It sounds like a riddle but really it’s just an introduction to the workings of the Trusts of Land and Appointment of Trustees Act, under which a Claimant can make an application to the Court to be declared the true owner of a property which is not in their name, or the owner of a larger share of the property than they appear to own.
Applications under TOLATA often arise between co-habitants after relationship breakdown. Arrangements which might have been acceptable to the people concerned, such as one person paying the mortgage and the other paying the household bills, become less acceptable when the first person suddenly announces that they are the sole owner of the property, being the one who has always met the mortgage liability. A claim may be necessary to untangle the financial arrangements and ensure a fair split.
I have recently represented a client in another situation where TOLATA claims often arise: claims within families where a parent has passed property to a child either without transferring the beneficial interest, or with the intention that the beneficial interest should be held on behalf of other family members. In my case, a mother had passed property to her son via a series of transactions (including a transfer to her husband, from husband to daughter and from daughter to son) which were not wholly explained but which only involved a transfer of the legal interest. The beneficial interest remained with my client.
Her son opposed this, arguing that the beneficial interest had also transferred to him. Matters had come to a head as he had sold the property and my client had had to obtain freezing orders to prevent him from dissipating the proceeds of sale. The parties were totally unable to agree on who should be entitled to the proceeds and so the involvement of the court was necessary. The matter was listed for a three day hearing – TOLATA cases are frequently lengthy because of the number of witnesses required to try to unpick arrangements which can be decades old and the wide range of evidence which can be involved.
In my case, the judge was satisfied that my client had retained the beneficial interest in the property despite the series of transfers of the legal interest. This was supported by letters within the family (the validity of which was disputed), by text messages, and crucially by the fact that the mother continually took responsibility for the property regardless of who was named as the owner. It was a rented property which she managed and rent payments which went into the son’s account were then always transferred out to the mother.
After 3 days of evidence, my client was successful in obtaining a declaration that she was the beneficial owner of the property and therefore of the proceeds of sale. However, as with many of these types of cases, her victory came at a cost. Disputes within families are frequently highly emotional and it may be that the relationships are now damaged beyond repair. There is also a financial cost to the loser because these cases are governed by the Civil Procedure Rules and costs follow the event (even where the case is heard in the Family Court or where it arises as a result of relationship breakdown). In this case, mediation had been unsuccessful and so the chance to resolve the matter at an early stage, and at a lower cost, was not taken.