r invalidate a transaction. 46

43 Law Reform Commit tee , 23rd Report, Powers and Duties of Trustees, Cmnd. 8733.

S e e Emmet on Title, 18th ed., p. 322.

Trustee Act 1925, s.25(2), as substituted by Powers of Attorney Act 1971, s.9(2).

44

45

46 Walia v. Michael Naughton Ltd, The Times, 1 December, 1984.

16

G. Bare t rus t s

3.27 Generally, where t w o or more people hold interests in land,

then either t h e Sett led Land Act will apply or there will be a t rus t for sale. However, a bare t rus t is within neither system, and so is to some

exten t an anomaly. A bare t rus t exists when t h e entire beneficial

interest is vested in one person and t h e legal e s t a t e in another. The

t rus tee in such a case has no duties other than to obey t h e beneficial owner, who is, to all intent, t h e real owner. Such a t rus t may arise, for

example, because land held on t rus t for several beneficiaries has become vested in one adult beneficiary, or because land is being held by a

nominee. A more frequent situation which may involve a bare t rus t arises where t h e property of any unincorporated association is held on

t rus t for i t s members by trustees.47 Generally bare trusts do not cause problems for purchasers, because either t h e purchaser is aware of the equitable interest and investigates to ensure t h e sale is with t h e consent of t h e beneficial owners, or h e is unaware and takes f r e e of them as a

bona fide purchaser of t h e legal estate for value without notice.

However, t h e overreaching machinery provided by 5.2 of t h e Law of Property Act 1925 does not apply to bare trusts,48 and there may be

situations where a purchaser fails to obtain a good title.

Summary

3.28 I t will be seen from t h e preceding paragraphs tha t many of t h e problems spring from t h e exis tence of two systems which can each be

used for much t h e s a m e purpose and y e t have major differences in t h e way they operate. Added to this is t h e preference t h a t t h e legislation

shows for t h e creation of se t t led land, so t h a t land may inadvertently come within t h e Sett led Land Act 1925, even though this is inappropriate.

47 Worthing Rugby Football Club Trustees v. Inland Revenue Commissioners t1985l I W.L.R. 409.

48 Except where t h e bare t rus t has arisen because a t rus t for sale has ended and t h e purchaser buying from t rus tees for sale can assume t h e t rus t continues, Law of Property Act 1925, s.27.

17

However although i t appears at f i r s t sight t h a t t h e legislation governing

the two systems covers all possible situations, i t has become apparent t h a t this is not so. Bare t rus t s a r e not ca te red for, and l ifetime rights of

49 residence have only been made to f i t within se t t led land with difficulty.

The Interests which Any System Must Take into Account

4.1 Before looking at a range of possible reforms, i t is important

to establish what kinds of in te res t s in land a r e involved in any proposals for reform. The principal interests may be categorised as follows:

(i) successive interests,

(ii) concurrent interests,

(iii) minors' interests,

(iv) t h e in te res t s of purchasers,

(VI in te res t s under bare trusts.

W e do not consider in de ta i l in this paper t h e special problems which may ar i se where land is held by charit ies or unincorporated associations. The

s t ruc ture of such organisations and t h e rights and duties of their trustees

and members involve questions outside the scope of land law. However

land is held on t rus t by these bodies and where appropriate we do consider t h e impact of our proposals on them.

4.2 Successive interests. The creation of tradit ional successive

in te res t s (e.g. to F for l i fe to S for l i fe to G in Tail) may be less

common now than i t was when t h e 1925 legislation was being considered. Changes in social s t ruc ture and the impact of taxation have made t h e

creation of some elaborate se t t lements less a t t rac t ive . However, s t ra ightforward se t t lements a r e st i l l much used and i t is essential t h a t t h e

50

49 See also as to co-ownership and t rus t s for sale paras. 6.4 and 6.5 below.

Megarry and Wade, The Law of Real Property, 5th ed. 1984 p. 410. 50

18

law provides adequately for their creation. Where successive interests

a r e created, t h e tenant for life and t h e remainderman both have interests

in t h e land. To some extent , their interests may conflict, as t h e tenant for l i fe may wish to maximise what he receives, t h a t is, t h e income,

whereas t h e remainderman is interested in t h e security and maximisation of t h e capi ta l which h e will eventually receive. Any system must be able

to balance these conflicting interests. In addition, t h e tenant for life, being exclusively ent i t led to t h e income, may have a claim to be more

closely involved with t h e management of the property than any other beneficiary of a trust. In making proposals for reform, it is important

not t o lose sight of one of t h e main reasons for t h e present systems within which and no one person has complete control, there is a danger t h a t it

will be impossible for anyone to deal with t h e land effectively. The powers t h a t t h e tenant for l i fe or t h e t rustees for sale now have avoid this

problem, and this advantage must be retained.

4.3 Concurrent interests. Far more usual than successive interests a r e concurrent interests. One is to determine the na ture and s ize of the beneficial interest. The other is to

provide a means of set t l ing disputes between beneficiaries as to t h e use of t h e property, and its disposition whether by sale, lease, mortgage, etc. Any system must ensure t h a t i t is possible for a purchaser to know whether or not t h e persons with whom h e is dealing can give him a good title.

Here a r e two problems.

4.4 W e do not propose making any al terat ion in t h e

rule t h a t a minor cannot hold a legal estate in land. I t is essential t h a t special consideration should be given to a suitable form of t rus t of land f o r minors where a minor has a n interest in land and there a r e neither succcessive nor concurrent interests. In addition, while in general if it is

desired to give land to a minor, a t r u s t or se t t lement will be created, it is necessary to make provision for those occasions where a n a t t e m p t is made

to convey a legal estate in land to a minor.

Minors.

19

4.5 An important a im of any reform of this a r e a should be t h e simplification of conveyancing. Hence t h e effect of any reform on purchasers is a vital consideration. Because of t h e need to

protect purchasers, while we hope t h a t our review of this a r e a will be

wide-ranging, we a r e not intending to propose any alteration to t h e fundamental principle of t h e 1925 property legislation, t h a t there should be only two legal estates in land. W e consider t h a t this aspect of t h e

1925 legislation has worked well, and t h a t other in te res t s should be c rea ted in equity behind a trust. From t h e point of view of purchasers, i t

is essential t h a t they should be ab le to establish who has t h e power to sell and convey t h e legal t i t le, t h a t they should be able to discover any beneficial interests which cannot be overreached, and t h a t they should be cer ta in t h a t if they pay their money to t h e proper persons, they will obtain a good ti t le, f r e e f rom overreachable equitable interests.

Purchasers.

4.6 Bare trusts. I t , is useful in some situations for t h e legal estate and equitable in te res t to be separated even though t h e t rus tee has none of t h e usual duties of a trustee. I t is important t h a t any proposed change

should not make such a separation impossible. I t should make provision to ensure t h a t purchasers of such land can obtain a good t i t l e f r e e f rom t h e

equitable interest .

Outline of Proposals for Reform

5. I The remainder of this paper will present f ive different

approaches to reform in this area. They a r e not all mutually exclusive - some could be combined. The first , however, is intended to stand alone.

I t is a proposal for a complete reform of this a r e a involving not only t h e

repeal of t h e Se t t led Land Act 1925 but t h e creation of a new t rus t of

land with a power of sale which would be used for both successive and

concurrent interests. The second i s t h e less radical proposal t h a t t h e

Se t t led Land Act should be repealed, and all successive interests be crea ted behind a t rus t for sale. The third is a proposal t h a t t h e Se t t led Land Act be retained, but t h e burden of proof shifted so t h a t a se t t lement

20

would be assumed to have been crea ted behind a t rus t for a sale unless specific provision were made t h a t i t should not be. The fourth proposal

could be combined with either t h e second or t h e third, and i s tha t a form

of co-ownership should be devised which would not, at least initially, involve a t rus t at all. The f i f th proposal is for a ser ies of individual

reforms which resolve particular difficulties in t h e operation of sett led land and t rus t s for sale without altering t h e basic structure. These

reforms could be combined with any of t h e previous three.

PROPOSAL I

A New Trust of Land

6.1 If t h e dual system is regarded as unwieldy, one possible

solution is to c r e a t e a new t rus t of land. This t rus t of land would not be a t rus t for sale. The t rus tees would hold the land on t rus t with a power t o sell and a power t o retain. The trustees would have t h e legal e s t a t e and would be able t o convey i t to a purchaser f r e e from the equitable

interests which arise under t h e trust.

6.2 The proposed new t rus t would apply in a l l t h e situations where at present land is either se t t led under t h e Se t t led Land Act 1925, or a

s ta tu tory t rus t for sale is imposed by t h e Law of Property Act 1925. I t would therefore be possible to repeal both t h e Sett led Land Act and those

provisions of t h e Law of Property Act which re la te to s ta tu tory or other t rus t s for sale.

6.3 I t is necessary to consider separately each of t h e situations

where under t h e present law land is e i ther se t t led or held on t rus t for sale, to see how t h e new t rus t would a f f e c t them.

6.4 The au tomat ic imposition of a t rus t for sale on

co-owners who may have purchased t h e property for their own occupation

is highly art if icial and difficult to explain to a lay client. As has been

sa id , t h e s t ruc ture of co-ownership laid down in 1925 is no longer suitable

CO-owners.

21

for modern conditions. Under this proposal, land held by co-owners would be held on trust , but there would b e no duty to sell. Since t h e r e i s no

duty to sell, the doctrine of conversion would not be applicable, as this

doctrine depends on t h e r e being a duty to sell, with equity assuming t h a t

t h e sale has taken place, even when i t has not.

6.5 A t present, although i t is c lear t h a t t h e 1925 legislation was

intended to impose a t rus t for sale in all cases of beneficial co-ownership, there a r e some circumstances which i t did not expressly cover. These

a r e identified by Megarry and Wade as follows:- 51

(i) a conveyance to A (an infant) and B (an adult) as tenants in common;

a conveyance to A and B as joint tenants, where equity requires them to t a k e as beneficial t enants in common, e.g. because they a r e partners, or contribute purchase- money in unequal shares;

a conveyance to X purchasing as t rus tee for A and B‘who a r e equitable owners in common of t h e purchase-money; and

a declaration by A as sole owner, t h a t h e holds on t rus t for himself and B in equal shares.

(ii)

(iii)

(iv)

In addition t h e courts have assumed t h a t where land is purchased in t h e

name of one person alone, and another person contributes to t h e purchase price, t h e land is held by t h e sole legal owner on t rus t for sale for himself

and t h e other person who ~ o n t r i b u t e d . ~ ’ W e would suggest t h a t c lear provision should be made so t h a t wherever concurrent in te res t s in land a r e

c rea ted , t h a t land should be held under t h e new trust.

51

52

Megarry and Wade, The Law of Real Property, 5th ed., 1984, p. 438.

Bull v. Bull [1955] I Q.B. 234, Williams & Glyn’s Bank Ltd v. Boland r19811 A.C. 487.

22

6.6 - Minors. A t present, land conveyed to a minor is automatical ly se t t led land under t h e Sett led Land Act 1925.53 That Act

has never provided a really satisfactory solution to t h e problem of land being held by a minor. The Act is best suited to t h e situation where a tenant for l ife manages t h e land. Where t h e tenant for l ife is a minor, this is impossible, and t h e Act has to make special provision a s to who is

t o exercise t h e powers. Normally, t h e trustees of t h e se t t lement hold t h e legal estate and exercise t h e powers.54 Under t h e new t rus t , t h e t rus tees would hold t h e land and have t h e powers of management, and there would be no need for special provision. The proposal would

therefore not have a grea t deal of practical effect where a minor is enti t led to land, but i t would simplify t h e present position.

6.7 Successive interests. I t is where successive interests have

been crea ted tha t t h e proposal will make t h e most difference to t h e interests of those involved. At present, t h e legal estate in such cases is

generally held by t h e tenant for l ife who has all t h e powers of disposition and management. The trustees play a limited role until t h e land is actually sold, when t h e purchase price has to be paid to them. Under the

proposal, t h e legal estate would be held by t h e t rus tees who would prima

fac ie have all t h e powers. The details as to how t h e interests of the

t rus tees and beneficiaries would be a f f e c t e d a r e discussed further below.

6.8 Entailed interests. I t seems t o us t h a t entailed interests,

which since 1925 have been able to exist in equity only, a r e an anachronism. W e put forward for consideration t h e proposition t h a t

existing entails could be converted into fee ta i l es ta tes and t h e creation of new entailed interests could be forbidden. Entailed interests as a t

present consti tuted a r e in some ways misleading. They give t h e

53 The conveyance i s t rea ted as a cont rac t to s e t t l e t h e land on t h e minor, Se t t led Land Act 1925, s.27.

Set t led Land Act 1925, s.26. 54

23

impression t h a t t h e land will necessarily be kept in t h e family, whereas in fact t h e entail can nearly always be barred. Even if i t is not, t h e tenant intail can sell t h e land, so tha t i t is only t h e capital sum which will pass

down t h e family. W e a r e supported in this view by Megarry and Wade who state:-

Entails might well have been abolished in 1925, along with t h e old rules of inheritance. They a r e now l i t t l e more than a nuisance, accompanied by much in t r ica te law. I t is t rue t h a t entails played an important part in t h e old-fashioned t y p e of s t r ic t sett lement. But such se t t lements a r e out of favour today, and were not of paramount importance even in 1925. Very similar results can be obtained, if indeed they a r e desired, by simpler forms of t r u ~ t s . 5 ~

6.9 Conditional and determinable fees. The Sett led Land Act

1925 includes in i t s scope land held in fee simple or for a te rm of years absolute subject to an executory gift over and land held for a base or

determinable fee. Under this proposal, t h e t rus tees would hold t h e legal estate in such land and have t h e powers of disposition and management.

In these cases at present t h e t rus tees a r e likely to have little, if any, role and t h e r e may well be cases of determinable fees where there a r e no trustees. So f a r as existing se t t lements a r e concerned, we set out proposals la te r which should go some way to solving th i s problem. W e

consider t h a t such in te res t s a r e likely in any event to be rare, and t h e gain, so f a r as simplification is concerned, from treating them in t h e same

way as other forms of successive interest should not be lost by treating them as a special case.

6.10 Although such interests, according to t h e Se t t led Land Act , exist in equity only, t h e effect of s.7 of t h e Law of Property Act 1925 (as amended by Law of Property (Amendment) Act 1926) i s t h a t a fee simple

which is subject to a legal or equitable right of en t ry or re-entry is a f e e simple absolute, and hence a legal es ta te . Although t h e r e does seem to

55 Megarry and Wade, The Law of Real Property, 5th ed., 1984, p. 1151.

24

be some conflict between these two Acts, i t has always been assumed tha t t h e Law of Property Act provision prevails. The Law of Property Act provision was introduced to prevent land subject t o a rentcharge from

coming within t h e Set t led Land Act. The Rentcharges Act 1977 will

eventually (by 2037) abolish al l rentcharges except those which come within t h e Set t led Land Act, estate rentcharges, and rentcharges imposed

by s ta tu te , or by order of t h e court. Es ta te rentcharges developed as a way of avoiding some of t h e difficulties of enforcing positive

covenants.56 Were a comprehensive system of land obligations to be

produced, it should be possible to draf t a provision t o have e f f e c t a f t e r 2037 so t h a t a l l conditional and determinable f e e s would exis t only behind a trust.57 For t h e present, however, i t seems t h a t only those conditional

and determinable fees which do not come within s.7 would be able to

come within t h e new trust.

6.11 Family charges. The only reason why land charged, whether voluntarily or in consideration of marriage or by way of family

arrangement, with t h e payment of any sums for t h e benefit of any person

which the land can be sold and t h e vendor t a k e f r e e f rom t h e charge. I t does seem rather complicated to subject t h e whole of an a r e a of land t o a

t rus t when i t may be only charged with a relatively small sum. Our proposal would exacerba te this problem: because t h e whole legal estate

would have to be held by trustees. However, this does seem to be t h e best way of protect ing t h e interest of t h e person with a family charge,

while enabling t h e land to be sold or otherwise deal t with. I t may be tha t at present t rustees a r e only appointed when t h e land is t o be sold. W e would welcome views as to whether it is necessary to impose a t rus t at a l l in such cases.

is at present t rea ted as se t t led land is to provide a convenient way in

56 S e e Law Com. No. 127 for a possible solution to this problem, recommending a new system of land obligations which would include positive covenants and which would be enforceable against successors in title.

57 Save for those which exis t under the School Si tes Act etc. Implementation of Law Com. No.111 would do much to remove any remaining difficulties with them.

25

6.12 By s.29 of t h e Se t t led Land Act 1925, a l l land vested in t rus tees for charitable, ecclesiastical or public t rus t s o r

purposes is deemed to be se t t led land. The t rus tees a r e not to be t r e a t e d as s ta tu tory owners, but do have a l l t h e powers of a tenant for life. I t is

difficult to see t h e relevance of them not being t r e a t e d a s s ta tu tory owners, because t h e definition of a s ta tu tory owner is fundamentally t h e persons who have the powers of a tenant for life.5* The t rus tees were

simply t o hold t h e land on t rus t with t h e s ta tu tory powers which would be provided under this proposal, nothing would be lost. At present, t h e

purchaser must ensure t h a t necessary consents have been obtained -this is an exception to t h e general principle of t h e 1925 property legislation t h a t purchasers d o not have to look behind t h e trusts, and we would welcome views as to whether i t is necessary.

Charities.

6.13 Intestacy. A t present, land forming par t of an intestate 's

estate is subject to a t rus t for sale.59 However, land forming par t of a testate estate is not, unless a t rus t for sale is imposed by t h e will. Instead, executors a r e given all t h e powers of t rus tees for sale in

disposing of or managing t h e land.60 Where intestacy is concerned, despite the wording of t h e s ta tu te , i t appears t h a t t h e adminis t ra tor does

not really hold t h e land on t rus t for sale because t h e beneficiaries do not receive a beneficial interest , and t h a t generally t h e adminis t ra tor is using

t h e powers under s.39 of t h e Administration of Es ta tes Act 1925 ra ther

than holding t h e land on t rus t for sa le under s.33. However, this does not

render s.33 totally unnecessary, as t h e e f f e c t of s.33(2) is t h a t undisposed of money is used f i r s t to provide for t h e payment of any pecuniary

legacies. There does seem to be some uncertainty as to t h e precise relationship between t h e t w o sections. Nor is i t clear whether, at t h e

point t h a t the adminis t ra tor ceases to deaI with t h e land under s.39 and becomes a t rus tee under s.33, i t is necessary for an assent to be executed.

58

59

60

Sett led Land Act 1925, s. 117(l)(xxvi).

Administration of Es ta tes Act 1925, s.33.

Administration of Es ta tes Act 1925, s.39.

26

W e would suggest t ha t t h e law in this a r e a would be improved by making

it c lear at what point t h e "initial stage" ends and a n administrator 61 becomes a trustee, and whether it is necessary to execu te an assent.

Since we a r e recommending t h e abolition of t h e s ta tutory t rus t for sale for other purposes, i t would c r e a t e a n additional complication if such a t rus t were to b e retained for intestacy only. Is it necessary?

Provisionally, w e think not. While i t is essential t h a t administrators should have a power t o sell, t he re seems no reason why t h e land should be

subjected automatically to a t rus t for sale. The land could be held on

t rust with power t o sell, and t h e administrators given all t h e powers which

such t rustees would have. Similarly it would be necesjary to a l t e r t h e

provision with respect to personal property which at present must also b e

sold6' and, again, we see no reason to impose a duty t o sell.

