Co-Ownership lecture notes PDF

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Lecture notes, the topic of co-ownership...

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Co-ownership Introduction A situation where two or more people simultaneously are entitled to possession of the whole area of land (two or more people have concurrent rights over the land) Co-ownership must take place by means of a TRUST: we are looking at the trust structure. Co-owners hold the house on trust for themselves. ● ● ● ●

[Acquisition of interests in the home] (don’t focus on this, this is equity) The mechanics of co-ownership – forms of co-ownership and ‘severance’ (more important: joint tenancies and tenancies in common) The legal framework of co-ownership – TOLATA 1996 (VIP Tambien) How are purchasers affected by the trust of land machinery? (not as important either

Overview – the main issues for us The mechanics of co-ownership ● How is the property held at the start? ● Has anybody severed the beneficial interest? Disputes over the trust property ● How would the court deal with a dispute between the co-owners of the co-owners and the bank? (TOLATA 1996) Birth ● Land bought by 2+ people ● How is the property held? Life ●

Any change in the way the property is held?

Death ● Who wants the property sold? ● The balance between different interests ● Trusts of Land and Appointment of Trustees Act 1996

The mechanics of co-ownership: types of co-ownership Joint tenancy (here we talk about the holding of land, we are not necessarily talking about leases) Tenancy in common Overview Features of joint tenancy ● Can exist at law or in equity, the legal and equitable title can both be held as a joint tenancy. ● ‘Wholly entitled to the whole’: co-owners do not own a share in the property, all tenants own the land as a whole ● Four unities -PITT

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SURVIVORSHIP operates

Features of tenancy in common ● Only exist in equity ● ‘Shares’ ● Unity of possession only ● NO SURVIVORSHIP Features of the joint tenancy (unlikely to be asked to establish this): 1. Joint tenancy can exist at law or in equity a. i.e. Both the legal and the equitable estate in the property can be held as JT 2. Cases a. Burton v Camden LBC i. Each co-owner must be regarded as being ‘wholly entitled to the whole.’ -per Lord Millett b. Hammersmith and Fulham LBC v Monk: i. Transfer of land to two or more people as joint tenants ‘operates so as to make them, vis a vis the outside world, one single owner.’-per Lord B-W 3. Existence of the four unities a. Unity of possession: all the co-owners are entitled to possess the property at the same time. b. Interest: all have identical interests in the land in terms of extent and duration. c. Time d. Title: both titles come from the same document 4. ESSENTIAL: Principle of SURVIVORSHIP applies a. Death of one co-owner = their interest extinguished and remaining co-owners become entitled to the whole of the co-owned estate b. Survivorship operates automatically on the death c. Cannot leave interest in the property by will Features of the tenancy in common 1. Can only exist in equity, only the beneficial interest can be held as a tenancy in common a. i.e. only the beneficial interest in the property can be held as T in C 2. Only unity of possession present (as it’s on the nature of what a co-ownership is), the other three are not present. 3. Each co-owner is entitled to a specific ‘share’ in the land a. ‘shares’ = ‘undivided shares’ in the land (you are not actually dividing the land up) i.e. shares in the abstract entity which is the estate in the land 4. Principle of survivorship does not operate a. The share will pass on their death to whoever is entitled under their will or on intestacy Introduction: the context of co-ownership Trustee: Legal title Held as a joint tenancy

Beneficiaries: Beneficial interest Can be either JT or tenancy in common The legal title ● The legal title can only be held as a JOINT TENANCY ● Not possible to create a T in C of a legal estate directly – s.1(6) LPA 1925 ● Not possible to sever the JT of the legal estate-s.36(2) LPA 1925 ● Maximum number of trustees = 4 people in the legal title (the first 4 will hold the title on trust for all the rest) - s.34(2) LPA 1925

The beneficial/equitable interest (most challenging) ● ● ●

Equity provides a more flexible approach as to how property is held. The equitable/beneficial interest in the property may be held as joint tenancy OR tenancy in common at the start So, at the start of the trust, how do we know....?

