ENGLISH LAND LAW
CO-OWNERSHIP
Introduction ...1
Types of co-ownership ...1
Joint tenancy ...2
Tenancy in common ...4
Tenancy by entireties and coparcenary ...8
Severance of joint tenancy ...8
Creation of co-ownership ... 12
Termination of co-ownership ... 15
Land Law
CO-OWNERSHIP READING PATH:
Gray & Gray: Chapter 8.
1. INTRODUCTION
This is always a popular area for examination. Students will see that Gray & Gray link co-ownership directly for trusts for reasons which will become obvious. Remember that the device of the strict settlement, which created successive estates in land, was traditionally used as a way of holding property. The strict settlement was the result of the social aspirations of an earlier era in which individuals wanted to ensure that family property was retained within the family without giving any particular member unfettered powers of disposal.
Since the Trusts of Land and Appointment of Trustees Act 1996, new strict settlements under the Settled Land Act cannot be created.
Changing social conditions have resulted in the strict settlement commonly being replaced by co-ownership, whereby two or more individuals own the property at the same time. In the contemporary context of sexual equality, the working wife’s contribution to the mortgage scenario and the modern emphasis on equality of living arrangements, successive property holding is no longer appropriate. As Gray & Gray suggest, concurrent ownership of land has become the new expression of the change in social conditions.
2. TYPES OF CO-OWNERSHIP
There are four different types of co-ownership, namely:
씰 joint tenancy 씰 tenancy in common 씰 tenancy in entireties 씰 coparcenary.
Before looking at these in detail please note that, since 1925, a legal estate can only be held by way of joint tenancy. Section 1(6) of the Law of Property Act 1925, provides that there can be no tenancy in common at law. However, in equity, both modes are still possible. Therefore, if persons wish to hold land by way of a tenancy in common, they can simply
arrange to hold the legal estate jointly and upon trust for themselves as tenants in common (or in undivided shares).
Conveyancing convenience was the reason for the change in 1925. Conveyancing is much simpler if there is no possibility of legal estates being conveyed in undivided shares. The purchaser needs only to deal with those names that appear on the title.
3. JOINT TENANCY
The whole basis of joint tenancy is that each joint tenant is entitled to the whole of the property. They do not have shares in land because together they make up the owner of the estate which is regarded as one single estate. It can be disposed of only as a single entity by the joint tenants acting together in relation to it – i.e. they are regarded in law as being one composite person. As Gray puts it, each of the joint tenants ‘holds everything and yet holds nothing’.
One of the very important elements of joint tenancy is the fact that none of the joint tenants owns shares in the property. If the joint owners do own shares in the property, they will not be regarded as holding as joint tenants but as tenants in common, albeit only in equity. An example is where property is said to be held by the parties in equal shares. This will be sufficient to indicate that the property is held on a tenancy in common. It follows therefore that one joint tenant cannot dispose of any interest in the land by will as he has nothing to dispose of.
CHARACTERISTICS OF A JOINT TENANCY
RIGHT OF SURVIVORSHIP
One of the distinguishing characteristics of joint tenancy is the operation of the right of survivorship or ius accrescendi.
Simply put, this means that where there is a joint tenancy, and one of the joint tenants dies, the surviving joint tenant
becomes the sole owner of the property. The deceased joint tenant’s personal representative or heirs cannot make a claim.
For example, suppose that A, B and C are joint tenants, then when A dies, B and C will be left entitled as joint tenants; and when B dies, C will be solely entitled. In the end all property held in joint tenancy will resolve itself into land held in sole tenancy if it is not disposed of before that.
An illustration of the application of the doctrine of
survivorship can be seen in the case of RE DENNIS [1995] 3 All ER 171. Here, a husband and wife owned two properties as beneficial joint tenants. In September 1982, the husband committed an act of bankruptcy and a bankruptcy petition was presented in December. In February 1983, the wife died leaving her property to her two children. In May 1983, a receiving order was made, and in November 1983 the
husband was adjudicated bankrupt. The bankrupt’s trustee in
bankruptcy sought the court’s determination as to whether the beneficial joint tenancy had been severed before the wife’s death.
On appeal, it was held that the title of the trustee in bankruptcy related back to the date when the act of bankruptcy occurred even though the bankrupt was only adjudicated a bankrupt at a much later date. Thus, the act of bankruptcy in September 1982 caused a severance of the joint tenancy and therefore the wife’s share passed under her will on her death and was not available to the creditors.
Advantages of the right of survivorship
The survivorship principle has a number of advantages:
씰 It makes conveyancing simple
If P wishes to purchase property, and the legal estate has been conveyed to A, B and C, P does not have to trace the devolution of the individual shares of A and of B and of C; all he need do is look for disposals by A, B and C jointly or else for the death of A, if it is only B and C who are claiming to be entitled to convey the legal estate to P.