6.14 Land held by mortgagees. Where t rustees have invested t rust

money by lending i t on mortgage and t h e mortgaged land becomes vested in them f r e e from the right of redemption, t h e t rustees hold t h e land upon

t rus t for sale.63 I t i s said t h a t this preserves t h e character of t he investment as being one of personalty. However, i t i s doubtful whether today t h e difference between t h e t r ea tmen t of realty and personalty is

sufficient to make this necessary. Therefore, we see no reason why such land should not be held under a t rus t of land with power t o sell.

6.15 Purchase of land with t ru s t funds. Where t rustees of

personalty o r t rustees fo r sale of land invest t h e t ru s t funds in t h e purchase of land, at present they hold i t on t rust for sale.64 As t h e main

reason for this provision is t o prevent t h e land coming within t h e Set t led

Land Act 1925, once t h a t is no longer possible, t he re should be no objection t o such land being held on t rus t with power t o sell.

61

62

63

64

A paper considering this problem and others relating to title on death is in t h e course of being prepared. Administration of Es t a t e s A c t 1925, s.33.

Law of Property A c t 1925, s.31.

Law of Property A c t 1925, s.32.

27

Is an express t rus t needed?

6.16 Where se t t led land i s concerned, i t has been suggested t h a t t h e 65 phrase "limited in trust" means t h a t there must be an express trust .

Likewise, where co-ownership is concerned, i t has been suggested t h a t there must be an instrument expressly creating t h e tenancy in common o r joint tenancy.66 The law in this a r e a is unclear. I t would be desirable if i t were clarified and if the same rule applied to trusts of land however

they arose. W e can see no good reason to insist on an express trust. The trust-relationship arises f rom t h e si tuation itself, because, for example,

successive interests a r e necessarily equitable, as a r e tenancies in common. Accordingly, in some cases, situations a r e bound t o a r i se where

t h e legal implications of a transaction a r e not fully understood. This may particularly occur where a matrimonial home i s acquired. To require an

express trust , or any particular instrument, would, in such circumstances, d e f e a t t h e purpose of imposing a trust.

Should t h e express t rus t for sale be retained?

6.17 Should a se t t lo r be able to impose a duty t o sell on t h e t rus tees if h e wishes to? W e would suggest t h a t he should not. If such a duty were to be imposed, t h e question would then arise as to whether a power to postpone sa le should necessarily be implied. Indeed this i s t h e real question at t h e hear t of t h e consideration of t h e continuation of the

express t rus t for sale. If a power to postpone is to be implied in every case, we would suggest t h a t there i s l i t t l e practical point in an express

t rus t to sell. Such a t rus t would have l i t t l e e f f e c t on t h e trustees '

decision to sell or retain and would reintroduce t h e problems of t h e

doctrine of conversion. If t h e power to postpone were not to be implied by s t a t u t e into every such trust , t h e r e might be t rus t s where i t was

omi t ted and t h e t rus tees were forced into a sale at a t i m e which was

65

66 9 v. [I9621 A.C. 696.

Binions v. Evans [19721 Ch. 359. 366.

28

disadvantageous t o t h e beneficiaries. Even t h e present position, where

t h e power to postpone is implied unless a contrary intention appears is not

entirely satisfactory, because t h e sett lor may not realise tha t cer ta in words he has used can be interpreted to exclude t h e power and cause

problems for t h e benef ic ia r ie~ .~’ If our view is not accepted, and express t rus t s for sale continue to be permitted, we would suggest tha t , to protect t h e beneficiaries t h e power to postpone sale should be implied into every such trust , and t h e beneficiaries should be considered to have

interests in t h e land unless and until a sale takes place.

Existing se t t lements and t rus t s

6.18 When introducing a new system of land holding, one of t h e most difficult decisions to make is whether i t should apply only t o fu ture

se t t lements and co-ownership rights, or whether i t should apply t o all interests t h a t exist when t h e Act comes into force. The former approach has t h e advantage t h a t existing arrangements, which may be t h e result of careful advice, a r e not upset. The new t rus t of land will involve t h e

t rus tees in having t h e legal estate, so t h a t where a tenant for life at present has t h e legal estate, there would have t o be a transfer of t h e legal estate to t h e trustees. However, leaving existing se t t lements alone has t h e disadvantage tha t , for a considerable t i m e to come (and even given

t h e rule against perpetuit ies some se t t lements can las t a long time), there would not be a dual system but a tr iple system of se t t led land, t rus t s for

sale and t h e new t rus t of land. An immediate change has t h e disadvantage t h a t a tenant for l i fe who has hitherto had to ta l control over

t h e land would lose i t overnight. This is a very real problem. However, we think i t might be adequately dealt with by provisions relating to delegation and consents as to which, see below. I t might also be said t h a t

to change existing se t t lements is to defea t t h e settlor’s intention.

However, t h e t rus t of land is not a t rus t for sale, and while i t is t rue t h a t

t h e tenant for l ife loses some of his powers, we would suggest that , as a

67 Law of Property Act 1925, s.25(1) and see R e Rooke 119531 Ch. 716, R e Atkins’ W.T. [I9741 W.L.R. 761.

29

whole, t h e new t rus t of land would not be radically different from a se t t lement under t h e Se t t led Land Act. W e would particularly welcome views on this point. Our provisional view is t h a t while an immediate

change to t h e new system might cause initial difficulties, t h e advantages

in te rms of simplification of t h e system a r e overwhelming. If this

proposal proves acceptable, we would envisage a provision so that, on t h e d a t e t h e Act comes into force, the legal estate presently vested in t h e

tenant for l i fe would, by s ta tu te , be vested in t h e trustees, and i t would

be essential for a purchaser to t a k e a conveyance from t h e t rus tees to obtain a good title. Transitional provisions would have to deal with transactions which were between cont rac t and conveyance a t t h a t date. Provision would have to be made for se t t lements where, at present there

a r e no trustees. Some of t h e difficulties which could arise might be lessened if t h e tenant for l i fe were t o be a trustee.68 The adoption of

this proposal might have implications for the Land Registry, as t h e t rus tees might consider they had a duty to register their t i t le, in order to pro tec t the t rus t property. 69

6.19 While i t seems to us tha t , where se t t led land is concerned, t h e balance of advantage does l ie in changing a l l se t t lements to t h e new

system, where express t rus t s for sale a r e concerned, t h e question raises slightly different issues. The effect of a change is t h a t t h e t rus tees lose

t h e duty to sell. I t is difficult to distinguish between those t rus t s where t h e se t t lo r intended t h e t rus tees to be under a duty to sell and those

t rus t s where a t rus t for sale was used as t h e only available form. To convert t rus t s of t h e first kind into t h e new t rus t of land is to a l te r what

the se t t lo r intended. W e would tentatively suggest tha t , despite this, a l l express t rus t s for sa le should be converted. I t will, in practice, be

impossible to distinguish between t h e t w o kinds of trusts. The t rus tees will st i l l have t h e power of sale, and t h e beneficiaries may, in some circumstances. be able to force a sale.

68 See para. 7.6.

69 See para. 11.1.

30

6.20 Where a t rus t for sale’has been imposed by s ta tu te , then i t

should be converted into a new t rus t of land so t h a t t h e t rus tees lose t h e

duty t o sell. The benefits of t h e new t rus t s where co-owners a r e

concerned have already been discussed7o and i t seems important t h a t all co-owners should obtain these benefits.

Trustees

7.1 Successive interests. The present provisions a s to who shall b e t h e t rus tees of se t t led land a r e elaborate. They a r e not s e t out here,

but a r e contained in s.30 of t h e Sett led Land Act 1925. In addition, t h e

provisions of s.36 of t h e Trustee Act 1925 apply, laying down who has t h e

right to appoint new trustees.71 I t seems t o us tha t under t h e new trusts of land, such elaboration should not be necessary. The trustees should be t h e persons appointed by the sett lor to be t h e trustees, and if, in t h e case

of a se t t lement c rea ted by will, no t rus tees have been appointed, as at present t h e personal representatives of the sett lor will act as trustees

until new t rus tees a r e appointed. I t is unlikely t h a t there will be no t rus tees of an inter vivos trust. To consti tute t h e trust , ei ther t h e sett lor must declare himself a trustee, or t h e t rus t property must be

vested in trustees. Sect ion 36 of t h e Trustee Act 1925 should continue to apply where new t rus tees a r e to be appointed. Under s.30(l)(v) of t h e Se t t led Land Act 1925, those who together a r e enti t led to t h e beneficial

interests a r e able to appoint t rus tees if none (other than t h e personal

representatives of t h e se t t lo r ) a r e available under t h e other parts of t h e section.72 Beneficiaries of a t rus t for sale have no such express power. However, t h e Se t t led Land Act power is really a recognition of t h e f a c t

70 See para. 6.4.

71 Trustee Act 1925, s.64.

72 R e Spearman 119061 2 Ch. 502.

31

t h a t if al l t h e beneficiaries a r e ascer ta ined and of full age, they could bring t h e se t t lement t o an end.73 Similarly, t h e beneficiaries could bring a t rus t for sale to an end, and while they have no power to appoint a new

trustee, t h e knowledge t h a t they can end t h e t rus t should influence those

who do have t h e power of a p p ~ i n t m e n t . ~ ~ I t should be pointed out t h a t i t is probably unusual for all t h e beneficiaries of a t rus t to be ascertained, and of full age, except where t h e t rus t arises through co-ownership. I t

seems t o us t h a t i t might be useful to add to s.36 of t h e Trustee Act 1925 so f a r as t h e t rus t s of land a r e concerned, a provision tha t , where a l l t h e

beneficiaries a r e ascertained and of full age, they should, acting unanimously, be able to appoint a new t rus tee or trustees. Such a provision recognises t h e strong position of such beneficiaries. There

seems no reason why th is power should not apply to a l l trusts, and not just to t rus t s of land. However, th i s raises mat te rs beyond t h e scope of this

paper. W e consider t h a t t h e power should t a k e priority over t h e right of remaining t rus tees to appoint bearing in mind t h a t t h e beneficiaries could end t h e trust. Purchasers do not have to enquire as to whether t h e

trustees have been properly appointed. 75

7.2 Where land is held on t rus t because i t has been conveyed or

devised to a minor,76 t h e above provisions would apply, so t h a t e i ther t h e

grantor or t h e tes ta tor should appoint trustees. If a tes ta tor fails to do

so, then his personal representatives will be t rus tees for t h e t i m e being.

If a grantor fails to do so, then t h e conveyance should be t r e a t e d as a declaration of t rus t in favour of t h e minor.

73

74

75 Trustee Act 1925, s.38.

76

Saunders v. Vautier (1841) 4 Beav. 115.

Although i t does not always do so, R e Brockbank cl9481 Ch. 206.

Se t t led Land Act 1925, s.27.

32

7.3 Where land i s conveyed t o co-owners, t h e provisions of s.34(2)

of t h e Law of Property A c t 1925 should continue t o apply so t ha t t h e land

would be t r ea t ed as if i t had been conveyed to t h e four f i rs t named in t h e

conveyance as joint t enan t s to hold i t on t rust for all those named in the

conveyance. They would not, of course, b e holding i t on t rus t fo r sale, but on t h e new statutory trust . The provisions of s.36 of t h e Trustee Ac t

with t h e amendment suggested above, should continue t o apply where new trustees a r e t o b e appointed.

7.4

be t h e t rustees as a t present.

Where the t rust arises on intestacy, t h e administrators would

Powers of t rustees

7.5 Powers. A t present, t h e powers of a t rus t ee for sale a r e

decided by reference t o the powers of a t enan t for life. The powers of t he t enan t for life, as set out in the Set t led Land A c t 1925, a r e extremely

complex without being comprehensive. The start ing-point for t h e powers of t he t enan t for l i fe was a situation where the t enan t for l i fe had virtually no powers ta deal wi th t h e legal estate. During t h e 19th

century, his powers were gradually increased, with powers t o deal with

particular si tuations being added bit by bit. The result i s not appropriate to a modern trust . In particular, when applied to t rusts for sale, they do not give t h e t rustees power to raise t h e purchase pr ice of t h e land by

mortgage. The Law Reform c o m m i t t e e have recommended7’ cer ta in a l terat ions to t h e powers of t h e t enan t for life. While we ag ree t h a t these amendments would go a long way towards improving t h e present situation, we consider t h a t a simpler solution might b e found by a more

radical reform of this area. I t s eems to us t h a t t rustees could b e given

a l l t h e powers over t h e land of a n absolute owner. To do so is not to put t h e beneficiaries at t h e mercy of t h e trustees, because t rustees always

have to exercise their powers fo r t h e benefit of t h e trust . Any list of

77 Law Reform Commit tee , 23rd Report, Cmnd. 8733, paras. 8.1-8.10 and see Appendix C.

33

powers is a lmost bound to have omissions or to become unsuitable with

t h e passing of time. W e understand t h a t i t is common practice to give trustees fa r greater powers than they a r e given by s t a t u t e in any event. The question t h a t then arises is whether a se t t lo r should be able to limit

t h e powers of t h e trustee. Is i t essential t h a t there should be someone

with an unfet tered power of sale? W e doubt if t h e conditions which gave rise t o this being a m a t t e r of such importance in t h e past st i l l exist today,

and we therefore very much doubt whether any such provision is necessary provided t h a t t h e position of purchasers is protected. We will be grateful

for any views on this point. I t may be t h a t t h e suggested extension of t h e powers of t rus tees should only apply to trusts imposed by s ta tu te , as, for example, where there is co-ownership, and not to express trusts.

7.6 Tenant for l i fe as a trustee. Where there is a tenant for

life,78 one of t h e disadvantages of t h e proposed new t rus t is t h a t t h e tenant for l i fe would no longer have t h e powers of disposition and management t h a t he has at present. That this is not an overwhelming disadvantage is demonstrated by t h e preference shown for t h e creation of

t rus t s for sa le rather than se t t led land. However, i t may be a problem in some cases. Increased powers of delegation” may assist, but one other

idea is to give t h e tenant for l ife a right to be appointed as a trustee. This would give him a d i rec t voice in t h e management of t h e property,

while t h e other t rus tees (there would have to be at least one other if t h e land were to be sold) would ensure t h a t t h e in te res t s of o ther

beneficiaries were protected. The right to be appointed as t rus tee should

not apply if t h e se t t lo r excludes i t , nor should i t apply if there a r e a l ready four trustees.

78 While not at this s tage at tempting an exhaustive definition of who would be a tenant for life, we envisage including most of those at present given t h e powers of t h e tenant for l ife by t h e Sett led Land Act 1925.

79 See para. 8.2.

34

7.7 Duty t o act unanimously. The Law Reform Commi t t ee has considered" t h e question as to whether t h e rule t h a t t rustees must act unanimously except where t h e se t t l emen t contains power to act by a majority, is a satisfactory one. They concluded, and we ag ree with their conclusion, t ha t t h e rule is satisfactory and should remain. I t is

apparently r a re for power to act by a majority decision t o b e conferred in t h e set t lement , and t h e Law Reform Commi t t ee thought it significant

t ha t this particular rule is usually retained. It should be noted t h a t t h e 81 e f f e c t of t h e rule will no longer b e t h a t one t rus t ee can fo rce a sale;

instead, subject t o application to t h e court under s.30 of t h e Law of

Property A c t 1925, one t rus t ee would be able to prevent a sale. Since the re would be no duty to sell but only a power t o sell, a l l t h e t rustees would have t o ag ree to a sale. Removing t h e emphasis on sale is arguably a major change but one which f i t s in with t h e general t h e m e of this proposal.

Beneficiaries

8.1 Should t h e beneficiaries of the new t rus t have any special r ights over and above those rights which t h e beneficiaries of any t rust have?82 W e have already discussed t h e possibility t h a t where the re is a t enan t for life, h e should have a right to be a trustee.

8.2 Delegation. The present provisions relating to delegation by

t h e t ru s t ees a r e ra ther limited. Under s.29 of t h e Law of Property Ac t 1925, t h e t rustees may delegate to t h e l ife-tenant the powers of and

incidental to leasing, accept ing surrenders of leases and management. Delegation must be in writ ing and is revocable. T h e delegated powers

are exercised in t h e name of t h e trustees, but t h e l ife-tenant is liable for

80 Ibid., para. 3.60.

81 As for example, in R e Mayo 119431 Ch. 302.

82 As to which see Hanbury and Maudsley Modern Equity 12th ed., 1985, pp. 493-495.

35

any breach of trust , t h e t rus tees a r e not. If t h e t rus tees refuse to

delegate, t h e life-tenant can apply t o t h e court who may order t h e

trustees to delegate.83 W e would suggest t h a t where an existing se t t lement is converted into t h e new t rus t on t h e coming into force of

these provisions, and t h e tenant for l ife has, a t t h a t da te , t h e legal estate and t h e powers of a tenant for l i fe under t h e Se t t led Land Act, there should be a s ta tu tory irrevocable delegation of the trustees ' powers of

management, including t h e power of sale, to t h e tenant for life. The t rus tees should not be liable for t h e life-tenant's exercise of these powers. They have no choice over delegating them.

8.3 Where a new se t t lement is c rea ted a f t e r these provisions come

into force, or a new tenant for life becomes enti t led, t h e discretionary power to delegate should continue to exist and should be extended so t h a t

t h e t rus tees can delegate all their powers, including t h e power of sale. However, t h e to ta l exclusion of t h e trustees ' duty seems unnecessarily

wide, and t h e r e should be be t te r provision t o ensure t h a t t h e interests of other beneficiaries a r e not damaged. Where t rus tees employ agents, t h e

Law Reform Commit tee has recommendedg4 t h a t t rus tees should have a duty to exercise a general supervision over t h e agent. The wording

suggested there is not appropriate here because t h e trustees' discretionary powers a r e being delegated, and not merely t h e carrying-out

of specific acts. I t is probably already t r u e that, in deciding whether to delegate, t rus tees already a r e under a duty to take into account t h e

in te res t s of t h e remaindermen. This could be extended so t h a t t h e t rus tees come under a duty to exercise a continuing general supervision

over t h e t rus t property in order to safeguard t h e interests of t h e other

beneficiaries. I t has been a crit icism of t h e se t t led land system t h a t t h e

remaindermen have had too l i t t l e p r o t e c t i ~ n . ~ ~ The proposed system of

83

84 Ibid., para. 4.1 1.

85

Law of Property Act 1925, s.30.

England v. Public Trustee (1967) 112 S.J. 70.

36

delegation would give t h e t enan t for l ife some control, while providing bet ter protection for t h e remaindermen. The courts should continue t o be able t o order delegation in appropriate cases if t h e t rustees refuse.

8.4 We would envisage t h a t delegation would operate in t h e same way as delegation under s.25 of t h e Trustee Act 1925, except t ha t t h e

delegation need not be l imited to twelve months. Delegation would thus

be by power of a t torney and as under s.25 t h e t rustees would continue to be liable for t h e acts or defaul ts of t he donee of t h e power. W e would

welcome views as to how capital monies received by t h e t enan t for l ife when exercising his delegated power should be treated. I t is clearly important t h a t t h e interests of any remaindermen a r e adequately

protected. In this connection w e would welcome information as t o how

delegation under s.29 of t h e Law of Property Ac t 1925 and under s.25 of

t h e Trustee Ac t 1925 works. A t present i t seems t o us t h a t t h e t enan t for l ife could receive t h e money. The remaindermen would be protected by t h e continuing liability of t h e trustees.

8.5 I t is one of the paradoxes of the present system t h a t i t is impossible for a set t lor to restr ic t t h e power of sale of a

t enan t for l i fe of set t led land,86 but possible to make t h e sale of land held on t rus t fo r sale subject to consents. The policy of t h e Set t led Land Ac t 1925 was t o ensure t h a t land was not made inalienable, but t h e provisions relating to t rusts for sale do not seem t o have caused any g rea t difficulties. T h e court has a power t o order a sale where a consent is

refused.87 W e suggest t h a t t h e power of sale under t h e t ru s t should be

capable of being made subject to t h e consent of one or more persons. There should be a provision equivalent t o s.30 of t h e Law of Property A c t

Consent t o sale.

