• March 28, 2024
 Court can order sale of property to trustee at expert’s valuation price

Court can order sale of property to trustee at expert’s valuation price

In a recent appeal, a High Court judge upheld a decision which allowed one beneficial owner of a property to buy out his siblings’ (the other beneficial owners’) interests in the property at a price determined by a valuation exercise rather than a sale on the open market.

In this case, a house was left by Sybil and John Chaston to their four children. When she died, Mrs Chaston’s beneficial half share was passed to a discretionary trust with her four children as equal beneficiaries. When Mr Chaston died, his half share in the property went directly to the children in equal shares.

In 2014, one of the children sold and transferred her 25% share to her brother (the respondent). This left the brother with 50% beneficial ownership of the property. He then wanted to buy the remaining 50% share from his two siblings (the appellants) who each owned 25% each.

While the siblings agreed to a sale, they felt that the property should be sold on the open market. However, the brother sought to buy his siblings’ interest in the property at a price to be determined by a valuation exercise and made an application under s. 14 of the Trusts of Land and Appointment of Trustees’ Act 1996 (TLATA) to do so.

The District Judge granted the application but took four months to deliver his written judgment. In response, the appellants appealed to the High Court.

As well as criticising the initial delay, the other two co-owners argued that:

  • The court had no power to direct the sale of the property to only one of the beneficiaries under s. 14 TLATA
  • It was wrong for the trial judge to take into account a previous agreement in principle to sell the property to the respondent at a value to be agreed with the appellants
  • The trial judge should not have paid any attention to the wishes of the beneficiaries, because they had no right of occupation and not all were trustees
  • As a trustee, she (one of the appellants) was bound to obtain the best possible price for the sale of the trust asset, which could only be done through a sale on the open market
  • As the property was unique the value could not be obtained by valuation mechanisms, but only by marketing it on the open market.

However, the High Court judge disagreed and did not accept these points. Crucially, Matthews HHJ in the High Court decided that s.14 of the Trusts of Land and Appointment of Trustees Act 1996 gave the district judge more discretion than the trustees themselves and the appeal was dismissed.

Read a full summary of Chaston & Anor v Chaston [2018] EWHC 1672 (Ch)

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