씰 It is convenient for trustees
On the death of a trustee, it is not necessary to recover the share of that trustee from his personal
representatives and then vest it in the surviving trustees or in the surviving trustees with a new trustee. The legal estate automatically vests in the surviving trustees.
씰 Indestructibility of survivorship
Survivorship takes precedence over any testamentary disposition made by the deceased joint tenant.
씰 An estate planning device
In the case of a married couple, the property will automatically vest in the survivor upon the death of the other. Consequently, it is a simple and cost-effective estate planning device.
씰 Protection of the property from unsecured creditors Upon the death of a joint tenant, the property
automatically vests in the remaining joint tenants. A consequence of this is that, if the deceased joint tenant had creditors, the creditors have no claim on the property. This has been criticised.
THE FOUR UNITIES
In order for there to be a joint tenancy, the four unities must be present. These are the unities of:
씰 possession 씰 interest
씰 time and 씰 title.
씰 Unity of possession
Joint tenants are only such if they are entitled to
possession of the same parcel of land. If they are not so entitled then there is no co-ownership, and they can only be neighbours. If only one person is entitled to
possession of an area of land that is several ownership, not co-ownership.
씰 Unity of interest
Because joint tenants hold one estate, it follows that they must all be entitled to the same interest, for example, in fee simple, or for a term of 90 years, or for their joint lives, or the life of one of them. The co-owners cannot dispose of their interest by themselves as individuals because they do not own the whole estate: THAMES GUARANTY LTD v CAMPBELL [1984] 2 All ER 585.
씰 Unity of time
The interests of joint tenants must all vest at the same time.
씰 Unity of title
Joint tenants must derive their interests from the same legal act – i.e. all must claim under the same conveyance to them.
4. TENANCY IN COMMON
The distinction between joint tenancy and tenancy in common is that in the case of a tenancy in common, the co-owners hold the land in ‘undivided shares’. The important difference is the presence of the word shares, as it is only in the case of a tenancy in common that there are any distinct shares at all.
In the case of a tenancy in common, the right of survivorship does not apply. On the death of one co-owner, his share (which is already fixed in terms of its quantum) will pass to his next of kin either under the intestacy rules or in accordance with his will.
The only unity that must exist in the case of a tenancy in common is the unity of possession. There is co-ownership only if both owners have rights entitling them both to possession of the whole parcel of land concurrently.
As the owners in the case of a tenancy in common have separate property rights, there is no need for unity of title, time or interest. The co-owners can also have unequal shares in the property.
Think Point 1
If you own property together with your spouse, friend or co-habitee, take a look at the document of title and consider the circumstances of your case and the type of co-ownership you possess. Do you think that it is suitable for you?
LIABILITIES AS BETWEEN TENANTS IN COMMON
OCCUPATION AND USE
Before 1925, tenants in common were entitled to the
possession as well as to the use and enjoyment of the whole of the land. This right has survived the changes of 1925: the imposition of the trust of land of the legal estate has not affected the right of a person to possession if he is entitled to an undivided share behind the trust.
It is now clear that no action will lie against a co-owner merely because he has exclusive occupation of one part rather than another, provided that he does not occupy more than his
‘just share and proportion’. In JACOBS v SEWARD (1872) LR 5 HL 464, the court held that there was no claim in trespass where one tenant in common had cut grass from a part of the property. But if one co-owner excludes or ousts another from the property then an action in trespass is available: BULL v BULL. Alternatively, the injured co-owner could rely on a claim in nuisance, or on a claim of voluntary waste where the action of the co-owner in possession is such as to damage or
devalue the property.
RENTS FROM A STRANGER
Where a tenant in common is not in occupation, he may be entitled to a share of the rents and profits derived from a stranger in proportion to his share in the property (see HENDERSON v EASON (1851) 17 QB 710).
PROFIT DERIVED FROM THE LAND
In HENDERSON v EASON, Parke B decided that, where a tenant in common makes a profit by his own efforts in cultivating the land, he need not account to the others for it. The reasoning appears to be that, since he would not be liable to account in the case of a loss, he should not be liable to account if he makes a profit.
However the decision in HENDERSON implies that there could still be some cases where there could be a liability to account to the other tenants in common – for example, where the profit made
devalues the land because the profit was derived from mining the land.
RENT OBLIGATIONS BETWEEN TENANTS
A co-owner is not obliged to pay rent to his fellow owners if, in fact, he is in occupation and they are not: JONES v JONES [1977] 2 All ER 231.
However, this general rule applies only where the non- occupying co-owner has voluntarily chosen not to occupy the property. This may be because he has alternative accommodation. In DENNIS v McDONALD [1981] 1 WLR 810, Purchas J held that one co-owner had caused the other to leave by threatening violence towards her. Consequently, it would be unreasonable to expect the latter to occupy the premises under those circumstances.