86

87

Set t led Land Ac t 1925, s.106.

Law of Property A c t 1925, 5.30.

37

1925 where consent is refused. A purchaser should, a s at present, only have t o ensure t h a t t h e consents of not more than two people have been obtained, even if more a r e required by t h e t rus t deed?' If t i t l e to t h e

land is registered any requirement for consents will be reflected in t h e

restriction registered to pro tec t t h e beneficial interests.

8.6 Consultation. As has been said, the present provision relating to consultation is weak.89 Like t h e s ta tu tory power to postpone, i t is arguable t h a t this duty is an implicit recognition of t h e inappropriateness of t h e duty to sell in some of t h e situations where t h e 1925 legislation imposed one. Once there is no duty to sell, t h e r e seems less need for any

special provision regarding consultation. The t rus tees have a general duty to exercise their powers for t h e benefit of t h e beneficiaries. That,

coupled with an extension of t h e rights of beneficiaries to apply to t h e However t h e exis tence of t h e

duty to consult may ensure tha t t h e beneficiaries a r e aware of some action by t h e t rus tees so t h a t they can t a k e s teps to prevent i t before i t is

too far advanced. In this respect t h e duty to consult is valuable, although, in i t s present from, probably too weak t o be of use. If i t is

thought necessary to retain some similar provision, then a more definite right to be informed as to t h e trustees' fu ture actions would be

preferable.

might be sufficient protection.

8.7 Rights of residence. The tenant for l ife of se t t led land clearly has t h e right to occupy t h e land. That is, generally speaking, t h e

purpose of t h e sett lement. Under a t rus t for sale, t h e position may depend on whether t h e land i s held on express t rus t for sale, when t h e r e

may be no rights of residence?' o r on t h e s ta tu tory t rus t s for sale

88

89 See para. 3.12.

90 See para. 10.10 (iv).

91

Sett led Land Act 1925, s.26.

Barclay v. Barclay [I9701 2 Q.B. 677.

38

imposed on co-owners, where there are.92 The rights of residence of co- owners depend on t h e pre-1926 law, and have been t h e mat te r of some

dispute. The d i f fe rence between the two situations seems to arise because t h e t rus t for sale in t h e la t te r case is a' mere conveyancing

device, in other words, wholly artificial. Once again, t h e imposition of an unnecessary duty to sell has made t h e law more complex than i t need

be. W e would suggest tha t a l l beneficiaries who have present (as opposed to fu ture) interests in land should have a right to occupy t h e land unless

specifically excluded by t h e sett lor or unless t h e t rus tees have been given discretion to choose which beneficiary can occupy. This would mean t h a t those enti t led on intestacy might acquire rights of residence if t h e administrators retained t h e property a f t e r the "initial stage" referred t o

above.93 While this is probably a change from t h e present position, there does not seem anything wrong with t h e result, because such a situation is

likely t o arise where there a r e infant beneficiaries or a widow with a life interest. The right of residence should not apply to, for example, rented property which t h e trustees hold for investment purposes.

8.8 There should be a clear statutory provision giving the courts power to d i rec t how t h e rights should be exercised.94 At present, t h e court varies occupation rights on an application by one co-owner for an order for sa le under s . 3 0 . ~ ~ W e would suggest tha t in accordance with

our other recommendations for broadening t h e scope for 5.30, a beneficiary should be able to apply for t h e rights of occupation to be

varied, even if he is not applying for a sale.

9 2

9 3

94

9 5

- Bull v. Bull Cl9551 1 Q.0. 234.

See para. 6.13.

Such a jurisdiction would not be entirely novel, as t h e courts a l ready vary rights of occupation under t h e Matrimonial Homes Act 1983 and t h e Domest ic Violence and Matrimonial Proceedings A c t 1976. The Matrimonial Homes Act 1983, s . l ( l l ) clearly assumes t h a t equitable co-owners do have rights of occupation.

Dennis v. McDonald [19821 Fam. 63.

39

8.9 The se t t lo r should be able t o exclude t h e right of residence if he so wishes. The right of residence would be capable of being

overreached if t h e land were sold and t h e purchase price paid to at least two t rus tees or a +rust corporation. Once a sale took place t h e

beneficiaries would no longer have any interest in the land and would thus have no right of residence in it. I t is important to make this point so t h a t i t is not thought t h a t t h e right of residence we propose is a new separa te

right, capable of subsisting on i t s own. W e a r e merely suggesting t h a t

t h e present law should be clarified to make i t clear t h a t one aspect of being t h e beneficiary of a t rus t of land may be having t h e right to occupy

it, just as a beneficiary has t h e right to be consulted, or t h e right to receive t h e t rus t income.

8.10 If each beneficiary has a right to occupy,

should t h e courts have t h e power t o order, for example, one co-owner to pay money to t h e other in respect of t h a t o c ~ u p a t i o n ? ~ ~ The present

97 law is discussed at some length at f i r s t instance in Dennis v. McDonald, where Purchas J. accepted tha t , "the t rue position under t h e old authorit ies was t h a t t h e Court of Chancery and Chancery Division would always be ready to inquire into t h e position as between co-owners being

tenants in common either at law or in equity to see whether a tenant in common in occupation of t h e premises was doing so to t h e exclusion of

one or more of t h e other tenants in common for whatever purpose or by whatever means. If this was found t o be t h e case, then if in order to do

equity between t h e parties an occupation ren t should be paid, th i s would be declared and t h e appropriate inquiry ordered. Only in cases where t h e

tenants in common not in occupation were in a position to enjoy their right t o occupy but chose not to do so voluntarily, and were not excluded

by any relevant factor, would t h e tenant in common in occupation be enti t led to do so f r e e of liability to pay an occupation rent." However, i t

Occupation rents.

96 There is a s ta tu tory power to do so in respect of married couples, Matrimonial Homes Act 1983, s.1(3).

[1982] Fam. 63, at pp. 70-71. 97

40

appears t ha t such a power t o require payment of a rent only exis ts if t h e

si tuation is one where the court would have power t o order a sale.98 T h e question tha t arises is whether this power should be placed on a s ta tutory

footing, or whether i t is best t o leave t h e court with t h e widest powers possible under a re-drafted s.30. The advantage of legislating is, as always, t h a t it would bring g rea t e r certainty, and so make set t lements ou t

of court more likely. The disadvantage in this particular case is t h a t t o

bring greater cer ta inty, one would have to define, with some precision, t h e si tuations in which a n occupation r en t could be paid, and to do so

would restr ic t what is at present a broad jurisdiction. In addition, one might have to lay down principles on which the r en t i s t o be calculated, a

ma t t e r on which the re is relatively l i t t l e law.99 Should i t be re la ted to

t h e market rent, or t o t h e fair r en t as if a tenancy of t he dwelling were

regulated under t h e Ren t A c t 1977 or t o t h e "reasonable rent" as if i t

were a restr ic ted contract? An al ternat ive measure might be t h e

income lost to t h e non-occupier through not being able t o invest t h e

money h e would have received had t h e property been sold. The circumstances in which t h e r en t might be ordered to be paid seem t o be so varied t h a t any a t t e m p t at precise definition i s likely to lead to unjust results. Accordingly, we suggest that , at most, t he re should be a provision along t h e l ines t h a t t h e occupation r en t should, so f a r as equi table and practicable, compensate a beneficiary for his loss of

occupation rights.

8.1 I Quite apa r t f rom t h e payment of a n occupation rent it seems

right t h a t t h e r e should be provision, similar to t h a t in s.1(3)(c) of t h e Matrimonial Homes A c t 1983, to t h e e f f e c t that , where appropriate, a

court can impose obligations regarding repair , maintenance, and discharge of liabilities in respect of t h e property. I t is probably t r u e t h a t a court

c a n already d o this under s.30 of t h e Law of Property Ac t 1925, but clarification might be an advantage.

98

99

S e e Bernard v. Josephs 119821 Ch. 391.

See Dennis v. McDonald [I9821 Fam. 63, at p.80.

41

Position of Third Par ty

9.1 PurchaserslO' should find their position much improved by t h e new scheme. Where land is at present se t t led under t h e Se t t led Land Act

1925, they have to take a conveyance from t h e tenant for life, but pay t h e money to two trustees. As has been seen, they may be in difficulties if t h e se t t lement has, in fact , ended. Under t h e new scheme, as under a t rus t for sa le now, a purchaser will t a k e his legal t i t l e f rom t h e t rus tees

and, providing t h e money is paid to at least two of them, o r to a t rus t corporation, t h e interests of t h e beneficiaries will be overreached."' The

beneficiaries will then have in te res t s in t h e proceeds of sale and not in t h e land.

9.2 If t h e money is paid to only one t rus tee and t h a t t rus tee is not

a t rus t corporation, t h e position will b e as at present, in t h a t t h e in te res t s of t h e beneficiaries will not be overreached. If t h e t i t l e to t h e land is

not registered, a bona fide purchaser for value will t a k e f r e e of t h e in te res t s if he has no notice. lo2 If t i t l e is registered, he will as at

present t a k e f r e e unless e i ther t h e interest is protected on t h e register by en t ry of a restriction or caution, or a beneficiary is in ac tua l occupation

and so has an overriding interest . 103

9.3 Another third party who may become involved i s a judgment

creditor. At present, a judgment creditor may obtain an interest in land by obtaining a charging order on t h e debtor's interest. The Charging

Orders Act 1979 covers any in te res t in land held on trust , and no

amendment would be necessary.

100 By which we include lessees, mortgagees and any o ther person who acquires an in te res t in t h e land.

101 Law of Property Act 1925, s.2.

102 I t should be noted t h a t an in te res t behind a t rus t is not capable of registration under t h e Land Charges Act 1972.

Land Registration A c t 1925 s.70(l)(g). 103

42

9.4 Under s.17 of t h e Sett led Land Act 1925, where t h e estate owner ( tha t is, t h e person with t h e legal estate) holds t h e land f r e e from other equitable interests under a t rus t instrument, t h e t rus tees a r e bound t o execute a deed declaring they a r e discharged. A purchaser can then

assume t h e land is no longer se t t led land. There is no comparable provision for t rus t s for sale. The provisions of s.17 cannot be adopted in

their en t i re ty for t h e new t rus t because they assume t h a t t h e legal e s t a t e is held by someone who is beneficially entitled. Trustees for sale already

have a duty, if requested by a beneficiary enti t led to have t h e legal e s t a t e vested in him, to transfer t h e legal e s t a t e to t h e beneficiary. Where t h e

proceeds of sa le a r e held in t rus t for persons of full age in undivided shares absolutely, those persons can require t h e trustees to vest t h e land

in them as joint tenants on t rus t for sale.lo4 What is required is t h a t t h e t rus tees should be given a power so to convey and a duty to execute a

deed of discharge which would protect a purchaser.

9.5 If t h e proposal in para. 6.18 were adopted, viz. t h a t all se t t led land should be converted in to land held on t h e new trust , t h e position of mortgagees of t h a t land would require consideration, a s would t h e position of t h e tenant for l ife where he has mortgaged t h e t rus t land. There is no

reason why t h e remedies of t h e mortgagees which a r e exercisable against t h e land, for example, taking possession or appointing a receiver, should

not continue t o be exercisable. The only difference would be t h a t as t h e legal estate would be vested in t h e trustees, i t would be necessary to bring proceedings against them. But what of t h e personal liability of t h e tenant for life? Unless t h e r e a r e express powers in t h e se t t lement t h e

tenant for l ife can only mortgage t h e legal estate for cer ta in purposes

connected with t h e sett lement. I t is therefore arguable t h a t his personal liability should cease once he loses t h e legal estate. However, this might prove unacceptable to mortgagees and we do seek views as t o what transitional provisions might be made to cope with this problem.

~ ~ ~~-

104 Law of Property Act 1925, s.3(l)(b)(ii).

105 Settled Land Act 1925, s.71.

43

Powers of t h e Court

10.1 At present, mat te rs affecting a t rus t of land may come before

t h e court under s.64 of t h e Sett led Land Act 1925, 5.57 of t h e Trustee Act 1925, s.30 Law of Property Act 1925 or in t h e exercise of i t s inherent

jurisdiction.lo6 In addition, of course, t h e court has jurisdiction to deal with breaches of trust. W e a r e not intending to make any recommendations relating to t h e inherent jurisdiction of t h e courts or

their powers over t rus tees who a r e in breach of their duty. These

mat te rs a r e t h e s a m e for all trusts and have no special significance for t rus t s of land. However, t h e other sections will require some amendment

if they a r e t o f i t in with t h e proposed scheme.

10.2 Section 64 of t h e Se t t led Land Act and s.57 of t h e Trustee Act a r e similar sections which give t h e cour t power to permit, in t h e case of s.64, a tenant for life, and in t h e case of s.57, t h e trustees, to do something which would otherwise be outside their powers. Sect ion 57 has

no application to se t t led land. W e would suggest t h a t if this proposed scheme is implemented so t h a t t h e legal estate is held by t h e trustees, t h e

provisions of s.64 would be unnecessary because s.57 would provide t h e court with adequate powers t o assist in all cases. 107

10.3 The l imitations of s.30 of t h e Law of Property Act 1925 have

already been referred to, but i t is useful here to draw together t h e issues relating to th is section in order to produce a coherent proposal. There

a r e t w o issues involved in any examination of s.30. First , under what c i rcumstances and by whom can an application be made, and secondly,

what powers should t h e court have and under what conditions should they be exercised?

106 As, for example, in R e Duke of Norfolk's Se t t lement Trusts [19821 Ch. 61.

107 The Variation of Trusts A c t 1958 applies if a permanent additional power is required.

44

10.4 I t might be suggested tha t i t is unnecessary t o confer special powers on t h e court where t rusts of land a r e concerned. Where other

t rusts a r e concerned, t h e courts can and will act t o restrain a breach of

t rust , but t h e courts do not normally interfere with t h e exercise of discretion by t h e t rustees unless their discretion is so exercised tha t t h e

exercise of t h e discretion is itself a breach of t h e trust . Why is a special power needed? I t is probably t rue tha t where express t rusts a r e

concerned, t h e t rustees a r e managing investments for t h e benefit of a number of beneficiaries, and disagreement among the t rustees to t h e

point where they can no longer ope ra t e t h e t rust is unlikely. Even if such disagreement were to exist , t h e solution would probably be for some of

t h e t rustees t o r e t i r e and, in t h e meantime, t h e effect of t h e disagreement would be unlikely materially t o a f f ec t t h e interests of t he

beneficiaries. However, where t rusts of land arising out of co-ownership a r e concerned, t h e t rustees and t h e beneficiaries a r e likely t o be one and t h e same. The case law shows t h a t all too o f t en disputes can ar ise as t o t h e occupation of the t ru s t property, and failure t o ag ree may lead t o one

or more of t h e t rustees or beneficiaries being homeless. Therefore, in this area, t he courts have found i t necessary t o interfere with t h e

exercise of t h e trustees ' discretion.

10.5 The present provision enables any person interested to apply t o t h e court to force a sale or to make t rus t ees exercise a power. I t does not enable anyone to apply to prevent a sale o r t o prevent t h e exercise of a power. Where t h e t rustees a r e act ing in breach of t rust , a beneficiary c a n apply t o t h e court anyway and special s ta tutory provision is unnecessary. However, t h e e f f e c t oi s.30 i s to allow t h e cour t to act where the re is no breach of t rus t and to subst i tute i t s own discretion for

t h a t of t h e trustees. In t h e context of co-ownership, t h e present

restriction on t h e circumstances in which an application may be made

may not mat ter , as t h e t ru s t ee who wants to sell will b e unable t o do so without his co-trustees' concurrence and so will apply t o t h e court. However, it is st range t h a t t h e co-trustee cannot ini t ia te t h e proceedings.

W e would provisionally recommend t h a t s.30 be amended so t h a t any

person interested can apply to t h e court t o prevent o r t o force t h e

t rustees to exercise their powers.

45

10.6 "Any person interested" may not include trustees who a r e not beneficiaries. Trustees under this proposal would have to act unanimously in order t o sell a s they have a power to sell, not a duty. The

Law Reform Commit tee has a l ready recommendedlo8 t h a t t rus tees

should be able to apply to t h e court for a sale, and t h e court could then

override t h e wishes of t h e dissenting trustees. W e agree with this recommendation, but a r e ab le t o go fur ther than the Law Reform Commit tee who were considering reform of t h e t rus t for sale only, and we

suggest tha t a a trustee, like a beneficiary, should be able t o apply e i ther

t o force or to prevent a sale.

10.7 At present, t h e court has power to make "such order as i t

thinks fit". I t appears t h a t this only gives t h e court discretion as to

whether to order a sale and as to t h e t e r m s of t h a t order if i t does order a sale. lo9 It can also order t h e t rus tees to exercise their power of delegation or dispense with t h e consent to sale of a beneficiary. I t cannot refuse to order a sa le and sti l l order an occupation ren t to be

paid.

10.8. Once t h e duty to sell has been removed, t h e r e i s no longer any reason for t h e preference for sa le which is implicit in t h e te rms of s.30. W e therefore would suggest t h a t any t rus tee and any person interested

should be able to apply to t h e cour t to prevent o r to force a sale, to make

t h e t rus tees delegate the i r powers, to dispense with t h e consent to sa le of any beneficiary, and to vary t h e rights of occupation of t h e beneficiaries. Coupled with this last power should be a power to order t h e occupying

beneficiary to pay an occupation ren t to t h e other beneficiary. W e have already discussed t h e difficult ies which might a r i se if a more detailed

provision were made. The court should also have power to make a suspended order.

~~ ~ ~~ ~~ ~

108 Law Reform Commit tee , 23rd Report, Cmnd. 8733, para. 3.63.

109 Bernard v. Josephs [I9821 Ch. 391, 410, per Kerr L.J.

46

10.9 There i s one fur ther aspect of s.30 which should be considered. A t present, t he re a r e no s t a tu to ry guidelines as to how t h e court should exercise i t s discretion. The guidance t o be derived from t h e cases i s based on t h e assumption t h a t t he re is a duty to sell. If t he court's powers

a r e made wider, then it may seem advisable t o give some guidance as to

how t h e discretion should be exercised. Such guidance would assist in encouraging se t t l emen t s out of court . Without it, litigation will have t o t a k e place before i t is known how t h e courts will exercise their wider

powers. What guidelines might be appropriate? Where t h e property in question is a dwelling and held on t rust for co-owners, and has been occupied by them as a family home, it would seem desirable t o state explicitly t h a t t h e welfare of any children should be taken into account in

deciding how t o exercise their powers. Arguably, in line with other

legislation, t h e welfare of t h e children should be t h e f i rs t

consideration.'" The existing position is unsatisfactory, because while i t

is usual to t a k e their interest into account, some judges have done so

directly, while others say t h a t t h e interests of t h e children can only

a f f e c t t h e outcome in so f a r as they a f f ec t t h e equity of one of t h e co- owners.'" lt will be necessary to find a suitable definition of "relevant children", because this provision should apply to unmarried as well as to

married couples. Possibly a relevant child should be any child who occupies t h e dwelling in question and is a child (or has been t r ea t ed as a child) of any person ent i t led to occupy by vir tue of t h e t rust . A common judicial approach in deciding whether t o order a sale has been to examine

t h e purpose for which t h e dwelling was bought and to order a sale if t he purpose no longer exists. This too should b e put on a s ta tutory footing. I t should not be forgot ten t h a t t h e courts may be asked to exercise their powers where the re a r e successive rights. While this is so at present, t h e case law refers mostly to disputes between co-owners. Where the re a r e

110 S e e e.g. Matrimonial and Family Proceedings Act , 1984, s.3.

111 See Rawlin s v. Rawlings [I9741 P. 398, Burke v. Burke [I9741 1 W.L.R. 106; Williams v. Williams 119761 C h m

47

successive interests, i t is arguable t h a t if t h e tenant for l i fe wants a sale,

he should be allowed t o have i t unless there a r e exceptional circumstances. At present, if successive in te res t s a r e c rea ted under t h e Sett led Land Act , t h e tenant for l i fe can choose when to sell. Under t h e

proposed scheme, he will not be able to do so unless t h e power has been

delegated to him, although he may have considerable influence a s one of t h e trustees. Should t h e court have to give f i r s t preference to t h e

wishes of t h e tenant for life? W e would suggest t h a t t h e tenant for l ife should generally be able t o prevent or to force a sale, but t h a t t h e court should have regard t o all t h e ci rcumstances of t h e case. Where t h e r e a r e concurrent interests, i t seems sensible tha t , although t h e court should

have regard to t h e circumstances referred to above, in t h e absence of special considerations, t h e wishes of t h e majority in value should prevail.

