Rahnema v Rahbari

Rahnema v Rahbari [2008] 2 P. & C.R. DG5

Rights to occupation rent and/or purchase from a co-owner of property.

Facts

Ms. Ansari’s mother, Ms. Rahbari, was married Dr. Rahbari, entering into a martial agreement which provided that property acquired during the marriage was to be jointly-owned. Ms. Ansari sold her house to Ms. Rahbari, with part of the purchase price deferred with Ms. Ansari being granted an equitable charge over the property. Ms. Rahbari executed a deed of trust declaring herself as owner of the property on trust for Ms. Ansari; Legal title was later conveyed to Ms. Ansari who continued to occupy the property. Dr. Rahnema and Ms. Rahbari divorced and Dr. Rahnema made an application for occupation rent from Ms. Ansari.

Issues

The question arose as to (1) whether Ms. Ansari was liable for an occupation rent in relation to the property that was held on trust for Dr. Rahnema and Ms. Ansari under the martial agreement and (2) whether Ms. Ansari can purchase the property from Dr. Rahnema.

Decision/Outcome

Firstly, the Court held that when property is held on trust in equal shares for two parties, both parties are entitled to benefit from the property in equal shares. Thus, on the principle of doing that which is equitable and just, if one co-owner occupies the property rent-free, the occupying party is liable to pay occupation rent to the other co-owner. Accordingly, as both Dr. Rahnema and Ms. Ansari held equal shares in trust in the property, Ms. Ansari was liable to Dr. Rahnema for occupation rent. Secondly, the Court held that, concerning Ms. Ansari’s right to purchase, the best way to ensure an equitable result was for the property to be sold on the open market for the best price, on which Ms. Ansari may purchase the property, and with the sale proceeds divided equally between the co-owners.