Coownership Notes FOR Exams PDF

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Coownership Notes FOR Exams...

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PROPERTY LAW:

CO-OWNERSHIP NOTES FOR EXAM

ELEMENT1:FOCUSOFANSWER

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ELEMENT2:STATETHEPARTI ESANDTHEI RRI GHTSI FGI VEN

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ELEMENT3:DETERMI NETHETYPEOFCOOWNERSHI P:

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1.

JOI NT 2

TENANCY( “ al l f oroneandonef oral l ” ) The4uni t i es:

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TheRi ght sofsur v i v or s hi p( Jusaccr escendi )

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2.TENANCYI NCOMMON

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Uni t yofPosses si on

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NO r i ghtofsur v i v or s hi p

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ELEMENT4:THECREATI ONOFCOOWNERSHI P

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CommonLaw:( pr es umpt i oni nf av ourofJoi ntTenant )

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Equi t y :( pr esumpt i oni nf av ourofTI C)

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ELEMENT5:RI GHTSANDOBLI GATI ONSBETWEENCOOWNERS A.Ri ght sr eoccupat i on B.Ri ght sr epr ofit s/i ncomeandr ent sf r om t hepr oper t y

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A. Ri ght s r ecompens at i onf oracont r i but i onf ori mpr ov ement st ot hecommonpr oper t y10 ELEMENT6:TERMI NATI ONOFCOOWNERSHI P Ter mi nat i onofaJ oi ntTenancy

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1.Sur vi v or s hi p

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2.Sev er ance

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Ter mi nat i onofaTenanc yi nCommon:

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1.Par t i t i on

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2.Sal e

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ELEMENT 1: FOCUS OF ANSWER 1. Where to Focus In Exam Answer a. If the question states the type of co-ownership and there are no facts to indicate to the contrary, just assume the type of co-ownership stated in the facts and move onto their rights, termination etc. b. If there is doubt as to the type of co-ownership or there are only facts relating to how title obtained etc, only then need to spend time determining the type of co-ownership.

ELEMENT 2: STATE THE PARTIES AND THEIR RIGHTS IF GIVEN State: (X) and (X) + (any number of X’s) share the property as (Joint Tenants/ Tenants in Common). -> If this information is not given (Move onto element 3). -> If this information is given move onto the rights of the parties/ termination (depending on the question).

ELEMENT 3: DETERMINE THE TYPE OF CO-OWNERSHIP: Types of ownership 1. Joint tenancy; OR, 2. Tenancy in common (If multiple people held interest inland they can be in one of those categories).

1. JOINT TENANCY (“all for one and one for all”) Joint tenancy has 2 features: 1. The 4 unities and; 2. The Rights of survivorship State: A Joint tenancy is an “all for one and one for all” scenario characterised by the parties of the Joint Tenant owning an entire piece of land together, but individually owning nothing. The first crucial element to determine the existence of a Joint Tenant is satisfying the 4 unities: The first Unity required is the unity of title…….unity of time……unity of possession….. unity of interests.

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The 4 unities: 1. Unity of Title a. The interests of the parties must derive from the same instrument/created on the same instrument. Separate instrument = Tenancy in common b. S.4 of the Statute of Fraud needs to be satisfied and if the not in writing then Adverse Possession should be considered. c. Unity of title can also be created by the acts of part performance 2. Unity of Time a. The interests must come about and commence at the same time b. This rule was abolished by s.39 of the PLA, but normally it is a requirement because of the Unity of Title. c. The interest of each co-owner must vest in interest or possession at the same time. d. Title must be received at the same time.

3. Unity of Possession a. Each co-owner must be entitled to possess all of the land equally with/ subject to the rights of the other co-owners. b. All tenants can use all of the land, so that an action in the tort of trespass cannot be brought by one Joint Tenant against another Joint Tenant. c. Each co- owner entitle to the possession of the whole property d. No claim of any particular part of land 4. Unity of Interest a. The interest of each co-owner must be the same in nature, extent and duration. i. i.e. if 3 co-owners, must each have 1/3 share ii. i.e if one tenant has fee simple and the other has a life estate, there is no unity of interest.

