TOLATA — A guide to disputes between the co-owners of properties

When two or more people own a property together, there is the potential for disputes as to how much of the property they each own and/or whether the property should be sold.

In this article, we explain what TOLATA is, the different types of TOLATA claim, who can make a claim and what happens once the claim is issued at court.

What is TOLATA?

TOLATA (or TLATA) is an abbreviation for the Trusts of Land and Appointment of Trustees Act 1996. This is the statute that gives the court the power to make orders regulating property ownership.

Under TOLATA the court’s powers are quite narrow — it can order the sale of a property, declare the parties’ beneficial shares in the property and make orders concerning how the trustees of a property exercise their powers.

What are the types of TOLATA claim?

There are three main types of application that can be made under TOLATA:

1. to decide who is entitled to occupy a property;
2. to decide the nature and extent of the ownership of a property; and
3. to decide whether there should be a sale of a property.

The court does not have power to adjust the proportions in which property is held.

How much does making a TOLATA claim cost?

TOLATA claims that go to trial are expensive, sometimes prohibitively so. It is for this reason that the court strongly encourages parties to try to resolve their differences through mediation or negotiation and is critical of parties (often penalising them with orders to pay a proportion of the other party’s legal costs) who make no attempt to settle matters prior to issuing a claim.

It is not only your own costs you have to take into consideration when bringing a TOLATA claim. After deciding the claim, the judge will make a decision as to who shall be responsible for the legal costs the parties have incurred. The general rule is that costs follow the outcome i.e. the unsuccessful party must pay the costs of the successful party.

Anyone assured that they have a strong case still needs to be wary about the legal costs they incur and how they will repay them if they have, for example, taken out a loan to fund the proceedings. The successful party does not always recover all their legal costs. If the parties cannot agree the amount the unsuccessful party will pay then, the court will assess the costs and decide the exact amount payable.

The TOLATA claims process

Below we have outlined the process that the majority of TOLATA claims will follow.

A limited number of claims are suitable for the CPR Part 8 procedure. That procedure is more streamlined.

1. Pre action steps

• The claimant writes to the defendant before making a court application setting out their case.
• The defendant should respond to that letter.
• Each party should provide copies of key documents they intend to rely on.
• The parties should try a method of alternative dispute resolution (ADR).

2. Application to the court

• An application is made in a claim form and accompanied by particulars of claim.
• There is a court fee payable.
• The claim form is sent to the court for issuing.
• The claim form is served on the defendant.

3. Response to the claim

• The defendant has 14 days from service to file an acknowledgement of service (AOS) stating whether they admit or dispute the case.
• If the defendant has filed an AOS, they have 28 days from service to file a defence.
• The defendant can include a counterclaim against the claimant with the defence.

4. Allocation

The court provisionally allocates the matter to a ‘track’ and usually makes directions for the claimant and defendant to file directions questionnaires and confirm the draft directions they will be seeking in order to ensure that all the information and documents are prepared and available for a trial to take place.

TOLATA applications are usually allocated to the multitrack. If the case is on the multitrack a costs budget (referred to as Precedent H) must be completed by each party.

5. Costs and case management conference

The case is listed for a costs and case management conference (CCMC) at which a judge considers the timetable and whether they are satisfied that everything has been considered for the effective running of the case to trial. In doing so the judge resolves any disputes between the parties about what is required to decide the case.

The court also amends or approves the parties’ cost budgets.

6. After the costs and case management conference

The order made by the judge at the CCMC will include a deadline for filing witness evidence, inspecting disclosure and getting expert reports (if required). It might also provide for there to be a further hearing prior to the trial.

7. Pre-trial review

If a pre-trial review is listed then the parties will file a pre-trial checklists ahead of this hearing. The document is intended to confirm which witnesses will give oral evidence and how long they think the trial will last. Sometimes the court is satisfied that such a hearing is not required.

8. Trial

This is the hearing where a judge reads all of the evidence submitted by the parties, hears evidence from the witnesses and then makes a decision (delivers a judgment) as to the outcome of the claim.

How will the court decide a TOLATA claim?

The key issues that the court will consider when determining a TOLATA claim are:

• what the parties intentions were concerning property ownership and what the property was purchased for;
• any written agreements or declarations of trust;
• financial contributions made to the property; and
• to a limited extent, the welfare of any children residing at the property.

The court will make its decision based on the specific facts of the case.

How long does a TOLATA case take?

It is difficult to provide a specific timeline for TOLATA claims as each case is unique and there are varying levels of complexity.

Cases can be resolved through correspondence or alternative dispute resolution in a matter of months. Claims that go to trial, or involve a party who is reluctant to progress matters, are reliant on the listing of court hearings which in turn depend on how busy the court is. It is likely to take over a year to resolve a case that goes to trial.

How to prevent a TOLATA claim

If a TOLATA application has been made, you will need to follow the process outlined above. However, if you are planning to cohabit with your partner, there are a number of steps that you can take to reduce the risk of a TOLATA claim if the relationship breaks down:

• enter into a cohabitation agreement;
• clearly record your intentions regarding ownership of the property in writing and review what was originally agreed if your intentions/circumstances change;
• keep a record of the financial contributions that you and the other cohabitee(s) have made to the property.

TOLATA and Schedule 1 counterclaims

As outlined above, the court’s powers in TOLATA proceedings are limited. Claims are determined under property and trust law. ‘Fairness’ does not feature in property and trust law in the way it does in matrimonial law.

In cases where the claim arises due to relationship breakdown and there are children or the family, it is important to consider whether Schedule 1 of the Children Act 1989 may also be relevant. Under Schedule 1, the court can consider what measures need to be taken to ensure that any children are financially provided for.

Engaged couples may also have other legislation they can rely on.

