Sharing Homes and the Property Rights of Cohabitants

Current law:  Procedural aspects & worked examples

Copyright Mike Horton October 2003-All rights reserved.

No part of this document may be copied or used without the  written permission of the author.

 

1 Initial advice

1.1 Full proof: NB try not to ask leading questions

1.1.1 Who paid for what?

1.1.2 What discussions were there about ownership?

1.1.3 Were any promises made?

1.1.4 Did either party give up something?

1.2 Information/ documents:

1.2.1 office copy entries

1.2.2 transfer form

1.2.3 conveyancing file

1.2.4 mortgage statements

1.2.5 bank statements

1.3 Restriction if in sole name of other party

1.3.1 New Land Registration Act 2003 now in force

1.3.2 Cautions against dealings now abolished

1.3.3 Now you must apply for a 'restriction'

1.3.4 Land Registry guides:

1.3.4.1 Practice Guide 19: Notices, restrictions and the protection of third party interest in the register: see http://www.landregistry.gov.uk/publications/practice_guides/lrpg019.pdf

1.3.4.2 Practice Guide 24: Private trusts of land: see
http://www.landregistry.gov.uk/publications/practice_guides/lrpg024.pdf

1.3.5 The Land Registry guides suggest that a person seeking to protect an interest under a constructive trust should apply for a restriction in form A. This refers to the wording of the restriction which will appear on the register.

1.3.5.1 A form A restriction reads:
"No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court."

1.3.5.2 This is the same restriction which will appear whenever property is transferred into the names of two or more persons and they hold as tenants in common.

1.3.5.3 A form A restriction provides protection of dubious quality. The registered proprietor would be able to find a helpful friend to add as a joint legal owner. The transfer into their joint names would not be stopped by the form A restriction (as no capital monies arise). With there now being two registered proprietors, a sale or re-mortgage would not now be stopped by the form A restriction, and any interest under a constructive trust etc would be 'overreached'.

1.3.6 So, apply for a form N restriction, which reads thus:
"No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by [name] of [address] {signed on behalf of [name] of [address] by [representative]}"

1.3.6.1 The Land Registry Guides suggest that a person with an interest under a bare trust should apply for a restriction in form N.

1.3.7 See application form for restriction RX1: these can be downloaded from the Land Registry website at: http://www.landregistry.gov.uk/publications/lrforms/03/rx1.pdf
or in word format at: http://www.landregistry.gov.uk/publications/lrforms/03/rx1.doc

1.3.8 "The beneficiary will need to satisfy the registrar that there is a trust. In practice, this will involve completing panel 13 of form RX1 with sufficient information to do so. This will involve more than a bare assertion that a trust has arisen. You will need to explain the circumstances that have caused it to arise."

1.3.9 The registered proprietor can object to the restriction being entered, and a restriction may be cancelled or withdrawn. In the event of a dispute, the matter can be referred to the Adjudicator to HM Land Registry - or you can always issue proceedings!

1.4 Sever joint tenancy?

1.4.1 NB on severance, proprietor to apply for form A restriction

2 Pre-action steps

2.1 See the Practice Direction - Protocols. No specific pre-action protocol in relation to ToLaTA claims.

2.2 But para 4 of the Practice Direction governs 'pre-action behaviour in other cases'.

2.3 NB failure to behave properly can attract costs sanctions.

2.4 Part 36 offers

2.4.1 Detailed provisions relating to the making of Part 36 offers and the consequences in costs for their acceptance are to be found in Part 36 of the CPR. To be effective, a part 36 offer must:

2.4.1.1 be in writing, stating that it is a part 36 offer!

2.4.1.2 state whether it relates to the whole claim or to part of it or to an issue that arises in it and if so to which part or issue;

2.4.1.3 state whether it takes into account any counterclaim;

2.4.1.4 be expressed to be open for at least 21 days after the date it was made;

2.4.1.5 be pitched below (if only slightly) the level you expect the court to find: the costs consequences set out in CPR 36.21 only apply where the judgment is more advantageous than the terms of the offer. You have to beat your offer, not just match it.

2.5 Pre-issue: check whether:

2.5.1 adequate letters of claim & response were sent/received;

2.5.2 the parties' positions have changed since then; if so, how?

2.5.3 the issues remaining in dispute have been clearly identified and could be further narrowed;

2.5.4 serious attempts to settle have been made;

2.5.5 a (further) Part 36 offer should be made or accepted now;

2.5.6 mediation/ ADR should be considered or tried pre-issue;

2.5.7 evidence is ready or in hand;

2.5.8 arrangements are in place for service.

3 Issuing proceedings

3.1 The Part 7/ Part 8 debate

Rule 8.1 Types of claim in which Part 8 procedure may be followed

8.1

Types of claim in which Part 8 procedure may be followed

(1) The Part 8 procedure is the procedure set out in this Part.

