Deed of Assignment Invalid Due to Non-Compliance with Regulations

OUTCOME: Dismissed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

([APPELLANT])

Case Reference : CAM/33UE/PHI/2019/0008 & 0010

Property : [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted]

question arising under the Mobile Homes Act 1983

or agreement to which it applies [MHA 1983, s.4]

Tribunal Members : [NAME] & C Gowman BSc MCIEH MCMI

Date of determination : Wednesday 21st August 2019

DECISION

following a determination on the papers

• Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . paras 1–2

• Agreement and Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . paras 3–9

• Applicable law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . paras 10–15

• Discussion and findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . paras 16–22

1. This case concerns the issue of succession to a park home agreement by virtue of

a will, the effect of section 3 of the Mobile Homes Act 1983 and of the the Mobile

Homes (Selling and Gifting) (England) Regulations 2013 (“the Selling and Gifting

Regulations”) made pursuant to the Act. In particular :

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a. In section 3(3)(b) does the phrase “the person entitled to the mobile home

by virtue of [NAME]’s will or under the law relating to intestacy”

include a gift passing under a deed of variation of the will under section

142 of the Inheritance Tax Act 1984?

b. If the answer to a. above be Yes, does the application of section 3(4) mean

that the agreement shall not in the circumstances of this case enure for the

benefit of the donee under the deed of variation?

c. Is the Deed of Assignment dated 1st November 2018 effective?

d. If the answer to c. be No, who has inherited the mobile home under [NAME]’s will and the benefit of the agreement under the Act?

2. For the reasons which follow the tribunal determines that :

a. While section 142 is effective for the purposes of mitigating tax liability,

by deeming the varied transaction to have been effected by [NAME],

it is not for other purposes an entitlement “by virtue of [NAME]’s will”

as expressed in section 3(3)(b)

b. Even were the above incorrect, section 3(4) would still prevent the benefit

of the agreement, and the right to reside on the pitch, from enuring to Mr

[NAME] under the Deed of Arrangement and section 3(3)(b)

c. The Deed of Assignment refers to the incorrect written agreement and so

is ineffective at law, and to validate an assignment under section 3(2) the

[NAME] would need to comply with the Selling and Gifting Regulations

d. Pending compliance with the Selling and Gifting Regulations the mobile

home remains an asset of [NAME]’s estate vested in the [NAME]

pending distribution, as does the benefit of the agreement under the Act

between the site owner and [NAME].

Agreement and Background

3. By a written agreement dated 25th November 2005, made between [NAME]) [COMPANY] as site owner and Mr [NAME] as [NAME] the latter was granted

a licence under the Mobile Homes Act 1983 to place a mobile home on and

occupy as his main or only residence the pitch known as Watersmeet at what has

since June 2010 become the applicant’s [ADDRESS], a protected [APPELLANT]

mobile home site behind the Bristol Arms Public House at Shotley Gate, Ipswich.

4. It has been suggested that [NAME] was assignee of an agreement dated 13th

December 1984 made between Tollemache and [COMPANY] as site

owner and [NAME] and [NAME] as [NAME] for a term

deemed to have commenced on 1st May 1979. If so, then it appears to have been

superseded by the 2005 agreement directly with [NAME].

5. Very unusually the term expressed in the agreement, which one would normally

expect to be 50 or 60 years, is defined as “Four weekly commencing on the start

date until determined by either party giving the other at least twenty-eight days

notice in writing”

6. On 26th January 2018 Mr [NAME] died, leaving a last will and testament

dated 20th March 1996. Ms [RESPONDENT] as principal of the [NAME] acts

as [NAME] of [NAME]’s estate, of which the mobile home in question is the

sole substantial asset.

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7. The principal beneficiary [NAME] having predeceased Mr [NAME],

by his will the residue of his estate was divided into three parts and bequeathed

to a total of fifteen beneficiaries, including [NAME]’s son [NAME]. By a Deed

of Variation dated 1st November 2018, expressed to be made under section 142

of the Inheritance Tax Act 1984, the above will was varied by adding a clause 4(d)

whereby [NAME] gave the mobile home to [NAME] absolutely. This was

conditional upon [NAME] paying the sum of £30 000 to the will trustees for

distribution to the residuary beneficiaries in accordance with the will.

8. Also on 1st November 2018 Ms [NAME] as [NAME] and trustee executed a Deed

of Assignment purporting to assign to [NAME] the “tenancy agreement” for

the “letting” of the “property” (meaning the land known as Watersmeet) and all

rights and interests in the mobile home. Not only is the expression “tenancy

agreement” inapt for a written agreement under the 1983 Act granting a licence

to occupy the pitch, but the agreement is identified in the First Schedule as an

“agreement dated 13 December 1984 made between [COMPANY] (1) and [NAME] [NAME] and [NAME] [NAME] (2) for a

term deemed to have commenced on 1st May 1979.”

