A recent appeal to the High Court considered the value of the loss of the beneficial interest in a holiday home where one party excluded the other from its use and enjoyment. Ellie Hampson-Jones and Katriona King examine the decision.

In this case, Dr Rowland purchased Tadmarton House, a large Grade III-listed Italianate villa built in 1830 set in 24 acres of grounds in the countryside near Banbury, Oxfordshire, for £1.5m in early 2009. Dr Rowland paid all the purchase costs but bought the property in joint names with his then partner, Ms Blades.

Dr Rowland and Ms Blades each had their own homes. Tadmarton House was bought on the basis that it would be used by the couple at weekends or during the holidays. When the parties separated in 2009, Dr Rowland formed a new relationship. Ms Blades expressly told Dr Rowland that he was not welcome to attend Tadmarton House with his new partner.

The court found that Dr Rowland had been excluded from the property. Although Ms Blades had on occasion invited Dr Rowland to provide her with dates when he might want to visit the property, the court found that Ms Blades was in control of the agenda and in situ at the property.

At the first instance hearing, Dr Rowland argued that the property was solely owned by him. Ms Blades argued that the property was held for each of them as joint tenants in equity. Ms Blades was successful. The appeal did not challenge this finding. Dr Rowland’s appeal focused on the amount of compensation he should receive due to his exclusion from the property during Ms Blade’s occupation.

The law

Pursuant to sections 12 to 15 of the Trusts of Land and Appointments of Trustees Act 1996 (“TOLATA”), if you share a beneficial interest in a property with another person and are unreasonably excluded from that entitlement or have it restricted, the court has the power to require the ‘excluder’ to make compensation payments.

In determining how to calculate the compensation, the court must have regard to the intentions of the persons who own the property, the purpose for which the property is held and the circumstances and wishes of each of the beneficiaries.

The facts of this case

As set out above, Dr Rowland and Ms Blades were both found to have a beneficial interest in the property. It was also found that Ms Blades had unreasonably excluded or restricted Dr Rowland’s entitlement to enjoy and attend the property. As such, Ms Blades was required to compensate Dr Rowland.

At first instance, the judge ordered Ms Blades to pay compensation of £59,958. This was based on the daily rate an expert in the case had provided for the “rent that would be payable for occasional weekend and short usage of Tadmarton House”. The judge applied this day rate at the rate of two three-day stays a month, working on the assumption that Dr Rowland and Ms Blades would not have stayed at the property at the same time.

Dr Rowlands appealed this amount, arguing it was too low and not compensatory as it was based on rental values but not on the loss of his enjoyment of the property. Ms Blades cross-appealed and said the appropriate figure for Dr Rowland’s loss of enjoyment was £36,000.

The appeal heard by His Honour Judge Jarman QC concluded that the appropriate award should be £120,000. He considered that assessing compensation was evaluative rather than purely arithmetical. Dr Rowland’s loss was the loss of a grand weekend and holiday home rather than a simple holiday let. The loss was more than an occasional weekend but less than the loss of a home.

Partner Matthew Humphries comments:

“The principles of this case are key ones to consider before purchasing a property in joint names. It reiterates the principle that if a couple purchase a property in joint names, regardless of whether one party alone provides the purchase monies, there is a risk that the property will be regarded as being held for both of them equally

“His Honour Judge Jarman QC sets out clearly that when assessing the compensation due in cases of loss of enjoyment of a second home, one cannot simply resort to straightforward mathematical calculations based on the market rental value of the property. Assessing compensation owed to a beneficial owner of a property must be a holistic and evaluative exercise, taking into consideration the intended purpose of the property.”