There are numerous exceptions to the general rule to be found in the cases ending with CHHOKAR v CHHOKAR [1984]
FLR 313. In CHHOKAR it was said that the court would impose a rent obligation between co-owners where the imposition of such an obligation would be fair. The Court of Appeal suggested that ‘fairness’ was the appropriate test, and Gray argues that the position may now be that there is a rental obligation between co-owners. See also RE PAVLOU [1993] 3 All ER 955 on this point which is considered later in this chapter.
The quantification of the rent appears to be on the basis of the detriment suffered by the ousted co-owner as suggested by the Court of Appeal in DENNIS v McDONALD.
LIABILITY FOR REPAIRS AND IMPROVEMENT
The general rule governing whether there is an obligation on the part of other co-owners to compensate a co-owner who has spent his own money on repairs or improvement of the property is stated in LEIGH v DICKESON (1844–85) 15 QBD 60. In this case, it was held that the co-owner who has incurred such expenditure cannot demand repayment from the others unless there has been an agreement between them, or the repairs were carried out at their express or implied request or pursuant to an obligation to a third party.
The co-owner who has incurred expenditure in this manner does, however, have an ‘equity’ which allows him to make a claim against the proceeds of sale where the value of the property has been increased because of the repairs or the improvement (see LEIGH v DICKESON and RE JONES [1893] 2 Ch 461).
The measure of compensation appears to be the increase in value consequent upon the improvements or repairs as suggested in PARKER v TRIGG (1884) WN 27. There are,
however, other authorities, such as RE JONES, which suggest that the measure of compensation is the amount of the actual expenditure.
Think Point 2
Which do you think is the more appropriate measure of compensation when a co-owner has expended monies on repairs? Why?
It should be noted that where the repairs are only in the nature of ordinary maintenance it is unlikely that the co-owner will have a claim (see McMAHON v PUBLIC CURATOR OF QUEENSLAND [1952] St R Qd 197).
The issue of rental obligations and expenditure incurred on co-owned property was recently considered in RE PAVLOU [1993] 3 All ER 955. In this case, the respondent husband and wife were the joint legal and beneficial owners of their matrimonial home. They separated in January 1983 and the wife was left in sole occupation of the home. Thereafter, the wife paid the mortgage instalments and the costs of repair and improvements to the home. The husband was adjudicated a bankrupt in March 1987. This had the result of severing the beneficial joint tenancy in the property and, as such, the home was owned by them as beneficial tenants in common.
The trustee in bankruptcy sought a declaration as to the beneficial interests in the home, an order for possession and an order for sale. It was agreed that the orders for possession and sale should be granted but the wife argued that she was entitled to reimbursement for her expenditure on the
property.
It was held that the guiding principle in cases of beneficial joint tenants and beneficial tenants in common is that neither party can take a benefit resulting from an increase in value of the property without making an allowance for what had been spent by the other which had caused the increase in value.
Thus, on an order for sale, the proportions in which the property was to be divided between the parties had to take account of such an allowance. The wife was therefore entitled to either one half of the increase in value of the property (resulting from her improvements and repairs) or one half of her actual expenditure, whichever was the less. The wife was also entitled to credit for one half of the increase in the value of the equity of redemption which had resulted from her mortgage repayments from the date the husband left the property.
Further, the court would order payment of an occupational rent not only where the co-owner who left had been ousted by the other co-owner, but also in any other case in which it was necessary in order to do equity between the parties.
Where the property was the matrimonial home and the marriage had broken down, an occupational rent would normally be payable as, in most cases, the co-owner who left would not normally be allowed back into occupation.
However, if the tenant in common left the property voluntarily and he or she would be welcome back into the property, it would not normally be fair or equitable to order payment of an occupational rent. On the facts of the case, the wife was prima facie liable to pay an occupational rent from March 1986, when she had presented a petition for divorce.
SALE
As regards the decision whether or not to sell the co-owned property, you should refer to Chapter 10.
5. TENANCY BY ENTIRETIES AND COPARCENARY
These types of co-ownership are now more or less extinct and so I do not propose to deal with them here.
6. SEVERANCE OF JOINT TENANCY
Although no joint tenant has a distinct share in the estate, anyone can sever his interest from the others and hold an undivided share. If there are four joint tenants, each has a potential one quarter share and can obtain it by severing his interest in the joint tenancy in equity. Section 36(2) of the Law of Property Act 1925 makes it clear that there can be no severance of a joint tenancy of the legal estate.
If one severs his interest, the others continue to hold jointly.
For example, if A, B and C were joint tenants and A severed his share, A would have a one third share and B and C would jointly have a two thirds share. On the death of C, A would still be entitled to his one third share but B would be entitled to the two thirds share under the right of survivorship.
