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Family Law

The leading authority on all aspects of family law

22 JUN 2015

Recurring misconceptions in TOLATA cases

Rhys Taylor

Barrister and Arbitrator

@RhysTaylor32

Recurring misconceptions in TOLATA cases
At a distance, cohabitation disputesinvolving constructive trusts, proprietary estoppel and applications under theTrusts of Land and Appointment of Trustees Act 1996 (TOLATA) look very muchlike a 'family law' dispute. However, close up, they are very differentcreatures indeed.

Whereas in a financial remedy claim (ondivorce) you can (broadly speaking) tot up the assets and divide by two, a TOLATA case can end up being all ornothing. Few financial remedy cases depend upon who said what years ago – theyare largely forward looking and the court paints justice with a broad brush.This means that family lawyers are not generally used to preparing statementsin which minute levels of detail need be recorded. It is enough to give a broadpicture. A TOLATA case is backward lookingand cares little for fairness. It often turns on who is to be believed aboutwho said what. The fine detail of evidence can paint a picture which may makethe difference between winning and losing. This requires a different approachto a financial remedy case.

As is well documented, there is no suchthing as a common law wife (save in a narrow set of circumstances beyond the scope of this note) and the absence of a statutory scheme for cohabiteeshas been described as the black hole of family law. However, the consequence ofthis is that cohabitants must fall back on the general law, in particularrelying upon equitable doctrines. Unlike the Matrimonial Causes Act, whichsimply (?!) enjoins the court to be 'fair' to the parties, a TOLATA applicationis, generally, seeking to discern the parties’ 'intentions'. So family lawyersneed to stop thinking about what is fair in-the-round and concentrate insteadon what intentions can actually be proved on the balance of probabilities.

NumerousTOLATA applications go awry before they are even properly off the startingblocks. If you are on the brink of a TOLATA dispute, you might like to considerthe following.

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  1. If there is an expressdeclaration of trust then that is (usually) the end of the matter, unless thetrust can be set aside for one of the usual vitiating factors. For conveyancessince April 1998 in Form TR1, there is a box which requires co-purchasers ofland to declare their beneficial interests. Get the executed TR1 from the Land Registry.If the conveyance was before April 1998 the form of conveyance did not usuallycontain a declaration of trust – but some conveyances had bespoke clauses.Always get the conveyance and also check to see if there was any subsequentdeclaration of trust made after purchase.
  2. Contributions are often anindication of what the parties’ intentions may have been. The law is seeking todiscern what the contributions say about intentions, they are not an end inthemselves. Clients can sometimes be woolly and/or contradictory in how theycategorise a sum of money. It may have been a contribution to purchase price,it may have been a gift or a loan. These three types of 'contribution' arelikely to have profoundly differing effects on the outcome. Make sure that thelay client understands the difference between these and is absolutely clear in theirinstructions to you.
  3. Too often open correspondencelimps on for months in which various assertions and counter assertions aredeveloped. It is a cross-examiner’s paradise. The account needs to be correctfrom day one. Consistency matters.
  4. The detail matters. Countlessinstructions, open letters, and (more grievously) statements of case and/orevidence baldly assert, 'the parties agreed that...' This is not good enough –the law here requires particularity. What precisely was said, when was it said,how was it said, where was it said, what else was going on, was anyone elsethere, what was the reply? This can take hours to properly iron out. Too oftena letter before action makes vague assertions which will not come anywhere nearmeeting the evidential hurdle to persuade a court on the balance ofprobabilities and to which no meaningful reply can be given. Such vagueassertions do not provide the foundation of any negotiation. Detail, detail, detail.
  5. Whether it be a constructivetrust or estoppel claim, the law is looking for detrimental reliance, in lightof agreements and/or representations and/or a common understanding. Thedetrimental reliance needs to be made out on the evidence. It is not enough tosimply have a representation left swinging in the wind.
  6. A clear view needs to be hadabout what discussions post-separation are admissible and those which benefitfrom the cloak of without prejudice privilege.
  7. There is sometimes amisconception about how complicated these proceedings can be and when the costsneed to be incurred. In financial remedy proceedings, there is often a flurry of activity after thecase has started, just before a First Appointment or a FDR. In a TOLATA casethe thinking needs to be front-loaded and undertaken prior to commencement ofproceedings (and preferably before the sending of a pre-action protocolletter). Solicitors unfamiliar with this area of work can be surprised byquotes emanating from chambers for a pre-action conference. It is often thecase that the issues are someway more knotty than the instructions give creditfor. Counsel might be seeing problems (eg consequences of illegality) whichare not yet fully appreciated. In that conference, aside from all the legal andprocedural issues, counsel needs to see and hear what the client has to say?What kind of impression is the client going to make to a judge? Is this is casewhich will stand up in court? What are the risks? As they say, a stitch intime...
  8. This is risky litigation. Yourclient may come away with nothing but a huge costs bill for your costs and theother side’s costs. Detailed attendance notes are absolutely essential. Theyneed to accurately record the substance and detail of what has been discussed. Counsel’swritten advice, with the benefit of a conference, should be on the file. Itwill cover the bases and make clear the risks. No client should ever be allowedto go into the witness box without having been comprehensively and clearlywarned as to the potential consequences of what they are doing.
  9. Too often, in the'family/civil' domain, cases get issued without enough thought as to what isrequired for a Part 7 or Part 8 claim. A part 7 claim requires a particulars ofclaim. This is not a statement of evidence. A Part 8 claim requires allevidence to be filed in support. In either event this writer sees too manyclaims where the necessary detail is just not there; subsequent attempts atamendment can just look (correctly) likecounsel trying to get a cart out of a ditch. If a family department is not usedto drafting such claims then approach counsel before you have taken significantsteps, and not after.
  10. In civil proceedings the costsmatter almost as much (and sometimes more) than the substantive dispute. Familylawyers, whose natural environment usually starts with a 'no order as to costs'presumption, need to think at every point in the case 'and what may be thecosts’ consequences of this?' The completion of Precedent H (not the FPR Form H!)is a complicated art. Family departments/firms do not usually have thenecessary experience to do this properly. Often costs are under-estimated, which runs the risk that costs may notbe recovered in due course. Family lawyers, in this writer’s view, should besending their Precedent Hs to costs’ draughtsmen.
With costs and the risk of costs many ofthese cases will never fight through to a trial. There is too much at stake oneither side. ADR/DR/NCDR (however it is now to be described) is the order ofthe day. However, in order to avoidlitigation and bring matters to a speedier conclusion, a great deal of front-loadedwork must be undertaken to properly understand a party’s case.

Oncethis work has been undertaken, and the correct 'parish' of the case identified,more intuitive, soft skills and negotiation can return to the fore, in order to(hopefully) bring about an early settlement. Mediation using the civil model,where the lawyers might be present, may well be more appropriate than thefamily model. If the problem remains knotty then consider family arbitration,which does not typically (unless the parties so wish) have a costs’ shiftingjurisdiction. This allows for a bespoke and private adjudication of contentiousissues, without the complexities and hazards of CPR compliance.
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