How to resolve a dispute over jointly owned personal effects

Personal effects can sometimes have intrinsic value with items such as antique furniture, paintings, jewellery and vintage cars often being worth thousands of pounds. Even if not intrinsically valuable, a personal item can have considerable emotional importance to an individual, particularly if it was once the treasured belonging of a much loved parent.

Sir Michael and Lady Butler were the parents of four children, Caroline, James, Katharine and Charles, and owned a collection of 17th century Chinese porcelain which had great intrinsic value being assessed as worth up to £8 million. To the Butlers and their children the collection also had emotional value having formed the backdrop to the children’s childhood. Between 1987 and 1993 Sir Michael and Lady Butler gave the majority of the china to their four children largely as an inheritance tax planning measure.

The children considered making a written agreement setting out the agreed terms of their ownership but this was never implemented, although they did agree verbally that they would preserve the collection at least during their father’s lifetime, subject to any financial need they might have which might result in a sale of items from the collection.

In a letter of wishes to his Will made in 2012 Sir Michael expressed the wish that the collection should be retained intact for a decade. Following Sir Michael’s death the following year, simmering tensions between the four siblings surfaced almost immediately. Caroline and James wanted the collection to be divided between them while Katharine and Charles wished to keep the collection intact and available for scholarly study.

The dispute could not be resolved and ended up in the High Court when Caroline and James applied for an order under s188(1) of the Law of Property Act 1925. S188 (1) provides that if personal effects are owned by several persons, any individual or individuals together entitled to at least a half share can apply to the court for an order dividing the chattels. Under s188(1) the court can then make such order as it thinks fit.

After extensive consideration of the various legal authorities, the court made an order as requested by Caroline and James providing that the collection should be divided with each sibling taking it in terms to choose an item. Katharine and Charles’s alternative proposal involving the right for them to buy out their siblings’ interests was rejected on the grounds that it might cause further dissention between them.

Disputes over personal effects are not uncommon and, although s188 might offer a remedy in some cases it comes at the considerable cost of a court application, and is not available unless an aggrieved co-owner or co-owners own at least a half share; it is also thought that s188 is only applicable to a collection of chattels and not to a single item, so it has limited application.

In this type of situation it is better to put in place a sharing agreement at the outset dealing with such matters as custody, insurance, storage, sale or retention and what happens on the death of any co-owner. Perhaps in Sir Michael’s case he should have insisted on such an agreement being drawn up between his children and signed concurrently with the deed giving the collection to them, as this may have avoided an acrimonious and expensive dispute.