#6939 - Property B Summary Co Ownership - Property Law

Topic 2: Co-Ownership

Co-ownership:

• Ownership of an interest in land by more than one person at the same time

• Does not refer to any physical subdivisions of the property

1. Types of Co-ownership

   1. Joint Tenants

      1. Definition

         • A joint tenancy is where two or more persons simultaneously hold an interest in the same parcel of land, where the two distinguishing features are apparent: the right of survivorship and the four unities.

         • Joint tenants are said to hold per my et per pour tout (for nothing and for all) meaning that no JT has any individual share, but that each has a right, with the other JT, to the whole of the property

         • Despite the fact that a JT does not have an individual share, JT’s can freely dispose of their interests to another by severance.

      2. Right of survivorship (‘just accrescendi’)

         • The interest of a joint tenant does not form part of his/her estate on death but accrues to the surviving joint tenant(s) - the jus accrescendi, or right of survivorship, rule

         • Consequence - a joint tenant cannot leave his/her interest to another person in his/her will

         • A joint tenant is free, however, to sever the joint tenancy, thereby creating a tenancy in common.

         • If they die at the same time: PLA 184 - Where two or more persons have died in circumstances rendering it uncertain which survived, such deaths shall be presumed to have occurred in order of seniority and the younger is deemed to have survived the elder.

      3. Requires Four Unities (If one is missing – TIC, if Unity of Possession is missing = NEITHER)

         1. Possession - each co-owner is entitled to possession of the whole property

            • Each co-owner is entitled to possession of the whole of the property, not exclusively for himself or herself but to be enjoyed together with the other joint tenants

         2. Interest - each has an interest of the same nature, extent and duration

            • The interest of each JT must be the same in nature, extend and duration.

         3. Title - each has acquired title under the same instrument or act

            • All the JT must derive their interests from the same document or the same act

         4. Time - the interests vested at the same time

            • The interests of all joint tenants must vest at the same point in time. E.g. A to life and B and C when they turn 21. The interests of B and C are different as B and C have different birth dates. There are to exceptions to this: any conveyance executed to a trustee for beneficiaries or any disposition in a will may give rise to a JT in the grantees, even where unity of time does not exist M’Gregor v M’Gregor

      4. Presumption of JT

         • There is a presumption of a joint tenancy if you give land to someone

         • Can be rebutted through words of severance:

           • Words of severance - indicate an intention that the transferee will have distinct shares, eg. Equally; between; among; in equal shares; to A and B respectively etc.

             1. Only slight evidence is required to rebut the presumption

             2. 'to share and share alike as joint tenants' = this was held to be a joint tenancy despite the words of severance

                1. Deed: look at first set of words

                2. Will: look at second set

   2. Tenants in Common

      1. Definition:

         • Each TIC is entitled to the possession of the whole of the land (undivided) and is entitled to a distinct share thereof

           • The shares need not be equal

         • No tenant can claim a particular piece of the land

         • Each TIC’s share is fixed and cannot be enlarged by the death of another TIC

      2. Different with JT

         • There is not right of survivorship

         • The share of a TIC passes to the beneficiary nominated in his/her will, or descends to the person entitled to his/her property under the rules governing interstate succession

         • A tenant can alienate his undivided share and it may become the subject matter of co-ownership

      3. There must still be unity of possession

2. Creation of co-ownership – the position in law versus the position in equity

   1. Common law:

      1. At law, there is a common law presumption that co‐owners intended to hold the property as joint tenants where:

         • the four unities are present; and

         • no words of severance are used (see above)

      2. TLA ss 30(2), 33(4)

         • s30(2) – where two or more persons are registered as joint proprietors they are deemed to be joint tenants

         • s33(4) – any 2 or more persons named in an instrument are entitled jointly unless a contrary intention exists

   2. In equity: is a JT in law necessarily a JT in equity?

      1. Equity normally follows the law and presumes that joint tenants at law are joint tenants in equity

         • Esp when the parties take conveyance of land as JTs and provide purchase money in equal shares

         • Or when parties were married and held land as JT’s Cummins

      2. However, equity presumes a tenancy in common where two or more persons (these can be rebutted)

         • Make unequal contributions to the purchase price (subject to a contrary intention and the presumption of advancement) Baumgartner

           • If two or people acquire an interest in land (or any other object), having contributed unequally to the purchase price, they are presumed in equity to hold as tenants in common in proportion to their respective contributions Robinson v Preston.