The Rights of survivorship (Jus accrescendi) State: –The Right of Survivorship is the second crucial element of a joint tenancy, for if there is no right of survivor ship, then there is no joint tenancy. Page3

What is it:

Survivorship: 1. When one Joint Tenant dies, their interest is automatically extinguished and the surviving Joint Tenants hold the whole of the interest amongst themselves. 2. If all Joint Tenants die simultaneously, the law presumes the Joint Tenants died in order of their seniority so that the youngest Joint Tenant will get the whole of the title, which will then pass to their estate (s 120(i) PLA 1969). 3. The only way to avoid the right of survivorship is to sever the Joint Tenant during their lifetime (see severance below). Application to Companies: S. 29 (1) PLA - Companies can also hold Joint Tenancy. S. 29 (3) PLA – dissolution/ bankruptcy of a company is treated the same way as a death of a person. The right of survivor ship can be avoided by virtue of: S. 61 TLA – it is possible to put no right of survivorship at the time of registering interest (rare situation).

2. TENANCY IN COMMON A Tenancy in Common has 2 features: 1. The unity of possession and; 3. NO Right of survivorship!! (Of the 4 unities only the Unity of Possession needs to apply). However, it’s not the only unity that can apply and thus if all 4 unities apply the Tenancy could be either a Joint Tenancy or a Tenancy in Common. -> If this is the case view Severance (below) and Right of survivorship to determine the relationship.

1. Unlike Joint Tenants, Tenants in Common have a separate, distinct share in the property Nullagine. 2. Each of the TIC have a right to possession of the whole of the property. 3. Thus, Unity of Possession is the only unity that is required.

Unity of Possession 1. Unity of Possession a. Each co-owner must be entitled to possess all of the land equally with/ subject to the rights of the other co-owners. b. All tenants can use all of the land, so that an action in the tort of trespass cannot be brought by one Joint Tenant against another Joint Tenant. Page4

c. Each co- owner entitled to the possession of the whole property d. No claim of any particular part of land e. The TIC can hold their share in equal or unequal shares. 2. The other unities may all be present, and it can nevertheless be a Tenancy in Common.

NO right of survivorship a. There is no right of survivorship since each co-owner has a distinct share. b. A disposition in a will of an interest held as Tenancy in Common is effective.

a. S. 60 TLA – separate certificate of title can be issued for the proportionate interests held.

ELEMENT 4: THE CREATION OF CO-OWNERSHIP

Common Law: (presumption in favour of Joint Tenant) At Common Law, there was a presumption in favour of a Joint Tenancy when determining the type of co-ownership.

S. 60 TLA – if 2 or more people are registered as holding interest in land, they are deemed to be joint tenants, if its not clear as to whether the co-ownership is Joint Tenancy or Tenancy in Common.

However, this could be rebutted if there is evidence of a Tenancy In Common: Page5

i. One of the Four Unities Absent 1. If any one of the unities were absent, there was a Tenancy in Common. 2. However, just because all four unities are present does not automatically mean that it is not a Tenancy in Common. ii. Words of Severance 1. The court would depart from the presumption of Joint Tenancy where words of severance were used. 2. These words of severance must indicate that the co-owners are to take their interests separately. 3. Anything, which in the slightest degree indicates an intention to divide the property, must abrogate/ abolish the idea of a Joint Tenant and create a TIC (Robertson v Fraser). 4. Examples: a. “in equal shares” b. “to be divided between” c. “to be distributed among them in joint and equal proportions” d. “respectively” e. “among” iii. Intention to Create a Tenancy in Common 1. The court looks at all the circumstances, particularly when there are conflicting words (Re Barbour). a. i.e. the intention that the property remains in the family might favour a Joint Tenant etc. b. That case contained the words “as joint tenants” but also had words of severance = property to stay in family favours Joint Tenant -> Held as a Joint Tenant.

Equity: (presumption in favour of TIC)

Equity preferred a TIC as the right of survivorship operates unjustly. • Equity likes the certainty and equality of tenant in common. An intention to create a Tenancy in Common was presumed at equity: i.

Where there is unequal contribution to the purchase price eg. ¼ and ¾ share – equity will presume that they intended a tenancy in common: Bull v Bull

i.

Where the co-owner advanced money on a mortgage whether in equal or unequal proportions 1. where money was lent to both parties a tenancy in common is Page6

presumed – unlikely that mortgagees would have intended survivorship to apply: Re Jackson. 1.