10.10

regard to t h e following matters:-

To sum up, we a r e suggesting t h a t t h e court should have 113

(i) t h e purpose for which t h e property was purchased, so t h a t if t h a t purpose no longer exists, t h e property should

normally be sold;

where t h e property i s occupied by co-owners as a family

home, t h e welfare of any children who occupy and who a r e t h e children of any person enti t led to occupy under

t h e trust; t h e wishes of t h e tenant for life;

(ii)

(iii)

(iv) t h e wishes of t h e majority in value of those holding in te res t s in possession in t h e property.

Having considered a l l these factors, t h e court should s t i l l be able to t a k e

into account other relevant considerations.

112 See para. 7.6.

113 The Insolvency Bill 1985 makes specific provision where an application is made under s.30 as t h e result of insolvency and we would therefore suggest t h a t cases covered by th i s provision should be expressly excluded from t h e proposals made here.

48

10.11 I t might be thought odd to have such specific mat te rs in a successor to s.30, yet t o have suggested t h e removal of t h e right of t h e beneficiaries t o be consulted. However, as has been said, t h e existing

right to be consulted is too weak t o be of any grea t use. To impose a set of restrictions similar to t h e above on trustees seems unnecessary. They a r e liable to t h e beneficiaries if they a c t in breach of trust. Knowledge

of t h e fac tors t h e court may look at will influence their actions. In view

of this, i t seems be t te r t o impose t h e guidelines on t h e court , where they

may assist in t h e se t t lement of litigation, rather than on t h e trustees, where they should be less necessary.

Land Registration Implications

11.1 The proposed scheme should greatly simplify t h e position as regards registered title. Where land is se t t led under t h e Sett led Land Act 1925, either t h e tenant for life, or t h e statutory owners, a r e

registered as proprietors with different restrictions being entered depending on whether there a r e trustees. ' l4 Land held on t rus t for sale is

always registered in t h e names of the trustees with a restriction being entered unless t h e registrar is satisfied tha t the t rus tees a r e beneficially

entitled.'l5 We would propose t h a t a l l land held on t h e new t rus t should be t rea ted a s land held on t rus t for sale now.

11.2 W e have already recommended t h a t t h e old and new systems

should not run in parallel so t h a t se t t led land and land held on t rus t for sale should be converted into t h e new t rus t of land. This would make no

difference to t h e registered t i t l e of land held on t rus t for sale, but where at present t h e tenant for l ife i s t h e registered proprietor, i t is necessary

for t h e t rus tees to become t h e registered proprietors. I t i s obviously impract icable for this to be done on t h e init iative of t h e Land Registry,

I14 See Ruoff and Roper, Regis tered Conveyancing, 4th ed., 1979, Ch. 19.

115 Land Registration Act 1925, s.58(3).

49

who would not know t h e names of t h e t rus tees and for whom i t would be a huge administrative task. I t is also unrealistic to expec t every tenant for l ife to execute a transfer to t h e trustees. I t would be possible to ask

t rus tees to register themselves as proprietors. However in cases where

t h e t i t l e to se t t led land is registered t h e r e is a duty to en ter a restriction, and the restriction will always name t h e t rus tees unless t h e r e a r e none.'l6 Where t h e t rus tees a r e named, i t would be possible to deem

them to be t h e registered proprietors with au tomat ic vesting and divesting of t h e legal estate and powers of di~posit ion. '~ ' In other cases, t h e best solution seems to be to make t h e change when t h e r e is a registered disposition or charge of t h e land. I t could be provided that, as in unregistered land, only t h e t rus tees can give the purchaser a good t i t l e ,

and where t h e tenant for l ife is a registered proprietor (and t h e restriction will show t h a t h e is only a tenant for life), a special form could

be used whereby, in one transaction, h e would transfer his t i t l e to t h e t rus tees and t h e t rus tees would transfer i t to t h e purchaser."' Similarly,

if t h e land was to be charged, t h e procedure would make it c lear t h a t t h e t rus tees had t h e power to do so, and t h e opportunity would b e taken to make them t h e registered proprietors. The tenant for l ife would be

placed under a duty to execute t h e necessary documents. Where t h e powers had been delegated to a beneficiary, we would suggest t h a t t h e t rus tees should remain t h e registered proprietors, bu t should have a duty

to execute any documents which a r e necessary for the beneficiary to exercise his delegated powers. 119

116 Land Registration Act 1925, 5.86 and Land Registration Rules 1925, rr 56-59 and Forms 9-11.

117 Although th is information may be o u t of date.

118 Possibly, th i s could be e f f e c t e d by a declaration by t h e t rus tees as to t h e circumstances of t h e transaction, and this would b e sufficient for t h e purchaser to become registered as t h e proprietor, c p Administration of Es ta tes Act 1925, s.36(6).

Although th is would not be necessary i t t h e t rus tees granted t h e tenant for l ife a power of attorney.

119

50

Conclusion

12.1 W e hope t h a t t h e preceding paragraphs have demonstrated

t h a t there would be advantages in creating a new t rus t of land which would fulfil both t h e functions of t h e Sett led Land Act and t h e functions

of t h e t rus t for sale. Such a single system would have t h e obvious

advantage of grea te r simplicity than t h e present dual system. One

disadvantage of t h e proposal is t h a t i t removes t h e au tomat ic ent i t lement of a tenant for life (often t h e person who occupies t h e land and currently

has t h e grea tes t interest in i t ) t o have t h e legal estate vested in him alone and to exercise complete control over t h e land. The tenant for life,

acting alone, is likely to be able to make quicker, though not necessarily better, decisions than t h e t rus tees who must agree a course of action.

However, in practice t h e Se t t led Land Act is, we think, very l i t t l e used. Indeed, one of the mat te rs on which we particularly seek information i s

t h e ex ten t of i t s cur ren t use. We a r e also aware t h a t t h e administration of very large se t t led estates may involve d i f fe ren t factors, and we would

welcome information as t o t h e ex ten t to which t h e Sett led Land Act 1925

is st i l l used, for them and whether t h e introduction of this proposal or any aspect of i t would cause particular problems for large estates. One other aspect of this proposal which might be seen as a disadvantage in principle is t h a t i t does involve some substantial re-writing of the 1925 property

legislation. W e need to be very sure t h a t such a major change would be a change for t h e better. W e therefore seek comments or cri t icisms on a l l aspects of th i s proposal.

PROPOSAL I1

Conversion of All Se t t lements to Trusts for Sale

13.1 I t has been suggested120 t h a t t h e best way to solve t h e

problems caused by t h e dual system is to repeal t h e Se t t led Land Act 1925

so t h a t a l l se t t lements a r e c rea ted behind a t rus t for sale. For t h e

120 See Cheshire and Burn's Modern Law of Real Property, 13th ed., 1982, p. 205.

51

purposes of t h e discussion we assume t h a t t h e existing t rus t for sale is

adopted virtually unaltered. W e do not believe t h a t in fact this measure would effect any grea t change in t h e way in which se t t lements a r e

generally ordered. Many se t t lements which could now be c rea ted under t h e Se t t led Land Act a r e not, and t h e t rus t for sale form is used. However, it would no longer be possible to give the tenant for l ife t h e

unfet tered powers which he has at present although delegation would be possible. His position is discussed fur ther below. Where a person

crea tes a n inadvertent se t t lement by granting rights of occupation for l ife to someone in his will, at present t h a t person as tenant for l ife is enti t led

to t h e legal estate and has full power to deal with t h e land. The fact t h a t

in such a situation t h e tes ta tor may have failed to make an express appointment of trustees is unlikely to mat te r until t h e point at which t h e

land is due to be sold. Under this proposal, i t would be essential for t rus tees to be appointed, as they must hold t h e legal estate and manage

t h e land. This should not be a problem as provision could be made so t h a t executors of t h e will a r e t h e t rus tees if no o thers have been appointed.

As such, they would continue to hold t h e legal estate they obtained in their capaci ty as executors. Thus, the new system should be simpler

where such inadvertent se t t lements a r e created, because t h e r e will be no need for a conveyance of t h e legal estate to t h e tenant for life. Similar

problems should not a r i se with inter vivos sett lements, as e i ther t h e

se t t lo r must declare himself to be a t rus tee or t h e land must be vested in

trustees. This is not to say t h a t inadvertent se t t lements cannot be c rea ted inter vivos - they can, and t h e problems caused by them a r e

discussed below. 121

Existing se t t lements

13.2 Existing se t t lements could be allowed to continue in their present form, or they could be converted into t rus t s for sale. The

problem with allowing them to continue in their present form is t h a t

~ ~~ ~

121 See para. 16.16.

52

se t t l emen t s can last for a considerable t ime, and thus an a rea of law t h a t had otherwise disappeared would linger on. To convert them into t rusts

for sale may, however, do violence to t h e intention of t h e set t lor , i.e. he may have intended tha t t h e t enan t for l ife should have t h e legal estate and a l l t h e powers of disposition and management. Further, t h e set t lor may not have intended t h e land t o be sold. Although under t h e Set t led

Land Ac t 1925 i t is always possible for t h e land to be sold, t h a t i s ra ther

different from t h e position under a t rust for sale where t h e primary duty

of t he t rustees is t o sell. The legal estate would have to be t ransferred from t h e t enan t for l ife to t h e trustees, and t h e t enan t for l i fe would lose his powers. These problems could be ameliorated by making t h e sale of t h e land subject t o t h e consent of t h e t enan t for life, and deeming t h e

t rustees t o have made a n irrevocable delegation of their powers under s.29 of t h e Law of Property A c t 1925. With these measures, we do not

think the re would be any g rea t objection to converting a l l set t lements into t rusts for sale, and i t would be a g rea t advantage to g e t rid of t he

dual system in one go.

The t enan t for l i fe

13.3 A change to a system which relies exclusively on t rusts for sale would remove power from t h e hands of t h e t enan t for l i fe and place

it with t h e trustees. The existing system of set t led land was intended t o enable t h e t enan t fo r life, who might well occupy t h e land, to make t h e

decisions about it. As t h e person most closely interested, h e would have t h e necessary knowledge to manage t h e land well. I t may b e said t h a t giving t h e legal estate to t h e t ru s t ees i s distancing management decisions

from t h e land itself. Three answers may be given to this point. In t h e f i rs t place, it may be t h a t t he re a r e now f e w set t lements of t h e kind where t h e t enan t fo r l i fe occupies a n estate, and so t h e problem may not

be a real one. Secondly, if it does exist, it may be alleviated by providing t h a t a sale can only t a k e place with t h e consent of t h e t enan t for l i fe and

by strengthening t h e power to delegate. A t present, t h e set t lor can make t h e sale of land subject to a t rus t for sale dependent on t h e consent of one

or more of t he beneficiaries. I t may be t h a t where the re is a t enan t for l ife (of course, not all set t led land involves a t enan t for life), t he re should

53

be an au tomat ic requirement t h a t t h e sa le is subject to t h e consent of t h e tenant for life. Thirdly, t h e position of t h e tenant for life as t h e

principal beneficiary and sole t rus tee arguably involves an unacceptable conflict of interests, and is harmful rather than beneficial. I22

13.4 As to delegation, we make below some general suggestions for altering t h e power to delegate. Here, t h e question is whether t h e

position of a tenant for l ife could be strengthened by an extension of t h e power to delegate. I t would be possible to make provision for wider delegation than t h a t provided by s.29 of t h e Law of Property Act 1925.

All powers of t rus tees could be capable of being delegated, both before and a f t e r land i s sold. A t present, powers relating to t h e t rus t fund can only be delegated for t h e very limited period provided by s.25 of t h e Trustee Act 1925. We would see no objection t o such an extension,

provided t h a t i t were accompanied by t h e measures suggested below to ensure t h a t t h e remaindermen a r e protected. Could the duty to sell be

delegated as well? I t would be possible to f r a m e a provision t o this e f fec t , but we think i t would be undesirable in principle. I t is one of t h e

fundamental principles of t rus t law t h a t a t rus tee cannot delegate his duties. The requirement t h a t a tenant for l ife should have to consent t o

a sa le should be sufficient to give him some influence in t h e decision. The t rus tees will necessarily have to be involved in a sale, since they have t h e

legal estate. The beneficiaries do, in any event, have t h e power to apply to court to force a sale. 123

Purchasers

13.5 From the point of view of purchasers, t h e system has t h e advantage t h a t they obtain a conveyance from t h e t rus tees and pay t h e

purchase-money to those trustees. Purchasers no longer have to see a

122 See para. 3.16

123 Law of Property Act 1925, s.30.

54

special vesting deed. The change would remove the danger which exists

at present t h a t t h e purchaser may t a k e a conveyance from a person who is no longer entitled.124 I t also removes t h e doubts t h a t do exist about t h e

ex ten t of t h e protection which a purchaser receives under s.lIO(2) of t h e Sett led Land A c t 1925.

Trustees

13.6 For trustees, t h e change would mean an increase in their duties. They would have t o t a k e primary responsibility for managing t h e

estate. This would cause no problems for new trusts for sale, but where existing se t t lements a r e concerned, i t might be t h a t existing trustees

would be unwilling or even unsuitable to be involved in this more onerous task, or, more likely, t h a t the charging clauses in t h e original se t t lement

would prove inadequate. The f i r s t problem can be solved by employing agents as permit ted by s. 23 of t h e Trustee Act 1925 or by permitting t h e

t rus tees t o retire. The second can be solved by giving t h e court s ta tu tory

power to increase t h e charges. Arguably, the court already has this power,125 but in this instance a clear statutory power would seem des i r a b 1 e.

Powers of t h e court

13.7 In Proposal I we considered widening t h e powers given t o t h e

court by s.30 of t h e Law of Property Act 1925. Some of t h e suggestions made there would not be appropriate here, because if t h e land i s held on t rus t for sa le i t seems right in principle t h a t t h e court should lean in favour of a sale in t h e event of dispute. Therefore there is not such a strong case for providing guidelines for t h e exercise of t h e court 's discretion. However, t h e other suggestions made there as to t h e widening

of t h e range of those who can apply, enabling trustees or beneficiaries t o

~ ~~-

124

125

Stone, "A Set t led Land A c t problem revisited", [I9841 Conv. 354.

R e Duke of Norfolk's Se t t lement Trusts [I9821 Ch. 61.

55

apply to s top a sa le as well as to enforce one, and clarifying t h e law relating to occupation ren ts would all, we think, be changes which should be looked at in t h e context of this proposal.

CO-owners

13.8 Under t h i s proposal co-owners would, as at present, hold t h e land on t rus t for sale for themselves as beneficiaries. I t may be thought

t h a t this is undesirable and for t h a t reason Proposal I or IV may be preferred. However, retaining t h e present system has t h e advantage t h a t t h e system is reasonably well known, and with t h e changes suggested to s.30 i t would work adequately. I t might be desirable to clarify t h e

situations where a t rus t arises, to include those where there a r e beneficial

co-owners but only one legal owner.126 I t would arguably be improved if

t h e suggestion discussed a t para. 16.5 et seq. were adopted with t h e result t h a t where there is no express declaration of t h e beneficial interests, t h e

beneficial interests will be presumed to follow t h e legal interests with t h e result t h a t t h e co-owners will be joint tenants in equity as well a s joint t enants in law.

Regis tered t i t l e 13.9 The proposal would make se t t lements easier to opera te where

t i t l e to land i s registered. I t would work in t h e same way as t h e t rus t of

land in Proposal I so t h a t t h e t rus tees would always be t h e registered

proprietors. Similar provisions would have to be made for t h e transfer of t h e legal t i t l e f rom t h e tenant for l ife to t h e trustees.

Conclusion

13.10 The advantage of this proposal is t h a t i t simplifies t h e law by

repealing parts of t h e Se t t led Land Act 1925, while at t h e same t i m e

making use of a well-known and understood structure, t h e t rus t for sale.

126 See para. 6.5.

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By making use of an existing structure, there a r e less likely t o be any unforeseen problems. The disadvantage is t h a t t h e s t ruc ture may not

represent what t h e se t t lo r wanted, since a sale might not have been in his mind at all and he may have wished t h e tenant for l ife t o have t h e legal

estate. While at present a sett lor cannot prevent a tenant for life from selling, it might be difficult to explain t o a would-be sett lor tha t t h e

t rus tees would have a duty t o sell although coupled with t h e power t o retain and subject to any consents t h a t a r e required even though, of course, there is a power t o postpone. The exis tence of the power t o postpone might be said to make t h e t rus t for sale a lmost misleading to a

layman. The proposal does l i t t l e t o a l te r t h e present system of co- ownership, although i t could be combined with Proposal IV. Unless tha t

proposal is adopted, one would be l e f t with the rather unreal situation t h a t where two or more people buy a house for their own occupation, they

come under an immediate binding duty to sell it, even though there is a power t o postpone which they actually intend to exercise.

PROPOSAL III

Changing t h e Burden of Proof

14.1 The problem of "inadvertent settlements", tha t is, se t t lements where the sett lor unintentionally subjects his land to t h e regime crea ted

by t h e Sett led Land Act 1925 and so confers on t h e person with a life

interest extensive powers of disposition and almost to ta l control of t h e land, could be solved by reversing t h e emphasis of the present legislation. At present, if land is conveyed in such a way as to c r e a t e successive

interests,127 t h e Se t t led Land Act 1925 automatical ly applies unless an

immediate binding t rus t for sale has been expressly imposed on t h e trustees. I t would be comparatively simple to provide t h a t wherever land

127 Or to c r e a t e any of t h e o ther interests set out in s.1 of the Sett led Land Act 1925.

57

was conveyed in such a way as to c r e a t e successive interests, a t rus t for sa le would be presumed unless specifically excluded. If t h e land had not

been conveyed t o trustees, th i s would involve t h e appointment of t rus tees

(but this may occur where se t t led land i s c rea ted now) and t h e transfer of t h e legal e s t a t e to them. In o ther respects, this proposal would leave t h e

existing Jaw as i t is. I t has t h e advantage of disturbing t h e s ta tus quo very little, while going some way to solve some t h e problems crea ted by

t h e dual system. I t could be combined with t h e fourth and f i f th Proposals, IV and V.

