Case report of baghums v Hafiz 2015 EWCA Civ 801.
Baghums and her two sons were in co-ownership of a property as tenants in common in equal shares meaning that, each individual owned an undivided share in the property which they all had equal rights to. The property was occupied by bagums and hafiz and bagums petitioned the court for an order allowing hafiz to purchase hais one third beneficial interest in the property due to the fact that the relationship between baghums and hafiz and hai had broken down as a result to a dispute that arose concerning the use and enjoyment of the property. this is a complex issue as each individual party has unity of possession meaning that all three tenants have equal rights to possession.
In the preluding case the judge ruled that in accordance with section 14 3 of the Trusts of Land and Appointment of Trustees Act 1996 it was not within the powers of the court to grant this petition as the provision prevents the courts issuing an order removing trustees from there beneficial interests of a property meaning that hai can’t be ordered to sell his third of beneficial interest. Instead the judge concluded that the act did allow her to issue an order of sale directing the trustees to sell the house on the provisory term that hafiz should get preliminary buying rights, at a price predetermined by the courts, before it went on sale to the open market in which all trustees would have the freedom to bid. This judgment was appealed by hai upon the basis that the judge did not have the powers to create and in turn didn’t have the jurisdiction under the trusts of land and appointment of Trustees act to exercise her powers in a way that forced one trustee to sell to another due to the courts not having powers under section six of the act to interfere with certain laws of equity and having the same economic effect as ordering a transfer of his trusts. However, it was held by Briggs LJ that the appeal was to be dismissed as the judge was correct in the premise that it was not within her powers to order the removal of hai by purchase or otherwise and correct further In her decision to create the order of sale with the provisions mentioned. The ratio dicendi for this ruling was based on the fact that the two transactions having the same economical effect, being money in exchange for beneficial interest, was irrelevant as power of sale to other beneficiaries was an undoubted power of a trustee and the removal of trustees by payment was not. Furthermore Briggs LJ held that the clear object of the act was to bestow upon the court wider discretional powers than available to trustees so that they could take into account factors such as the intention of the person who created the trust and the welfare of minors and that due to these reasons the ruling fell right within her jurisdiction as the unusual form of order was calculated to protect each individual beneficiary’s interest by allowing baglum and hafiz to continually occupy the property and hai to receive the proper value of his interest.
This case has been argued to be of high significance as it sets a precedent, due to Briggs lord justice careful wording, which allows the courts to gain wider discretionary powers that trustees would not have available to them self under general principles of equity. this means the courts can order trustees to do what they could not do themselves under general law principles. As a result of this the legal precedent set in this case is argued to have merit due to the fact that it clarifies the idea that the court does not have the power to transfer equity between trustees upon payment of a courts predetermined price, But, does have the power under the Trusts of Land and Appointment of Trustees Act 1996, ss 14 and 15 to make an order for sale, giving one beneficiary the first opportunity to purchase the other’s share at market value. This precedent has practical value as it allows the court to protect the interests of all beneficiary’s by taking into account a wide range of interests rather than just equitable.