9. In the written evidence of [APPELLANT], a director of the applicant site owner, and

of Ms [APPELLANT] there is mention of potential breaches of the pitch agreement

by Mr [NAME] building unauthorised extensions encroaching into the required

separation space between mobile homes, that the applicant has attempted to use

this to discourage the sale of the mobile home to anyone but the applicant, and

that this amounts to harassment. While they certainly add colour to the history

of this matter these are not questions which the tribunal is asked to determine,

and it shall therefore ignore them and concentrate on the legal question whether

the purported deed of assignment dated 1st November 2018 is effective at law or

in equity.

Applicable law

10. Section 142 of the Inheritance Tax Act 1984 makes provision for the alteration of

dispositions on death, whether by will or the laws applicable on intestacy. The

material parts read as follows :

(1) Where within the period of two years after a person's death—

(a) any of the dispositions (whether effected by will, under the law

relating to intestacy or otherwise) of the property comprised in his

estate immediately before his death are varied, or

(b) the benefit conferred by any of those dispositions is disclaimed,

by an instrument in writing made by the persons or any of the persons

who benefit or would benefit under the dispositions, this Act shall apply

as if the variation had been effected by [NAME] or, as the case may be,

the disclaimed benefit had never been conferred.

(2) Subsection (1) above shall not apply to a variation unless the instrument

contains a statement, made by all the relevant persons, to the effect that

they intend the subsection to apply to the variation.

(2A) For the purposes of subsection (2) above the relevant persons are—

(a) the person or persons making the instrument, and

(b) where the variation results in additional tax being payable, the

personal representatives.

Personal representatives may decline to make a statement under

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subsection (2) above only if no, or no sufficient, assets are held by them

in that capacity for discharging the additional tax.

(3) Subsection (1) above shall not apply to a variation or disclaimer made for

any consideration in money or money's worth other than consideration

consisting of the making, in respect of another of the dispositions, of a

variation or disclaimer to which that subsection applies.

(3A) [irrelevant]

(3B) [irrelevant]

(4) Where a variation to which subsection (1) above applies results in

property being held in trust for a person for a period which ends not more

than two years after the death, this Act shall apply as if the disposition of

the property that takes effect at the end of the period had had effect from

the beginning of the period; but this subsection shall not affect the

application of this Act in relation to any distribution or application of

property occurring before that disposition takes effect.

(5) [irrelevant]

(6) Subsection (1) above applies whether or not the administration of the

estate is complete or the property concerned has been distributed in

accordance with the original dispositions.

(7) [irrelevant – Scotland only]

11. Section 3 of the Mobile Homes Act 1983 (as amended) concerns successors in

title and provides :

(1) An agreement to which this Act applies shall be binding on and enure for

the benefit of any successor in title of the owner and any person claiming

through or under the owner or any such successor.

(2) Where an agreement to which this Act applies is lawfully assigned to any

person, the agreement shall enure for the benefit of and be binding on that

person.

(3) Where a person entitled to the benefit of and bound by an agreement to

which this Act applies dies at a time when he is occupying the mobile

home as his only or main residence, the agreement shall enure for the

benefit of and be binding on—

(a) any person residing with that person (“[NAME]”) at that time

being—

(i) the [NAME] of [NAME]; or

(ii) in default of a [NAME] so

residing, any member of [NAME]'s family; or

(b) in default of any such person so residing, the person entitled to the

mobile home by virtue of [NAME]'s will or under the law

relating to intestacy but subject to subsection (4) below.

(4) An agreement to which this Act applies shall not enure for the benefit of

or be binding on a person by virtue of subsection (3)(b) above in so far

as—

(a) it would, but for this subsection, enable or require that person to

occupy the mobile home; or

(b) it includes terms implied by virtue of paragraph 5 or 8A, 8B or 9 of

Chapter 2, or paragraph 5 of Chapter 4, of Part I of Schedule 1 to

this Act.

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12. As this is not a county council or local authority gypsy and traveller site Chapter

2 applies in this case. Paragraph 5 concerns termination by the court if the

appropriate judicial body is satisfied that the mobile home is not being used by

the [NAME] as his main residence and considers it reasonable for the agreement

to be terminated, 8A and 8B to the gifting to a member of the [NAME]’s family

of mobile homes occupied under new and existing agreements respectively in

England, and 9 (until repeal by Welsh legislation in 2014) made slightly different

provisions for sites in Wales.

13. In the circumstances of this case, where the 2005 written agreement pre-dates

the coming into force in May 2013 of paragraph 7A and thus does not fall within

the definition of a “new” agreement, it is appropriate to set out paragraph 8B in

full :

(1) Where the agreement is not a new agreement (as defined by paragraph

7A(3)), the [NAME] is entitled to give the mobile home, and assign the

agreement, to a member of the [NAME]'s family (referred to in this

paragraph as the “[NAME]” ) without the approval of the owner

if—

(a) the [NAME] serves on the owner a notice (a “notice of [NAME]

gift”) that the [NAME] proposes to give the mobile home to the

[NAME], and

(b) the first or second condition is satisfied.