PROPOSAL IV

A New System of Co-ownership

15.1 The au tomat ic introduction of a trust , especially a t rus t for sale, into a simple purchase of land for occupation by two people is

something t h a t puzzles t h e layman. I t is not entirely acceptable to t h e

lawyer either, because although trustee-beneficiaries a r e by no means uncommon, i t i s of t h e essence of a t rus t t h a t one person i s managing t h e property for t h e benefit of another. If t h e interests of t rus tees and

beneficiaries a r e entirely identical, then perhaps there should be no need for a trust. A s has been said earlier, i t is unlikely t h a t those who framed

t h e 1925 legislation had in mind t h e present si tuation where two people buy property in joint names for their own occupation. The proposal considered here i s t h a t we should develop a new form of co-ownership

which would not involve a trust. This form of co-ownership would only

apply where at present t h e legal and equi table interests a r e identical, t h a t is, t h e land i s owned by joint t enants holding on t rus t for themselves as joint tenants. Where this si tuation exists, t h e joint owners would simply be t rea ted in t h e same way as a sole owner - t h a t is, they would, together, have t h e whole legal and equitable in te res t with no t rus t interposed between t h e interests. They would be in t h e position of legal joint

t enants before 1926 and in t h e s a m e position as legal joint owners of cha t te l s a r e now. This proposal would not apply where one legal owner

holds on t rus t for himself and another, but only where t h e legal and

equitable interests a r e identical.

58

15.2 The previous paragraph suggests t ha t t he t ru s t could be

dispensed with where t h e legal co-owners a r e beneficial joint tenants. What if they a r e beneficial t enan t s in common? The problem he re is t h a t

t h e Law of Property A c t 1925, s.34 prevents t h e creation of a legal

tenancy in common. The re is therefore necessarily a t rus t wherever

t he re is a beneficial tenancy in common, because t h e legal and beneficial interests a r e not identical. To bring tenants in common within the

proposal would involve reintroducing t h e legal tenancy in common. The problem with legal tenancies in common, and t h e reason why they were

abolished, is that , each undivided share can b e deal t with separately; thus many people can acquire interests in one piece of land and, as they a r e all legal owners, each one would have t o execu te t h e deed if t h e land is to be properly conveyed. '** Land may become unsaleable if one person,

perhaps with only one-hundredth of the estate, cannot be traced. W e would welcome views as t o whether t he problems which were previously

thought t o be caused by legal tenancies in common would exis t if such tenancies were revived. I t s eems t o us at f i rs t sight t h a t they would.

15.3 I t might b e suggested that this fo rm of co-ownership should be

restr ic ted to t h e si tuation where the land is purchased for occupation by t h e joint owners. This would l imit i t s application and prevent t h e use of

this kind of co-ownership in property bought for investment purposes where possibly r a the r different issues arise. W e seek views on this point, but at present we think t h a t any such l imitation would cause more problems than i t would solve. The definition of "occupation" would be

difficult. What of t h e home bought as a country c o t t a g e or the home bought fo r eventual re t i rement?

Disputes

15.4 I t would be necessary to provide a procedure by which disputes relating to t h e management or sale of t h e land could be resolved.

128 S e e example given by A. Underhill in Fourth Report of Acquisition and Valuation of Land Commit tee , Appendix I, p.30.

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However, i t is not entirely easy t o see how such powers should be defined.

When a court makes a decision in a dispute concerning a t rus t for sale, i t can analyse t h e purpose of the trust , e.g. was i t for sale, was i t t o

provide a matrimonial home, etc., and make i t s decision in such a way as to fulfil t h e purpose of t h e trust. If there is no apparent purpose, then t h e cour t can fall back on the f a c t t h a t i t is a t rus t for sale, and t h e presumption t h a t t h e property should be sold. If t h e joint owners a r e

simply owners, t h e r e is nothing to analyse. I t therefore seems necessary t o provide some sor t of principle on which t h e cour t s would decide such

disputes. The Parti t ion Acts gave preference to t h e majority, so t h a t if

t h e majority wanted a sale, t h e cour t would normally order one, but t h a t is unlikely t o assist here as generally there will only be two joint owners

and, by definition, they will be equally entitled. Simply t o say t h a t t h e cour t may make such an order a s i t thinks f i t is not enough, a s i t gives neither cour t s nor l i t igants any idea a s to what an order is meant t o achieve.

15.5 A comparison may be made with s.188 of the Law of Property

A c t 1925 which gives ' the cour t power to se t t le disputes relating t o jointly owned ~ h a t t e 1 s . l ~ ~ The joint ownership of cha t te l s does not necessarily

involve a trust. I t states:

Where any cha t te l s belong to persons in undivided shares, t h e persons interested in a moiety or upwards may apply to t h e cour t for an order for division of t h e cha t te l s or any of them, according to a valuation or otherwise, and t h e court may make such order and give any consequential directions as i t thinks fit.

I t should be noted t h a t one must have at least a half share to apply and t h a t t h e only order t h e court can make is one of division of t h e chattels.

129 Law of Property Act 1925, s.28(3) provides for parti t ion of land held on t rus t for sale, and t h e cour t can order partition, Law of Property Act 1925, s.30.

60

I t seems t o us t h a t such l imited powers would b e inappropriate t o land where t h e decisions made may a f f e c t t h e owners' housing position and

where i t is more likely tha t third parties will be involved.

15.6 I t is suggested tha t any joint owner should be able t o apply to t h e court , and t h a t t h e court should be given wide powers to make whatever orders i t thinks fi t . W e would also suggest t ha t t he re should be

s ta tutory guidelines so tha t t h e courts should have t o have regard to t h e

following factors and then make such decision as seems just in all t he circumstances. The f ac to r s which t h e court should have t o t a k e into

account would be:- I30

(i) t h e purpose for which the land was bought and whether

t ha t purpose sti l l exists;

where t h e property is t he family home, t h e welfare of any children of t h e joint owners;

where the re a r e more than t w o owners, t h e wishes of the

majority in number.

(ii)

(iii)

15.7 On sale, t h e joint owners would convey t h e en t i r e legal and

beneficial interest t o t h e purchaser. I t would b e essential t h a t all t h e co-owners joined in the sale, because the re could be no equivalent to s.27

of t h e Law of Property A c t 1925 which effect ively allows t w o ou t of four

(or more) co-owners to sell. N o question of overreaching could arise, as t h e r e would be no separation of t h e legal and equitable interests. The purchaser would receive t h e whole interest in t h e property, both legal and

equitable, f rom t h e co-owners. This raises t h e question of what happens

to t h e purchase-money. Clearly, t h e money must be paid t o (or at t h e direction of) a l l t h e joint owners, but how is i t t hen to be held? I t would

be possible fo r t h e money t o b e held in t h e same way as t h e land is. This

~ ~

130 See, fo r fur ther discussion of these issues, paras. 10.9 and 10.10.

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would require no alteration in the present law, as there i s nothing t o

prevent personal property being jointly owned without t h e exis tence of a t rus t existence. In t h e event of dispute, any joint owner could simply

withdraw his share of t h e money.

Severance

15.8 A s was said earlier, this proposal would probably only apply

where t h e joint tenants hold t h e whole interest in t h e land. The right of survivorship would therefore apply. I t is necessary to provide some system whereby t h e right of survivorship can be excluded. This would

involve t w o things, f i r s t a separation of t h e legal and equitable interests,

and secondly, severing t h e equitable joint tenancy. W e would suggest t h a t a provision should be made so t h a t these two events could t a k e place

at t h e same time. Severance could t a k e place in t h e usual way, by serving a writ ten notice, by an agreement or by dealing with one's share in a way inconsistent with a joint tenancy. I t would probably be necessary to provide t h a t severance would be automat ic where one co-owner

becomes bankrupt, so t h a t t h e bankrupt's equitable in te res t can pass to t h e t rus tee in bankruptcy.

Conclusion

15.9 The advantage of this proposal is t h a t i t seems to simplify t h e

system t h a t applies in t h e very common situation where t w o people purchase a house or other land, normally for their occupation. They would no longer be trustees. In practical terms, we wonder whether such a provision would make much difference to t h e situation of t h e joint

owners. Provision sti l l has to be made for t h e resolution of disputes and for t h e protection of t h e purchaser on the sale of t h e property. A major

advantage might be t h a t it would no longer be necessary to explain to t h e layman why he has to be a t rus tee f o r sa le when a l l he wanted to be was

an owner-occupier. One disadvantage is t h a t to introduce a new system of co-ownership is to add something complicated to our already complex

system of land law without taking anything away, and this might increase costs. I t would sti l l be necessary to keep t h e t rus t for sale for situations

62

where t h e t rustees and t h e beneficiaries a r e not t he same people or their estates or interests differ. I t would not be necessary, of course, t o keep

set t led land, because ei ther Proposal I or Proposal I1 could be adopted and

t h e Set t led Land Ac t repealed, at least in part.

PROPOSAL V

16.1 This proposal, unlike the previous ones, does not involve any

al terat ion in t h e s t ructure of t rusts of land. Instead, a series of small

changes a r e described which would correct some of t h e difficult ies which prevent t h e present dual systems from working properly. The proposals a r e not necessarily connected and any one or more of them could be

combined with t h e previous proposals.

Law Reform Commi t t ee proposals

16.2 The Law Reform Commi t t ee has made numerous proposals connected with t h e powers of trustees. Some of these a r e relevant t o

t ru s t s of land. W e reproduce at Appendix C a summary of those proposals which are particularly relevant to t rusts of land, and we would

support t hese proposals.

16.3 In some respects, we think t h a t t h e Law Reform Committee's proposals do not go fa r enough. Where their recommendation no.37 is

concerned, t h a t t he re should be a section corresponding to s. 36(7) of t h e Administration of Es t a t e s A c t 1925 t o protect t he purchaser of land which

has previously been subject to a t rust for sale, we would suggest t h a t any such provision should clar i fy those si tuations in which t h e t rustees have

power t o convey t h e land in such a way as to end t h e t ru s t for sale. W e consider t h a t their recommendation no.55 t h a t t ru s t ees of a se t t l emen t

should be empowered to require a t enan t for l i fe t o obtain valuations of

t h e se t t l ed land before i t is sold, does not go f a r enough to protect t h e

remaindermen, because it is s t i l l no t c lear when it would be a breach of

t rust for t h e t rustees not to serve t h e notice which they suggest. Thus, t h e remaindermen might s t i l l be l e f t without a remedy. W e would suggest

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t h e addition of a requirement t h a t the trustees on receipt of a notice f rom t h e tenant for l ife t h a t h e is about to make some disposition of t h e

land,131 should be under a duty to send copies of i t to such of t h e

remaindermen as a r e ascer ta ined and a r e of full a g e and to t h e parents or guardians of those under age. This would give t h e remaindermen a chance to make representations to t h e trustees, and would also give them t h e opportunity of offering to purchase the land if they so desire.

Doctrine of conversion

16.4 W e have discussed earlier t h e art if iciali ty of t h e doctrine of conversion and t h e confusion t h a t now exists a s to i t s application, so t h a t

interests under a t rus t for sa le a r e sometimes in te res t s in land and

sometimes not. It seems to us t h a t l i t t l e purpose i s served today by t h e doctrine of conversion, and t h a t nothing would be lost by i t s abolition.

W e would therefore suggest t h a t t h e doctrine be abolished, so t h a t all interests in land held on a t rus t for sale a r e interests in t h e land, whether t h e land is held on an express t rus t or a s ta tu tory trust. While this reform on i t s own would not entirely alleviate t h e problem of using t h e

t rus t for s a l e for co-ownership, where no sale is intended, i t would remove some of t h e difficulties and i t would be in line with recent judicial

pronouncements on t h e subject.

Declarat ion of t h e equitable interests

16.5 A conveyance of t h e legal estate to two or more people as joint t enants does not opera te as a declaration t h a t they a r e joint t enants

in equity as well. The beneficial in te res t s have to be determined e i ther by an express declaration of t rus t or by looking at extrinsic evidence of

t h e intentions of t h e parties and their contributions to t h e purchase.

131 The tenant for l ife is obliged to serve such a notice, Sett led Land Act 1925, s. 101.

64

Unfortunately, it is by no means a general pract ice for t he re to be a n

express declaration and even if t he re is, t h e courts do not invariably give e f f e c t to it.132 If t he re is an express declaration the f i r s t question t h a t

ar ises is whether, if t h e declaration is contained in t h e conveyance or

t ransfer of t he dwelling, t h e purchasers must have executed t h e

conveyance or transfer for i t to be an e f f ec t ive declaration. I t has been held at f i r s t instance t h a t they must,L33 and in t h e Court of Appeal t h a t

they need not.13' T h e earlier case was not c i ted t o t h e Court of Appeal, where Buckley L.J. said, "I think we must proceed upon the footing f i r s t

t h a t this was a declaration of t rust inserted into t h e document at t h e

behest of t he purchaser or their solicitors; and t h a t t h e legal estate was vested in t h e purchasers upon t h e t rust declared in the document." Their Lordships did not r e fe r to s.53(l)(b) of t h e Law of Property Ac t 1925

which says t h a t a declaration of t rust of land must be manifested and proved by writing, signed by some person who is able to declare t h e trust .

However, i t is arguable t h a t s.53(l)(b) has no application where the re is a

conveyance of land to , for example, X and Y as beneficial joint tenants.

X and Y do not thereby declare themselves t o be trustees; t h e t rust is imposed by s ta tute . If t h e law is unclear, i t is necessary fo r us to

examine what t h e policy should be in order to determine what changes

might be necessary. The advantages of requiring t h e purchasers to

execu te t h e conveyance (strictly speaking only a signature is required at present) is t h a t t h e r e i s a chance t h a t they will read i t , and question t h e na tu re of t h e interests being conveyed to them. If t he re is no such

requirement, they may never see t h e conveyance and be qui te unaware of

its wording. Execution is desirable now, in order to extend t h e powers of t h e purchasers, but this would no longer b e necessary if our proposal135 to

132 S e e para. 16.7.

133 Robinson v. Robinson (1976) 241 E.G. 153.

134 Pink v. Lawrence (1977) 36 P.& C.R.98.

135 Para. 7.5.

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extend t h e powers of t rus tees of land were adopted. The disadvantages

of requiring such execution a r e t h a t if, accidentally, i t fails to t a k e place, one or other co-owner may be put at a disadvantage and i t may cause

delay to t h e transaction. Requiring formalit ies always puts a premium on

advice and leaves t h e cour t s with t h e of ten difficult task of deciding what t h e e f f e c t of failing to observe t h e formalit ies should be. In general, i t seems best to avoid t h e imposition of additional formalities unless they a r e absolutely necessary, and we would therefore suggest t h a t no execution should be required.136 I t should be noted t h a t purchasers a r e

I37 not, in any event, concerned with t rus t s affecting t h e proceeds of sale.

16.6 Where t i t l e to t h e land is registered t h e purchasers may at present be required to execute t h e transfer, not in order to declare t h e

na ture and ex ten t of t h e equitable interests, but in order to satisfy t h e registrar t h a t they a r e t h e beneficial owners. This is because s.58(3) of

t h e Land Registration A c t 1925 provides t h a t unless t h e registrar is so

satisfied, he must register a restriction against t h e title. The standard

form of transfer to joint tenants13' provides for execution by t h e purchasers. However, t h e authority given139 for this requirement is Robinson v. Robinson,140 which, as has been said, is not t h e only authority, and is, in any event, concerned with t h e rights of t h e co-owners

as between themselves, whereas t h e issue where registered t i t l e is concerned is t h e e f f e c t on purchasers. W e would suggest that , as

between t h e parties, t h e arguments in t h e previous paragraph apply and

136 A useful comparison is s.65 of t h e Law of Property Act 1925 which states t h a t a reservation of a legal estate opera tes without any execut ion by t h e grantee.

Law of Property Act 1925, s.27(1).

Form 19 (J.P.) c.p. Land Registration Rules 1925, Sched.

Ruoff and Roper, p. 321.

137

138

139

140 (1976) 241 E.G. 153.

66

execution should not be a requirement. W e would fur ther suggest t h a t i t is unnecessary as regards the registration of restrictions. A s t a t emen t in

t h e transfer t h a t i t is a transfer t o beneficial joint t enan t s should be sufficient for t h e registrar not to have t o en te r a restriction, unless he

has some other evidence t h a t they a r e not t he beneficial owners. Unless a restriction is registered, a purchaser is ent i t led to assume t h a t t h e

registered proprietors have full powers of disposition. 141

16.7 The general view is t ha t , if t he re is a n express declaration, then in t h e absence of fraud or mistake i t will p r e ~ a i 1 . l ~ ~ However,

t h e r e have been suggestions tha t t h e courts should consider t he purpose of t h e joint declaration, so t h a t if it was designed to protect t h e co-owners'

position on t h e death of one of them, i t should not necessarily involve them receiving equal shares of t h e proceeds if t h e property were sold

during their l ifetime. This seems to introduce unnecessary uncertainty. Where there is a n express declaration of t rust , it should

always prevail unless t he re i s f raud o r mistake. An express declaration t h a t t h e property is held with t h e co-owners as joint tenants in equi ty should therefore ca r ry these implications: f irst , that e i ther can sever at any t ime, and secondly t h a t if severed, or if t h e property is sold and t h e

proceeds divided, they receive equal shares.

16.8 Despite repeated reminders by t h e courts144 many advisers

fa i l to ensure t h a t their c l ients make a declaration of trust . In such a case, t h e position i s no more cer ta in than i t would be had t h e property

been conveyed into one name only. The fact of joint legal ownership will

141

142

143

144

Land Registration Ac t 1925, s.74.

R e John's Assignment Trusts [I9701 1 W.L.R. 955, Leake v. t19741 I W.L.R. 1528.

Burgess v. Rawnsle E19751 Ch. 429 per Lord Denning M.R. and see -- Wilson v. W d 6 6 3 1 1 W.L.R. 601.

Cowcher v. Cowcher [I9721 I W.L.R. 425, Bernard v. Josephs [I9821 Ch. 391, Walker v. Hall (1983) 14 Fam. Law 21. --

67

not necessarily imply joint equitable ownership. 145 One is therefore

thrown back to t h e necessity of examining t h e parties' conduct at t h e t i m e of the purchase, and their respective contributions. From their

conduct, one may be able to infer an agreement or a "common intention" as to how t h e property should be held. Their contributions may give rise to an equitable interest under a trust. I t is o f ten extremely difficult to decide what interests each should receive. 146 As Griffi ths L.J. put

it.147 "The contributions must be viewed broadly by t h e judge t o guide

him to t h e parties' unexpressed and probably unconsidered intentions as to t h e beneficial ownership of t h e house. There is of course an a i r of

unreality about t h e whole exercise ...'I.

. 16.9 Where difficulties arise f rom a failure to make c lear provision as to what is to happen, i t may be helpful for s t a t u t e to fill t h e gap to declare what t h e beneficial in te res t s a r e to b e if no express declaration has been made. This can only be done if i t is possible to make an

assumption about what most of those who fa i l to make an express declaration would have said if they had made such a declaration. W e

would suggest t h a t t h e f a c t t h a t t h e house has been put in to joint names should itself be indicative of an intention to c r e a t e some form of

beneficial co-ownership. Here, there is some evidence in respect of married couples,148 none in respect of unmarried couples. Such evidence

as there is suggests t h a t a joint tenancy in equity is t h e wish of most married couples where they buy a house for their occupation. The right

of survivorship whereby t h e surviving spouse automatical ly acquires t h e

deceased spouse's interest in t h e house is t h e most frequently mentioned

145 P e t t i t t v. P e t t i t t 119701 A.C. 777, 813.

146 See for example Young v. Young (1983) I 4 Fam. Law 271.

147 Bernard v. Josephs [I9821 Ch. 391, 404.

148 Todd and Jones, Matrimonial Property, 1972, Manners and Rauta , Family Property in Scotland.

68

reason for choosing joint tenancy.149 W e would consider i t undesirable as a ma t t e r of principle for property law t o differ for co-owners, depending on whether they were married or not. W e therefore wish to

seek views as to t h e desirability of a provision which would apply wherever a dwelling was conveyed into joint names at law without an

express declaration as t o t h e beneficial interests. 15' W e assume this should only apply to dwellings, as business premises a r e less likely t o

cause problems. The provision would state t h a t where the re was no

express declaration, t h e property would be deemed t o be held for t h e co- owners as beneficial joint tenants.

