Parkes v Wilkes

Under the Trusts of Land and Appointment of Trustees Act 1996, the court’s jurisdiction to make an order concerning trustees’ functions is distinct from the discretionary question whether the order should be made. If trustees could properly grant a lease as absolute owners, the court has jurisdiction to order that grant. The discretion must include the statutory factors, especially the parties’ common intention and the purpose for which the property is held, but the list is not exhaustive. Relevant background may also be considered. A lease extension for no premium may properly be refused where the evidence shows no common intention to grant it, the grant would diminish the trust property, and a statutory alternative remedy is reasonably available.

The claimant and defendant jointly acquired the freehold of a building containing their two flats through collective enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993. They held the freehold on trust as tenants in common in equal shares. Seven years later, the claimant sought an order under section 14(2) of the Trusts of Land and Appointment of Trustees Act 1996 requiring the defendant to grant her a 999-year lease extension at a peppercorn rent.

The County Court accepted that it had jurisdiction to make such an order but declined to exercise its discretion. It found no common intention to grant 999-year leases and considered that the grant would reduce the value of the trust property. The claimant appealed, relying principally on the marriage value reflected in the original collective-enfranchisement price, alleged omissions in the fact-finding, delay in producing judgment, and the availability of a statutory 90-year lease extension.

1. The appeal was dismissed. The court rejected the respondent’s submission that Trusts of Land and Appointment of Trustees Act 1996 provided no jurisdiction to make the order. Section 6(1) gives trustees the powers of an absolute owner, subject to section 6(6). Since an absolute owner could grant a new lease, the trustees could do so, and the court could order it under section 14(2). Jurisdiction and the proper exercise of discretion were separate questions.

2. The relevant section 15 factors included the common intention of the creators of the trust and the purpose for which the property was held. The common intention had to be genuinely common. The declaration of trust was clear and contained no purpose that could imply an entitlement to a 999-year lease at no premium.

3. The County Court judge was entitled to reject the claimant’s evidence and accept the defendant’s account that the advantages of acquiring the freehold included management without the former freeholder and savings on ground rent and insurance. The absence of express discussion of marriage value did not make the finding plainly wrong. The inferential significance of the collective-enfranchisement valuation was weaker than the direct evidence and surrounding circumstances.

4. Marriage value and the unequal contributions to the purchase price were relevant background matters in the overall discretion, even though they were not common intentions or purposes within section 15(1). They did not outweigh the strong fact-specific reason against the order: granting a 999-year lease for no premium would diminish the value of the freehold, which had not been acquired for that purpose.

5. The statutory route to a 90-year lease extension under section 39 of the 1993 Act could properly be treated as an available and reasonable alternative. The fact that it was less advantageous than the order sought did not justify substituting the claimant’s failed factual case. The delay in the County Court’s judgment did not justify a retrial.

• High Court (Chancery Division): appeal from the order of HHJ Vavrecka in the County Court at Southend dated 17 November 2016. The appeal was dismissed.