Court: High Court
Judgement by: Blackburne J
Date: 2008
The case of French v Barcham [2008] 1 WLR 1124 revolves around the issue of whether a trustee in bankruptcy can claim occupation rent from a co-owner of property under the court’s general equitable jurisdiction, outside the provisions of the Trusts of Land and Appointment of Trustees Act 1996 (TLATA).
The case rejected the interpretation of Stack v Dowden [2007] concerning statutory rights of occupation and the claim for occupation rent. The case is significant as it clarifies the scope of the court’s equitable jurisdiction in property disputes where bankruptcy is involved.
Facts of French v Barcham
The central facts of French v Barcham involve a married couple who were the registered proprietors of a bungalow. When the husband was declared bankrupt, the couple continued to reside in the property. The husband’s trustee in bankruptcy sought an order for the sale of the property under Section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TLATA), which allows the court to make an order for the sale of land if it is in the interests of the beneficiaries.
However, the issue arose as to whether the trustee in bankruptcy was entitled to claim occupation rent from the wife, the non-bankrupt co-owner. The wife argued that the trustee in bankruptcy was not entitled to occupation rent because the trustee was not a beneficiary entitled to possession under Section 13 of TLATA, which governs the rights of co-owners in relation to property they hold together.
Legal Issue
The key legal issue in French v Barcham was whether a trustee in bankruptcy could be entitled to claim occupation rent from the wife, the non-bankrupt co-owner, despite the lack of a statutory right of occupation under TLATA. The wife contended that since the trustee in bankruptcy was not a beneficiary with a statutory right of occupation, they were not eligible to claim occupation rent.
French v Barcham Judgement
The High Court, presided over by Blackburne J, held that the trustee in bankruptcy was entitled to claim occupation rent from the wife, rejecting the interpretation of Stack v Dowden [2007]. In Stack v Dowden, the House of Lords had held that where one co-owner did not have a statutory right of occupation, they could not claim occupation rent.
However, Blackburne J in French v Barcham disagreed with this interpretation and stated that the absence of a statutory right of occupation under TLATA did not preclude a co-owner, including a trustee in bankruptcy, from claiming occupation rent in appropriate circumstances.
Blackburne J clarified that TLATA did not prevent the court from exercising its wider general equitable jurisdiction to order occupation rent outside the statutory provisions of Section 13 TLATA. This decision marked a departure from the ruling in Stack v Dowden, where Baroness Hale had suggested that the statutory provisions of TLATA were the sole basis for determining the rights of co-owners, including claims for occupation rent.
Equitable Jurisdiction and Occupation Rent
Blackburne J emphasised that the court’s equitable jurisdiction could be exercised to order occupation rent, even when TLATA did not apply directly. The court could order occupation rent when it was deemed unreasonable for one co-owner to occupy the property, considering factors such as the identity and relationship between the co-owners. In other words, the court has the discretion to grant occupation rent if it would be unfair or unreasonable for a co-owner to continue to occupy the premises.
The court further held that if it was reasonable for the occupying co-owner to live in the property but they chose not to, then occupation rent would not be awarded. This is significant because it introduces a “reasonableness” test in determining whether occupation rent should be granted, which was not expressly outlined in the statutory framework of TLATA.
The court also recognised that a trustee in bankruptcy would generally be entitled to occupation rent. Since the trustee was not in a position to occupy the property, it would be unreasonable for the trustee to claim a right to occupy. Therefore, occupation rent was ordered to be paid to the trustee, with the rationale that it was unfair for the trustee to be deprived of rent while the wife continued to live in the property.
Exceptions to the Entitlement to Occupation Rent
Blackburne J acknowledged that there could be exceptions to this general entitlement. The trustee in bankruptcy may not be entitled to occupation rent if there was an understanding between the co-owners that no occupation rent would be charged, or if the occupying co-owner was unaware of the bankruptcy and had no reasonable means of discovering it. In such cases, the court recognised that it would not be fair to impose occupation rent on the co-owner if they were not aware of the bankruptcy or if there was an agreement not to charge rent.
Rejection of the “Reasonableness” Rule in Davis v Jackson
One important aspect of French v Barcham was the introduction of the “reasonableness” rule in determining when occupation rent should be ordered. However, this rule was not universally accepted. In the subsequent case of Davis v Jackson, the court rejected the reasonableness rule outlined in French v Barcham.
The decision in Davis v Jackson reaffirmed that the statutory framework of TLATA should be applied more strictly, and the notion of “reasonableness” in occupation rent claims was not always appropriate.
Conclusion
French v Barcham [2008] 1 WLR 1124 is a landmark case that expanded the scope of the court’s equitable jurisdiction in property disputes involving bankruptcy. The case rejected the rigid interpretation in Stack v Dowden and clarified that occupation rent could be ordered outside the statutory framework of TLATA. The ruling provides an important precedent for future cases involving co-ownership and bankruptcy, highlighting the court’s discretion to grant occupation rent based on the reasonableness of the circumstances.