To establish whether there is a JT or T in C at the start: 1st step: is there an express declaration? 1. YES: a. GR: Express declaration = decisive – e.g Goodman v Gallant (1986); Whitlock v Moree (2017) 2. NO: a. Then equity follows the law i.e. presumption of JT - Pettitt v Pettitt (1970) b. But this presumption of joint tenancy can be displaced in 3 situations (BUT NB. Family home) Types of co-ownership: the position in equity ● Express declaration is decisive ○ Goodman v Gallant: ■ ‘...the provision in the conveyance declaring that the plaintiff and the defendant were to hold the proceeds of sale ‘‘upon trust for themselves as joint tenants’’ concludes the question of the respective beneficial interests of the two parties...’ ○ BUT.... sometimes express declaration not conclusive: ■ E.g. City of London BS v Flegg (1988) HL ● House of the dispute is called Bleek house, conveyed for husband and wife as they held the property legally and on trust for themselves ● Half the purchase price was paid by wife parents though. ● Here hoL said despite the express terms of the conveyance, the Fleggs had a beneficial interest in the property because they contributed. They were now holding the legal title on trust for the parents too. ● NO EXPRESS DECLARATION: Where there is no express provision… ○ Equity follows the law ○ i.e. starting assumption is parties hold beneficial interest as JT (means the legal title are the join tenants holding it on trust for themselves) ○ Pettitt v Pettitt (1970)

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This is only a starting assumption and can be changed by express words or implication. Presumption of JT at the start can be displaced by… 1. Express or implied words of severance in the conveyance = -e.g. use of the word ‘shares’ or ‘divided equally’ in the conveyance (words which show that the conveyance created shares in the property, as in JT there are no shares) 2. Unequal contributions to the purchase price mean there is an intention to take a share which reflects the amount you’ve put in- Bull v Bull(1955) a. The land was conveyed on the name of one party only, even if two ppl had contributed in different amounts to the purchase price. b. The court said that this meat the person holding the legal title held the property on trust for both people. 3. The business relationship between the co-owners: you probably do not want severance to operate, therefore equity will step in and expect that that is what you intended a. Malayan Credit v Jack Chia-MPH Ltd (1986) i. The land was acquired jointly for separate business purposes and divided 60/40 the land. ii. The co-owners were business enterprises and were business partners, this means they were Tenants in common in equity in proportion to what was contributed. iii. Both a business relationship and an unequal contribution suggest that there is a tenancy in common in equity

BUT NOTE a more recent approach to unequal contributions to purchase price in the context of the family home: Stack v Dowden (2007) Jones v Kernot (2011) ● SC had to determine the beneficial interest in a house that was purchased by an unmarried couple, who intended the house as their family home. ● The house was conveyed into both names. ● Mis Jones paid a deposit for a mobile home, and the rest was paid for with a mortgage in their joint name. ● She also paid the mortgage out of their joint resources. ● He paid weekly expenses. ● A joint loan was taken in order to make weekly improvements to the property. ● He then moved out after 8 years of living in the property, and she lived in the property paying for all mortgage and expenses. ● He did not do anything else towards the house or its upkeep. ● He then bought a property of his own, and he could do that because he was barely paying any money towards the family. ● He then (many years later) claimed a half share of the beneficial interest of the home. ● She claimed she was the sole beneficial owner of the property. ● This case is mainly concerned with clarifying proportions of beneficial

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interests in houses for unmarried couples. (here this is not our prime interest though) The SC approved the approach in Stack v Dowden which said that when the property was purchased jointly with the purpose of being a family home, they held the BI in the property equally. VIP this means that the presumption is that the beneficial interest is one of a JT However, this presumption can be displayed if there is strong evidence of contrary intention since the beginning (this presumption can then be rebutted)

Two parties purchased a family home, and both names are in the legal title, there is a strong presumption that there is an equal beneficial interest (joint tenancy), even if there is an unequal contribution. Family home + Joint names on the legal title = Presumption of joint tenancy despite unequal contributions

LIFE OF THE TRUST: Transformation into a tenancy in common through: Severance If it starts as joint tenancy, the legal title CANNOT be changed, we are only talking about the beneficial interest. Converting joint tenancy to a tenancy in common is a process known as SEVERANCE NB. Harris v Goddard: Tell us what severance means: must know this ‘..the process of separating off the share of a joint tenant, so that the concurrent ownership will continue but the right of survivorship will no longer apply. The parties will hold separate shares as tenants in common.’

