#17300 - Consequences Of Co Ownership - GDL Land Law

The law of severance allows the parties to break out of JT to become TiC

• This is usually to escape survivorship as you do not want the other parties to get your interest

• Cannot sever by will, must sever before death (Gould v Kemp)

Most cases are a dispute over whether a severance has occurred

• There is a sense in such cases that the joint tenancy is unfair (Williams v Hensman and Burgess v Rawnsley)

• In these cases, they repeat the idea that the law favours the certainty of a joint tenancy, but equity favours the fairness of a tenancy in common

Common Law Severence:

• Williams v Hensman (1861)– a deceased’s estate was invested in a mortgage fund and co-owned by children as JTs. Some of children died: if joint tenancy then goes to the survivours; if TiC then goes to the dead children’s estates.

• Per Page-Wood VC, three ways to sever:

  • Act On Your Own Share

  • Mutual Agreement

  • Mutual Conduct

• [Also now:]

  • Statutory Severance (s. 36 (2) of LPA) and

  • Severence by Unlawful Killing (Crippen)

1) Statutory Severance under s.36(2) LPA

• Written notice sent to the written address of the property that is the subject of the severance (s.196 LPA 1925)

• It needs to be delivered, but not necessarily read (Re 88 Berkley Road)

• Once served, a notice to sever cannot be revoked

  • Kinch v Bullard (1998) – wife thinking husband would pre-decease her destroyed the letter severing tenancy. Held that this was still effective.

• Unclear what ‘written’ requires (does email count?)

• A will is not sufficient, but muitual wills are (Williams v Hensman)

• The written notice does not need to be formal – any written communication which indicates an immediate intention to sever will count

  • Smith v Davis (solicitors correspondence re divorce)

  • Quigley v Masterson (letter in relation to Court of Protection)

• But this intention must be immediate

  • A divorce petition alone does not convey immediate intention: Harris v Goddard.

  • Divorce proceedings that that have an application for immediate order of sale is effective (Re Draper’s Conveyance).

2) “An act operating on your own share”

• Joint tenant undertakes a legally binding act which severs their share.

  • Total alienation (disposition of share to a third party) under s.53(1)(c_ LPA 1925.

  • Partial alienation such as taking out an equitable mortgage (First National Securities v Hegerty)

  • Involuntary alienation, e.g. bankruptcy (Re Gorman)

• Needs to be written to ensure it is legally binding

• Leases could amount to severance (have done so in Australia) but could hold that everyone has ability to share in rent so no severance.

3) “By mutual agreement…”

• An agreement amongst all the existing joint tenants to bring the joint tenancy to an end.

• Previously inconclusive negotiations (including failure to agree on price) were not sufficient: Nielson-Jones v Fedden.

  • Burgess v Rawnsley disagreed as no specifically performable contract is required, merely evidence of intention. Thus, negotiations may be sufficient to sever.

• Hunter v Babbage [1994] – reaching an agreement to deal with a property in a way that involves severance is sufficient.

4) “…or course of conduct”

• Burgess v Rawnsley – no agreement but the course of conduct (negotiations to sell) implied intention.

  • Cannot pinpoint the agreement, but can say that all the joint tenants have behaved in such a way as to demonstrate that it was severed. Evidence/fact driven.

• Putting up a property for sale is not sufficient to constitute severance, but doing so with the clear intention to sever (i.e. one party receives ‘lion’s share’ of sale) is sufficient: Davies v Smith [2011]

• Used by courts if cannot find another better way.

5) Unlawful killing

• Clearly encompasses murder and manslaughter (Re Crippen). The policy here is to prevent the surviving joint tenant from benefitting from their wrong, no reason not to extend it beyond murder and manslaughteret

Trustees Powers; s.6 and s.7 TOLATA 1996

• Have all of the powers of an absolute owner.

• Where beneficiaries are sui juris then they may given written instructions for the appointment of new trustees. No obligation to appoint new trustees.

• S.9 allows trustees to delegate their powers.

• S.12/13 gives beneficiaries the right to occupy the land if that is the purpose of the trust.

Sale of Land

• Trustees have power of sale as if they were absolute owners, but they must have regard to the rights of the beneficiaries and must consult them (s.6(5) TOLATA).

• Must give effect to the wishes of the majority of the beneficiaries.

Power of the Court

• S. 14 TOLATA 1996 allows the court to make any order in relation to the co-owned land. This is very wide, including order of sales etc.,

  • Can make an order that the property not be sold (Holman v Howes)

  • Can make an order that one person pay rent to the other (Murphy v Guiness)

• E.g. if there is an overriding interest preventing mortgagee having priority they may apply under s.14.

• Any interest party can apply under s.14. But the court must give regard to the following factors (s.15):

  • (a) The intentions of the creator of the trust;

  • (b) The purposes for which the trust property is held;

  • (c) The welfare of any minor

  • (d) The interests of any secured creditor of any beneficiary.

  • (e) The wishes of any beneficiary of full age and entitled in possession etc.

  • The court is entitled to look at other factors (White v White)

Order of Sale

• If there is a disputes over the co-owners (no third party, bankruptcy, creditor) court may order sale

• Cases where the courts have ordered an immediate sale, suspended sale (Chung v Ho – suspended until children have compelted education) or where they have ordered no sale (Holman v Howes)

• No pattern – would have to look at the facts of the problem and make a judgement.

Applications made by a Third Party (Creditor of Mortgagee)

• The innocent parties – non-debtor – would get their share first, the bank would get some money back, not all that was lent

  • Bank of Ireland v Bell – Mr Bell disappeared leaving large debts. Bank ordered sale. Mrs Bell got her small share of the interest first before Bank got the rest.

• Some cases where the courts don’t order a sale, but they are rare – definite trend is to order a sale

  • Mortgage Corporation v Shaire – S’s partner remortgaged property twice by forging her signature. Partner...