This appeal concerned whether or not occupation rent was payable to the joint owner of a property who had left that property following the breakdown of her relationship with the other joint owner.
In short, Saini J concluded that it could be. The Court below had erred in law by refusing her claim for occupation rent on the basis that she had not been barred from exercising her legal right to occupy. Contrary to the decision of the first instance Judge, the statute and relevant authorities did not establish that an ouster of occupation was a condition precedent for such a claim.
The Factual Background
The Respondent/Claimant (‘R') and the Appellant/Defendant (‘A') were the joint owners of 3 Chestnut Road, Stockton-on-Tees (‘the Property'). They were the carers of R's grandson, whose mother had died when he was a few weeks old. The relationship between the parties deteriorated and A left the Property. The joint tenancy was subsequently severed.
R issued Part 8 proceedings seeking an order for sale and various ancillary orders under the Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA 1996') as well as the usual type of accounting and inquiries. A served a Defence and Counterclaim resisting the sale of the Property on the basis that it should be preserved for the grandson. A also pleaded a claim for occupation rent ‘to reflect [R's] exclusive occupation of the trust property to reflect her exclusion from such date as the court determines to the date of judgment'. The claim was premised on a ‘constructive ouster' of A by R.
The Trial Judge's Decision
Having heard the evidence the Recorder found largely in favour of R. He made an order for sale of the Property and refused to make an order in favour of A for occupation rent, or compensation, under s13(6) TOLATA 1996.
The Recorder concluded that an occupation rent was not payable because R had not denied A's legal rights of occupation. He focused on an analogy of landlord and tenant to support his decision (‘the Landlord Analogy'):
In a landlord and tenant situation it is not much different to the landlord coming in and changing the locks and throwing all your stuff onto the streets. In those circumstances you are obviously entitled to damages because they are not allowed to do that without a court order. Well, this is the equivalent of that. In other words, she would otherwise have effectively been living there but the claimant prevented her from doing so, i.e., exercising her rights.
The issue on appeal was whether or not the Recorder was wrong as a matter for law in rejecting the occupation rent claim.
Counsel for A contended that the Landlord Analogy showed that the Recorder had interpreted exclusion as too high a threshold, in effect requiring physical as opposed to constructive exclusion. Counsel for R argued that there was no misdirection in law and that the appeal sought to overturn factual findings made on the evidence by the Recorder.
The Legal Framework
In Stack v Dowden [2007] UKHL 17, one of the issues under consideration concerned the principles to be adopted on the taking of accounts between co-owners and in determining claims by a co-owner out of occupation for an occupation rent from a co-owner in occupation. The House of Lords unanimously held that the historic doctrine of equitable accounting no longer provided the foundational principles for such claims. They were instead to be found in statutory provisions of ss.12-15 TOLATA 1996. The Court did, however, note that the equitable and statutory routes would rarely produce a different result.
Baroness Hale provided in Stack the following summary of ss.12-15, which due to its utility bears repeating in full:
…Section 12(1) gives a beneficiary who is beneficially entitled to an interest in land the right to occupy the land if the purpose of the trust is to make the land available for his occupation…Section 13(1) gives the trustees the power to exclude or restrict that entitlement, but under section 13(2) this power must be exercised reasonably. The trustees also have a power under section 13(3) to impose conditions upon the occupier. These include, under section 13(5), paying any outgoing or expenses in respect of the land and under section 13(6) paying compensation to a person whose right to occupy has been excluded or restricted. Under section 14(2)(a), both trustees and beneficiaries can apply to the court for an order relation to the exercise of these functions. Under section 15(1), the matters to which the court must have regard in making its order include (a) the intentions of the person or persons who created the trust, (b) the purposes for which the property subject to the trust is held, (c) the welfare of any minor who occupies or might reasonably be expected to occupy the property as his home, and (d) the interests of any secured creditor of any beneficiary. Under section 15(2), in a case such as this, the court must have regard to the circumstances and wishes of each of the beneficiaries who would otherwise be entitled to occupy the property.
Saini J also had regard to the authority of Murphy v Gooch [2007] EWCA Civ 693, which concerned the very issue on appeal: namely, whether an ouster of occupation was a condition precedent to any claim for an occupation rent. The Court in Murphy concluded that ouster is not a condition precedent and in any event can be established on a constructive basis.
The Decision
Saini J noted that it was clear from the Recorder's reasons for refusing the claim for occupation rent that he considered the single issue to be determinative. That, Saini J decided, was erroneous. There was no need for A to prove as condition of making a claim under TOLATA 1996 that she had been excluded by R from enjoying legal rights to occupation of the Property. Moreover, there was no requirement, as the Recorder seemed to consider, that R had to prove something like a landlord's lockout.
Accordingly the appeal was allowed. The Recorder's decision on the rent issue could not stand; the first instance decision and costs order below were set aside. The Court directed that the issue of occupation rent and costs of the claim be freshly determined by a judge other than the Recorder.
This case provides a useful reminder of the principles which fall to be considered in the context of a claim under TOLATA 1996 for an occupation rent. It is settled law that ouster is not a condition precedent to such a claim; nor should physical exclusion be considered an obligate element in circumstances where constructive exclusion will suffice.
It is noteworthy that Saini J did not agree with the Recorder's Landlord Analogy, which appeared to conflate the separate jurisdiction of unlawful eviction with that of TOLATA 1996. Unlawful eviction claims are concerned with compensating a tenant who has been unlawfully deprived of their occupation of the premises through a statutory, contractual or tortious cause of action. Ss.12-15 TOLATA 1996 are designed, inter alia, to confer on trustees the power to regulate and set the terms for future occupation of trust land, with s.13 furnishing the court with a power to compensate a beneficiary whose entitlement to occupy has been excluded. Whilst the two are conceptually comparable it should be borne in mind that they are legally distinct.
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