SPECIFIC PERFORMANCE​​

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Purchaser of land treated as beneficial owner before completion

 

"[87] In our view, the authorities in this area make it plain that, by virtue of the fact that the purchase price for the Property was paid in full when the Sale Agreement was executed, beneficial ownership of the Property passed at that time from Mrs Elborne to the trustees of the Life Settlement and therefore that Mrs Elborne was not the beneficial owner of the Property when she died. 

[88] We think that the fact that the whole of the purchase price was paid up-front on execution of the Sale Agreement means that this case is readily distinguishable from the uncompleted executory contract pursuant to which none of the consideration had been paid, which was the situation being addressed by the House of Lords in Jerome. 

[89] The decision in Ezair raises a different question in this area, dealing as it does with the rights which the beneficial owner under a sale agreement that has not yet been completed is entitled to create prior to completion.  The basis of Patten LJ’s decision in that case, which relied on the decision of the Supreme Court in Southern Pacific and the Court of Appeal decision in Berkley, is that a contractual purchaser (such as B in Ezair) cannot create rights of a proprietary character which would take priority over other interests in land until the contractual purchaser has acquired the legal estate in the land. When applied to the facts in this case, it means that the trustees of the Life Settlement would have been unable to create proprietary rights over the Property by entering into a contract with a sub-purchaser in relation to the Property prior to acquiring the legal estate in the Property on completion. 

[90] However, that is not the question which we are addressing.  The fact that the trustees of the Life Settlement would have had to acquire the legal estate in the Property before they were able to create proprietary interests in the Property does not mean that the trustees were not the beneficial owners of the Property from the time that the Sale Agreement was executed or, more relevantly, that Mrs Elborne remained the beneficial owner of the Property from that time.  The authorities cited by Mr Bradley and referred to in paragraphs 83 to 86 above are, in our view, compelling that the beneficial ownership of the Property when Mrs Elborne died was vested in the trustees of the Life Settlement and not with Mrs Elborne notwithstanding the fact that completion had not yet occurred." (Executors of Elborne v. HMRC [2023] UKFTT 626 (TC), Judge Beare)

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Vendor-purchaser constructive trust applies even if purchaser holds legal title (leading to collapse of trust)

 

"[43] Even if the substance is ignored, and the transaction looked at merely as a matter of equitable mechanics, the appellants' case does not get them home. As both Nugee and Males LJJ explained in the Court of Appeal ( [2024] Ch 1 ), the VPCT was the mechanism by which Inc's equitable interest in each of Shares 1 and 2 reached Mr Bell and Mr Lyampert. Only when it became vested in each of them did their status as sole trustees of each share lead to the result that the equitable interest merged in the legal title. It is fair to say that, because immediate consideration for the sale was achieved by the 2010 Agreement, the VPCT had only a momentary existence, occupying what the appellants called a scintilla temporis. But I agree with the Court of Appeal that this is no obstacle to the recognition of a VPCT in this context." (Frenkel v. LA Micro Group (UK) Ltd [2024] UKSC 42)

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