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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hawk Recovery Ltd v Hall & Ors [2016] EWHC 3260 (Ch) (21 December 2016) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2016/3260.html Cite as: [2017] 4 WLR 40, [2017] BPIR 675, [2017] WLR(D) 7, [2016] EWHC 3260 (Ch) |
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CHANCERY DIVISION
ON APPEAL FROM THE ORDERS OF
DEPUTY MASTER MARK AND
DEPUTY MASTER MATHEWS
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
____________________
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Claimant |
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- and - |
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1. NICHOLAS JOHN HALL 2. SUSAN HALL 3. BRUNSWICK WEALTH LLP |
Defendants |
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Benjamin Hawkin (instructed by the Bar Pro Bono Unit) for the first and second Defendants
Hearing date: 8 December 2016
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Crown Copyright ©
MR JOHN BALDWIN QC:
18.1. That the Deputy Master was wrong to refuse the Defendants' application to adjourn the whole of the hearing on 9 January 2015.
18.2. That the Deputy Master was wrong to hold that the Defendants had no standing to be heard on the application for summary judgment and should have held that the Defendants had standing to argue that the proceedings were an abuse of process
18.3. That the Deputy Master was wrong to conclude that the Claimant's claim to be (by an assignment from a trust) the beneficial owners of the Property was in all circumstances suitable for summary judgment.
£300,000 to the Halls for the purchase of the Property, which money did not belong to him but was trust monies to which he was not entitled. By virtue of an assignment, Hawk had the right to recover the monies and restore the trust property.
36.1. In 2012 the Defendants were living at the Property as tenants under an Assured Shorthold Tenancy. The Property was owned by a Mr Martin.
36.2. Mr Baxendale-Walker offered to buy the Property for the Defendants.
36.3. On or about 26 October 2012 the Defendants (via their solicitors) received total sums of £310,230 from the BWP bank account, being the account which was used to hold Trust monies. This money was a purported gift from Mr Baxendale-Walker to the Defendants.
36.4. This money was intended for and applied to the purchase of the Property by the Defendants. The purchase took place on about 6 November 2012. The purchase price was £300,000 and on that date the owner, Mr Martin, executed a TR1 in favour of the Defendants. The Defendants have been subsequently registered as freehold owners of the property.
36.5. In addition the Defendants received the balance of the money (i.e. £10,320) for the purpose of paying the professional fees and disbursements associated with the transaction and/or received such professional services and disbursements without paying for them themselves.
23 I now turn to the first part of the application, concerning possession, which in fact at the hearing I dealt with last. The Claimant relies on its equitable interest in the property, and the concomitant lack of any such interest for the First and Second Defendants, both established by the order of Deputy Master Mark. It also relies on the fact that the order requires the Defendants to transfer the outstanding legal title to the property to it. Taken together, these two things, says Mr Hackett, entitle the Claimant (who is out of possession and has never been in possession) to possession as against the First and Second Defendants (who are and remain in possession, albeit without the consent of the Claimant).
24 I disagree. An equitable owner in possession of land but with no legal title may well have the right to sue a third party for trespass or other interference with possession. But that is not this case, and we need not consider it now. By virtue of the order of Deputy Master Mark, the Claimant has the entire equitable interest in the property. The Defendants, in possession, on the other hand have the legal ownership. I cannot see any basis on which this Claimant has a better right to possession of the land at law than these Defendants. Nor does the additional fact that there is an order of the court that the Defendants transfer the legal estate to the Claimant transmute the equitable interest of the Claimant into something giving such a right to possession.
25 Moreover, I do not think the position would be different if the First and Second Defendants were, contrary to my earlier holding, not still the legal owners. They are in possession and the Claimant must make a positive case for a better right to possession than them. This it cannot do. I entirely accept that a beneficiary entitled in possession under a trust of land may be entitled as against the trustee to occupy the land, subject to exceptions and to the imposition in some cases of terms, under provisions of the Trusts of Land and Appointment of Trustees Act 1996 . But that is not what the Claimant asked for in this case, and it certainly did not put any evidence forward to support such an application. What the Claimant wanted was essentially to put an end to the trust by calling in the legal title under the well-known rule in Saunders v Vautier. (I record here that this was in fact the only authority referred to during the hearing on either side.) But the Claimant already had an order to do that, under the order of Deputy Master Mark. The problem was that the Defendants did not comply with the order.
26 Accordingly, in my judgment, the Claimant fails to establish any better right to possession of Sandpipers Lodge than the persons in possession, the First and Second Defendants, and the application is dismissed. It will of course be different once the Claimant has the legal title. Then the presumption would be that the legal title carries the right to possession, and the Defendants having no equitable interest would in principle be unable to resist this. I will hear the parties on the question of consequential orders.
Where there is a bare trust T, the trustee must obey Z's (i.e. the beneficiary's) instructions about the disposition of the land. Z may therefor call for an outright conveyance to him. It is pointless to keep the legal and equitable interests separated where only one person is entitled to the whole beneficial interest. This is equally true if the trustees are expressly given duties to perform, e.g. to sell, or to accumulate the income, provided that all such duties are for the benefit of one person only, and that person is of full age. That is the basis of the rule in Saunders v Vautier.
The starting point is the duty of trustees to exercise their powers in the best interests of present and future beneficiaries of the trust, holding the scales impartially between the different classes of beneficiaries. This duty of trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first.
6 General powers of trustees.
(1) For the purpose of exercising their functions as trustees, the trustees of land have in relation to the land subject to the trust all the powers of an absolute owner.
(2) Where in the case of any land subject to a trust of land each of the beneficiaries interested in the land is a person of full age and capacity who is absolutely entitled to the land, the powers conferred on the trustees by subsection (1) include the power to convey the land to the beneficiaries even though they have not required the trustees to do so; and where land is conveyed by virtue of this subsection—
(a) the beneficiaries shall do whatever is necessary to secure that it vests in them, and
(b) if they fail to do so, the court may make an order requiring them to do so.
(5) In exercising the powers conferred by this section trustees shall have regard to the rights of the beneficiaries.
(6) The powers conferred by this section shall not be exercised in contravention of, or of any order made in pursuance of, any other enactment or any rule of law or equity.
(7) The reference in subsection (6) to an order includes an order of any court or of the Charity Commission.
11 Consultation with beneficiaries.
(1) The trustees of land shall in the exercise of any function relating to land subject to the trust—
(a) so far as practicable, consult the beneficiaries of full age and beneficially entitled to an interest in possession in the land, and
(b) so far as consistent with the general interest of the trust, give effect to the wishes of those beneficiaries, or (in case of dispute) of the majority (according to the value of their combined interests).
12 The right to occupy.
(1) A beneficiary who is beneficially entitled to an interest in possession in land subject to a trust of land is entitled by reason of his interest to occupy the land at any time if at that time—
(a) the purposes of the trust include making the land available for his occupation (or for the occupation of beneficiaries of a class of which he is a member or of beneficiaries in general), or
(b) the land is held by the trustees so as to be so available.
Mr Grant submitted that these sections make clear (i) that a bare trustee cannot defy the wishes of his beneficiaries (ii) cannot rely on any rights if so to do would be contrary to an order of the court.
Note 1 his judgment is reported at [2016] EWHC 3099 (Ch) [Back]