Children v Chargee

Mortgage Corporation v Shaire and others (Ch D TLR 21 March)

Prior to 3 January 1997 save in exceptional circumstances s30 of the Law of Property Act 1925 resulted in property owned by more than one person being held on trust for sale and that the will of the person seeking sale, be they a trustee in bankruptcy or a chargee, would prevail over the interest of children and families. However, on 3 January 1997 trusts for sale and s30 were effectively replaced by the Trusts of Land and Appointment of Trustees Act 1996, s1 of which rendered trusts for sale obsolete and replaced them with the less arcane trusts of land. Section 15 of the 1996 Act provides that in applications for an order for sale under s14 matters to which the court is to have regard include ‘(a) the intentions of the person or persons (if any) 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 any land subject to the trust as his home; and (b) the interests of any secured creditor of any beneficiary’. The interest of the chargee was now just one of the four specified factors to be taken into account and there was no suggestion that it was to be given any more importance than the interests of children residing in the house. Parliament had intended to relax the law so as to enable the courts to have more discretion in favour of families and against banks and other chargees. In the light of the change in the law introduced by s15 the old authorities should be regarded with caution. The bank’s application for an order for sale was refused.