Client successful in TOLATA proceedings

Shilpa Mathuradas

The case related to proceedings under the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”) in respect of joint ownership of two properties.

Background

The client had purchased the properties with her partner at the time. They had been together since early 1980s but had never married. The relationship ended in 2013. During the relationship and cohabitation, the parties had two children who were now both adult and independent. One of the properties was the family home worth £1.6 million (“Property A”). The other property had initially been used as a family holiday home, however, had since been let out as a holiday let and was valued at £725,000 (“Property B”). Parties had equal shares in both properties; Property A was owned by the parties as a joint tenancy and Property B was held as tenants in common.

The client was advised that as parties had equal shares in both properties, there should be orders for sale in respect of both properties. We wrote to the Defendant requesting settlement in the form of an immediate sale of both properties and for the net proceeds of sale to be divided equally between the two of them. The Defendant disagreed on the basis that he demanded there should be a recognition of the time, energy and skill that he had contributed over the years to increase the value of both properties.

Property A

The parties had been living in separate bedrooms for some time and tried to follow house rules to separate out the living space. Post an incident in 2016 where the Defendant assaulted the client and was charged, even this arrangement became unworkable and intolerable. The client had no option but to eventually leave in 2018. The Defendant was in occupation of Property A since that date. The client had to incur the cost of alternative accommodation for over 4 years.
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The Defendant refused an equal split as he purported to seek an account for some additional expenditure and maintenance which he carried out to Property A over the years. The client’s position was that there was never any agreement that he would be reimbursed the money or for this time. Rather, it was incurred as part of the overall division of labour and payment of the upkeep and improvement work of Property A as a family unit to which they both contributed. Indeed the client continued to pay towards the household costs after she moved out of Property A in September 2018.

Property B

The client viewed this as a joint venture and the Defendant never suggested otherwise until post separation. The net profits from the rental had always been declared in their respective accounts as equal profits. The Defendant, however, regarded Property B as a business which he stated that he ran and had built up thus entitling him to a greater share. The Property paid for itself in all the repairs and improvements to the Property were paid for by the “business” via the rental income
Outcome

At a mediation, a partition of the two properties was eventually agreed. The Defendant retained Property B and agreed to pay a balancing equality payment to the client of £400,000. The client retained ownership of Property B.. It was also agreed that joint bank accounts would be
closed. Tax specialists were consulted in relation to the CGT and SDLT liability before an agreement at mediation was reached.

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