TOLATA claim definitions

Acknowledgement of service

A document by which a claim is acknowledged by a defendant.

ADR (Alternation Dispute Resolution or non-court options)

A series of options through which the parties can avoid court and some of the time and costs that come with the court process. A court can impose penalties if ADR is not considered.

Allocation of case

The court allocates the matter to a ‘track’:

• Small claims track — claims worth less than £10,000 where a trial is not likely to exceed 1 day
• Fast track — claims worth more than £10,000 where the trial is likely to last more than 1 day
• Multi track — irrespective of value, claims are allocated to this track if they are considered to be specialist proceedings (CPR Part 49 Rules) or if the claim is relevant under CPR Parts 58-62.

Allocation questionnaire

A questionnaire is used to help determine which track is most appropriate for the case to be allocated to.

Arbitration

A privately funded, out of court, form of dispute resolution which can provide an outcome if matters proceed on a contested basis. It is highly adaptable process where both parties work with their appointed arbitrator to manage the case. If agreement cannot be reached the arbitrator will make the decision.

Calderbank offer

An offer of settlement written ‘without prejudice save as to costs’. Its effect is that the court cannot refer to it except at the conclusion of the matter when dealing with the issue of costs. The court has complete discretion to decide what weight should be attached to it when considering what costs order to make.

Case management

The court has a duty to actively manage each case and as such this procedure may be adapted to the particular circumstances of a case (see Part 1 of CPR: Overriding Objective).

Case management conference

A short hearing to identify and understand the issues in the case and consider whether they can be narrowed before trial.

Claimant

The person making the court application/asking the court to make an order.

Claim form

The document used to start proceedings. It contains information about the case including the particulars of the claim.

Chronology

A timeline of key events to provide the judge with a brief outline and dates relevant to the proceedings.

Consent order

When the parties reach an agreement which resolves the dispute, the agreement is written up into a document (draft order) which is signed by both parties and records the agreement which has been reached. Once this consent order has been judicially approved and sealed by the court it becomes legally binding. A Tomlin order is an order under which a court action is stayed on agreed terms. The terms are included within a schedule to the order and as such it is a form of consent order.

Costs orders

An instruction issued by the court concerning the costs of the proceedings (or a proportion of them). For example, that one party should pay all or part of another party’s costs.

Costs budget (Precedent H)

This is a form that the court requires the parties to the case to fill in detailing their costs. It is necessary to control the amount of costs recoverable by either party at the end of the proceedings.

Court bundle

Documents needed by the court to deal with a hearing regulated by CPR PD39A. Prior to each hearing, the claimant has responsibility to try to agree the contents of the bundle with the defendant and prepare a file a copy of the bundle for the court and parties. If the claimant is not legally represented, but the defendant is, it becomes the defendant’s responsibility to prepare the bundle.

Court fee

There is an initial court fee to be paid by the claimant upon issue of the claim and then further hearing fees also payable by the claimant (unless a matter proceeds on a counter claim alone in which case the hearing fees are payable by the defendant). The court fees vary depending upon the value of the claim.

Civil procedure rules

These rules are a procedural code to enable the courts to deal with civil claims justly.

Defence and counter claim

The defence is the evidence that the defendant will rely on to rebut the claimant’s case. A counter claim is filed when a defendant states that he has claims of his own to make against the claimant.

Defendant

The person or people receiving the court application.

Directions

The steps which must be taken and complied with to move a case forward. It may include the disclosure, expert evidence, preparation of witness statements and timescales for these actions to be complied with.

Disclosure

Disclosure of documents relating to the case is governed by CPR part 31, PD31A and PD32A. Each party must complete a standard disclosure form including a list setting out all of the documents which:

• they rely upon;
• adversely affect their case;
• adversely affect another party’s case;
• support another party’s case;
• which they are required to disclose by a relevant practice direction.

The other party can then make a request to inspect any of the documents that they wish to. Documents containing confidential communications between a legal professional and client are ‘privileged’ which means that they are protected and do not need to be provided for inspection.

Expert advice

May include valuations of property, tax issues.

Final hearing or trial

The hearing at which the court imposes a final decision on the parties.

Mediation

A confidential and impartial family law process. Together with your chosen mediator, the parties set the pace and agree topics for discussion and frequency of meetings. The mediator helps facilitate a supported conversation, it is not about relationship counselling, but helps the parties to try to reach an agreement in respect of finances.

Part 7 claim

The part 7 procedure is used where there is a dispute as to the facts of the case.

Part 8 claim

The part 8 procedure is used for claims where the court’s decision is on a question where there is unlikely to be a substantial dispute of fact.

Part 36 offer

An offer of settlement to try to avoid the matter going to a trial. They must be submitted accordance with the rules set out in CPR Part 36. The main rules are that the offers must be in writing and remain open for a period of 21 days or more.

Pre-action letter

This is a letter warning the other party that proceedings will be issued unless matters can be resolved PD Pre- Action Conduct and Protocols [para 6]. The claimant must set out in a letter the nature of the dispute and what they will be asking the court to do to resolve matters. It should also set out the background to the matter and legal arguments which the claimant will rely on.

Pre action protocol

Pre action protocols explain the conduct and steps that the court would normally expect parties to take before commencing proceedings. They are found in PD Pre- Action Conduct and Protocols [para 18].

Pre-trial checklist

A form which the parties must complete (usually following the expiry of the date upon which the last of the directions should have been complied with). It deals with compliance, witness and expert details, legal representation details and also the timeframe of the trial.

Service of proceedings

Service of documents is dealt with by CPR Part 6. The claim form is usually served by the court. The court will send to the claimant a notice which will include the date on which the claim form is deemed served.

Tracks

See allocation above.