Partnership (Business) – the rule of survivorship is not appropriate in the context of a commercial venture so TIC is assumed: Lake v Craddock.

i. Deals with the fact that partnerships cannot be the registered proprietor of property because they are not separate legal entities ii. This ensures that if a partner dies, the other one can continue to use the property for the partnership (ie winding up) by survivorship – however, the beneficial interest will pass to the deceased partner’s estate. Lake v Craddock: On Business Partnerships HELD: Although they were joint tenants in common law, they were tenants in equity because it would be unfair to permit survivorship to operate in an undertaking designed to produce profit since the partner who dies first would lose all their investments”.

ELEMENT 5: RIGHTS AND OBLIGATIONS BETWEEN CO-OWNERS 1. Each of the co-owners enjoy certain rights against each of the other co-owners. 2. Each of these rights are considered in turn below and generally only enforceable once the co-ownership has come to an end (see Termination of Co-ownership notes below).

A.Ri ght sr eoccupat i on Whether JOINT TENANTS or TENANTS IN COMMON: Each co-owner has the right to use and occupy the whole of the land as it is an undivided share (Thrift v Thrift). i. One co-owner cannot object to another bringing a stranger onto the property (Thrift v Thrift).

Upon the TERMINATION of Co-ownership: A co-owner can claim an occupation rent if that co-owner is not in possession for some time (Brickwood v Young). Page7

1. But if one co-owner does not exercise their right to occupation, then that co-owner cannot charge an occupation rent (Henderson v Eason).

However, there are some EXCEPTIONS to the rule in Henderson v Eason:

1. Ouster a. An ousted co-owner can claim occupation rent if they have been wrongfully excluded or prevented from using the property (Luke v Luke). b. An ousted co-owner may also have an action in tort for trespass (Forgeard v Shanahan).

a. Evidence of ousting: i. Violence by co-owner against the other = ousting (Dennis v McDonald) ii. Locking property to prevent access = ousting (Marriott v Franklin). iii. Express statutory power to restrain occupation, such as a domestic violence order or a restraining order = not ouster (Biviano v Natoli). iv. Mere animosity (strong hostility) = not ousting (Thrift v Thrift).

1.Agreement to Pay Occupation Rent a. There may be an express agreement between co-owners that the co-owner remaining in possession must pay occupation rent, in which case the co-owner is liable in contract (Rees v Rees).

2.Co-owner in Occupation Claims For Improvements/Outgoings a. Where a co-owner that is not in occupation has been requested to contribute towards improvements/outgoings to the property, that co-owner can claim an occupation rent in equity from the co-owner in occupation on the basis that one who seeks equity must do equity (Forgeard v Shanahan). b. The court will allow the counterclaim where it is just and equitable (McMahon). c. In calculating the occupation rent , the court looks to the fair market rent obtainable for the premises (mesne profits). i. The court will usually order the occupation rent at half the rent that could have been received for the property (Biviano v Natoli), but may depart from that where it is equitable to do so (i.e. S. 27 Statute of Queen Anne – provides for action for an account where one or more co-owners received more than the just share of rent/profit). d. This will be considered in each of the other rights (below).

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B.Ri ght sr epr ofit s/i ncomeandr ent sf r om t hepr oper t y A co-owner has the right to INCOME from the property: Any income above their just share is to be divided between the co-owners in proportion to their interest 1. Even if one party spends their own money and personal exertion on improvements, (such as building a granny flat etc) unless the income is derived solely from the coowners own exertion, the profits must still account to the other co-owners. 2. However: Where the income derived is from a combination of rental and occupying owner’s exertion (skill, labour and time), the exerting co-owner can claim an allowance (dealt with in improvements, below) (Squire v Rogers).

If the income is derived SOLELY from the co-owners own exertion: Any income they receive will NOT be more than their just share, so do not have to distribute (Henderson v Eason). Henderson v Eason a co-owned farm was occupied by only one of the co-owners. The occupied co-owner farmed the land while the other co-owners were not in possession. Late the other co-owners brought an action to have the profit. The court held that:“ in a situation where one or more co-owner cultivate the land and the return from the cultivation exceeds the value of the rent or the occupation of that land then the other coowner had no right to receive any profit from the energetic co-owner.

A.Ri ght sr ecompensat i onf oracont r i but i onf ori mpr ovement st ot hecommonpr oper t y Definition of “IMPROVEMENTS” 1. Something more than mere repairs and maintenance (Forgeard v Shanahan) 2. Does NOT include general maintenance and upkeep of the property. 3. However, If the repair nevertheless increases the value of the property, it might be considered an improvement (Leigh v Dickeson). i. Generally, a co-owner who makes improvements cannot recover any contribution from the other co-owners (Leigh v Dickeson).

