When can a non-occupying beneficial owner of a domestic property claim compensation from the occupying party?
Susan Bailey (SB) and Barry Dixon (BD), a cohabiting couple, jointly owned the property in which they lived with BD’s grandson. The relationship broke down and SB left the property. The joint tenancy was severed a number of years later with the consequence that SB and BD, as trustees of the legal interest, then held the beneficial interest in the property as tenants in common.
BD issued proceedings seeking an order for sale of the property under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). SB defended the action and as part of her case made a claim for an occupation rent to reflect BD’s exclusive occupation of the property since SB had departed and to reflect SB’s exclusion from the property.
The starting point is that as beneficial tenants in common both parties had a right to occupy the property. Section 13 (6) of TOLATA includes provision that where the entitlement of any beneficiary to occupy has been excluded or restricted the trustees may impose on any beneficiary a condition requiring him to make payments by way of compensation to the beneficiary whose entitlement has been excluded. This is often referred to as an occupation rent.
At first instance the County Court registrar refused SB’s claim for an occupation rent, primarily on the basis that SB had not been prevented from living at the property, rather she had chosen not to occupy. In other words, SB had not shown that she had been barred from exercising her legal right to occupy.
The High Court allowed SB’s appeal, holding that under TOLATA the Court may award compensation (an occupation rent) if it is just to do so, whether or not there is any proof of the claimant having been ousted from the property.
This is not new law but rather the High Court restating existing law. The Court will look at all the circumstances surrounding one beneficial owner leaving the property to determine whether it is just and equitable for the remaining beneficial owner to be charged with paying an occupation rent.
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