Bagum v Hafiz and another

Bagum v Hafiz and another [2016] Ch. 421

Court’s discretionary powers in relation to co-ownership in trusts of land.

Facts

A mother and her two eldest sons jointly purchased and occupied a home in Islington, registering as tenants in common with their beneficial interests in three equal shares. When disagreements arose as to the use of the family home, one son left and requested the other son to purchase his one-third beneficial interest. He applied an order to that effect under Section (14) Trusts of Land and Appointments of Trustees Act 1996. The first instance court declared no jurisdiction to make this order and instead ordered that the property be sold on the open market with liberty for the parties to bid for its purchase.

Issues

The question arose as to the exercise of the court’s discretionary powers of the court to make orders in relation to co-ownership and trusts of land, contrary to the unanimous consent of beneficiaries, under Sections (14) TOLATA.

Decision/Outcome

The Court held that Section (14) TOLATA gives it the “widest discretion to make orders relating to the exercise by the trustees of any of their functions” (para 11) on the basis of wide considerations. In doing so, the Court’s functions are to relieve the trustees from obtaining unanimous consent and to ensure that the property is dealt with justly. In lieu of these wider considerations, the Court upheld, firstly, that it has no jurisdiction to direct one beneficiary under a trust of land to sell their beneficial interest to another beneficiary. Secondly, the Court held that it was within the first instance judge’s jurisdiction under Section 14(2)(a) to exercise a wide discretion, contrary to the beneficiaries’ consent, to consider the intentions and purpose of the trust to provide a family home, circumstances of occupation, and to ensure that a beneficiary obtains proper value for his beneficial interest, so as to order the sale of the property on the open market for the best price.