However, this is subject to some EXCEPTIONS: 1. Agreement to the Contrary a. If there is an agreement between the co-owners as to payment for improvements, the co-owners will be liable in contract, and thus liable to make a contribution. 1. Joint or Common Obligation to Make the Improvement a. If a public authority or similar requires the provision of some improvement or other expenditure on the property, the expending-co-owner is able to claim a contribution (Leigh v Dickeson). Page9

2. Equitable Lien Asserted at Termination of Co-ownership a. If the co-ownership is brought to an end (see Termination (below)), equity will permit the co-owner who has made an improvement to have an allowance (Leigh v Dickeson). b. This applies to the person who made the improvements, and their successor in title. c. As an equitable lien, it is enforceable by successors but not a later bona fide purchaser for value without notice (Brickwood v Young).

Calculation of Quantum (IMPROVEMENTS) 1. The co-owner making the improvement will be entitled to the following: ▪ Either the cost of the improvement undertaken to the property, or ▪ The increase in value of the land because of the improvement o LESSER value will be given to the co-owner making the improvement 2. The co-owner who expended the money is entitled to no more than the expenditure themselves, even if they have significantly increased the value of the property (McMahon). 2. If the improvement cost more than the resulting increase in value of the property, the coowner can only recover the increase in value (McMahon).

1. If the improvement made the property decrease in value: • The co-owner who expended the money will be liable to pay the other co-owner the difference (Marriott). 1. If the improvement made lead to an increase in rents and profits (income) • The freeloading-co-owner is not entitled to those incomes unless they contribute to the cost of the improvement (Squire v Rogers). Example: i.e if improvements cost $100k, and land increases by $15k, freeloading co-owner must pay half of $100k (50k) to get benefit of increase (7.5k)

1. Right to Contribution for Outgoings • Generally, a co-owner who pays outgoings will be entitled to a contribution from the other co-owners (Leigh v Dickeson). i. As discussed in “Improvements” (above), maintenance and repairs are NOT outgoings that can be claimed, unless they amount to an improvement. ii. If there is an agreement as to outgoings, the court will give effect to it.

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iii. A contribution will be available where one co-owner pays debts owners are jointly liable for (Forgeard v Shanahan).

that all co-

1. Mortgage Repayments a. If both names are on the mortgage, it is a joint debt and the coowner who pays it is entitled to recover anything above their proportion (Forgeard v Shanahan). b. NOTE: This is a legal debt, so don’t need to resort to equity, and therefore do not have to adjust a counterclaim for occupation rent! 2. Council Rates a. If both names are on the rates, it is a joint debt and the coowner who pays it is entitled to recover anything above their proportion (Ryan v Dries). 3. Insurance, pest control, electricity, gas, etc a. These outgoings cannot usually be recovered (exception, part b) because there is no obligation to engage in pest control etc they are expenses the co-owner in occupation has chosen to bear b. However, if there is a mortgage or some other document that imposes these requirements (insurance, pest control, electricity, gas etc..), and all co-owners are liable under that mortgage or contract, the contributing co-owner can get a contribution from the other co-owners (Forgeard v Shanahan).

State: Who has to contribute to what, improvements, what proportions owned, what amounts can be recovered from an exerting owner etc.

ELEMENT 6: TERMINATION OF CO-OWNERSHIP Ter mi nat i onofaJoi ntTenancy

Termination in 2 ways: 1. Survivorship

1. Severance 1.Sur vi vor shi p

Conversion to sole ownership when the land vests in the final survivor. 2.Sever ance Page11

Severance is: The process by which a Joint Tenancy is converted to a Tenancy In Common. 1. A Joint Tenant may be converted to a TIC by severance, which involves destroying one of the four unities (Williams v Hensman). 2. NOTE: Destruction of unity of time is impossible

1. Unities can be destroyed in 3 ways (below) 1. Joint Tenant operates upon their own share/ alienation 2. Mutual agreement between the Joint Tenant’s 3. Any course of dealings sufficient to infer that the interests of all were mutually treated as constituting a Tenancy In Common.

1. Joint Tenant operates upon their own share/ alienation: A). At Law: Unilateral act/ alienation: Destruction of one of the 4 unities.’ B). In Equity

A). Alienation 1. Alienation by less than all Joint Tenants (will destroy Unity of Title). e.g. A and B are Joint Tenants: A sells to C, B and C are now Tenants In Common (owing to a destruction in Title).