It should be noted that the result of the severance will be equal shares, irrespective of the contributions towards the purchase price made by each of the co-owners, unless there is an agreement to the contrary.
The various methods of severance involved the destruction of a unity. No severance of the joint tenancy of a legal estate is possible since 1925 (remember that at law a joint tenancy is the only type of co-ownership which can exist), but the methods are still applicable in equity and will effect a
severance of the joint tenancy existing under the trust of land.
The 1925 legislation has also made provisions in relation to the joint equitable interest.
We shall now look at each of the different ways of severing the joint tenancy in equity.
SEVERANCE UNDER S.36 OF THE
LAW OF PROPERTY ACT 1925
Section 36(2) of the Law of Property Act 1925 allows the joint tenant to sever the joint tenancy in equity by giving the other joint tenants notice in writing of the desire to sever.
This provision, although it appears to be a convenient method of severance because it can be made unilaterally, is limited because:
씰 it applies only where land is held jointly, and so does not apply once the land has been sold and the trust property has become money
씰 it applies only where the same people are the trustees and the beneficiaries (i.e. where they are beneficial joint tenants), and so if land is held by A and B on trust for B and D, D cannot use this method of severance.
The notice in writing must evince an intention to sever immediately. Such notice can be given in legal proceedings although in HARRIS v GODDARD [1983] 1 WLR 1203 (matrimonial proceedings) where Mrs Harris issued a petition claiming an order ‘by way of transfer of property and/or settlement of property and/or variation of settlement’, the Court of Appeal held that this did not effect a severance. This was because, in effect, she was asking the court to make an order in the future severing the interest rather than showing an intention to do so herself with immediate effect.
The notice in writing can take the form of a writ or originating summons. In RE DRAPER’S CONVEYANCE [1969] 1 Ch 486, an application by a wife for a declaration under the Married Women’s Property Act 1882 was sufficient to amount to written notice within the section, and thus severance had occurred. HARRIS and DRAPER may seem a little difficult to reconcile. The essence is that the writing to be treated as the notice must show an intention that with immediate effect the parties are to be seen as having separate, distinct shares in the property.
Finally, it should be noted that the notice in writing must be served on all the joint tenants. See the case of RE 88 BERKELEY ROAD LONDON NW9 [1971] Ch 648. This issue was recently considered in KINCH v BULLARD [1998] 4 All ER 650. Here, a husband and wife acquired a property in 1987 as their family home. In 1994 the wife contemplated divorce proceedings and consulted solicitors to discuss the severance of the joint tenancy. In June 1995, the wife filed a petition for divorce and in July instructed her solicitors to serve a s.36 LPA 1925 notice to sever the beneficial joint tenancy. On the 3rd of August 1995, the notice was signed by the wife and sent by
first class post to her husband on the 4th of August. On the weekend of 5th and 6th of August, the husband suffered a heart attack and was hospitalised. The wife picked up the letter with the notice and destroyed it either on the 5th or 7th of August. The wife concluded that her husband would predecease her which he did. The claimants claimed to be entitled to a beneficial share of the property which depended on whether the notice had been served. The court decided that in accordance with s.36, the notice had been properly served on the husband notwithstanding that the wife tore up the notice before he could read it. Section 196 of the Law of Property Act 1925 provides various ways in which a notice can be served. Section 196(3) provides that it will be
effectively served if ‘left at the last known place of abode or business’ of the intended recipient.
Accordingly, the husband’s executors were entitled to the declaration that the notice had been validly served and the husband’s beneficiaries were entitled to a share in the property. Her failure to inform the husband that the notice had been withdrawn was also significant. The court did suggest that the case might have been decided differently if the addressee (the husband) had been notified that the notice to sever had been withdrawn. (Question: do you think this would/should have made a difference?) As it had not been withdrawn, the notice to sever was valid.
WILLIAMS V HENSMAN METHODS OF SEVERANCE
Apart from providing for severance by written notice, s.36(2) of the Law of Property Act 1925 further provides that the joint tenant ‘may do other such act or things which would have been effectual to sever the tenancy in equity’. These other acts or things could consist of one of the three types of severance specified in WILLIAMS v HENSMAN (1861) 1 John & H 546. These are:
ACTS OF A JOINT TENANT OPERATING UPON HIS OWN SHARE
If one joint tenant alienates his interest, his joint tenancy is severed. The alienee takes an undivided share since he has no unity of title with the remaining joint tenants. Since 1925, such alienation is by assignment of the equitable interest. An alienation by operation of law has the same effect. For example, if the joint tenant becomes bankrupt, so that his interest passes to the trustee in bankruptcy, the trustee will be entitled to an undivided share. Remember that the joint tenant cannot transfer his interest in the legal estate, for to do so would be contrary to s.36(2).
