#5352 - Concurrent And Successive Interests - Land Law

CONCURRENT AND SUCCESSIVE INTERESTS

A. TYPES OF CO-OWNERSHIP

• Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549: P & D entered into joint venture to obtain a lease of an area; agreed that would occupy a portion each and contribute proportionally to their share. Landlord executed a lease in their favour as joint tenants; issue later arose as to whether equity could intervene and presume them to be tenants in common; thought in this case that there were tenants in common in proportion to shares and it did not matter that issue was over lease and not freehold.

• Goodman v Gallant [1986] Fam 106: D was joint beneficial owner of property with her husband. After splitting from husband, P moved in and together they bought out the husband’s share, then declaring themselves as joint tenants. After relationship problems D tried to sever tenancy and claimed that she had a share. Slade LJ:

  • If the conveyance contains an express declaration of trust which declares the beneficial interests in the property or its proceeds of sale there is no room for the operation of resulting or constructive trusts unless and until the conveyance is set aside or rectified; until that event the document speaks for itself.

  • There is a real and important distinction between a conveyance into joint names which contains a declaration of trust of the beneficial interests and a conveyance which contains no such declaration.

  • As there was no claim for rectification or rescission the declaration as to joint shares had to stand.

• Thompson, [1987] Conv 29: Argues that should abolish equitable joint tenancies.

  • Little of advantage would be lost if joint tenancies were confined to ownership of the legal estate. In fairness, it should be pointed out that the abolition of equitable joint tenancies would carry one drawback. On the death of one of the tenants in common the sole survivor would need to appoint a second trustee to effect a sale of the property. It could not be assumed that the survivor took under the will of the deceased, thereby terminating the co-ownership.

    • While this is a disadvantage, it is suggested that it is outweighed by the advantages.

  • The advantages can be summarised as including ridding the law of the difficult and technical problem of determining whether severance has occurred and the concomitant possibility that the right of survivorship may operate inappropriately. Instead, the destination of the beneficial interests on death would be determined by each party's will which, one hopes, each would be encouraged to make when the property was acquired. Secondly, potential problems or interpretation of the Forfeiture Act 1982 would be avoided and, finally, each party would be encouraged to agree at the outset what share each would get in the event of a sale.

• Pritchard [1987] Conv 273: Disputes above submission.

  • Thompson notes the following mischief’s as justifying the radical solution:

    • Problems when the marriage or other initial arrangement goes sour;

      • Not clear that one can categorically say that this causes injustice and neglects the fact that many people are genuinely attracted to the survival aspects of joint tenancy.

    • The uncertainties as to the manners in which severance may be effected;

    • The special problems arising when one co-owner is responsible for the death of another; and

    • The unpleasant surprise for a severing co-owner that a severance will create equal beneficial shares, not resurrect the original contribution proportions.

  • This may be an attractive form of landholding both for married couples wishing to demonstrate the full content of their mutual vows and also unmarried siblings anxious to secure the smooth transition of ownership on death of not just the family home but also any family business.

  • Is it unarguably the case that the unsuccessful partnerships should dictate the apparatus of the law? If a relationship turns sour enough, why should not an aggrieved co-owner effect a severance? And are not the powers of the court to divide property on a break-down of a marriage sufficient? And is not the Inheritance (Provision for Family and Dependants) Act 1975 an adequate protection to cover the hardest cases that might occur through the failure to sever? Especially if the law were changed to allow severance by will?

• Thompson, [1987] Conv 275: Reform of the method of severance seems to be seeking to suppress the effect of beneficial joint tenancies while retaining the concept. Suggests that simpler to grasp the nettle and abolish them.

1. Severance of a joint tenancy

• Law of Property Act 1925 s 36(2): Cannot server a joint tenancy so as to create a tenancy in common at law; but can sever equitable interest whether or not the estate is vested in joint tenants at law; must give notice in writing of the desire to sever, or do things are acts that would amount to severance in equity; land then held on trust. Nothing in the Act affects the right of survivorship for joint tenants.

• Williams v Hensman (1861) 1 J & H 546, 557: A joint tenancy may be severed in one of the three ways which entail that the right to survivorship is lost by that person with respect to the other shares:

  • An act of any one of the persons interested in operating on his own share may create severance;

  • Mutual agreement;

  • Any course of dealing sufficient to intimate that the interests were mutually treated as a in common;

    • Will not suffice to rely on an intention declared only behind the backs of others interested;

    • Must find a course of dealing which affects all the shares of the concerned parties.

• Re Draper's Conveyance [1969] 1 Ch 486: House was conveyed to husband & wife as joint tenants; following divorce the wife intimated that she wanted to sell it, but the property remained unsold at the time of the husbands death. Issue as to whether or not the right of survivorship was in play. Plowman J:

  • A declaration by one of a number of joints tenants of his intention to sever will operate as a severance; the joint tenancy was thus ended before the death of H, and so she did not gain his share in survivorship.

  • Also thinks that issuing of summons coupled with affidavit would amount to severance in writing whether that be effected by equity or s36(2) LPA as the evidence an intention to sell the property and retrieve her share in the proceeds of sale.

• Nielson-Jones v Fedden [1975] Ch 222 : Husband & wife were beneficial and joint legal tenants of home. Following split wife signed a memorandum which permitted the husband to sell the property at his discretion and use proceeds to obtain a home for himself. Each had money from deposit for sale. Whilst negotiations were underway to separate their financial interests no agreement ever reached; although husband had indicated that he wished to sever; husband died before completion.

  • A beneficial joint tenancy cannot be severed by a unilateral declaration of an intention to sever.

  • The memorandum only sought to deal with the proceeds of sale and that question is wholly unambiguous to ownership. Here there was no sufficient course of conduct by the husband and wife to imply an agreement to sever, and so even a unilateral declaration by the husband was not enough to sever.

  • No conduct is sufficient to sever a joint tenancy unless it is irrevocable.

• Harris v Goddard [1983] 1 WLR 1203: Husband & wife were joint tenants of property used as home and place of business for the husband. Following separation wife served petition of divorce in which she requested that an order be made by way of transfer of property or settlement in respect of her share in the home. Just before hearing husband died. Lawton LJ:

  • When severance is said to arise under section 36 (2) , not from the giving of a notice in writing, but from doing other acts or things which would, in the case of personal estate, have been effectual to sever a joint tenancy in equity, the fact that the parties were married may make the drawing of inferences easier; but that is the only relevance which the existence of the married state has.

  • Unilateral action to sever a joint tenancy is now possible; was done so in this case.

  • When a notice in writing of a desire to sever is served pursuant to s36 (2) it takes effect forthwith. It follows that a desire to sever must evince an intention to bring about the wanted result immediately.

  • A notice in writing which expresses a desire to bring about the wanted result at some time in the future is not a notice in writing within s36 (2). Further the notice must be one which shows an intent to bring about the consequences set out in s36 (2) i.e. that the net proceeds of the statutory trust for sale shall be held upon the trusts which would have been requisite for giving effect to the beneficial interests.

• 100 LQR 161, JMT: It is expected that the CA will adopt the above approach when these sort of cases go up.

  • Submits that severance occurs if and only if, the parties have either disposed of their interests, or they have agreed in such a manner that equity can compel them to so dispose or alter their interests; this is the third category of case referred to in Williams v Hensman.

    • Old cases clearly required some act;

    • Effect of s36 was to mitigate the need for some act where intention declared in writing.

  • Cases also concerned dispute as to effect of serving court documents which express the intention to sever given that they were revocable; finds it surprising that the court considers these given that they are not served for the purposes of that section and do not purport to be so.

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