Severance Methods of severance 1. Written notice ○ s. 36(2) LPA 1925 ‘..where the legal estate ...is vested in joint tenants beneficially, and any tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants notice in writing of such a desire or do such other acts or things as would, in the case of personal estate, have been effectual to sever the tenancy inequity...’ ○ No particular form required BUT i. Must demonstrate an intention to SEVER (rather than do something else) IMMEDIATELY (not at some unspecified time in the future, this is problematic) ○ Harris v Goddard: i. Tells us again what severance is: ‘...a desire to server must evince an intention to bring about the wanted result immediately. A notice in

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writing which expresses a desire to bring about the wanted result at some time in the future is not, in my judgement, a notice in writing.’ per, Lawton LJ Example from Goodman v Gallant: i. ‘I hereby give you notice of my desire to sever as from this day the joint tenancy and equity of and in [Redacre] now held by you and me as joint tenants both in law and equity so that the property shall henceforth belong to you and me in equal shares.’ Compare and contrast this phrase to the one given in the problem ii. question. As no specific form of writing is necessary, these are some illustrative cases that have satisfied the statute: Re Draper’s Conveyance (1969) - documents starting legal i. proceedings ● The couple bought a family home and both names were in the legal title, they then divorced. ● The wife started legal proceedings seeking that the house be sold and the profit was to be divided equally ● The court held that the combination of the summons and the afi David were sufficient to sever a joint tenancy under this act. ● The documents consisted of written notice ‘that clearly evinced an intention on the part of the wife that she wished the property to be sold and the proceeds distributed, a half to her and a half to the husband.’ per, Plowman J ii. Harris v Goddard (1983) – prayer in a divorce petition ● Husband killed in a car accident, the husband’s executors tried to say that the propriety had been severed so that survivorship did not operate in favour on the wife. ● The courts held that a prayer in a divorce petition was not sufficient notice in writing. ● This was because the court said that the notice must have an immediate effect, here it did not. Quigley v Masterson (2011) – various attempts iii. ● The court had to deal with a range of issues regarding if there had been severance by written notice. ● The parties had been in a relationship and had acquired a property as joint tenants in equity and in law. ● They broke up. ● By the time the case got to court, the husband has dementia, and it's his daughter who is looking to sell the home in order to found his care. ● Before he lost capacity, he was advised by his solicitors to sever the JT in equity by selling a notice. ● The solicitors undertook to do this for him, and failed twice. ● The first attempt was not to her least address, the second one had her name wrong and was sent to her workplace. ● The court stated that there was no evidence that the letter had been posted or received, and they agreed that her workplace

did not qualify as her ‘least place of business’. However, they did find that she had some applications that stated that they each owned a 50% share in the house, and this did constitute written notice. ● What acted as a notice was her response to the solicitor’s attempt on making the notice. ● This shows that the courts show flexibility as to what and what not works. MUST NOTE THAT THIS IS TALKING ABOUT A UNILATERAL METHOD OF SEVERANCE, AKA THE PERSON SEVERANT IS THE ONE GIVEN THE WRITTEN NOTICE. Where there are 2 tenants, this means they are both severant, but if there are 4 tenants, they must all be given notice, if not some will remain to be joint tenants. ●

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For the notice to be effective, it must also be served to all of the other tenants, the notice must be ‘given’ s.36(2) states that the JT intending to server must ‘give’ the notice to i. the other JT’s. ii. When will the notice be held to have been given to the other JT’s? ● s.196(3) LPA 1925 a. It must be shown that the notice has been left at the last known address or place of business of the other JT/JT’s b. Does not matter whether the written notice is actually received by the JT’s or not: c. Kinch v Bullard: i. The couple were JT in law and in equity. ii. Wife petitioned for divorce, and sent a written notice to the husband, before he received it, he had a heart attack. iii. While in the hospital the letter was received, but then decided she would not benefit this, so she destroyed it. iv. The husband died, and she died a few months later. v. Had the letter severed the tenancy? The court said it had occurred: ‘Provided that it can be established that, irrespective of the identity of the person who delivered the notice to the particular address, it was delivered to that address, then the notice has been validly served at that address, provided that it is the addressee’s last-known abode or place of business.’ per, Neuberger J. 1. It did not matter that the letter had not been received, and it did not matter that the letter had been destroyed. 2. One this notice has been given it