The same rule applies to partial alienations – for example, by lease of his equitable interest or a mortgage of it.
In equity, a specifically enforceable contract for the transfer of an interest in land is treated as the transfer of it (the WALSH v LONSDALE doctrine). So, making a contract for alienation will
Further, if land was held for A, B and C for their joint lives and then for D in remainder, there were two estates in the land (the estate for the joint lives, and the remainder in fee simple).
But if B acquired D’s remainder, B’s interest in the joint
tenancy is merged in the remainder and causes a severance of his interest in the joint tenancy.
MUTUAL AGREEMENT
If those with joint interests have a common intention to hold in shares, then they will do so. An agreement amongst them to this effect would bring about a severance.
Such an intention may be implicit in an agreement between them and it will not matter if the agreement is unenforceable because it is not evidenced in writing (as previously required under s.40 of the Law of Property Act 1925) or, presumably, if it is void as not satisfying s.2 of the Law of Property
(Miscellaneous Provisions) Act 1989. What is essential is that the agreement shows a common intention that the joint
tenants are thereafter to have separate shares in the property.
An extreme example of this method of severance is found in BURGESS v RAWNSLEY [1975] 3 All ER 142, where the Court of Appeal held that an oral agreement by one joint tenant to sell her share to the other had effected a severance. The
reasoning appears to be that the parties were thinking in terms of shares and it was irrelevant that the agreement was in fact unenforceable for want of writing. However, where there have only been mere negotiations with no express agreement to sever, this would not amount to severance: GORE v CARPENTER (1990) 61 P & CR 456.
See also NEILSON JONES v FEDDEN [1975] Ch 222 as to the extent of the agreement required.
ANY COURSE OF DEALING WHICH SHOWS THAT THE INTERESTS OF ALL ARE MUTUALLY TREATED AS
CONSTITUTING A TENANCY IN COMMON
In BURGESS v RAWNSLEY, the court discussed when a course of dealing between the joint tenants might be sufficient to lead to an inference of an intention to sever. Lord Denning was firmest. He stated that any course of dealing or negotiation, not amounting to an agreement, that shows an intention by both that they should hold separate shares would be
sufficient to cause a severance. Browne LJ did not express an opinion on this. Sir John Pennycuick was more cautious. He stated that it could be possible to infer a common intention to sever from negotiations even though the negotiations broke down and led to no agreement. See also McDOWELL v HIRSCHFIELD LIPSON & RUMNEY AND SMITH [1992] 2 FLR 126. This method of severance would appear to be limited as suggested in BURGESS. It seems that it is insufficient to have an uncommunicated declaration by one joint tenant. Neither is it sufficient that there is a declaration by the joint tenant to a third party: GREENFIELD v GREENFIELD (1979) 38 P & CR 570.
It would seem also that an oral notice would not be effective to sever under this head.
The issue of severance was considered in HUNTER v BABBAGE [1994] EGCS 8. The Court decided that the joint tenancy had been severed by a draft agreement which was drawn up in December 1989. It was irrelevant that the agreement which implied or included an agreement for severance was not specifically enforceable. The significance of the agreement was not that it bound the parties but that it served as an indication of a common intention to sever.
SEVERANCE BY KILLING
One other method of severance would appear to result from one joint tenant unlawfully killing another joint tenant. In this situation the right of survivorship does not apply otherwise the survivor would benefit from the fruits of his crime (see IN THE ESTATE OF HALL [1914] P 1 and CLEAVER v MUTUAL RESERVE FUND LIFE ASSOCIATION [1892] 1 QB 147 for the general principle).
Although most other jurisdictions appear to accept that the homicide is the severing event, Gray argues that this is the wrong approach. His reasoning seems to be that the act of severance must strictly occur before the death – so to say that the killing is the severing event is in effect to put the cart before the horse!
A better view might be that the killing is not the severing event but that, because of the act of killing, the surviving joint tenant will hold the legal estate with the provision that the killer cannot benefit under the estate of the deceased.
This theory rests on the concept of the constructive trust and equity’s intervention to prevent unjust enrichment. However, what the precise form of the constructive trust is in cases like this is still open to question. You should also consider the effect of the Forfeiture Act 1982.
7. CREATION OF CO-
OWNERSHIP
Ideally, when creating co-ownership, people should devise or convey the property to persons as joint tenants upon an express trust for, say, C, D and E jointly or in undivided shares equally (or whatever proportions are desired). It is then clear that not only is the property held in co-ownership but also what type of co-ownership is involved. The
commonest case is where spouses or cohabitants (H and W) purchase a property together and it is transferred to, for example, ‘H and W as joint tenants in trust for H and W as tenants in common in equal shares.’
Where this has not been done, established principles of equity determine the type of co-ownership.