16.10 Various fur ther questions arise. Should the provision only

apply where the dwelling is bought for t h e joint occupation of t he co-

owners? Should the

deemed joint tenancy give way only to:-

A dwelling might be bought as an investment.

(i) an express declaration, or

(ii) any agreement , or

(iii) a contrary intention of e i ther party?

Of these (i) seems too absolute, while (iii) might allow t h e courts t o infer

a contrary intention from unequal contributions, which would reintroduce all t he existing difficulties. I t seems tha t hi) may be t h e best way, again

trying not t o lay t r aps for the unwary layman by demanding formalit ies for such an agreement. There would therefore be cer ta inty with

flexibility for those who do not wish t o b e bound by t h e rule.

Severance

16.11 A t present, under s.36 of t h e Law of Property Ac t 1925, an

equitable joint tenancy can be severed ei ther by notice in writing served

on t h e other joint tenant , or by any method which would have severed an

149 Although, for some couples, t h e t ax or intestacy consequences of automatic survivorship may be undesirable.

150 Compare the provisions of t h e Partnership A c t 1890 concerning ownership of partnership property.

69

equitable joint tenancy of personal property before 1926. This reference t o pre-1926 law is now unnecessarily mystifying, and at t h e very leas t i t

would be desirable t o have a s ta tu tory provision sett ing out all t h e methods which can be used. The most frequently adopted s ta tement of

151 t h e pre-1926 law is t h a t of Page Wood V.-C. in Williams v. Hensman. "A joint tenancy may be severed in three ways: in t h e f i r s t place, an a c t of any one of t h e persons interested operating upon his own share may

c r e a t e a severance as t o t h a t share ... Secondly, a joint tenancy may be severed by mutual agreement . And, in t h e third place, there may be a severance by any course of mutual dealing sufficient to in t imate t h a t t h e

in te res t s of all were mutually t rea ted as constituting a tenancy in common. When t h e severance depends on an inference of this kind without any express act of severance, i t will not suffice to rely on an

intention, with respect t o t h e particular share, declared only behind t h e

backs of t h e other persons interested." I t has been accepted t h a t t h e second and third categories a r e separa te so t h a t severance can be

e f fec ted by a course of dealings which does not amount t o an agreement t o sever.15* These three categories, together with t h e power to sever by

writ ten notice, could be incorporated into a statute.

16.12 Another possible reform which has a cer ta in a t t rac t ion is t o make a writ ten notice t h e only possible method of severance. The other

methods do raise problems, for example, as to what is a sufficient act. I t appears t h a t issuing a writ for t h e sale of land is a sufficient act, but asking for a property se t t lement in a divorce petition is not.153 Are t h e

other methods necessary? Severance has t o be looked at from two points of view: i t s effect on t h e other joint t enant and its effect on potential purchasers of t h e property. So f a r as a potential purchaser i s

concerned, he is not a f fec ted so long as there a r e two t rus tees holding t h e

legal estate for, by paying t h e price to them, t h e equitable interests a r e

151 (1861) 1 John & Hem. 546, 557.

152 Burgess v. Rawnsley [I9751 Ch. 429.

153 R e Draper's Conveyance [I9691 1 Ch. 486; Harris v. Goddard [I9831 1 W.L.R. 1203. Whether t h e la t te r case shows t h e present law in a favourable light is questionable.

70

overreached. If t he re is only one legal joint tenant remaining and the land was originally conveyed to joint tenants on t rust for themselves as joint tenants, t he purchaser i s enti t led t o assume tha t t h e right of

survivorship has operated t o vest t h e en t i r e legal and beneficial ownership

in t h e remaining legal owner, unless where t i t l e to land is unregistered a memorandum of severance has been at tached to the conveyance to t h e

joint tenants. 15' Where t i t l e to land i s registered, t he purchaser can assume t h e surviving proprietor can transfer a good t i t l e unless a restriction has been entered. Where land is transferred to joint owners, no restriction will be entered if t h e registrar is satisfied tha t they a r e jointly enti t led in equity as well as at law. 155 If severance does t a k e place, a purchaser will not be concerned with it unless a restriction is

entered. I t can be seen from this t h a t to a f f e c t a purchaser, severance already requires some formality and t h a t i t would therefore cause l i t t l e

difficulty t o insist t ha t a l l severance be done by wri t ten notice.

16.13 A s between t h e joint tenants, we would suggest t h a t such a proposal could cause injustice. They may know nothing about t h e

technicali t ies of joint tenancy and the right of survivorship. Not knowing i t exists, they will not know t h a t they can only end i t by writ ten notice if at all. If e i the r has behaved as though t h e joint tenancy does not exist and t r ea t ed t h e property as his own, i t s eems right t h a t t he law should

accep t t h a t and permit severance through t h e acts or agreement of t h e parties, even though this may give rise t o problems where t h e other co- owner does not realise tha t severance has occurred.

154

155 Land Registration Ac t 1925, s.58(3).

Law of Property (Joint Tenants) A c t 1964.

71

16.14 I t has been suggested156 t h a t i t should be possible to sever by

will. In t h e situation of matrimonial breakdown, a spouse may be anxious to sever so tha t , on his or her death, t h e property can be le f t to t h e children. Serving a notice may aggravate negotiations over, for example, access to t h e children. Two of t h e methods of severance at present

allowed a r e unilateral, t h e a c t treating t h e interests as severed and t h e giving of a notice. However,

he will necessarily know t h a t i t has happened. Severance by will would be similar. Severance would not, of course, t ake place until t h e tes ta tor

died, and t h e other joint t enant would then find out. There is t h e possibility of a n unjust result where t h e two co-owners die at t h e same t ime or within a short t i m e of each other and one dies unaware of t h e severance or unable to change his or her will. I t would be necessary to provide t h a t severance by will should be specified and explicit, so t h a t a s ta tement of intention to sever should be a requirement. Severance

should not be implied by a gift, for example, of a l l t h e residue to a charity, but a g i f t of "my halfshare of Blackacre" should be sufficiently explicit to sever. There is a theoretical difficulty with severance by will.

A will is e f fec t ive from t h e moment a f t e r t h e death of t h e testator, and t h e right of survivorship opera tes at t h e moment of death. There is

therefore a danger t h a t a notice of severance in a will comes too l a t e as t h e right of survivorship divests t h e estate of t h e property i t is desired to sever. I t would therefore be necessary t o make provision so t h a t any

notice of severance in a will severs t h e testator 's interest before t h e right

of survivorship operates.

The other joint t enant is given no choice.

Bare t rus t s

16.15 W e suggested ear l ie r t h a t bare t rus t s of land a r e a potential source of difficulty in t h a t they do not come within either of t h e existing

s ta tu tory systems for t rus t s of land. W e would not suggest any major changes to t h e existing law. As t h e bare t rus tee acts at t h e direction of

156 Cretney, Principles of Family Law, 4th ed., 1984, p. 659.

72

t h e beneficiary, it would be wrong t o impose any additional duties on him.

However, where sale of t h e land is concerned difficult ies may arise. Generally the purchaser will obtain a good t i t l e f r e e f rom equitable

interest , because t h e t ru s t ee conveys in accordance with t h e wishes of t h e beneficiary. However, if t he t ru s t ee conveys without t h e knowledge of

t h e beneficary h e may appear t o be t h e sole beneficial owner. In such a case t h e purchaser, where t i t l e i s unregistered, will only t a k e f r e e if h e

purchases fo r value in good f a i th and has no notice of the equitable interest . Where t i t l e is registered, t h e purchaser will t a k e f r e e unless t h e beneficiary has protected his minor interest on t h e register, or is in actual occupation.157 I t seems t o be an underlying principle of t he Law of Property A c t 1925 t h a t land held on t rus t should be capable of being

conveyed f r e e f rom beneficial interests whether or not t he purchaser has

notice of them. This is t h e reason for t h e overreaching machinery provided in s.2. W e would suggest tha t bare t rusts should be brought

within s.2 so t h a t t h e interests of t h e beneficiary can be overreached, provided t h a t a t least one additional t ru s t ee is appointed.

Inadvertent s e t t l emen t s

16.16 Inadvertent set t lements fa l l into t w o categories. The f i rs t a r e those where t h e intention is to c r e a t e some so r t of t rus t or

set t lement , and t h e sett lor, by failing expressly to subject t h e land to a t rus t for sale, brings it within t h e Set t led Land A c t 1925. If, as is likely, this is a t rus t in a will, t h e executors may not realise t h e t rue e f f e c t of

t h e provisions and t h e wrong procedure may be followed, causing problems

for subsequent purchasers. This t ype of inadvertent s e t t l emen t could b e prevented by t h e adoption of any of t h e f i rs t t h r e e proposals, as it would then, in every case, be clear what type of t ru s t had been created. The second type of inadvertent s e t t l emen t occurs when a person is given t h e

right to reside in a property during his l ifetime, and subject to t h a t r ight

t h e property i s conveyed o r passes on death to another. A t present t h e

~-

157 Hodgson v. Marks [I9711 Ch. 892.

7 3

result of such a n arrangement may be t h a t t h e land is se t t led land under t h e Se t t led Land Act 1925, and t h e person with t h e right of residence is

158 t h e tenant for l ife with full powers of disposition and management.

This result may be thought to be unsatisfactory, as there was no intention to confer such an extensive interest on t h e tenant for life.159 However,

these cases should not necessarily be seen as wrongly decided. As Megarry and Wade put it, “i t has to be remembered t h a t t h e deliberate

policy of t h e A c t is t h a t t h e s ta tu tory powers must always be available, so t h a t t h e land is not sterilised, and t h a t these powers cannot be restricted or fe t te red , whatever t h e settlor’s intentions. This policy may naturally produce unintended results, but t h a t is not necessarily a good reason for excluding a case from t h e purview of t h e Act.”16o

16.17 W e would suggest t h a t there is no simple answer to this

problem. However, a useful approach might be to say t h a t t h e effect of

a provision conferring rights of residence should depend on whether i t

appears, f rom t h e documents or f rom extrinsic evidence, t h a t t h e se t t lo r

intended to give t h e person an in te res t in t h e land. If i t does so appear

then we would suggest that , ra ther than bring t h e land within t h e Sett led Land Act 1925, t h e land should either be held under t h e new t rus t of land

outlined in Proposal I, or be held on t rus t for sale, any sale to be subject in either case to t h e consent of t h e person enti t led to reside so long as he

or she continues to be in residence. By this means there would b e someone, namely t h e trustees, who could deal with t h e land, t h e person

with a right of residence would have a considerable degree of protection, and a result would be achieved which would seem t o a c c o r d t o s o m e

158 R e Duce and Boots Cash Chemists (Southern) Ltd [19371 Ch. 642, Bannister v. Bannister [I9481 2 All E.R. 133, Binions v. Evans [I9721 Ch. 359. --

159 Griffi ths v. Williams 119781 E.G.D. 919.

160 Megarry and Wade, 5 th ed., 1984, pp. 349-350, footnotes omitted.

74

ex ten t with t h e intentions of t h e person who gave t h e right of residence

(although i t may be t h a t he did not also intend to give any interest in t h e proceeds of sale once t h e land is sold).

16.18 Where no interest in land was given, t he courts could invoke

t h e developing a rea of l icences (a full discussion of which i s outside the

scope of this paper), in order to protect t he occupier. 161

CONCLUSION

17.1 W e would emphasis t h a t any conclusions drawn in this paper

a r e provisional only. There is l i t t l e or no published information available as to the ex ten t t o which t h e Set t led Land Act 1925 is sti l l in use ei ther

for existing se t t l emen t s or for t he creation of new ones, and i t may be tha t information we receive in response t o this paper will reveal a picture

different f rom t h a t which we envisage. However, our provisional view is t h a t t h e form of s e t t l emen t provided by t h e Set t led Land Ac t 1925 is excessively complex and no longer necessary. Whether i t should be

replaced entirely by a new t rus t with power t o sell o r by the t rust for sale

tentat ive, although at present we have some preference towards the

former solution. W e a r e not yet persuaded tha t a new form of co- ownership as set ou t in Proposal IV is necessary as we consider it may

simply add more complication to an already elaborate system. However, we a r e aware t h a t t h e proposal does have at t ract ions and we look forward

to receiving views on it. We hope t h a t discussions of t h e s t ructural reforms set ou t in the f i r s t four proposals will no t prevent discussion of

Proposal V. Although not proposing one coherent reform, t h e ma t t e r s set out there, such as severance, and declarations of t h e equitable interest ,

(i.e. Proposals I or 11) is a question on which our views a r e still more

161 See t h e judgment of Lord Denning in Binions v. Evans. For fur ther discussion of l icences see Megarry and Wade, 5th-1984, pp. 798- 808, esp. 807-808, and Hanbury and Maudsley, 12th ed., 1985, pp. 833-868, esp. pp. 863-864.

75

are important and problems in those areas may have a practical e f f ec t on significant numbers of people. Our suggested solutions may not be the right ones, and again we look forward to receiving comments, criticisms and alternative proposals.

76

APPENDIX A

REFERENCES

Books

Cheshire and Burn's Modern Law of Real Property, 13th ed., 1982.

Emmet on Ti t le 18th ed. 1983.

-

6. English and J. Saville, S t r ic t Sett lement: a guide for historians, 1983.

R.E. Megarry and H.W.R. Wade. The Law of Real Property, 5th ed., 1984.

A.W.B. Simpson An Introduction to t h e History of t h e Land and Law,1961.

Commit tee Reports

Survey of Northern Ireland Land Law, 1971.

Law Reform Committee, 23rd Report , The powers and duties of trustees, 1982, Cmnd. 8733.

Articles

Benas, "The mending of t h e ren ts in t h e sett led land curtain", (1947) 11

Conv. (N.S.) 159.

Boyle, "Trusts for sa le and t h e doctrine of conversion", [I9811 Conv. 108.

Cock, "Co-ownership - back to t h e Parti t ion Acts?" [I9821 Conv. 415.

Cretney, "A technical and tricky matter", (1971) 34 M.L.R. 441.

Dockray, "Limited owners and inflation-proof rents"; [ 19791 Conv. 258.

Friend and Newton, "Undivided shares and t rus t s for sa le - a draftsman's

error?" [I9821 Conv. 213.

Garner, "Reforms of t h e land law - Northern Ireland style", (1971) 35 Conv. (N.S.) 92.

Grove, "Conveyancing and t h e Property Acts of 1925, (1961) 24 M.L.R.

123.

Hornby, "Tenancy for l ife or licence", (1977) 93 L.Q.R. 561.

Lewis "Settlements of land", (1938) 54 L.Q.R. 576.

Pot te r , "Strict se t t lement and t rust for sale", (1944) 8 Conv. (N.S.) 147.

Pot te r , "Rents in t h e se t t led land curtain", (1946) 10 Conv. (N.S.) 135.

Pot te r , "Dispositions of se t t led land by personal representatives", (1946)

11 Conv. (N.S.) 91.

Prichard, "Trusts for sa le - t h e nature of the beneficiary's interest", [I9711 C.L.J. 44.

Prichard, "Joint tenancy - t rus t for sale - conversion", 119791 C.L.J. 251.

Ryder, "Settled land: mistakes and their consequences", (1962) 15 C.L.P.

194.

Scammell, "The Reform of t h e Se t t led Land Act 1925", (1957) 10 C.L.P. 152.

Stone, "A Set t led Land Act problem revisted" [1984] Conv. 354.

Underhill, "Property", (1935) 51 L.Q.R. 221.

Withers, "Twenty years' experience of t h e property legislation of 1925",

(1946) 62 L.Q.R. 167.

APPENDIX B

CONTENTS

Set t led Land Ac t 1925

s. 1

s. 18

SS. 26 - 27

s. 36 s. 106 S. 110

Trustee Ac t 1925

s. 25

Law of Property A c t 1925

ss. 26 - 30

SS. 34 - 36

Administration of Es ta tes Ac t 1925

s. 33 s. 39

SETTLED LAND ACT 1925

What consti tutes 1.- (I). Any deed, will, agreement for a se t t lement or

other agreement , Act of Parliament, or other instrument, or a se t t lement

any number of instruments, whether made or passed before or

af te r , or partly before and partly a f t e r t h e commencement of this Act , under or by virtue of which instrument or

instruments and land, a f t e r t h e commencement of this Act, stands for t h e t i m e being -

(i) l imited in t rus t for any persons by way of

succession; or

(ii) limited in t rus t for any person in possession - for an entailed interest whether or not

capable of being barred or defeated;

for an estate in fee simple or for a te rm of

years absolute subject to an executory limitation, gift , or disposition over on failure

of his issue or in any other event;

for a base or determinable fee or any

corresponding interest in leasehold land;

being an infant, for a n estate in fee simple or for a te rm of years absolute; or

(iii) limited in t rus t for any person for an estate in fee simple or for a te rm of years absolute contingently

on t h e happening of any event; or

(iv) ...

( v ) charged, whether voluntarily or in consideration of marriage or by way of family arrangement , and whether immediately o r a f t e r an interval, with the

payment of any rentcharge for t h e l i fe of any

person, or any less period, or of any capi ta l ,

annual, or periodical sums for t h e portions,

advancement, maintenance, or otherwise for t he benefit of any persons, with or without any t e rm of years for securing or raising t h e same;

c rea t e s o r i s for t h e purposes of this Ac t a set t lement and is in this A c t referred t o as a set t lement , or as the set t lement , as

t h e case requires:

Provided tha t , where land is t h e subject of a compound set t lement , references in this Ac t t o the se t t l emen t shall be

construed as meaning such compound set t lement , unless t he context otherwise requires.

(2) Where an infant is beneficially entitled t o land for

an estate in f e e simple or for a t e rm of years absolute and by reason of an intestacy or otherwise the re is no i n s t r u m e n t

under which t h e interest of t h e infant arises or is acquired, a se t t l emen t shall be deemed t o have been made by t h e

intestate , or by the person whose interest t h e infant has acquired.

(3) An infant shall be deemed to be ent i t led in

possession notwithstanding any subsisting right of dower (not assigned by metes and bounds) a f f ec t ing t h e land, and such a right of dower shall be deemed t o be an interest comprised in t h e subject of the se t t l emen t and coming to t h e dowress under

o r by vir tue of t h e set t lement .

Where dower has been assigned by metes and bounds, t h e le t te rs of administration or probate granted in respect of t h e

estate of t h e husband of t h e dowress shall be deemed a se t t lement made by t h e husband.

(4) An estate or interest not disposed of by a se t t lement and remaining in or reverting to t h e sett lor, or any

person deriving t i t l e under him, is for t h e purposes of this A c t

a n estate or interest comprised in t h e subject of the

se t t lement and coming t o t h e sett lor or such person under or

by virtue of t h e sett lement.

( 5 ) Where-

(a) a se t t lement c r e a t e s an entailed interest which is incapable of being barred or defeated, or a base or determinable fee, whether or not t h e reversion or right of reverter is in t h e Crown, or any

corresponding interest in leasehold land; or

t h e subject of a se t t lement is an entailed interest , or a base or determinable fee ,

whether or not t h e reversion or right of rever te r is in t h e Crown, or any

corresponding in te res t in leasehold land;

(b)

t h e reversion or right of rever te r upon t h e cesser of t h e

interest so crea ted or se t t led shall be deemed to be an interest

comprised in t h e subject of t h e se t t lement , and limited by t h e set t lement .

(61 Subsection ( 4 ) and ( 5 ) of this section bind t h e

Crown.

[(7) This section does not apply t o land held upon t rust for sale.]

