5.2.3 Trustees in Land Lecture - Hands on Examples
The sections set out above discuss various parts of the law for trustees of land. Those areas include the appointment of trustees, the powers trustees wield and how those powers are managed, and what happens where there is a breach of trust by the trustees. The following questions are designed to test your knowledge on these most important aspects of trustees of land. The answers to the questions can be found at the bottom of the page, however you are encouraged to attempt to answer the questions first based on your own recall or notes of the topic before looking at the answers.
Always think about the facts, the relevant statutory provision, the cases that interpret that provision, and what the outcome will be based on how those principles and cases apply to the question. As you may have gathered, the TOLATA 1996 is especially important, not least where it grants powers to trustees over their beneficiaries and the land, so be sure to highlight provisions from that Act and have it to hand when you are dealing with questions relating to trusts of land. Although you would not be expected to give the full citations of cases you cite (just the names of the parties and the year is usually sufficient, the name of the judge giving the ratio is even better!), you will be expected to accurately cite the relevant sections and subsections of the TOLATA 1996 and other legislation. Simply reciting the name of the statute in your exam without the corresponding section and subsection will not be sufficient.
Q1. Amalgamated Properties Ltd is hoping to purchase Blackacre from Bert. Bert assures them that he is the sole legal owner of the property, and the land searches appear to bear out this assertion. However, Amalgamated Properties Ltd are subsequently contacted by Cheryl, who informs Amalgamated that she is actually the beneficial owner and occupant of the land, and tells Amalgamated that they cannot purchase the property. Amalgamated do some further investigation, and found out that Bert is indeed a sole trustee of the property, and Cheryl has the beneficial interest. There is no one else holding the land on trust. Amalgamated ask you if they can nevertheless overreach her interest.
Q2. You are appointed as trustee of a trust of land, which includes as its beneficiaries Fanny, Gareth and Helen. The trust instrument requires you to consult with all of the beneficiaries before exercising your powers. Helen begins to cause problems for Fanny and Gareth by continually taking up space with ever-more elaborate gym equipment, and Fanny and Gareth ask you if you can do anything about the situation. Further: what if you took action without consulting Helen?
Q3. Julia nominates Kevin as her trustee to execute the trust over Greenacre, transferring the estate to Hannah. After Julia passes away, Kevin falls into a coma and his doctors conclude that he will not be coming out of his coma for a significant period of time. Leonard, aged 15, wants to move into Greenacre as a matter of urgency. He comes to you for legal advice, asking if he can put herself forward as trustee, alternatively if the court can nominate one for him.
Q4. Mike forges the signature of his wife, Noreen, on a mortgage document with the bank Oweusmoney plc. After Mike is declared bankrupt, he absconds from the property, leaving Noreen alone with their children. Mike cannot be traced. The debt to Oweusmoney plc goes unpaid, and the debt continues to increase. The bank appoints a trustee-in-bankruptcy to manage Mike’s debts. Fourteen months pass after that appointment, at which point the trustee-in-bankruptcy makes an application for the property to be sold. Noreen is worried because she has recently fallen extremely ill, and her diagnosis is said to be terminal. Advise Noreen.
A1. The clue here lies in the fact that Bert is said to be the sole and only trustee. It is not clear whether he is unaware of his status or as a trustee, but in any event the question is whether in the circumstances he as sole trustee can sell the property to Amalgamated. As you will recall from the discussions on the number of trustees, there must be at least two trustees involved in the signing of certain documentation for a conveyance of land. Where there is only one trustee, and their status has arisen due to a resulting or constructive trust, there is no recourse for the purchaser.
A2. This is to do with the powers of trustees. As you will recall, trustees have the power to exclude some but not all beneficiaries from occupation of the land. Further, trustees may be required to consult the beneficiaries. If you as trustee were to exclude Helen without first consulting her, then you would be in breach of your obligation and she would be entitled to compensation.
A3. This deals with the appointment of trustees, and the circumstances in which the beneficiary can put themselves forward as trustee or where the court can nominate a trustee on the beneficiary’s behalf. Sections 19 and 41 of TOLATA 1996 deal respectively with these situations. Leonard cannot put himself forward as trustee as he lacks majority, meaning he is under the required age of 18. Under s.41 of TOLATA the court would acknowledge that it is expedient to appoint a new trustee, given that the nominated trustee lacks capacity (he is in a coma).
A4. This is a like-for-like replica of Bank of Ireland v Bell. You will recall that a ‘powerful consideration’ for the court in these circumstances is whether the debt will never be satisfied if the bank refrains from seeking an order for sale. Given the length of time, the bank’s interests are now paramount and overwhelming. Noreen is terminally ill and this could mean a moratorium on when the order for sale will be made, but it ultimately cannot be prevented.
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