(2) The first condition is that, within the period of 21 days beginning with the

date on which the owner received the notice of [NAME] gift (“the 21-day

period”), the [NAME] does not receive a notice from the owner that the

owner has applied to a tribunal for an order preventing the [NAME] from

giving the mobile home, and assigning the agreement, to the [NAME] (a “refusal order”).

(3) The second condition is that—

(a) within the 21-day period—

(i) the owner applies to a tribunal for a refusal order, and

(ii) the [NAME] receives a notice of the application from the

owner, and

(b) the tribunal rejects the application.

(4) If the owner applies to a tribunal for a refusal order within the 21-day

period but the [NAME] does not receive notice of the application from the

owner within that period—

(a) the application is to be treated as not having been made, and

(b) the first condition is accordingly to be treated as satisfied.

(5) A notice of [NAME] gift must include—

(a) the relevant evidence (as defined by paragraph 8A(3)), and

(b) such other information as may be prescribed in regulations made

by the Secretary of State.

(6) A notice of [NAME] gift or notice of an application for a refusal order—

(a) must be in writing, and

(b) may be served by post.

(7) An application for a refusal order may be made only on one or more of the

grounds prescribed in regulations made by the Secretary of State; and a

notice of an application for a refusal order must specify the ground or

grounds on which the application is made.

(8) The owner may not require any payment to be made (whether to the

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owner or otherwise) in connection with the gift of the mobile home, and

the assignment of the agreement, as mentioned in subparagraph (1).

(9) The Secretary of State may by regulations prescribe procedural

requirements to be complied with by the owner, the [NAME], a [NAME] or the person to whom the mobile home is given in connection

with the gift of the mobile home, and assignment of the agreement, as

mentioned in sub-paragraph (1).

14. For completeness, paragraph 8C provides that regulations under paragraphs 8A

and 8B must be made by statutory instrument. Currently, these are the Mobile

Homes (Selling and Gifting) (England) Regulations 2013.1

15. Regulations 5 to 7 and 9 deal with gifting, and prescribe notices that must be

served and the form of any assignment : see Schedules 3 to 5.

Discussion and findings

16. Attention has focussed on whether the Deed of Variation of the will, by adding

the gift of the mobile home in clause 4(d), has the effect of making [NAME]

a “person entitled to the mobile home by virtue of [NAME]’s will” and thus

entitled to the benefit of the written agreement under section 3(3)(b). However,

this is of extremely limited value because section 4 makes clear that it will not

enure for his benefit if the agreement would enable him to occupy the mobile

home. That is rather the point of an agreement under the 1983 Act. Further, the

agreement has implied into it by statute the very terms referred to in section 4(b),

so it can’t enure to his benefit under section 3(3)(b) on this ground as well.

17. What is ignored is the fact that by section 3(2), where an agreement is lawfully

assigned, the agreement will enure for the benefit of and be binding on that

person. An agreement may be lawfully assigned by the [NAME] to a member of

his family under paragraph 8A or, in the case of an existing agreement like this,

paragraph 8B. An [NAME] of [NAME] [NAME] stands in

his shoes and, provided the provisions of paragraph 8B and the relevant parts of

the Selling and Gifting Regulations are complied with, can lawfully assign the

mobile home and benefit of the agreement to a [NAME].

18. In this case the [NAME], who may know about probate and the administration

of estates, does not appear to understand the legislation applicable to [APPELLANT]

mobile homes.

19. She has also committed a fatal error, for the efficacy of her intended scheme, by

failing :

a. To comply with the Selling and Gifting Regulations by serving upon the

site owner the prescribed notices in Schedules 3 and 5, and by using the

assignment form in Schedule 4; and

b. To assign the benefit of the correct 2005 written agreement.

20. Had the mobile home and benefit of the 2005 agreement been validly assigned

then [NAME] could have occupied Watersmeet as his main residence or

alternatively sold on the mobile home with the benefit of the agreement under

Schedule 1, Part 1, Chapter 2, paragraph 7B.

1 SI 2013/981 (in force from 26th May 2013)

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21. However, as it has not, the position in law is (whatever it may be in equity as

between [NAME] and his father’s estate) that the estate has not validly divested

itself of and assigned the mobile home and the benefit of the agreement to him.

It therefore, for the time being, remains an asset of the estate in the possession

of the [NAME] unless or until it is validly sold or assigned by way of gift to a

family member. The consequences of selling as opposed to gifting differ.

22. The answers to the two questions posed in the application form are thus :

a. The Deed of Assignment, being incorrect both in substance and in form,

is of no lawful effect

b. The mobile home and the benefit of the 2005 agreement remain an asset

of [NAME]’s estate yet to be disposed of by the [NAME].

Dated 21st August 2019

[NAME]

First-tier Tribunal Judge

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