Case Law Update: Savage V Savage [2024] EWCA Civ 49

Introduction

1. In Savage v Savage [2024] EWCA Civ 49 (“Savage”), the Court of Appeal reached a much required decision on the statutory interpretation of Section 15 of the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA 1996”) and held that, when considering an application under Section 14 TOLATA 1996 and a dispute between beneficiaries of a trust of land, the Court was permitted to consider the circumstances and wishes of the minority beneficiaries under Section 15 (3) TOLATA 1996.
2. The above decision confirms that whilst consideration must be given to the relevant factors set out in Section 15 TOLATA 1996, the Court is not precluded from considering any other relevant factor it considers appropriate in reaching a decision on an application under Section 14 TOLATA 1996.

Background

3. Savage concerned a second appeal against the order of His Honour Judge Farquhar sitting at the Family Court at Sussex (Brighton) (“the Order”) with Lord Justice Snowden delivering the leading judgment. The Order was made in the context of financial remedy proceedings and concerned the method of sale of three parcels of land which included land upon which the Appellant ran a business involving a campsite, a tennis court and other facilities.
4. The land was held upon trust for the Respondent and the children of his late brother which included the Appellant. The Respondent held a two-thirds interest in the largest parcel of land, a three-quarters interest in the second largest parcel of land and a one-half interest in the smallest parcel of land. The remaining interests were held by the siblings. The beneficiaries of the parcels of land could not agree how a sale should take place.
5. The Judge at first instance made an order which gave the Appellant a right of pre-emption over the land from which he conducted his business (i.e. a right of first refusal to the Appellant to buy out the Respondent’s interest in the land before it was offered for sale on the open market). The Judge considered the interests of the Respondent as majority beneficiary in value who wished to see the land sold as a whole and to move on with his life.
6. The Judge also considered that he was not prevented by Section 15 (3) TOLATA 1996 from having regard to the circumstances and wishes of the minority beneficiaries (i.e. the siblings) who all supported the Appellant. Whilst the Appellant could buy land elsewhere from the proceeds of sale, the Judge accepted that this was not the same as continuing a location sensitive business in the same area.
7. In reaching the above decision, the Judge considered that Section 15 TOLATA  1996 included only a non-exhaustive list of factors and that whilst the Court was obliged to take into account the factors set out therein, it was not governed by them alone. The Judge placed reliance on Briggs LJ’s observations in Bagum v Hafiz [2016] Ch 241 (at [21] and [23]-[25]) that Section 14 TOLATA conferred a wide discretion for the Court to make orders (and to take into account the non-exhaustive factors at Section 15 TOLATA 1996) where the unanimous consent and direction of the beneficiaries breaks down.
8. At the first appeal, His Honour Judge Farquhar disagreed with the first instance Judge. Relying upon principles of statutory interpretation, particularly the presumption that the grammatical meaning of an enactment is the meaning intended by the legislator (and the express mention of one thing excludes all others),  His Honour Judge Farquhar concluded that the wording of Section 15 (3) TOLATA 1996 was such that once the parties are in dispute then only the wishes and circumstances of the majority beneficiaries could be taken into account.
9. His Honour Judge Farquhar made the Order, namely the sale of the parcels of land on the open market without the Appellant being given any right of pre-emption. The Appellant appealed His Honour Judge Farquhar’s Order and conclusion in relation to Section 15 (3) TOLATA 1996 to the Court of Appeal.

Judicial Reasoning

10. Lord Justice Snowden provided a useful summary of the principles of statutory interpretation at paragraphs 15 to 21. In a nutshell, the Court emphasised the requirement to interpret a statutory provision in the context of the legislation itself with regard to its historical background and legislative purpose. Extrinsic aids to interpretation could be taken into account (e.g. Law Commission reports) as a secondary source. Further, the maxim that the express mention of one thing excludes all others was not an absolute rule and could not be applied where there is some reason for mentioning some but not other factors (e.g. where the statute lists a few examples).
11. Lord Justice Snowden reflected on the fact that Section 14 TOLATA 1996 gave the Court a broad discretion to make orders within its remit in relation to trusts of land than had previously existed. He also understood that Section 15 (1) TOLATA 1996 opened with the words “the matters to which the Court is to have regard in determining an application for an order under Section 14 include,” which indicated that the list in Section 15 TOLATA 1996 was not intended to be exhaustive. The Court was not bound to give effect to those factors or prioritise them over any of the other listed factors. In other words, if a factor is not listed in Section 15 TOLATA 1996, whilst the Court was not obliged to have regard to that factor, it was permissible for the Court to take it into account.
12. The above analysis, supported by the commentary derived from the Law Commission working papers, reports and draft explanatory notes (see paragraph 34 to 49), led to Lord Justice Snowden concluding that, in the case of a dispute, Section 15 (3) TOLATA 1996 does not oblige the Court to have regard to the circumstances and wishes of the minority (as opposed to the majority). However the Court is permitted to take this factor into account. The structure and purpose of Section 15 TOLATA 1996 is to set out factors to which the Court is obliged to have regard but is not intended to limit other factors the Court is permitted to take into account.
13. The strength of the above analysis was supported by an example posited by Lord Justice Snowden at paragraph 41. In essence, he considered that where two individuals hold an equal beneficial interest in property and there is a dispute between them, if His Honour Judge Farquhar was correct, the Court would be prevented from taking the circumstances and wishes of either beneficiary into account because neither held a majority interest for the purposes of Section 15 (3) TOLATA 1996 (and nor could minority interests be considered). Lord Justice Snowden considered the above scenario absurd and rather the Court in the above scenario would not be obliged to take the circumstances and wishes of either beneficiary into account but it would be permitted to do so. The Court of Appeal reversed the Order of His Honour Judge Farquhar and restored the order of the first instance Judge.

Comment

14. Savage provides for a welcomed clarification of the specific operation of Section 15 (3) TOLATA 1996. Fundamentally however, Savage has provided a welcomed clarification of the application of Section 15 TOLATA 1996 as a whole. On a simple exercise of statutory interpretation, in my view the only conclusion available to the Court of Appeal was the one that it reached. Section 15 TOLATA 1996 provides for a list of non-exhaustive factors for the Court to take into account when attempting to reach a decision for the purposes of making an order under Section 14 TOLATA 1996. The listed factors are those the Court must take into account (where applicable) but the Court is permitted to take into account any other factor it considers material.
15. Savage not only provides for a welcomed clarification of the law in this area but also provides for the following important reminder for practitioners and judges. Section 14 (and Section 15) TOLATA 1996 was introduced to provide the Court with a much greater discretion and power (to make orders justly and effectively) than would otherwise be available to the trustees in a situation where there is a heated dispute between beneficiaries over trusts in land (and where the basis of consent between beneficiaries breaks down as explained by Briggs LJ in Bagum v Hafiz [2016] Ch 241 at [21] and [23]-[25]). The decision in Savage not only gives effect to this understanding of the operation of Section 14 and 15 TOLATA 1996 but reinforces the point that the ultimate decision for an order under Section 14 TOLATA 1996 is to be made by the Court by reference to any material factor it considers appropriate in the circumstances. A decision under Section 14 TOLATA 1996 is and remains, by and large, a wide ranging fact specific decision.

Whilst every effort has been taken to ensure that the law in these articles is correct, they are 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 these articles represent the opinion of the authors and does not necessarily reflect the view of any other member of chambers.