TOLATA through the courts: a long and winding road?

Most property disputes between former cohabitants can be settled without taking the matter to court. The court process can be long, expensive and financially risky, deterring many people who are in dispute about their home at the end of their relationship. Occasionally, though, the assistance of the court is crucial. Some find themselves travelling the long and winding road through the civil courts, into an unfamiliar and sometimes hostile world.

If parties have not married they must turn to property law to resolve any dispute over their family home. If a party claims a beneficial interest in the home, or needs the court to order that the home be sold, their action will be under the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”). Such a claim falls outside the remit of the family courts, governed by the Family Procedure Rules and moves into the sphere of the civil courts and their associated Civil Procedure Rules (“CPR”).

Gone is the starting point that each party will bear their own costs, replaced by a general rule of thumb that the loser pays the winner’s costs (CPR 44.2(2)(a)).That is one reason why parties are encouraged to consider opportunities for settlement at all stages of the litigation.  The most common method is mediation but arbitration, early neutral evaluation and the use of ombudsman schemes are also encouraged as cheaper and faster alternatives to court.

The procedure for starting a claim involves the following steps:

Pre-action protocol

Before proceedings are begun, the parties must follow the general pre-action protocol under the CPR. The aim is to bring about an end to the dispute at this stage, either by sowing that the claim is without merit or prompting a negotiated settlement (eg. through correspondence, at a round table meeting or meditation).

This requires:

• Letter of Claim- writing to the other party or their legal team to set out the claim and any supporting evidence, making clear what is sought.

• Response- the other party or their solicitors will prepare a full letter of response within a reasonable time (14 days in a straightforward case, no more than 3 months for more complex cases).

Issuing proceedings

If the dispute cannot be resolved at this stage, the issue of proceedings is the next step but should always be a last resort. The key stages are as follows (strict timings are in place, with sanctions for default, and the CPR are frequently amended, so always check the rules carefully):

• Claim Form – proceedings can be issued under CPR Part 7 with Form N1 (and Particulars of Claim) or, if there is no substantial dispute of fact, under the simplified procedure in CPR Part 8 on Form N208 (supported by a witness statement).

• Defence- if Part 7 is used, the Defendant will required to file a defence (often after an acknowledgement of service has reserved their position) taking the points in the Particulars of Claim in turn. Sometimes a defence will also include a counterclaim, mandating a Reply from the Claimant (although this may also be used to refute grounds in the Defence).

Under Part 8, the defendant must file an acknowledgement of service, confirming whether the claim is accepted, accompanied by any written evidence in support.

• Directions - at this stage under Part 7, the claim will be provisionally assigned to a ‘track’ in the court, which will determine further procedural steps. Many will go to the multi-track, but some low-value, straightforward matters may go to the fast-track.

A directions questionnaire will be required to assist the court with allocation. From there much will depend on the track, which court is dealing with the matter and whether there are any Pilot Schemes in place.

This is also the point at which the court will decide next steps in Part 8 claims including whether the claim is in fact more suitable for the Part 7 procedure.

A recent case of ours in the County Court (subsequently transferred to the Business and Property Courts) involved completing a directions questionnaire, costs budget and disclosure report ahead of a Costs and Case Management Hearing. Directions were ordered, including for disclosure and witness statements, to see the matter through to a Pre-Trial Review and Trial. A hearing for Handing Down of Judgment was also required.

It can be very difficult for anybody who has just left their relationship and finds themselves in a dispute over their property to navigate the path. In a world where deadlines missed means costs sanctions, or applications for relief from sanctions, it is important to get it right first time.

Here at Mills & Reeve we have a wide range of experience in cohabitation matters and recent experience of taking matters to trial. Contact one of our family lawyers to learn more.