           • The presumption will not arise where a conveyance to the parties expressly declares their beneficial interest in the property Goodman v Gallant.

         • Advance money as mortgagees (equally or not) Re jackson

           • You wouldn’t intend that someone would get your investment when you die (like Lake v Craddock)

           • Supported in section 112 and 113 of PLA

         • Acquire property for a business venture as partners Lake v Craddock

         • Hold land for separate business purposes/flexible approach Malayan Credit Ltd v Jack Chia

      3. Is it possible to have a sole ownership at law but a co-ownership in equity?

         • Once they are presumed to hold equally, equity will presume JTs

         • Vedejs v Public Trustee

           • Mr Asaras and Ms V had developed a relationship and decided to live together as a defacto couple

           • Close and loving relationship

           • Pooled income for domestic expenses

           • Plans to get married

           • Mr V died without will

           • Mrs V argued there was a common intention that they would co-own the property as JT’s so they were JTs in equity and the rule of S would operate

           • Common intention: neither had contemplated that the land would go to someone else

           • Held: CICT

3. Rights and Duties of Co-Owners

   1. Right of possession:

      1. Each co-owner has the right to possess and enjoy the whole of the land

      2. Consequences:

         • CO’s cannot bring an action for trespass against another CO

           • Exception: if CO’s occupation has excluded another CO’s from possession, or, possible, where a CO does something preventing common enjoyment of the land Stedman v Smith.

         • Nor as a result can the CO claim rent from another CO. The fact you are not using it is your fault.

   2. Right to make improvements to the land.

      1. Under section 233, VCAT may allow a CO to claim improvements to land or goods

         • Types of costs available to be claimed:

           1. any amount that a co-owner has reasonably spent in improving the

           2. any costs reasonably incurred by a co-owner in the maintenance or insurance of the land or goods;

           3. the payment by a co-owner of more than that co-owner's proportionate share of rates (in the case of land), mortgage repayments, purchase money, instalments or other outgoings in respect of that land or goods for which all the co-owners are liable;

           4. damage caused by the unreasonable use of the land or goods by a co-owner;

           5. in the case of land, whether or not a co-owner who has occupied the land should pay an amount equivalent to rent to a co-owner who did not occupy the land;

           6. in the case of goods, whether or not a co-owner who has used the goods should pay an amount equivalent to rent to a co-owner who did not use the goods.

         • Orders VCAT may make 233(1)(a-c) PLA

           1. Compensation or reimbursement

              1. Old CL held that a CO was entitled to the lesser of the actual cost of the improvements, and the increase in value of the property resulting from the improvement

              2. Only have to pay your proportion e.g. if you own 20% of the land, you only pay 20% of the cost

           2. Account to the other co-owners in accordance with s 28A

           3. Adjustment made to a co-owners interest in land to take account of amount payable

   3. Right to receive rents and profits Section 28A(1-2) PLA

      1. (1) A co-owner (either a JT or TIC) is liable to account to the other co-owner/s where they have had more than their just proportionate share.

         • EXCEPT: Henderson v Eason – if a person uses their own money and labour to greatly exceed the value of rent/compensation for mere occupation of land, then it will not be sufficient to mount a claim

      2. Procedure:

         • Application made to VCAT: 234B PLA

         • VCAT will make an order it thinks fit to ensure just and fair accounting of the amounts received by co-owners 234B(1)

      3. Types of orders VCAT can make: 234B(2)(a-b) PLA

         • Order a CO to account for that rent to other CO’s; and

         • Make any order it considers just and fair for the purposes of an accounting by a CO who has received more than their just and proportionate share

   4. Right to receive occupation Rent

      1. 233(3) VCAT must not make an order requiring a co-owner who has occupied the land to pay an amount equivalent to rent to a co-owner who did not occupy the land unless (TO PAY OCCUPATION RENT)

         • (a) the co-owner who has occupied the land is seeking compensation, reimbursement or an accounting for money expended by the co-owner who has occupied the land in relation to the land; or

         • (b) the co-owner claiming an amount equivalent to rent has been excluded from occupation of the land; or

         • (c) the co-owner claiming an amount equivalent to rent has suffered a detriment because it was not practicable for that co-owner...