Bagum v Hafiz [2016]

Court: Court of Appeal

Facts:  the court was called to assess its discretionary powers over co-ownership under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). This case concerned a mother and her two sons who jointly owned a home in Islington as tenants in common, each holding one-third of the beneficial interest. Following disputes over the property, one son requested that his share be purchased by his brother. Seeking enforcement, he applied under Section 14 of TOLATA for the court to order this sale to his brother.

The initial court found that it did not have jurisdiction to compel one beneficiary to sell to another. Instead, it ordered that the property be sold on the open market, allowing any of the parties to bid. The central issue involved the extent of the court’s discretion under TOLATA, particularly when the beneficiaries are in conflict over the property’s disposition.

Held: The Court of Appeal upheld the lower court’s ruling, confirming that it lacked the authority to order a direct sale from one beneficiary to another. However, the court affirmed that it could order a sale of the property on the open market and permit beneficiaries to bid. The court emphasized that Section 14 gives broad discretionary powers to address conflicts in land trusts.

Key Judicial Statements: Briggs LJ underscored that under Section 14(2) of TOLATA, the court could not mandate one beneficiary to sell directly to another, as this was outside the trustees’ direct functions. However, the court does have jurisdiction to order an open-market sale, with an option for beneficiaries to buy. The court observed that although this approach may have the same practical effect as directing a sale between beneficiaries, it remains within the scope of the court’s powers as outlined by TOLATA. Further, the court highlighted that Sections 14 and 15 confer broad discretion, which allows the court to deviate from strict beneficiary alignment in favor of broader considerations. This includes safeguarding the trust’s purpose—here, providing a home for the family and enabling the departing son to gain financial benefit. Thus, while trustees generally operate with the unanimous consent of beneficiaries, the court may override this in the interest of fairness and equity.

💡 Leveluplaw: This case illustrates the significant discretion courts have under TOLATA to resolve disputes over co-owned property, particularly in balancing competing interests and considering broader family and personal factors beyond mere beneficiary consensus.