NOTES Words omit ted repealed by t h e Married Women (Restraint upon Anticipation) Ac t 1949, s. 1(4), Sched. 2; amendment in square brackets made by t h e Law of Property (Amendment) Ac t 1926, s 7, Sched.

Restr ic t ions on dispositions of set t led land

18.41 1 Where land i s t h e subject of vesting instrument and t h e t rustees of t h e set t lement have not been discharged under

where t rustees this Act , then- have not been discharged.

(a) any disposition by t h e tenant for i f e or s ta tutory owner of t he land, other than a disposition authorised by this Ac t or any other s ta tute , or made in pursuance to any additional o r larger powers mentioned in t h e

vesting instrument, shall be void, except for t h e purposes of conveying o r creat ing such equitable interests as h e has power, in right of his equitable interests and powers under t h e t rust instrument, to coveny o r create; and

(b) if any capital money is payable in respect of

a transaction, a conveyance to a purchaser of t h e land shall only t a k e e f f e c t under this A c t

if t h e capi ta l money is paid to or by t h e direction of t h e t ru s t ees of t h e se t t l emen t o r

into court; and

(c) notwithstanding anything to t h e contrary in t h e vesting instrument, or t h e t rus t instrument, capital money shall not, except

where t h e t rus tee is a t rus t corporation, be paid t o or by t h e direction of fewer persons

than two as trustees a s of t h e sett lement.

(2) The restrictions imposed by this section do not a f fec t -

(a) t h e right of a personal representative in

whom t h e sett led land may be vested t o convey or deal with t h e land for t h e purposes

of administration;

(b) t h e right of a person of full a g e who has

become absolutely enti t led (whether

beneficially or as t rus tee f o r sale or personal representative or otherwise) to t h e se t t led land, f r e e f rom all limitations, powers and charges taking effect under t h e t rus t

instrument, t o require t h e land t o be

conveyed to him;

(c) t h e power of the tenant for life, statutory

owner, or personal representative in whom t h e se t t led land is vested to transfer o r

c r e a t e such legal estates, to t a k e effect in priority to t h e sett lement, as may be

required for giving effect to any obligations

imposed on him by s ta tu te , but where any

capital money is raised or received in respect of t h e transaction t h e money shall be paid to

or by t h e direction of t h e t rus tees of t h e se t t lement or in accordance with an order of the court.

Infants, how to be 26.- (1) Where an infant is beneficially enti t led in possession t o land for an estate in f e e simple o r for a t e r m of a f f ec t ed

years absolute o r would if of full age be a t enan t for l ife of o r have t h e powers of a t enan t for life over set t led land, then,

during t h e minority of t h e infant-

(a) if t he set t led land is vested in a personal representative, t he personal representative, until a principal vesting instrument has been

executed pursuant to t h e provisions of this Act; and

(b) in every other case, the t rustees of the sett lernent;

shall have, in referene t o the set t led land and capital money,

all t h e powers conferred by this Ac t and t h e se t t l emen t on a t enan t fo r l ife, and on t h e t rustees of t he set t lement .

(2) If t h e set t led land is vested in a personal

representative, then, if and when during t h e minority the

infant, if of full age, would have been ent i t led t o have t h e

legal estate in t h e set t led land conveyed to o r otherwise vested in him pursuant to t h e provisions of this Act, a principal vesting instrument shall, if t h e t rustees of t h e se t t l emen t so require, be executed, at the cost of t h e t ru s t estate, for vesting t h e legal estate in themselves, and in t h e meant ime t h e personal representative shall, during t h e minority, give e f f e c t to t h e directions of t h e t ru s t ees of t h e set t lement , and shall not be concerned with t h e propriety of

any conveyance directed to be made by those t rustees if t h e conveyance appears to be a proper conveyance under t h e

powers conferred by this A c t or by t h e set t lement , and t h e capi ta l money, if any, arising under t h e conveyance is paid

to or by t h e direction of t h e t rus tees of t h e se t t lement or into court , but a purchaser dealing with t h e personal representative

and paying t h e capital money, if any, t o him shall not be

concerned to see t h a t t h e money is paid to t rus tees of t h e

se t t lement o r in to court , or to inquire whether t h e personal

representative is liable to give e f f e c t to any such directions, or whether any such directions have been given.

(3) Subsection (2) of this section applies whether t h e

infant becomes enti t led before or a f t e r t h e commencement of this Act, and has e f f e c t during successive minorities until a

person of full age becomes enti t led to require t h e se t t led land to be vested in him.

(4) This section does not apply where an infant is beneficially enti t led in possession to land for an e s t a t e in fee simple or for a t e r m of years absolute jointly with a person of full a g e (for which case provision is made in t h e Law of Property Act 1922, but i t applies to two or more infants enti t led as aforesaid jointly, until one of them a t ta ins full age.

( 5 ) This section does not apply where an infant would,

if of full age, consti tute t h e tenant for l ife or have t h e powers

of a tenant for life together with another person of full age, but i t applies to two or more infants who would, if al l of them were of full age, together consti tute t h e tenant for l i fe or

have t h e powers of a tenant for life, until one of them a t ta ins full age.

( 6 ) Nothing. in this section a f f e c t s prejudicially any

beneficial interest of a n infant.

Effec t of 27.- ( I ) A conveyance of a legal estate in land t o an infant conveying legal alone, or to two or more persons jointly, both or a l l of whom estate t o infant a r e infants, for his o r their own benefit shall ope ra t e only as

an agreement for valuable consideration to execu te a se t t l emen t by means of a principal vesting deed and a t rust

instrument in favour of t h e infant o r infants, and in the meant ime t o hold t h e land in t rust for t he infant or infants.

(2) Nothing in this Ac t prevents an equitable interest in set t led land being vested in or transferred t o an infant.

(3) ...

NOTE Words omit ted repealed, with saving, by t h e Family Law Reform Ac t 1969, s.ll(a).

Undivided shares 36.- ( I ) If and when, a f t e r t h e commencement of this Act ,

~hin',a",etr~,:'~~: settled land is held in t rust for persons ent i t led in possession sale of t h e land under a t rus t instrument in undivided shares, t h e t rustees of

t h e s e t t l emen t (if t h e set t led land is not already vested in

them) may require t h e estate owner in whom t h e set t led land is vested (but in t h e case of a personal representative subject

to his rights and powers for purposes of administration), at t h e

cost of t h e t rust estate, t o convey t h e land to them, or assent to t h e land vesting in them as joint tenants, and in t h e meant ime t h e land shall be held on t h e s a m e t rusts as would

have been applicable the re to if i t had been so conveyed t o o r

vested in t h e trustees.

(2) If and when t h e set t led land so held in t ru s t in

undivided shares i s or becomes vested in t h e t rustees of the

set t lement , t h e land shall be held by them (subject t o any

incumbrances affect ing t h e set t led land which a r e secured by

a legal mortgage, but freed from any incumbrances affecting t h e undivided shares or not secured as aforesaid, and from any

interests, powers and charges subsisting under the t rus t instrument which have priority to t h e t rus t for the persons

enti t led t o the undivided shares) upon the statutory trusts.

(3) If the estate owner refuses or neglects for one

month a f te r demand in writing to convey t h e se t t led land so held in t rus t in undivided shares in manner aforesaid, or if by reason of his being outside t h e United Kingdom or being unable to be found, o r by reason, of t h e dissolution of a corporation, o r for any other reason, t h e cour t is satisfied t h a t t h e

conveyance cannot otherwise be made, or cannot be made without undue delay or expense, the court may, on t h e

application of t h e t rus tees of t h e sett lement, make an order

vesting t h e se t t led land in them on the s ta tu tory trusts.

(0) An undivided share in land shall not be capable of

being c rea ted except under a t rus t instrument or under t h e Law of Property Act 1925, and shall then only t a k e effect behind a t rus t for sale.

( 5 ) Nothing in this section affects t h e priority inter se of any incumrbances whether a f fec t ing t h e en t i re ty of t h e

land or an undivided share.

( 6 ) For t h e purposes of this section land held upon t h e s ta tu tory t rus t s shall be held upon t h e t rus t s and subject t o t h e

provisions following, namely, upon t rus t to sell t h e same, with

power to 'postpone t h e s a l e of t h e whole or any par t thereof,

and to stand possessed of t h e n e t proceeds of sale, a f t e r payment of costs, and of t h e ne t ren ts and profits until sale,

a f t e r payment of rates, taxes, costs of insurance, repairs, and

other outgoings, upon such t rus t s and subject to such powers

and provisions as may be requisite for giving effect to the

rights of t h e persons interested in t h e sett led land [and t h e right of a person who, if t h e land had not been made subject to a t rus t for sale by virtue of this Act, would have been enti t led t o an entailed interest in an undivided share in t h e land, shall

be deemed to be a right to a corresponding entailed interest in

t h e ne t proceeds of sale a t t r ibu te to tha t share].

(7) The provisions of this section bind the Crown.

NOTE Addition in square brackets t o sub-s. (b) was made by t h e Law of Property (Entailed Interests) Act 1932, s. l( lL

Prohibition or 106.- (1) If in a sett lement, will, assurance, or other instrument executed or made before or af te r , or partly before limitation against

exercise of powers void, and and partly after, t h e commencement of this A c t a provision is provision against inserted - forfeiture

(a) purporting or a t tempting, by way of direction,

declaration, or otherwise, to forbid a tenant for l i fe or s ta tu tory owner to exercise any power under this Act , or his right t o require t h e sett led land t o be vested in him; or

(b) at tempting, or tending, or intended, by a limitation, gift , or disposition over of se t t led land, or by a limitation, gift , or disposition of other real

or any personal property, or by t h e imposition of any condition, or by forfeiture, or in any other

manner whatever, to prohibit or prevent him from exercising, or to induce him to abstain from

exercising, or to put him into a position

inconsistent with his exercising, any power under

this Act, or his right t o require t h e se t t led land t o be vested in him;

t h a t provision, a s f a r a s i t purports, or a t tempts , or tends, or

is intended to have, or would or might have, t h e operation aforesaid, shall be deemed to be void.

(2) For t h e purposes of this section an estate or

interest limited to continue so long only as a person abstains f rom exercising any such power or right a s aforesaid shall be

and t a k e effect a s an estate or interest to continue for t h e period for which i t would continue if tha t person were to abstain from exercising t h e power or right, discharged from liability t o determinat ion or cesser by or on his exercising t h e

same.

(3) Notwithstanding anything in a sett lement, t h e

exercise by t h e tenant for l ife or s ta tu tory owner of any power

under this A c t shall not occasion a forfeiture.

Protect ion of purchasers, etc.

110.- (1) On a sale, exchange, lease, mortgage, charge, o r other disposition, a purchaser dealing in good faith with a

tenant for l ife or s ta tu tory owner shall, as against a l l parties enti t led under t h e sett lement, be conclusively taken to have

given t h e best price, consideration, or rent, as t h e case’may require, t h a t could reasonably be obtained by t h e tenant for

life or s ta tu tory owner, and to have complied with all t h e requisitions of this Act.

(2 ) A purchaser of a legal estate in se t t led land shall

not, except as hereby expressly provided, be bound or enti t led to call for t h e production of t h e t rus t instrument or any

information concerning t h a t instrument or any ad valorem s t a m p duty thereon, and whether or not he has notice of i t s

contents h e shall, save as hereinaf ter provided, be bound and

ent i t led if t h e las t or only principal vesting instrument contains t h e s ta tements and particulars required by this A c t to assume that-

t h e person in whom t h e land is by t h e said instrument vested or declared to be vested is t h e

tenant for l i fe or statutory owner and has all t h e

powers of a tenant for l i fe under this Act ,

including such additional or larger powers, if any, as a r e therein mentioned;

t h e persons by t h e said instrument stated to be the

t rustees of t h e set t lement , or their successors appearing to be duly appointed, a r e t h e properly

const i tuted t rustees of t h e set t lement;

t h e s ta tements and particulars required by this A c t and contaiend (expressly or by reference) in t h e

said instrument were cor rec t at t h e date thereof;

t h e s t a t e m e n t s contained in any deed executed in

accordance with this A c t declaring who a r e t h e t rustess of t h e se t t lement for t h e purposes of this

A c t a r e correct ;

t h e s t a t e m e n t s contained in any deed of discharge,

executed in accordance with this Act , a r e correct :

Provided that , as regards t h e f i rs t vesting instrument

executed for t h e purpose of giving e f f e c t to-

(a) a se t t lement subsisting at t h e commencement of this Act; or

an instrument which by virtue of this Act is deemed t o be a sett lement; or

a se t t lement which by virtue of this Act is deemed

to have been made by any person a f t e r t h e

commencement of this Act; or

an instrument inter vivos Intended t o create a se t t lement of a legal estate in land which is

executed a f t e r t h e commencement of this Act and

does not comply with t h e requirements of this Act

with respect to t h e method of effecting such a sett lement;

a purchaser shall be concerned to see-

(i)

(ii)

(iii)

t h a t t h e land disposed of to him is comprised in such se t t lement or instrument;

t h a t t h e person in whom t h e se t t led land i s by such vesting instrument vested, or declared

to be vested, is t h e person in whom i l ought to be vested as tenant for l i fe or s ta tu tory

owner;

t h a t t h e persons thereby s t a t e d to be t h e

t rus tees of t h e se t t lement a r e t h e properly

consituted trustees of the sett lement.

(3) A purchaser of a legal estate in sett led land from a personal representative shall be enti t led to act on t h e

following assumptions:-

(i) If t h e capital money, if any, payable in respect of t h e transaction i s paid t o t h e personal representative, t ha t such

representat ive is act ing under his s ta tutory

or other powers and requires t h e money for purposes of administration;

(ii) If such capi ta l money is, by t h e direction of the personal representative, paid t o persons

who a r e s ta ted to be t h e t rustees of a set t lement , t ha t such persons a r e the duly

consti tuted t rustees of t h e se t t l emen t for t h e purposes of this Act, and tha t t h e personal

representative is act ing under his s ta tutory powers during a minority;

(iii) In any other case, t h a t t h e personal

representat ive is act ing under his s ta tutory or other powers.

(4) Where no capi ta l money arises under a transaction, a disposition by a t enan t for l i fe or s ta tutory owner shall, in favour of a purchaser of a legal estate, have e f f e c t under this A c t notwithstanding t h a t at t h e d a t e of t h e transaction the re a r e no t rustees of t h e set t lement .

( 5 ) If a conveyance of or a n assent relating to land formerly subject to a vesting instrument does not state who

a r e t h e t ru s t ees of t h e se t t l emen t fo r t h e purposes of this Act,

a purchaser of a legal estate shall be bound and enti t led to act on t h e assumption t h a t t he person in whom t h e land was

thereby vested was ent i t led to t h e land f r e e f rom all

limitations, powers, and charges taking ef fect under that settlement, absolutely and beneficially, or, if so expressed in the conveyance or assent, as personal representative, or trustee for sale or otherwise, and that every statement of fact in such conveyance or assent is correct.

TRUSTEE ACT 1925

Power to delegate 25.- [ ( I ) Notwithstanding any rule of law or equity to t h e t rusts during contrary, a t rus tee may, by power of at torney, delegate for a absence abroad

period not exceeding twelve months t h e execution or exercise

of all or any of t h e trusts, powers and discretions vested in

him as t rus tee e i ther alone or jointly with any other person or persons.

(2) The persons who may be donees of a power of

a t torney under this section include a t rus t corporation but not (unless a t rus t corporation) t h e only other co-trustee of t h e

donor of t h e power.

(3) An instrument c rea t ing a power of a t torney under this sect ion shall be a t t e s t e d by at least one witness.

(4) Before or within seven days a f t e r giving a power of a t torney under this sect ion t h e donor shall give wri t ten not ice thereof (specifying t h e d a t e on which t h e power comes into

operation and i t s duration, t h e donee of t h e power, t h e reason why t h e power is given and, where some only a r e delegated,

t h e trusts, powers and discretions delegated) to-

(a) each person (other than himself), if any, who under any instrument creat ing t h e t rus t has

power (whether a lone o r jointly) to appoint a new trustee; and

(b) each of the o ther t rustees , if any;

but failure to comply with this subsection shall not, in favour of a person dealing with t h e donee of t h e power, invalidate any

a c t done or instrument executed by t h e donee.

( 5 ) The donor of a power of a t torney given under this

section shall be liable for t h e acts or defaults of t h e donee in t h e same manner as if t hey were t h e acts o r defaults of the

donor].

[(6)1 For t h e purpose of executing or exercising t h e t rus t s or powers delegated to him, t h e donee may ewercise any of t h e powers conferred on t h e donor as t rus tee by s t a t u t e o r

by t h e instrument creating t h e trust , including power, for the

purpose of t h e transfer of any inscribed stock, himself to

delegate to an a t torney power to transfer but not including t h e power of delegation conferred by th i s section.

[(7)] The fact t h a t i t appears f rom any power of a t torney given under this section, or f rom any evidence required for t h e purposes of any such power of a t torney or

otherwise, that in dealing with any stock t h e donee of the

power is acting in t h e execution of a t rus t shall not be deemed

for any purpose to a f f e c t any person in whose books t h e s tock is inscribed o r registered with any notice of t h e trust.

[@U This section applies to a personal representative, t enant for l i fe and s ta tu tory owner as i t applies to a t rus tee except t h a t subsection (4) shall apply as if i t required t h e

notice there mentioned to be given-

(a) in t h e case of a personal representatives, to

each of t h e o ther personal representatives, if

any, except any executor who has renounced

probate;

in t h e case of a tenant for life, to t h e t rustees of t h e set t lement and t o each person, if any, who together with t h e person

giving t h e notice const i tutes t h e tenant fo r life;

in t h e case of a s ta tutory owner, to each of

t h e persons, if any, who together with t h e person giving t h e notice const i tute t h e

s ta tutory owner and, in t h e case of a s ta tutory owner by virtue of section 23(l)(a)

of t h e Set t led Land Ac t 1925, to t h e t rustees of t h e set t lement .

NOTE Amended by t h e Powers of Attorney Ac t 1971, s.9.

LAW OF PROPERTY ACT 1925

Consents to t h e 26.- ( I ) If t h e consent of more than two persons is by t h e execution Of a disposition made requisite t o t h e execution of a t rus t for sale t rus t for sa le

of land, then, in favour of a purchaser, t h e consent of any two of such persons t o t h e execution of t h e t rus t or to t h e exercise of any s ta tu tory or other powers vested in t h e t rus tees for sale shall be deemed sufficient.

(2) Where t h e person whose consent t o t h e execution

of any such t rus t or power is expressed to be required in a disposition is not sui juris or becomes subject t o disability, his

consent shall not, in favour of a purchaser, be deemd to be requisite to t h e execution of t h e t rus t or t h e exercise of t h e power; but t h e t rus tees shall, in any such case, obtain t h e

separa te consent of t h e parent or tes tamentary or other guardian of an infant or of t h e ... receiver (if any) of a [person

suffering from mental disorder].

[(31 Trustees for sale shall so f a r as practicable consult

t h e persons of full a g e for t h e t i m e being beneficially

interested in possession in t h e rents and profits of t h e land until sale, and shall, so far as consistent with t h e general

interest of t h e trust , give effect to t h e wishes of such persons, or, in t h e case of a dispute, of t h e majority.(according to t h e

value of their combined interests) of such persons, but a purchaser shall not be concerned to see t h a t t h e provisions of

this subsection have been complied with.

In t h e case of a t rus t for sale, not being a t rus t for sa le

c rea ted by o r in pursuance of t h e powers conferred by this or any other Act , this subsection shall not aply unless t h e

contrary intention appears in t h e disposition creating t h e

trust.]