cannot be withdrawn. 3. Neuberger J: ‘Once the sender has served the requisite notice, the deed is done and cannot be undone.’ 4. BUT: ‘I am inclined to think that the position would be different if, before the notice was ‘‘given’’, the sender had informed the addressee that he wished to revoke it. In such a case, it appears to me that the notice would have been withdrawn before it had been ‘‘given’’.’ per, Neuberger J: Obiter he said that position could be different if the sender revokes the letter before it arrives the address. Once delivered to last known address it cannot be withdrawn ○

Recorded post/registered delivery = slightly different rules i. Posting alone is sufficient, as long as it is noticed not returned undelivered.

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s.196(4) LPA 1925 + Re 88 Berkeley Road(1971): i. Beneficial tenants, one of them was about to marry so sent the other tenant a letter by registered post, but the letter arrived and the intended recipient never got the letter. ii. Was the tenancy severed? Yes even if the letter was never received. iii. The letter will be effective as long as it is sent by registered post, as long as it is not returned to the sender.

2. The common law (or Williams v Hensman) methods: ●

Williams v Hensman: ‘A joint tenancy may be severed in three ways: in the first place and the act of any one of the persons interested operating on his own share may create a severance as to that share...Secondly, a joint tenancy may be severed by mutual agreement. And, in the third place, there may be severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common...’ per, Page Wood V.-C.

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Retained by s.36(2) LPA 1925: ‘..where the legal estate ...is vested in joint tenants beneficially, and any tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants notice in writing of such a desire or do such other acts or things as would, in the case of personal estate, have been effectual to sever the tenancy inequity...’

Williams v Hensman Methods: ● Act of one tenant operating on his own share: this means that the joint tenant does some act that shows that intend to show their interest in a way that is inconsistent

with the continuation of a joint tenancy. ○ Examples ■ JT selling their interest to a third party which is a co-owner: ● Complicated bc JT cannot own a share of the property, but in order to sell their interest in the land, they must own a share to transfer. ● Must look at it as it the sale or mortgage of their interests, creates this share. ● For it to be effective under this head, the method must be irrevocable, in other words, the joint tenant must have gotten to the stage to form a valid contract for their transfer of the property, and it must satisfy s 2 of the Law of Property of the miscellaneous act 1999 ● Mere oral negotiation for either sale or mortgage is going to be sufficient. ■ JT mortgaging their interest to the bank: ● Bedson v Bedson: Authority for both sale and mortgage. ○ If an H and W were JT’s‘...either husband or wife could ...at any time by voluntary assignment or sale or mortgage of his or her beneficial interests have created a tenancy in common in undivided shares.’ per, Russell LJ ● NOTE: ○ Like ‘written notice’, this method is unilateral. Because of this, it does not require of the consent or agreement of the other party. ○ It will operate to server only the interest of JT who has acted on his/her own share. ■ 2 JT’s and one servers by ‘written notice’ or ‘acting on own share’ = Both become T in C ■ 4 JT’s – A B C and D. A severs by ‘written notice’ or ‘acting on own share’ = A as a TC of ¼ with B-D remaining as JT’s of the remaining ¾. ■ If A acts on own share by selling to B, B takes on a dual role – B is a TC of ¼ but remains a JT of the remaining ¾ with C and D ■

JT fraudulently transferring or mortgaging the entire interest in the land to somebody else: Ahmed v Kendrick (1988) ■ Fraudulent transfer of whole property? Qu. What happens if one joint tenant tries to sell/mortgage the whole property without other coowners knowledge? (forging names into the document) A. Severs the fraudster’s interest and transfers their share only ●

Fraudulent mortgage of entire property: First National Securities v Hegerty (1985)

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Joint tenants for a family home, without wife's knowledge, husband mortgaged the house forging the wife's signature. ■ The courts held that the effect of this was to sever the JT and convert the parties in tenants in common. ■ The effect was also to mortgage the husbands share to the bank. ■ TH court held that the husband had no power on his own to mortgage the whole beneficial interest, but he did have a power to mortgage his own interest. ● Fraudulent trans...