LACK OF A UNITY
If one of the four unities is missing there can be no joint tenancy. Obviously, if the unity of possession is missing as well, there can be no co-ownership at all.
WORDS OF SEVERANCE
If the conveyance to the individuals involved contains words of severance, then this would indicate that the individuals were intended to take separate shares in the property. For instance to ‘A and B equally’ would make them tenants in common. Other examples of words of severance include words like ‘between’, ‘in shares’, ‘amongst’, ‘respectively’ – it is always a question of intention. In these cases the parties with the power to do so have made their intention clear. Effect is given in equity to this intention.
UNEQUAL PURCHASE MONEY
If two or more persons contribute in unequal shares to the purchase of property, equity presumes the intention to be that they are to have shares in the property as tenants in common with shares in proportion to their respective
contributions. If the contributions are equal, a joint tenancy in equity is likely to be presumed.
Remember, however, that this is merely a presumption and that the court is at liberty to conclude that the intention of the parties was that they should hold equal shares in the
property notwithstanding that the parties had made unequal contributions to the purchase price. In SAVILL v GOODALL (1993) 25 HLR 588, the Court of Appeal decided that, on the facts of the case, where an ordinary sensible couple declare an intention to own the property jointly they can only be taken to intend that they shall own it equally. This was notwithstanding that the parties had contributed unequally to the purchase price. A similar conclusion was reached in CLOUGH v KILLEY (1996) 72 P&CR 122.
PARTNERSHIP ASSETS
Partners are business people and equity presumes that business persons, on a venture together, do not intend that the survivor will scoop the whole pool and be left the sole owner of the business. Accordingly, land held as a partnership asset is presumed to be held as tenants in common by the partners.
This principle extends beyond partners to those carrying on any kind of undertaking with a view to profit (see LAKE v CRADDOCK (1732) 3 P Wms 158).
LOANS ON MORTGAGE
If two persons advance money together on a mortgage which is made to them jointly then, in equity, they are entitled in undivided shares. However, as with the previous rules, this is only a presumption.
BUSINESS TENANTS
In MALAYAN CREDIT LTD v JACK CHIA MPH LTD [1986] AC 549, the Privy Council held that there was a beneficial tenancy in common of a business lease of premises. It was noted that the earlier categories of presumptions, where equity leans in favour of a tenancy in common, are not necessarily
exhaustive. The test is whether the circumstances lead to an inference that a tenancy in common rather than a joint tenancy was intended.
THE LAW OF PROPERTY ACT 1925
AS AMENDED BY THE TRUSTS OF
LAND AND APPOINTMENT OF
TRUSTEES ACT 1996
It should be noted that s.36(1) of the Law of Property Act 1925, as amended by the Trusts of Land and Appointment of Trustees Act 1996, provides that, ‘where a legal estate is beneficially limited to or held in trust for any persons as joint tenants, the same shall be held in trust’. So, s.36 covers the case of a conveyance ‘to A and B’, or ‘to A and B on trust for C and D’ or ‘to A on trust for C and D’.
The effect of dispositions to tenants in common is provided by s.34 of the Law of Property Act 1925 as amended. This states that, ‘where … land is expressed to be conveyed to any persons in undivided shares and those persons are of full age, the conveyance shall… operate as if the land had been expressed to be conveyed to the grantees… as joint tenants in trust for the persons interested in the land’.
The overall effect is that wherever land is held in law or equity (or both) by more than one person there will be a trust. If it has not been declared expressly by the parties themselves, it will be imposed by statute. Indeed, the only case today where there will not be a trust is where one, adult person holds the whole estate in law and equity – i.e. where he is the beneficial owner. A sole legal owner cannot hold in trust for himself alone. The trust will be a trust of land and subject to the Trusts of Land and Appointment of Trustees Act 1996. This is considered in the next chapter.
8. TERMINATION OF CO-
OWNERSHIP
A co-ownership can be terminated by:
씰 partition
씰 the union of the property in one joint tenant o r
씰 the conveyance of the property to a single third party.
If any one of these applies then the co-ownership will be terminated or extinguished. Please look up the relevant details.
Revision
You should now revise the material in this chapter carefully before attempting the Self-assessment Test..
