A simple guide to issuing claims under TOLATA 1996 for separating cohabiting couples

In the absence of financial provision akin to divorcing couples, the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) is a tool for separating couples in relation to their property. TOLATA claims are brought under the Civil Procedure Rules (CPR).

This article is a simple guide to TOLATA claims.

What remedies can the court provide?

Sections 14 and 15 TOLATA sets out the court’s powers. The court can declare the nature and extent of a person’s interest in property subject to a trust, as it thinks fit. The court can make orders for sale of trust properties and a distribution of the proceeds pursuant to s.14(2)(a).

The court can also undertake equitable accounting and compensation, where one co-owner has spent money on the property, such as for repairs or mortgage payments, while the other has not contributed. On the other hand, one co-owner might have gained benefits from the property, like rent payments or use of the property through occupation, while the other has not. The court’s role is to find a fair balance between the two co-owners (Murphy v Gooch [2007] EWA Civ 603).

Pre-action procedure

As TOLATA claims are brought under the CPR, the pre-action conduct and protocols practice direction should be followed. Paragraph 6 sets out the steps required before issuing a claim:

1. the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated;
2.  the defendant responding within a reasonable time – 14 days in a straightforward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and
3.  The parties disclosing key documents relevant to the issues in dispute.

How to issue a claim

A TOLATA claim can be issued under CPR part 7 or 8. In general, TOLATA claims are issued under part 8.  Part 8 is appropriate to “seek the court’s decision on a question which is unlikely to involve a substantial dispute of fact” (practice direction 8 – alternative procedures for claims). Part 8 is therefore best for more straightforward claims such as an order for the sale of a property. On the other hand, part 7 is reserved for cases with a substantial dispute of fact. Therefore, it is most appropriate where there is a significant dispute over the existence or extent of a beneficial interest.

The pre-action protocols are designed to provide sufficient information about the nature of the issues in dispute to enable the claim to be issued under the most appropriate Part of the CPR.

CPR parts 7 and 8 require two different claim forms and procedures:

Part 7

• Issue claim form N1 and a particulars of claim. The particulars of claim can be served with the claim form or within 14 days of service of the claim form.
• After receipt of the particulars of claim, the defendant has 14 days to file and serve their defence or they can file and serve an acknowledgement of service within 14 days and subsequently file and serve their defence within 28 of the service of the claim form.
• Disclosure, inspection and witness evidence follow.
• Part 7 claims are subject to costs management.

Part 8

• Issue claim form N208 and written evidence on the face of the form or in an attached witness statement.
• The defendant has 14 days to file and serve their acknowledgment of service alongside any written evidence.
• The claimant may file and serve evidence in reply within 14 days and serve further evidence.

Part 8 is a quicker route, but it is crucial to be aware that if the defendant raises a substantial dispute of facts, the case is likely to be moved to the part 7 track.

Which court should a TOLATA claim be issued in?

Both the county court and high court have jurisdiction to hear TOLATA claims (s23 TOLATA). However, if other equitable relief is sought (alongside or as an alternative to the remedy under TOLATA), the county court has a limit of £350,000. The High Court has unlimited jurisdiction under TOLATA 1996, however, proceedings for a specified sum may not be commenced in the High Court, unless the value of the claim is for more than £100,000.

Alternative dispute resolution

It is important to demonstrate a willingness to engage in alternative dispute resolution (ADR) because civil claims can have strict costs consequences. Since Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416, the courts have the power to induce parties to participate in ADR. Sometimes TOLATA claims are adjourned at the first hearing to enable the parties an opportunity to engage in ADR.

What evidence is required for TOLATA claims?

In the case of separating cohabiting couples, disputes commonly arise over the parties’ beneficial interests. The first place to start (after the Office Copy entries) is the conveyancing file to try and locate an express declaration of trust. When purchasing the property, the parties may have signed an express declaration of trust through either a formal declaration of trust or by completing the “declaration of trust” section of a TR1 form.

The TR1 form can also be obtained directly from the Land Registry if necessary.

In the absence of an express declaration, the conveyancing file may set out relevant conversations or how each party contributed to the deposit. A full copy of the conveyancing file, expressly to include all correspondence and attendance notes, should be obtained.

What will the court consider?

Section 14 TOLATA sets out the matters the court will consider:

1. the intentions of the person or persons (if any) who created the trust;
2. the purposes for which the property subject to the trust is held;
3. the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home; and
4. the interests of any secured creditor of any beneficiary.

As recently as August 2024, the court have confirmed that a declaration of trust is conclusive unless varied by subsequent agreement or affected by proprietary estoppel (Nilsson & Anor v Cynberg [2024] EWHC 2164 (Ch)).

As set out in Stack v Dowden [2007] UKHL 17, subsequent agreement can involve:

• A formal agreement compliant with the Law of Property Act 1925 (LPA 1925)
• A common intention constructive trust

A common intention constructive trust may arise from assurances made after an express declaration of trust (Bahia v Sidhu [2022] EWHC 975; Clarke v Meadus [2010] EWHC 3117). Intention may be established by express discussions evidencing an agreement or understanding, usually at the time of the acquisition, to the effect that each party should have a beneficial interest, or by drawing inferences from conduct (Lloyds Bank plc v Rosset & Anor [1990] UKHL 14).

Practical advice for clients to avoid TOLATA claims

As prevention is better than cure, it is good practice for cohabiting couples to sign a declaration of trust when purchasing a property; draw up a cohabitation agreement; and keep a clear financial record of the parties’ contributions to the property.

Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational purposes. Readers are respectfully reminded that it is not intended to be a substitute for specific legal advice and should not be relied upon for this purpose. Please also note that this article represents the opinion of the author and does not necessarily reflect the view of any other member of chambers.