Laurence John Hallman v Tracy Harkins

On a reference under section 73(7) of the Land Registration Act 2002, the First-tier Tribunal may determine the merits of an objection to a restriction, including whether a claimed beneficial interest exists. Its jurisdiction is confined to the matter referred by the registrar.

Where quantification of beneficial shares is unnecessary to decide whether a restriction should be entered, the Tribunal has no jurisdiction to determine those shares. It should neither give a non-binding indication nor volunteer one. A dispute requiring quantification should ordinarily be directed to the court under section 110(1).

A substantial joint contribution by an engaged couple to improvements may independently create a beneficial interest under section 2(1) of the Law Reform (Miscellaneous Provisions) Act 1970.

Laurence John Hallman, the sole registered proprietor of the former family home, objected to Tracy Harkins's application for a restriction protecting her claimed beneficial interest. The matter was referred to the First-tier Tribunal under section 73(7) of the Land Registration Act 2002.

The FTT found that Ms Harkins had acquired an interest both through joint liability for a loan funding home improvements while the parties were engaged, and through a common intention constructive trust. It directed entry of a restriction and also stated that her share was 35%.

Mr Hallman appealed, challenging the factual basis for the finding of a beneficial interest and the quantification. The central issue was whether the FTT had jurisdiction to quantify beneficial interests when deciding an objection to a restriction.

1. Appeal dismissed. The Tribunal confirmed the FTT's direction that the Chief Land Registrar give effect to Ms Harkins's application for a restriction. The FTT's statement that her beneficial interest was 35% was set aside in substance: it was not part of the order, is not binding, and has no effect on the parties' rights or obligations.

2. The FTT was entitled to find that Ms Harkins had a beneficial interest through the jointly obtained loan which funded £4,400 of home improvements while the parties were engaged. Section 2(1) of the Law Reform (Miscellaneous Provisions) Act 1970, applying the approach in section 37 of the Matrimonial Proceedings and Property Act 1970, required consideration of whether there was a contribution to improvement, whether it was substantial, and whether a contrary agreement existed. The joint liability was capable of being substantial relative to the parties' modest resources and the property's value. This free-standing ground was unaffected by errors in the FTT's assessment of other financial evidence.

3. The FTT's alternative inference of common intention was unsafe. It materially overstated the pooling of resources by wrongly assuming that Ms Harkins's salary was paid into the joint account, and it had not resolved important disputed evidence about contributions to household expenditure.

4. The FTT's quantification was wrong in principle. Fair quantification under a common intention constructive trust requires an assessment of the whole course of dealing relating to the property. The FTT instead gave decisive weight to an arithmetical comparison between the length of the engagement and the relationship, and made errors in calculating both periods.

5. More fundamentally, under sections 42(1), 73(7) and 108(1) of the Land Registration Act 2002, the FTT could determine only the referred question whether entry of a restriction was necessary or desirable. Quantification was unnecessary to that task and lay outside the registrar's and FTT's jurisdiction. Parties could not enlarge that statutory jurisdiction by consent. The Tribunal should refuse non-binding requests to quantify shares; where quantification is likely to be disputed, a direction to commence court proceedings under section 110(1) will generally be preferable.

• Upper Tribunal (Lands Chamber): Appeal dismissed. The FTT's direction to enter the restriction was confirmed, but its stated quantification of the beneficial interest was held non-binding and outside its jurisdiction.
• First-tier Tribunal (Property Chamber): On a reference under section 73(7) of the Land Registration Act 2002, it directed entry of a restriction and stated that Ms Harkins's beneficial interest was 35%.