CASES REFERRED TO IN THIS CHAPTER
MAJOR CASES
RE DENNIS 1995
JACOBS v SEWARD 1872 HENDERSON v EASON 1851 JONES v JONES 1977 DENNIS v McDONALD 1981 CHHOKAR v CHHOKAR 1984 LEIGH v DICKESON 1884–85 RE PAVLOU 1993
HARRIS v GODDARD 1983 RE DRAPER’S CONVEYANCE 1969
RE 88 BERKELEY ROAD, LONDON NW9 1971 WILLIAMS v HENSMAN 1861
BURGESS v RAWNSLEY 1975 HUNTER v BABBAGE 1994 GORE v CARPENTER 1990 NEILSON JONES v FEDDEN 1975
CLEAVER v MUTUAL RESERVE FUND LIFE ASSOCIATION 1892 SAVILL v GOODALL 1993
YOUNG v McKITTRICK
McDOWELL v HIRSCHFIELD, LIPSON & RUMNEY AND SMITH 1992
KINCH v BULLARD 1998
OTHER CASES
GREENFIELD v GREENFIELD 1979 IN THE ESTATE OF HALL 1914
THAMES GUARANTY v CAMPBELL 1984 RE JONES 1893
McMAHON v PUBLIC CURATOR OF QUEENSLAND 1952 BULL v BULL 1955
MALAYAN CREDIT LTD v JACK CHIA MPH LTD 1986 PARKER v TRIGG 1884
WALSH v LONSDALE 1882
SELF-ASSESSMENT TEST QUESTION 1
What are the four unities that must be present in order for there to be a joint tenancy?
QUESTION 2
What new method of severance did s.36 of the Law of Property Act 1925 create?
QUESTION 3
Sarah, Kathy and Brian were tenants in common of a house which they had bought together in equal shares. Not long after moving in they started to argue with each other. Kathy spent £1,000 of her own money renovating the kitchen and claims that the others should now pay their share. Sarah puts a lock on the door to her room and moves out. She claims rental from the others. Kathy and Brian tell her that such an arrangement is unacceptable to them. Advise Brian.
SPECIMEN ANSWERS TO SELF-
ASSESSMENT TEST QUESTION 1
In order for there to be a joint tenancy the four unities must be present, namely: unity of possession, interest, time and title.
Unity of possession: The alleged joint tenants are only joint tenants if they are all entitled to possession of the same parcel of land. If they are not, there is no co-ownership, and they can only be neighbours. An area of land in which there are boundaries (whether vertical or horizontal) is described as owned in severalty and is not the subject of co-ownership at all.
Unity of interest: Because the joint tenants hold one estate, it follows that they must all be entitled to the same interest, for example, in fee simple, or for a term of 90 years, or for their joint lives, or the life of one of them.
Unity of time: The interests of the joint tenants must all vest at the same time.
Unity of title: All of the alleged joint tenants must derive their interests from the same legal act – i.e. all must claim under the same conveyance to them.
QUESTION 2
Section 36(2) of the Law of Property Act 1925 allows the joint tenant to sever the joint tenancy in equity by giving the other joint tenants notice in writing of such desire. This provision, while seeming at first glance to be a convenient method of severance as it can be made unilaterally, is a limited one. It applies where land is held jointly, and so does not apply once the land has been sold and the trust property has become money. It only applies where the same people are the trustees and the beneficiaries. So, if land is held by A and B on trust for B and D, D cannot use this method of severance as the wording of the section does not permit it.
It should be noted that the notice in writing must evince an intention to sever immediately, although it can be given in legal proceedings. In HARRIS v GODDARD [1983] 1 WLR 1203 (matrimonial proceedings), Mrs Harris issued a petition claiming an order ‘by way of transfer of property and/or settlement of property and/or variation of settlement’. The Court of Appeal held that this did not effect a severance. Mr Justice Stockdale took a similar approach in McDOWELL v HIRSCHFIELD, LIPSON & RUMNEY AND SMITH [1992] 2 FLR 126. It is also clear that the notice in writing can take the form of a writ or originating summons. In RE DRAPER’S CONVEYANCE [1969] 1 Ch 486, an application by a wife for a declaration under the Married Women’s Property Act 1882 was sufficient to amount to written notice within the section and thus
severance had occurred. Although HARRIS and DRAPER may seem difficult to reconcile, the point is that to be effective the notice must show an intention that the joint tenants are immediately to have distinct, separate shares in the property.
A notice asking the court (at some future hearing) to make an order bringing about severance is not sufficient.
The notice in writing must also be served on all the joint tenants (RE 88 BERKELEY ROAD, LONDON NW 9 [1971] Ch 648). In KINCH vBULLARD [1998] 4 All ER 650, the wife contemplated divorce proceedings and consulted solicitors to discuss the severance of the beneficial joint tenancy of their family home.
On the 3rd of August 1995, the notice was signed by the wife and sent by first class post to her husband on the 4th of August. On the weekend of the 5th and 6th of August, the husband suffered a heart attack and was hospitalised. The wife picked up the letter with the notice and destroyed it either on the 5th or 7th of August. The wife concluded that her husband would predecease her which he did. The plaintiffs claimed to be entitled to a beneficial share of the property which depended on whether the notice had been served. The court decided that the notice had been properly served on the husband notwithstanding that the wife tore up the notice before he could read it. The notice had been properly served in accordance with s.196 (3) of the Law of Property Act 1925, having been left at the last known abode of the
husband. Accordingly, the husband’s executors were entitled to the declaration that the notice had been validly served and the husband’s beneficiaries were entitled to a share in the property. The court did suggest that the case might have been decided differently if the addressee (the husband) had been notified that the notice to sever had been withdrawn. As it had not been withdrawn, the notice to sever was valid.
