Rollerteam Limited v Linda Riley & Anor

A trustee holding land for a sole beneficiary must give effect to the beneficiary’s valid directions concerning transfer or sale, provided they are consistent with the general interest of the trust. This may require transfer or sale with vacant possession. A contractual power to direct the terms of sale must be exercised lawfully and in good faith.

Where the trust deed and Trusts of Land and Appointment of Trustees Act 1996 already provide an adequate mechanism, the court will not imply a term requiring vacant possession. A trustee’s performance is not conditional upon immediate reimbursement unless the trust instrument so provides. However, the trustee need not fund substantial possession proceedings personally without funding or an adequate indemnity.

Rollerteam was the beneficial owner of a property held by Linda Riley under a 2013 trust deed. It sought declarations and relief concerning Riley’s obligations to transfer or sell the property, including whether she had to procure vacant possession. The property was occupied by Stephen Riley and Elizabeth Mackertich, who claimed continuing rights of occupation.

The court also considered whether Rollerteam’s reimbursement obligations were mutually dependent upon Riley’s performance, whether the occupants’ licences were encumbrances prohibited by the trust deed, and whether Rollerteam had rights to occupy the property as beneficiary. By the final day of trial, the property had been transferred and the mortgage discharged, so some issues became moot.

1. Rollerteam’s occupation. The court would have rejected Rollerteam’s claim to occupy the property during the trust. Under section 12 of the Trusts of Land and Appointment of Trustees Act 1996, the relevant question was whether the purpose of the trust was to make the land available for the beneficiary’s occupation. The trust was a temporary holding arrangement pending transfer or sale, not an arrangement intended to provide residential or operational occupation.
2. Transfer and sale with vacant possession. Clause 10, read with section 11(1)(b) of the Trusts of Land and Appointment of Trustees Act 1996, enabled Rollerteam to require a transfer with vacant possession. Riley’s refusal to comply with the October 2015 direction was a breach of trust. Clause 10 also entitled Rollerteam to direct a sale with vacant possession. Its discretion was subject to legality and good faith and could not be used maliciously or to procure an undervalue sale leaving Riley personally liable under the mortgage.
3. Implied term. No additional term requiring vacant possession was implied. The express provisions of the trust deed, supplemented by the 1996 Act, already provided a sufficient mechanism. The proposed qualification concerning occupants consented to under clause 3 was also unrealistic and unnecessary.
4. Occupants’ status. Stephen and Elizabeth were bare licensees. Neither had a proprietary interest or tenancy binding on Rollerteam. Stephen’s alleged contractual licence failed because his occupation was not provided in consideration of work or care, the promise was not made on behalf of Rollerteam, and his potential claims had in any event been settled by the 21 May 2013 consent order. Their occupation did not prevent directions for vacant possession.
5. Mutuality and funding. Neither party could rely on the other’s alleged breach to withhold performance. Rollerteam’s reimbursement obligation was not conditional on Riley’s performance, and Riley’s transfer or sale obligations were not conditional on immediate reimbursement. Riley was entitled to seek funding or a clear indemnity before incurring significant possession costs, but she could not simply ignore a valid direction. Her refusal to act on the 2015 and 2017 directions was a breach of trust. The consequences and any equitable compensation were left for later determination.
6. Clause 3. Permitting the occupants to remain as bare licensees did not create an encumbrance. A bare licence is not an interest in land or a burden on title. Riley therefore did not breach clause 3 by allowing their occupation to continue.