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Report No. 86

VI. Statutory trust for sale-The machinery

Operation of statutory trust for sale.- The statutory trust for sale in England operates as follows:-

Under the Law of Property Act, when there is a statutory trust, the land- is held upon trust to sell the land, with power to postpone the sale and to hold the rents and profits until sale and the ultimate proceeds of the sale upon trust to give effect to the beneficial and equitable rights of the persons to whom the land was limited.1

So long as all the trustees desire to continue their enjoyment of the property, they need not sell the land, in view of the power to postpone the sale.2 But if all of them cannot agree to postpone the sale, the imperative direction to sell must be given effect to. If the persons concerned are all of full age in undivided shares, they all become joint tenants upon this statutory trust. Thus, if land is conveyed to A, B, C and D in equal shares, then all four become joint tenants of the legal estate, and are entitled, equitably to the proceeds of the sale when the sale is held, and to the rents and profits until the sale is held.2 They need not sell at once, or indeed at any tune, in view of their power to postpone the sale. Instead of sale, a partition of the land is also allowed.4 The trustees or personal representatives of the persons beneficially interested have also this right.5-6

No possibility of deadlock.- There is no deadlock in the scheme of the English Act. Either the other tenants-in-common agree to purchase the share-in which case the trust for sale is terminated by a conveyance to those beneficiaries, or (if the trustees refuse to exercise their power) the beneficiary can apply to the court for a vesting or other order.7-8 It may also be mentioned that any "person interested" can apply for an order to compel the trustees to se11.9

Other statutory provisions in England.- It remains to note that by section 90 of the Inclosure Act10, 1845 power to make partition orders was conferred upon the Inclosure Commissioners. This power ultimately devolved upon the Minister of Agriculture and Fisheries, but this power was seldom used, and is believed to have been impliedly repealed by the provisions of the Law of Property Act, 1925.11

No legal estate in undivided share.- To revert to the Law of Property Act,12 a legal estate is not now capable of subsisting or being created in an undivided share in land and in most cases it can now be created only so as to take effect behind a trust for sale.13-14

Thus, neither a joint tenancy nor a tenancy in common as known to the common law can now be held in England, except in the capacity of trustees. As a result of the passing of the Act of 1925, partition actions in England have been rendered unnecessary, and have become obsolete.15

Effect of section 34(2), L.P. Act, 1925.- It is unnecessary to go into further details about the provisions of the 1925 Act. It is enough to add that section 34(2) of the Law of Property Act, 1925 provides, in effect, that conveyance of land to any person in undivided share shall (where the persons are of full age) operate as if the land had vested in the grantees as joint tenants upon the "statutory trusts hereinafter mentioned". Under section 35 of that Act, such a trust is upon trust to sell the same and to possess the net proceeds of sale after payment of costs etc., upon such trusts and subject to such powers and provisions as may be requisite for giving effect to the rights of the persons interested in the land.

Sections 23 to 26 and 28 make detailed provisions as to how the trust for sale is exercised, and how the property is to be managed until it is sold.16 Unsold lands can be partitioned, or provision made for equality money under section 28(3) of the 1925 Act. Chattels can be partitioned under section 188. If one of the tenants in common unreasonably refuses consent, then an order for sale can be obtained from the court, but the court would make such order only if it is satisfied that it is just and proper to do so, and may impose terms as to alternative accommodation.17-18

Settled Land Act, 1925.- Where the land is settled land, the matter is governed by detailed provisions in the Settled Land Act, 1925. Again, it is unnecessary to enter into any elaborate discussion thereof for the purposes of this Report.19 In practice, the legal fee simple is conveyed to trustees (who may or may not be the beneficiaries) upon an express trust for sale, the details of which are set out in full on the face of the document of settlement which would give all necessary or proper consequential directions.

Legislation in England of 1964.- In 1964, legislation was enacted in England20 to remove certain doubts as to how far a surviving joint tenant could sell off his share.21 The details of this legislation are also not material for the present purpose.

1. Section 35, Law of Property Act, 1925.

2. Goodeve & Potter Modern Law of Real Property, (1929), p. 395.

3. Section 34(2), Law of Property Act, 1925.

4. Section 28(3), Law of Property Act, 1925.

5. Brooker Public Trustee (in re:) v. Young, 1934 Ch 610.

6. As to chattels, see section 188, Law of Property Act, 1925.

7. Goodeve & Potter Modern Law of Real Property, (1929), pp. 402, 403.

8. See Snell Equity, (1966), p. 247.

9. Section 3, Law of Property Act, 1925.

10. The Inclosure Act, 1845 (8 & 9 Vic., C. 118).

11. Halsbury's, 3rd Edn., Vol. 32, p. 346, para. 544.

12. Section 106, Law of Property Act, 1925 (15 & 16 Geo. 5, C. 20).

13. Halsbury's, 3rd Edn., Vol. 32, p. 329, para. 514, p. 338, para. 529 and section 36 (4) of the Settled Land Act, 1925.

14. Sections 30, 34, 35 & 36, Law of Property Act, 1925.

15. Halsbury's, 3rd Edn., Vol. 32, p. 344, para. 540.

16. See M. Lewis Statutory 1114SiS for sale, (1940) 56 LQR 255.

17. Bull v. Bull, (1955) 1 AER 253 (256) (CA).

18. See also Cook v. Cook, 1962 Probate (1962) 2 AER 811.

19. For a neat summing up of the points, see Stephen's Commentary on the Law of England, (1950), Vol. 1, p. 220.

20. The Law of Property (Joint Tenants) Act, 1964.

21. See Law Times (March 20, 1964), p. 159.

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