Three Days in Court the Result of Informal Arrangements

When land is owned in trust for the benefit of more than one person, the question of what should be done with it can be the source of dispute. Often, the best solution is to partition the land between the beneficiaries, so that each can do what they wish with their part.

However, trustees wishing to partition land in such cases need to obtain the agreement of the trust’s beneficiaries to do so and this sometimes proves impossible to do.

Fortunately, the Trust of Land and Appointment of Trustees Act 1996 gives the court the right to partition land held in trust, even if the beneficiaries are unwilling to give their consent, and to decide what, if any, ‘equality money’ should be paid as a consequence.

In a recent case, two friends bought a property they wished to develop, the intention being that each of them would build a house on their part of the land. When a purchase is carried out in this fashion, a trust will arise for the benefit of both purchasers. One of the men employed a negligent builder, with the result that the house he was having built had to be demolished before it was finished. The other man built his house and moved in. He also built a garage on the site, which the first man claimed made the development of his part of the property unfeasible.

The problem was compounded by the fact that the two purchasers had not agreed beforehand where the boundary should lie when they eventually came to divide the property.

The issue remained unresolved for several years. Eventually, the man whose property was not built sought an order from the court that the entire property should be sold and the proceeds divided between the two men or, alternatively, that the other man should pay him a sum of more than £180,000, to include the capital sum and interest.

The house owner requested that the court divide the property and transfer ‘his part’ into his sole name and the other part into the name of the other man. Alternatively, if the court ordered the sale of the property, he argued that his share of the sale proceeds should reflect his contribution to the value of the property.

The court commented that the case was complicated by the fact that ‘being good friends, the parties did not reduce to writing the terms of their joint venture’. Also, much of the evidence of the man who brought the case was oral.

After a court hearing lasting three days, the eventual outcome was that the court ordered that the property be divided without the payment of compensation.