QUESTION 3
A co-owner is not obliged to pay rent to his fellow owners if he is in fact in occupation and they are not: JONES v JONES [1977] 2 All ER 231.
That general rule applies only where the non-occupying co- owner has chosen voluntarily not to occupy the property.
This may be because he has alternative accommodation. In DENNIS v McDONALD [1981] 1 WLR 810, Purchas J held that one co-owner had caused the other to leave by threatening violence towards her and it would not be reasonable to expect her to occupy the premises under those
circumstances.
It would, however, appear that there are numerous exceptions to the general rule culminating in CHHOKAR V CHHOKAR [1984] FLR 313, where it was said that the court would impose a rent obligation between co-owners where the imposition of such an obligation would be fair. The Court of Appeal suggested that ‘fairness’ was the appropriate test.
Gray argues that the position may now be that there is a rental obligation between the co-owners.
The question that arises here is whether the others will have to pay rent to Sarah as she demands. This is ultimately a
question of fact, and it may centre upon whether the court considers the arguments between them to be of such a nature and character that they can be regarded as sufficient to force Sarah to move out. In the event that the answer to that question is in the negative, it may be that there is still an obligation to pay rent if the court thinks that it is fair and just to do so, in accordance with the test laid down in CHHOKAR v CHHOKAR. What can be said is that in this case it is likely to be a question for the court to decide on the facts.
The issue of occupational rent was considered recently in RE PAVLOU [1993] 3 All ER 955. Here, the court decided that it would order payment of an occupational rent not only where the co-owner who left had been ousted by the other co- owner, but also in any other case in which it was necessary in order to do equity between the parties. Where the property was the matrimonial home, and the marriage had broken down, an occupational rent would normally be payable as in most cases the co-owner who left would not normally be allowed back into occupation. However, if the tenant in common left the property voluntarily and he or she would be welcome back into the property, it would not normally be fair or equitable to order payment of an occupational rent. On the facts of the case, the wife was prima facie liable to pay an occupational rent from March 1986, when she had presented a petition for divorce.
As regards the claim for payment of a share of the repair costs, the general rule as to whether there is an obligation to compensate a co-owner who has expended his or her own money on the repairs or improvement of the property on behalf of the other co-owners is as stated in LEIGH v
DICKESON (1884-85) 15 QBD 60. In that case, it was held that a co-owner who has incurred expenditure in this way cannot demand repayment from the others unless there has been an agreement between them or it was carried out at their express or implied request, or pursuant to an obligation to a third party.
It should also be noted that in YOUNG v McKITTRICK 267 III App 267, it was stated that a request or agreement will not be implied merely from the making of improvements or repairs which were necessary.
The co-owner who has incurred expenditure in this manner does, however, have an ‘equity’ which allows him to make a claim against the proceeds of sale where the value of the property has been increased because of the repairs or the improvement (see LEIGH v DICKESON and RE JONES [1893] 2 Ch 461). The measure of compensation appears to be the
increase in value as a result of the improvements or repairs as suggested in PARKER v TRIGG (1884) WN 27. There are however other authorities, one of which is RE JONES, which suggest that the measure of compensation is the amount of the actual expenditure.
In RE PAVLOU [1993] 3 All ER 955, it was held that the guiding principle in cases of beneficial joint tenants and beneficial tenants in common is that neither party can take a benefit
making an allowance for what has been spent by the other which has caused the increase in value. Thus, on an order for sale, the proportions in which the property was to be divided between the parties had to take account of this fact. A party who had expended money on the property was therefore entitled to the lesser of either one half of the increase in value of the property (resulting from her improvements and repairs) or one half of her actual expenditure, if that was less than the increase in value.
It appears that minor refurbishments are to be disregarded completely on the ground that they are merely in the nature of ordinary maintenance and thus do not constitute a permanent improvement of realty.
Thus in this case the question whether Kathy is able to claim a share from the others rests on whether there was an
agreement for the work to be done and the expenses to be shared, or whether there is an obligation to a third party to do the repairs. If there has been no agreement, or there is no such obligation, then she would not be entitled to claim against the others immediately. However, in the event that the property is sold, and if there is an increase in value which is attributable to the repairs done by her, then she has an equity to claim against the proceeds of sale.
It is likely that the quantum which she gets will be based on the increase in value and not the actual expenditure. It should be noted that the amount which she spent was only £1,000:
if the court regards this as normal maintenance which does not increase the value of the property then she would be unlikely to get anything back.
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LLB_Land_Ch09(06/03)
