#7148 - Co Ownership And Priority Problem - Property B

• A joint tenancy (JT):undivided shares, right of survivorship

• A tenancy in common (TIC): same interest shared in distinct shares

There is an issue of co-ownership. Here, [eg Y wants to prove joint tenants/X wants to prove TiCs and reason why they want to prove]. The position at both law and at equity must be considered to decide the rights of the parties.

At common law there is a presumption for joint tenancies, which is applied by the Torrens system legislation.

The Transfer of Land Act 1958 (Vic):

• S 30(2) provides that if two or more persons are registered as joint proprietors, they are deemed to be entitled as joint tenants (JTs). This deeming provision may be rebutted by evidence a JT was not intended.

• S 33(4) has the effect that if a document granting a mortgage (or any other interest in land including leases, transfers) is lodged for registration they are deemed to be entitled as JTs unless the document states otherwise. This deeming provision may be rebutted by evidence that a JT was not intended.

Registration as JTs conclusively determines the nature of their interests as far as third parties are concerned. However, even under legislation, the parties can establish they hold as TICs between themselves: Calverley

To decide if the presumption of a JT is rebutted, common law must also be considered. [Remember that adverse possessors may not be registered so only CL rules will apply]

The common law presumes a JT as long as the four unities are present and the document establishing the co-ownership contains no words of severance.

Four unities

1. The unity of possession means that each co-owner is entitled (along with the other co-owners) to possession of the whole property.

   1. One party is not permitted to exclude the other or sue another for trespass

   2. However destruction of the property or exclusion may mean remedies arise

2. The unity of interest requires that the interest of each tenant must be the same in nature, extent and duration.

   1. Eg both must have life estates, fee simple, lease for the same period of time

3. The unity of title requires that all the tenants have derived their interests from the same document/instrument or same act.

   1. Document: lease/contract/registrable transfer etc

   2. Act: eg adverse possession

4. To show unity of time, the interests of all the tenants must vest at the same point in time.

   1. Exceptions: a JT may arise even where the unity of time does not exist where:

   • the interest is conveyed to a trustee for beneficiaries [the concept of trust still means there is unity of time]

   • any disposition in a will.

Words of severance

If the instrument that creates the co-ownership uses words of severance (words indicating an intention to hold in distinct shares), the parties will be TICs rather than JTs.

• Examples: ‘among’, ‘between A and B’, ‘to A and B respectively’, ‘to A and B to share and share alike’, ‘in equal shares’, ‘amongst’ or ‘respectively’.

If there are contradicting expressions used (eg ‘share and share alike as JTs’), a rule of construction provides that:

• the first words will prevail in a deed

• the last words will prevail in a will

[Note if JT/TIC; whether right of survivorship and note effects will be considered at end of analysis]

To decide overall whether a JT or TIC applies, the position in equity must be considered, since it will prevail.

Equity will normally follow law, but there are certain situations where equity will presume a TIC.

• Per Malayan Credit, the accepted situations may not be an exhaustive list.

To show a TIC, the unity of possession is required. As above, this unity is/is not present.

In such case, parties are presumed in equity to hold as TICs in proportion to their contributions (Robinson v Preston; Bull v Bull).

• ‘Contributions’ will include assuming joint liability under a mortgage: Calverley

• The presumption of a TiC does not arise where a conveyance to the parties expressly declares their beneficial interests in the property (Goodman v Gallant)

• This is subject to the presumption of advancement (see ‘resulting trusts’ for relevant relationships). However, a presumption of advancement can be rebutted by evidence of actual intention to the contrary at the time of the transfer or purchase. [Note evidence]

In such case, equity will presume a TIC despite the position at law (Re Jackson). This is because mortgagees usually lend money as an investment and it is unlikely that co-owners would expect to forgo their money if they died before it was repaid.

• A mortgagor who deals in good faith with a mortgagee is entitled to assume that one mortgagee can give a valid receipt for the money: PLA s 112-113. If one of two or more mortgagees gets the money of another mortgagee, he or she holds it on trust for the other mortgagee or (after death) their personal representative.

In such case equity will presume a TIC despite the position in law (Lake v Craddock). This is because it is unfair to permit the principle of survivorship to operate in an undertaking designed to produce a profit, since the partner who died first would lose all his investment

In such case equity will presume a TIC despite the position at law (Malayan Credit).

• This will be more clearly the case where the grantees divide up the premises into distinct parts and pay shares of rent and connected costs proportionately (Malayan Credit).

The situations where equity will prescribe a TIC are not rigidly circumscribed, and the courts will consider each particular case on it merits (Malayan Credit).

[Note whether TIC presumption applies; if not it is a JT in equity]

To avoid a right of survivorship taking effect, a joint tenant must sever the JT prior to death.

Here, ... may argue that the JT that exists here [in law/equity] was severed by

1. Unilateral action

2. Agreement with the other JTs to sever the interest of one or all of the JTs

3. A course of dealing, short of an agreement, evincing an intention to treat the joint tenancy as at an end

Other ways of severing (not elaborated on below)

4. Order of the court requiring property to be transferred from one JT to another or ordering that it be sold and the proceeds divided (Re Johnstone; Public Trustee v Grivas)

   1. Eg under s 79 Family Law Act: the court can order matrimonial property be held as tenants in common

5. Homicide by one joint tenant against the other will sever the JT.

   1. The surviving killer becomes sole proprietor at law but becomes a trustee in equity as a TIC with the deceased’s estate under a constructive trust

   2. The shares of JTs innocent of the killing will be enlarged by the share of the deceased but the killer will not benefit: Rasmanis v Jurewitsch

   3. This rule will apply even where the offender is mentally ill but capable of being held guilty of manslaughter: Public Trustee v Fraser

   4. Will not apply (ie will not sever the JT) in cases of:

      • suicide pacts, since there was no intention to benefit from the killing: Permanent Trustee Co Ltd v Freedom from Hunger Campaign

      • self-defence, where a woman kills her partner after years of violent treatment: Public Trustee v Evans

      • negligent driving of a JT killing another: Gardner v Moore

6. Sequestration (bankruptcy): an order of the court declaring a joint tenant bankrupt. This severs the JT in equity by vesting the JT’s interest in the Trustee in Bankruptcy (Re Francis; Ex Parte Official Trustee in Bankruptcy). The legal position will not change until the statutory requirements are met.

A JT can be severed and consequently become a TIC by one JT operating on their own share (Hensman). This can occur by the JT:

1. Alienating the share to another person (a third party or a fellow JT) (requires CT)

1. A JT can alienate his/her interest without the knowledge or agreement of the other JTs (although he/she will need the certificate of title to do so)

2. This severs as there is no longer unity of time or title

3. If Torrens land need to have the transfer registered; if general law land must have a deed

4. Mutual transfers between two joint tenants on Torrens land will effect severance: Wright v Gibbons

5. Severance by merger occurs where one JT acquires an interest in the estate different from their existing interest and the interests merge to create one interest (eg a life estate merging with a fee simple/remainder). This destroys the unity of interest

6. Mortgaging a share in general law land will sever a JT (since this requires a transfer of the interest to the mortgagee) (Lyons)

   1. Making an enforceable contract of sale or a gift which is effective in equity.

1. Creates an equitable interest in the property

2. Severs the JT in equity despite the original JT still being on the register

3. A gift requires...