Purchaser not to be concerned with t h e t rusts of t h e proceeds of sale which a r e to be paid t o two or more t rustees or t o a t rust corporation

(4) This section applies whether t he t ru s t for sale is

c r ea t ed before or a f t e r t h e commencement or by virtue of this Act.

NOTES Sub-s.(2): amended by t h e Mental Health Ac t 1959, s.149(1), Sched. 7, P a r t I.

Sub-~43): substi tuted by t h e Law of Property (Amendment) Ac t 1926, s.7, Sched.

27.- (1) A purchaser of a legal estate from trustees for sale shall not be concerned with t h e t rusts affect ing t h e proceeds

of sale of land subject t o a t rust for sale (whether made t o attach t o such proceeds by vir tue of this Ac t or otherwise), or affect ing the rents and profits of t h e land until sale, whether or not those t rusts a r e declared by t h e same instrument by

which t h e t rust for sale i s created.

[(2)1 Notwithstanding anything t o t h e contrary in t h e instrument (if any) creat ing a t rust for sale of land or in t h e

se t t l emen t of the ne t proceeds, t h e proceeds of sale or other capi ta l money shall not be paid t o or applied by t h e direction

of fewer than two persons as trustees for sale, except where t h e t ru s t ee i s a t rus t corporation, but this subsection does not

a f f ec t t h e right of a sole personal representat ive as such to

give valid receipts for, or direct t h e application of, proceeds

of sale or other capi ta l money, nor, except where capi ta l money arises on t h e transaction, render i t necessary to have

more than one trustee.]

NOTE Sub-s.(2): substi tuted by t h e Law of Property (Amendment) Ac t 1926, s.7, Sched.

Powers of management, etc., conferred on t rus tees for sale

28.- (1) Trustees for sa le shall, in relation t o land o r to manorial incidents and to t h e proceeds of sale, have all t h e

powers of a tenant for l ife and t h e trustees of a se t t lement under t h e Se t t led Land Act 1925, including in relation to t h e land t h e powers of management conferred by tha t Act during a minority land where by s t a t u t u t e se t t led land is or becomes vested in t h e t rus tees of t h e se t t lement upon t h e s ta tu tory trusts, such t rus tees and their successors in of f ice shall also

have all t h e additional or larger powers (if any) conferred by t h e se t t lement on t h e tenant for life, s ta tu tory owner, or

t rus tees of t h e set t lement) and (subject to any express t rus t to t h e contrary) all capital money arising under t h e said

powers shall, unless paid or applied for any purpose authorised by t h e Se t t led Land Act 1925, be applicable in t h e same

manner as if t h e money represented proceeds of sa le arising under t h e t rus t for sale.

All land acquiried under this subsection shall be

conveyed to t h e t rus tees on t rus t for sale.

The powers conferred by this subsection shall be exercised with such consents (if any) as would have been

required on a sale under t h e t rus t for sale, and when exercised shall opera te to overreach any equitable in te res t s or powers

which a r e by virtue of this Act or otherwise made to a t t a c h to t h e ne t proceeds of sa le as if c rea ted by a t rus t affecting those proceeds.

(2) Subject to any direction to t h e contrary in t h e

disposition on t rus t for sa le or in t h e se t t lement of t h e

proceeds of sale, t h e n e t ren ts and profits of t h e land until sale, a f t e r keeping down costs of repairs and insurance and

o ther outgoings shall be paid or applied, except so far as any

par t thereof may b e liable t o be set aside as capital money under the Set t led Land Ac t 1925 in like manner as t h e income of investments representing the purchase money would b e payable or applicable if a sale had been made and t h e proceeds had been duly invested.

(3) Where t h e ne t proceeds of sale have under the

t rusts affect ing t h e same become absolutely vested in persons

of full a g e in undivided shares (whether or not such shares may

b e subject to a derivative t rust) t h e t rustees for sale may, with t h e consent of t he persons, if any, of full age, not being

annuitants, interested in possession in the net rents and profits of t h e land until sale:-

(a) partition the land remaining unsold or any par t thereof; and

(b) provide (by way of mortgage or otherwise) for t h e payment of any equality money;

and, upon such parti t ion being arranged, t h e t rustees for sale shall give e f f e c t t he re to by conveying t h e land so parti t ioned

in severalty (subject o r not to any legal mortgage c rea t ed fo r

raising equality money) t o persons of full age and ei ther absolutely o r on t rus t for sale or, where any pa r t of t h e land

becomes se t t l ed land, by a vesting deed, or partly in one way and partly in another in accordance with the rights of t h e

persons interested under t h e parti t ion, but a purchaser shall not be concerned to see or inquire whether any such consent as aforesaid has been given:

Provided that-

(i) If a sha re in t h e ne t proceeds belongs to a [person suffering from mental disorder], t h e

consent of his ... receiver shall b e sufficient

t o protect t h e t rustees for sale:

(ii) If a share in t h e ne t proceeds is a f fecs ted by

an incumbrance t h e t rus tees for sale may either give effect there to or provide for t h e discharge thereof by means of t h e property allotted in respect of such share, as they may

consider expedient.

(4) If a share in t h e net proceeds is absolutely vested in an infant, t h e t rus tees for sale may act on his behalf and

retain land (to be held on t rus t for sale) o r o ther property to represent his share, but in other respects t h e foregoing power

shall apply as if t h e infant had been of full age.

( 5 ) This section applies to dispositions on t rus t for sale

coming into operation e i ther before or a f te r t h e

commencement or by virtue of this Act.

NOTES Sub-s (1): amended by t h e Law of Property (Amendment) Act 1926, s.7, Sched.

Sub-s (3): 149(1), Sched. 7, P a r t I.

amended by t h e Mental Heal th Act 1959, s.

Delegation of 29.- (1) The powers of and incidental to leasing, accept ing

surrenders of leases and management, conferred on t rus tees

for sale whether by this Act or otherwise, may, until sale of

powers of mnagement by t rus tees for sale

t h e land, be revocably delegated from t i m e t o t ime, by

writing, signed by them, to any person of full age (not being merely an annuitant) for t h e t i m e being beneficially enti t led in

possession to t h e ne t rents and profits of t h e land during his l ife or for any less period: and in favour of a lessee such

writing shall, unless t h e contrary appears, be sufficient

evidence t h a t t h e person named therein is a person to whom t h e powers may be delegated, and t h e production of such writing shall, unless t h e contrary appears, be sufficient

evidence t h a t t h e delegation has not been revoked.

(2 ) Any power so delegated shall be exercised only in t h e names and on behalf of t h e t rustees delegating t h e power.

(3) The persons delegating any power under this

section shall not, in relation to t h e exercise or purported

exercise of t he power, be liable for t he acts or defaults of t he

person to whom t h e power is delegated, but tha t person shall, in re la t ion-to t h e exercise of t h e power by him, be deemed to be in t h e position and to have t h e duties and liabilities of a trustee.

(4) Where, at the commencement of this Act, an order

made under section seven of t h e Set t led Land Ac t 1884 is in force, t h e person on whom any power is thereby conferred

shall, while t h e order remains in force, exercise such powers in t h e names and on behalf of t he t rustees for sale in like manner

as if t h e power had been delegated to him under this section.

Powers of court 30. If t h e t rustees for sale refuse to sell or t o exercise anv where of t h e powers conferred by ei ther of t h e las t two sections, or for sale refuse to exercise powers any requisite consent cannot b e obtained, any person

interested may apply t o t h e court for a vesting or other order

for giving e f f e c t to t h e proposed transaction o r fo r a n order directing t h e t rustees for sale to give e f f e c t thereto, and t h e

cour t may make such order as i t thinks fit.

E f fec t of future 34.- (I) An undivided share in land shall not be capable of being c rea t ed except as provided by t h e Set t led Land Ac t 1925 dispositions to

tenants in common or as hereinafter mentioned.

(2) Where, a f t e r t h e commencement of this Act, land is expressed to be conveyed to any persons in undivided shares

and those persons a r e of full age, t h e conveyance shall [notwithstanding anything to t h e contrary in this Ac t ) ope ra t e

as if t h e land had been expressed t o be conveyed to t h e grantees, or, if t he re a r e more than four grantees, to t h e four

f i r s t named in t h e conveyance, as joint t enants upon t h e s ta tu tory trusts hereinafter mentioned and so as t o give effect t o t h e rights of t h e persons who would have been enti t led to t h e shares had t h e conveyance operated to c r e a t e those

shares:

Provided tha t , where t h e conveyance is made by way of

mortgage t h e land shall vest in t h e grantees or such four of them a s aforesaid for a te rm of years absolute (as provided by

this Act ) as joint tenants subject t o cesser on redemption in like manner as if t h e mortgage money had belonged to them on a joint account, but without prejudice to t h e beneficial

interests in t h e mortgage money and interest .

(3) A devise bequest or tes tamentary appointment, coming in to operation a f t e r t h e commencement of this Act , of

land to two o r more persons in undivided shares shall opera te as a devise bequest or appointment of t h e land to t h e t rus tees

(if any) of t h e will for t h e purposes of t h e Sett led Land Act 1925 or, if there a r e no such trustees, then to t h e personal representatives of t h e testator, and in each case (but without prejudice to t h e rights and powers of t h e personal

representatives for purposes of administration) upon t h e

s ta tu tory t rus t s hereinafter mentioned.

(4) Any disposition purporting to make a se t t lement of

an undivided share in land shall only opera te as a se t t lement of a corresponding share of t h e n e t proceeds of sale and of t h e ren ts and profits until sa le of t h e en t i re ty of t h e land.

Meaning of t h e 35. For t h e purposes of this Act land held upon t h e

"statutory trusts" shall be held upon t h e t rus t s and subject to s ta tu tory t rus t s

t h e provisions following, namely, upon t rus t s to sell t h e same and to s tand possessed of t h e net proceeds of sale, a f t e r

payment of costs, and of the n e t ren ts and profits until sale a f t e r payment of rates, taxes, costs of insurance, repairs, and

other outgoings, upon such trusts, and subject t o such powers

and provisions, as may be requisite for giving e f f e c t to t h e rights of t he persons (including an incumbrancer of a former undivided share or whose incumbrance is not secured by a legal mortgage) interested in t h e land [and the right of a person

who, if t h e land had not been made subject t o a trust for sa l e

by vir tue of this Act , would have been enti t led to an entailed

interest in an undivided share in t h e land, shall be deemed t o

be a right to a corresponding entailed interest in t h e ne t proceeds of sale at t r ibutable to t h a t share].

[Where-

(a) an undivided share was subject to a set t lement , and

(b) t h e set t lement remains subsisting in respect of other property, and

(c) t h e t rustees thereof a r e not t he s a m e persons as t h e t rustees for sale,

then t h e s ta tutory t rusts include a t rust for t h e t rustees for sale to pay t h e proper proportion of t h e ne t proceeds of sale or

other capi ta l money at t r ibutable t o the share to t h e t rustees

of t h e se t t l emen t to be held by them as capi ta l money arising under t h e Set led Land Ac t 19251.

NOTES Firs t amendment made by t h e Law of Property (Entailed Interests) A c t 1932, s.1; second amendment made by t h e Law of Property (Amendment) Ac t 1926, s.7, Sched.

Joint tenancies

36.- (I) Where a legal estate (not being set t led land) is beneficially limited to or held in t rust for any persons as joint

tenants, t h e same shall b e held on t rust fo r sale, in like

manner as if t h e persons beneficially ent i t led were t enan t s in common, but not so as t o sever their joint tenancy in equity.

(2) No severance of a joint tenancy of a legal estate, so as to c r e a t e a tenancy in common in land, shall be

permissible, whether by operation of law or otherwise, but this subsection does not a f f e c t t h e right of a joint t enant to release his in te res t to the other joint tenants, or t h e right to sever a joint tenancy in an equitable interest whether or not t h e legal estate is vested in t h e joint tenants:

Provided that, where a legal estate (not being se t t led

land) is vested in joint tenants beneficially, and any tenant desires t o sever t h e joint tenancy in equity, he shall give t o

t h e other joint t enants a notice in writing of such desire or do such o ther a c t s or things as would, in t h e case of personal

estate, have been ef fec tua l to sever t h e tenancy in equity, and

thereupon under t h e t rus t for sa le affecting t h e land t h e net proceeds of sale, and t h e ne t ren ts and profits until sale, shall

be held upon t h e t rus t s which would have been requisite for giving effect t o t h e beneficial in te res t s if t h e r e had been an

ac tua l severance.

[Nothing in this Act affects t h e right of a survivor of joint tenants, who is solely and benefically interested, to deal

with his legal estate a s if i t were not held on t rus t for sale.]

(3) Without prejudice to t h e right of a joint t enant to release his interest to t h e other joint t enants no severance of a mortgage te rm or t rus t estate, so as to c r e a t e a tenancy in

common, shall be permissible.

NOTE Sub-s (2): amended by t h e Law of Property (Amendment) A c t 1926, s.7, Sched.

ADMINISTRATION OF ESTATES ACT 1925

Trust for sale 33.- (1) On the death of a person in tes ta te a s to any real or personal s ta te , such e s t a t e shall be held by his personal representatives-

(a) as t o t h e real e s t a t e upon t rus t t o sell t h e same; and

(b) as to t h e personal e s t a t e upon t rus t t o call in

sell and convert into money such part thereof

a s may not consist of money,

with power t o postpone such sale and coversion for such a period a s t h e personal representatives, without being liable t o account, may think proper, and so t h a t any reversionary interest be not sold until i t falls into possession, unless the

personal representatives see special reason for sale, and so

also tha t , unless required for purposes of administration owing to want of other assets, personal cha t te l s be not sold except

for special reason.

(2) Out of the ne t money t o arise from t h e sale and conversion of such real and personal estate (after payment of

costs), and out of t h e ready money of t h e deceased (so fa r as not disposed of by his will, if any), t h e personal representative shall pay a l l such funeral, tes tamentary and administration

expenses, debts and other liabilities as a r e properly payable

thereout having regard to t h e rules of administration contained in this P a r t of this Act , and out of t h e residue of t h e said money t h e personal representative shall s e t aside a fund sufficient to provide for any pecuniary legacies bequeathed by t h e will (if any) of the deceased.

(3) During t h e minority of any beneficiary or t h e

subsistence of any l i fe interest and pending t h e distribution of t h e whole or any par t of t h e estate of t h e deceased, t h e personal representatives may invest t h e residue of t h e said money, or so much thereof as may not have been distributed, in any investments for the t i m e being authorised by s t a t u t u t e for t h e investment of t rus t money, with power, at the

discretion of t h e personal representatives, to change such investments for others of a like nature.

( 4 ) The residue of t h e said money and any investments

for the t i m e being representing t h e same, including (but without prejudice to t h e t rus t for sale) any par t of t h e estate of the deceased which may be retained unsold and is not required for t h e administration purposes aforesaid, is in this

A c t referred to as "the residuary estate of t h e intestate."

( 5 ) The income (including n e t ren ts and profits of real estate and cha t te l s real a f t e r payment of rates, taxes, rent,

costs of insurance, repairs and o ther outgoings properly

a t t r ibu tab le to income) of so much of t h e real and personal

estate of t h e deceased as may not be disposed of by his will, if any, or may not be required for t h e administration purposes aforesaid, may, however such estate is invested, as from t h e

death of t h e deceased, be t rea ted and applied as income, and for t h a t purpose any necessary apportionment may be made between tenant for l ife and remainderman.

(6) Nothing in this section a f f e c t s t h e rights of any

creditor of t h e deceased or t h e rights of t h e Crown in respect

of death duties.

(7) Where t h e deceased leaves a will, th i s section has

e f f e c t subject to t h e provisions contained in t h e will.

Powers of management

39.- (1) In dealing with t h e real and personal estate of t h e deceased his personal representatives shall, for purposes of administration, or during a minority of any beneficiary or t h e subsistence of any life interest, or until t h e period of distribution arrives, have-

(i) t h e same powers and discretions, including

power t o raise money by mortgage or charge

(whether or not by deposit of documents), a s

a personal representative had before t h e

commencement of this Act, with respect to personal estate vested in him, and such power of raising money by mortgage may in the

case of land be exercised by way of legal mortgage; and

(ii) al l the powers, discretions and duties

conferred or imposed by law on trustees holding land upon an e f fec tua l t rus t for sale (including power to overreach equitable

interests and powers a s if t h e same af fec ted t h e proceeds of sale); and

(iii) al l t h e powers conferred by s t a t u t e on t rus tees for sale, and so t h a t every cont rac t

en tered into by a personal representative shall be binding on and be enforceable against

and by t h e personal representative for t h e t i m e being of t h e deceased, and may be carried into e f fec t , or be varied or rescinded

by him, and, in t h e case of a cont rac t entered

into by a predecessor, as if i t had been entered into by himself.

(2) Nothing in this section shall a f fect the right of any person to require an assent or conveyance to be made.

(3) This section applies whether the testator or intestate died before or after the commencement of this Act.

APPENDIX C

LAW REFORM COMMITTEE, Z3RD REPORT

THE POWERS AND DUTIES OF TRUSTEES

PART I X

SUMMARY OF RECOMMENDATIONS

9.1 law a r e s e t out in this summary.

Only those conclusions which Will require some change in t h e

III Trustees' Duties

Powers and Duties of Investment (paragraphs 3.1-3.25)

(a) Investment in Land (paragraphs 3.1-3.14)

... 6. ( iv) t h e decision in r e Power should be reversed and a new

statutory power introduced enabling t rus tees to purchase a residence for occupation by t h e person

enti t led to t h e income on the moneys laid out in t h e purchase or eligible t o have i t applied for his benefit;

(paragraph 3.5)

7. Trustees should be empowered t o make purchases under recommendation 6(ivl above on mortgage. (paragraph 3.1 1)

...

Duty to Act Unanimously (paragraphs 3.60-3.66)

24. Section 30 of t h e Law of Property Act 1925 should be

extended to allow an application to t h e court for an order for sale

by t h e t rus tees even where they a r e not themselves beneficiaries under t h e trust . (paragraph 3.64)

...

V M i l l a n e w s Points (paragraphs 5.1-5.8)

... 37. Legislation should be introduced corresponding to section 36(7)

of the Administration of Es ta tes Act 1925 to apply where there has been a conveyance of a legal estate not expressly made subject to

t h e t rus t for sale. (paragraph 5.6)

...

VI Powers and Duties to Charity Trustees (paragraph 6.1-6.6)

... 41. Land held by charitable trustees on a fixed da te , which has not

a l ready vested in t h e Official Custodian for Charit ies or any other corpora te body, should vest in t h e Official Custodian for Charities.

The t rus tees should then be empowered to convey t h e legal estate on his behalf under t h e provisions of section 17(2) of the Charit ies A c t 1960. (paragraph 6.3).

...

VIII Settled Land (paragraphs 8.1-8.11)

52. A tenant for l ife of se t t led land should be empowered to grant

a lease of tha t land or any par t of i t at a ren t initially ascertained by arbitration or valuation, or any other generally recognised method of arriving at t h e best rent. (paragraph 8.4)

53.

concurrent leases. (paragraph 8.5).

A tenant for l i fe should be given s ta tu tory authority to grant

54. Sect ion 41 of t h e Se t t led Land Act 1925 should be amended to give t h e tenant for l ife t h e power to grant ordinary leases of 99 years. (paragraph 8.6).

55. Trustees of a settlement should be empowered to require a fenant for l i fe to obtain valuations in respect of transactions under section 101 of the Settled Land Act 1925 so enabling them to control transactions with the settled land more effectively. (paragraph 8.9).

56. Section 51 of the Settled Land Act 1925 should be amended so

as to enable the tenant for l i fe of a settlement to grant options at a

price to be fixed by valuation, arbitration or any other generally recognised method. (paragraph 8.1 01.

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