(2) A claimant may use the Part 8 procedure where-

(a) he seeks the court's decision on a question which is unlikely to involve a substantial dispute of fact; or

(b) paragraph (6) applies.

(3) The court may at any stage order the claim to continue as if the claimant had not used the 
Part 8 procedure and, if it does so, the court may give any directions it considers appropriate.

(6) A rule or practice direction may, in relation to a specified type of proceedings-

(a) require or permit the use of the Part 8 procedure; and

(b) disapply or modify any of the rules set out in this Part as they apply to those proceedings.

Practice Direction-How to Make Claims in Schedule Rules and Other Claims

8BPD.1 This Practice Direction supplements CPR Part 8, and Schedule 1 and Schedule 2 to the CPR

1.1 In this practice direction "Schedule rules" means provisions contained in the Schedules to the CPR, which were previously contained in the Rules of the Supreme Court (1965) or the County Court Rules (1981).

8BPD.2 Contents of this Practice Direction

2.1 This practice direction explains-

(1) how to start the claims referred to in Sections A and B;

(2) which form to use as the claim form; and

(3) the procedure which those claims will follow.

8BPD.3 How to use this Practice Direction

3.1 This practice direction is divided into Sections A and B. Only one section will be relevant to how tomake a particular claim.

3.2 If the claim is described in paragraph A.1-use section A.

3.3 If the claim is described in paragraph B.1-use section B.

8BPD.4

Section A: Application

A.1 Section A applies if-

(1) the claim is listed in Table 1 below;

(2) an Act provides that a claim or application in the High Court is to be brought by originating summons;

or

(3) before 26 April 1999, a claim or application in the High Court would have been brought by originating summons, and no other method for bringing the claim or application on and after 26 April 1999 is specified in a rule or practice direction.

A.2

(1) The claimant must use the Part 8 procedure unless an Act, rule, or practice direction, makes any additional or contrary provision.

(2) Where such additional or contrary provision is made the claimant must comply with it and modify the Part 8 procedure accordingly.

8BPD.5 Claim form

A.3 The claimant must use the Part 8 claim form.

3.1.1 Before the CPR, proceedings under s 30 of the Law of Property Act 1925 and s 14 of the Trusts of Land and Appointment of Trustees Act 1996 would be brought by originating summons in the High Court, and by originating application in the county courts. This means that Section A of the Practice
Direction to Part 8 applies, which suggests that the use of the Part 8 procedure is mandatory, even where there is likely to be a substantial dispute of fact.

3.1.2 However, because the rules allow the Defendant to object to the use of the Part 8 procedure if there is a substantial dispute of fact, be wary of issuing under Part 8 where pre-action correspondence indicates either a substantial dispute of fact or a significant disagreement as to the legal framework of the claim.

3.1.3 At one end of the spectrum, eg case with trust deed drawn up at time of purchase, trust deed is clear, no case of fraud or mistake has been raised or can be foreseen: Part 8 likely to be appropriate.

3.1.4 Opposite end: cases involving eg proprietary estoppel claims likely to benefit from clear exposition of issues in detailed particulars of claim.

3.1.5 Are the factual issues such that full pleadings will assist in the resolution of the dispute?

3.2 Venue:

3.2.1 High Court only if very complex or very valuable claim (see para 2.4 of the Practice Direction to Part 7); otherwise, county court

3.2.2 Old county court rules: proceedings to be issued in county court for the district in which the property is situate

3.2.3 Now, proceedings to be issued in the "defendant's home court", ie the county court for the district in which the defendant resides or carries on business (CPR r 2.3(1)). Clearly, if the defendant is living in the property which is the subject of the dispute, this will be the same county court.

3.3 Part 8:

3.3.1 Proceedings commenced by Part 8 claim form (n208) plus detailed witness statement filed and served at time of issue

3.3.2 Defendant to file acknowledgment of service and witness statement in reply

3.3.3 There will then be a first directions appointment. Case automatically allocated to multitrack.

3.3.4 The defendant can object to the use of the Part 8 procedure, if it appears that there will be a substantial dispute of fact: CPR r 8.8. The court can also raise the issue of whether the Part 8 procedure is appropriate. See r 8.1(3).

3.4 Part 7:

3.4.1 Part 7 claim form (n1) and detailed particulars of claim

3.4.2 Defendant to file defence etc

3.4.3 Full timetable for allocation questionnaires, disclosure etc

3.5 Evidence: s 15 checklist

3.5.1 Section 15(1) of the 1996 Act contains a checklist of items to which the court is to have regard in determining an application under s 14.

3.5.2 If a dispute is possible on, eg, whether or not there should be an order for sale, evidence will be needed on the matters set out in the checklist, including cost of rehousing for parties if sale ordered.