Divide and conquer: the division of chattels

27 Sep 2017

The principles governing the division of land are subject to well-established legal precedents of legal and beneficial ownership. However, while it is possible to create a joint tenancy and tenancy in common over chattels, the law in this area is less established. This then leads to uncertainty when issues arise over the division of assets, particularly as part of an estate.

Disputes will commonly arise where the beneficiaries are jointly bequeathed assets and then disagree as to the division of those assets? S.188(1) of the Law of Property Act 1925 provides that:

"Where any chattels belong to persons in undivided shares, the persons interested in a moiety or upwards may apply to the court for an order for division of the chattels or any of them, according to a valuation or otherwise, and the court may make such order and give any consequential directions as it thinks fit."

Therefore, a person holding at least a half share in the asset(s) may apply to court for an order for the division of the chattels. There is no specific power to make an order for sale, although this may come with in the latter part of the section but this is against the background for an application for division. As such, if the asset is indivisible, it would not seem possible for the person to obtain a court order for the sale of the asset, and a person with less than a half share may not make such an application at all. The power of the court is therefore limited to assets capable of division, which will not assist the co-owners of other valuable assets such as a single painting.

This issue arose most recently in 2016 in the case of Butler v Butler[1]. The case surrounded the division of the Butler Family Collection – a collection of 17th century Chinese porcelain items accumulated by the late Sir Michael Butler, who was an aide to Margaret Thatcher. The BFC was gifted to the four children in 1987, but although it was agreed that the collection would be maintained during Sir Michael’s lifetime, no formal agreement was reached as to the division of the collection after his death. Under the terms of Sir Michael’s Will and accompanying Letter of Wishes, it was clear that he wished the BFC to be maintained as one collection after his death, although he accepted that the collection may be divided. The Claimants wished the collection to be divided equally among the four children, whilst the Defendants sought to keep the entire collection on display at the family museum.

Ultimately, the court granted the Claimant’s application, and it was ordered that the collection be divided. Whilst this case provides helpful legal precedent for divisible assets, uncertainty remains as to the position of co-owners of indivisible property.

It is common for a Will to leave valuable chattels to beneficiaries equally, or for chattels to form part of the individual’s Residuary Estate, which will then be divided in specified proportions between named beneficiaries. Generally, agreements will be made between the beneficiaries as to the division of assets. However, where there are possible disagreements then testators may wish to provide clear instructions as to whether assets should be sold, maintained or divided (where appropriate).

Alternatively, the testator could choose to create a trust to hold the assets, possibly with independent trustees who will be able to work to resolve disputes. The terms of the trust deed should clarify the powers of the trustees, including the powers of sale. If the deed is silent on this point, s.57 of the Trustee Act 1925 gives the court power to approve any disposition in the management and administration of trust assets where such action would be ‘expedient’ and for the benefit of the whole trust.

The relative uncertainty of the law means that testators may choose to take further steps to provide certainty for their executors and beneficiaries, as such choices may avoid lengthy and costly court battles in the future.

[1] 2016 EWHC 1793 (Ch)

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