• In the case of Bagum v Hafiz [2015] E.W.C.A. Civ 801, it was held that the court has no power under the Trusts of Land and Appointment of Trustees Act 1996 to direct the sale of beneficial interest to another beneficiary. However, the court has power to give another beneficiary the right to a pre-emptive bid before the property is put on the open market.

Facts of the Case

  • C was the sole registered owner of a property. C lived in the property with her 2 eldest sons (X and Y), both of whom had made financial contributions to the purchase and the subsequent mortgage thereafter.
  • Before Y moved out, all parties agreed to make a declaration of trust. However, a dispute arose as to the enjoyment of the property.
  • C sought an order for X to purchase Y’s beneficial interest in the property or alternatively an order for sale in the open market.
  • At the trial of a preliminary issue, the judge concluded that they lacked the jurisdiction to make such an order. The judge instead made an order for sale, giving X first opportunity to bid at a price determined by the court.
  • Y submitted that the judge had no jurisdiction to make this order, and even if they did it was not a proper exercise of their jurisdiction.


  • Did the judge have the jurisdiction and discretion to make an order for sale contrary to the unanimous consent of beneficiaries?

Held by the Court of Appeal (Civil Division)

  • Finding for C, that the 1996 Act gave the court wide direction to make orders relating to the exercise by trustees of their functions. The courts functions are to relieve the trustees from unanimous consent and ensure that the property is dealt with justly.
  • The court did not have jurisdiction to order the sale of a beneficiary’s beneficial interest to another beneficiary. However, it did have discretion, contrary to the beneficiaries’ consent, to consider the intentions and purpose of the trust to provide a family home, to order the sale of the property on the open market.

Briggs L.J.

  • It is not part of the functions of trustees to deal with or dispose of beneficial interests under the trust. The exercise of their power to sell may turn a beneficiary’s interest into money since it is overreached upon the sale. The direct disposal of a beneficiary’s interest does not fall within the trustee’s functions.
  • Save perhaps for certain tax consequences, a sale by trustees of property to beneficiaries A and B has much the same effect as a compulsory transfer of beneficiary C’s interest to A and B, in exchange for money. But it does not follow from this that both transactions lie outside the functions of trustees.
  • It was argued that such a sale as ordered runs counter to the rule of equity that trustees may not exercise their powers with a view to advance the purposes of one party interested in the execution of the trustee at the expense of another party.
  • “I shall assume for the purposes of argument rather than by way of decision that the two principles relied upon may constitute what are referred to in section 6(6) as rules of equity although, with respect to the parliamentary draftsman, I would regard equity as laying down principles rather than rigid rules. But the purpose of section 6(6) is not to define the extent of the trustees’ powers or even functions, but rather to prohibit the trustees from exercising them in certain ways. It is in marked contrast with the effect of section 14(2), by which the court is given the widest discretion to make orders relating to the exercise by the trustees of any of their functions, having regard in particular to the non-exclusive list of the matters to which the court is to have regard, set out in section 15(1) and (3)…” [21].
  • It was argued that this order is outside the judge’s discretion. The burden lies on Y to show either the judge took into account irrelevant matters, failed to consider relevant matters, or that the decision reached could not reasonably flow from analysis of relevant considerations. Viewed in that way, the judge clearly considered all relevant factors, and the decision is unchallengeable.