#7581 - Co Ownership Creation Enjoyment And Termination Of Rights - Property and Equity 2

• Two types of co-ownership are joint tenancies and tenancies in common – but these have not been adequate to regulate the rights of multi-occupancy in modern days

• Attempts have been made to do so – e.g. ‘company title’ where people bought shares to possess units until the shares were sold; these would require payment of annual sums to carry out repairs – but restrictions on the right to sell were problematic

  • Hence strata title was developed which provides that owners collectively own property as a ‘body corporate’ and each owner has title in their own unit and can distribute rights freely

  • Legislation and by-laws have additional duties that are imposed

• Other similar communal ownership arrangements are seen in retirement villages and ‘community tite’

The NSWLRC, Unilateral Severance of a Joint Tenancy Report No 73 (1994)

• There are two distinguishisng features of a joint tenancy: the right of survivorship and the four unities

• The right of survivorship (jus accrescendi) – when one joint tenant dies the remainder of the estate vests in the surviving joint tenant not through succession but rather death frees the property from control of one owner

  • A joint tenant cannot dispose of their interest by will or otherwise; survivorship cannot be defeated but severance of a joint tenancy can occur to make the co-owners own as tenants in common

• The four unities

  • Unity of possession – each owner is entitled to possession of the whole of the property, not exclusively but to be enjoyed with the other joint tenants

  • Unity of interest – interests of each must be the same in nature, extent and duration

  • Unity of title – all must derive their interests from the same document or the same act

  • Unity of time – all of their interests must vet at the same point in time

    • Except in the case of a conveyance executed to a trustee for beneficiaries or;

    • Any disposition in a will

      • Either can give rise to a joint tenancy in the grantees even if unity of time doesn't exist (M’Gregor v M’Gregor’)

• The distinguishing feature with tenancy in common is in that arrangement each have a distinct yet undivided share in the property that can be dealt with as they want. There is also no right of survivorship, the rules of intestacy or wills will govern the passing of title by a person on death

The position at common law

• There is a presumption that an interest given to two or more persons either by way of legacy or otherwise is joint unless there are words of severance (Morley v Bird)

  • This arises from the feudal origins of the arrangement – feudal dues were easier to extract for laws and furthermore incidents connected with inheritance wouldn’t have to be paid because of survivorship. Also purchasers could investigate title easily since ownership will be concentrated, not dispersed like in TIC

• The courts of the common law preferred tenancies in common but were always constrained by ancient law which favoured joint tenancies – hence dispositions were interpreted liberally and the slightest indication of TIC was seized upon or courts would be ‘driven to rely on minute grounds for holding a severance to have taken place’ (Williams v Hensman)

• Equity always preferred the certainty and equality of tenancy in common hence even though a legal estate passed in survivorship, circumstances indicating a severalty of interests would make the survivor in equity hold the estate on trust for themselves and legal representatives of the deceased co-owner

• The popularity of joint tenancies – because of the smooth transition of ownership it tends to be preferred by married couples purchasing property together

• Joint tenants are said to hold per my et per tout (for nothing and for all) since neither has an individual share but each has a right with the others to the whole of the property – they are bound in a “thorough and intimate union of interest and possession (Blackstone)

• The right of survivorship precedes the operation of a will

• At common law corporations were incapable of being ‘joint tenants’ since they didn’t die but the s 25 of the Conveyancing Act (NSW) provides that they may become joint tenants – dissolution of the company equating to death (allowing corporations to hold as trustees)

• Survivorship generally makes it unnecessary to determine which joint tenant died first.

  • Some jurisdictions say that where the order is uncertain – seniority is said to govern the rules

  • In the ACT, WA and NT if there is uncertainty the property devolves as if the joint tenants had held the property as tenants in common in equal shares

• Generally common law said there was a joint tenancy unless the four unities weren’t present or ‘words of severance’ were used in the instrument – this applies to Torrens land too unless statutory provisions say otherwise

• Words of severance are those which show an intention that co-owners take a distinct share in the property including – ‘in equal shares’ ‘share and share alike’ ‘amongst or respectively’

  • The concept of equal shares is inconsistent with joint tenancies due to the nature of survivorship – one gets the whole of the estate to the exclusion of the other

• “Anything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy and to create a tenancy in common” (Robertson v Fraser)

  • Re Leaver – will provides that estate to be held on trust for A and B as joint tenants, a later codicil to the will says C is to share ‘equally as a joint tenant’ with A and B

    • Held: The use of the word ‘equal’ indicates that they should all take as tenants in common

• Concurrent ownership isn’t restrict to land; Dennis v Dennis – plaintiff seeks a declaration that they are the co-owner of a horse as a tenant in common with a defendant and the taking of account of prize money received. Windeyer J comes up with categories which differentiate between:

  • The transfer to the plaintiff of a legal half share in the horse

  • A contract for sale of a half share, which if specifically enforceable amounts to an equitable half interest

  • A contract under which the plaintiff receives a half share of winnings and of proceeds of sale in return for paying training expenses – this is where the person fell into

• Derham - A co-owner can generally not sue another co-owner in conversion where there has been wrongful disposal of a chattel

  • Except where the sale of a chattel resulted in destruction (e.g. ship wrongfully sold and sunk by the purchaser shortly after – Barnardiston v Chapman)

There are three particular situations where equity held that joint tenants at law would hold as tenants in common

Business partners

• Lake v Craddock

  • Facts: C’s father, Lake and 3 others purchased marsh land to drain it and increase its value for profit. They took as joint tenants, there being no words of severance. C’s father abandoned the enterprise; but 8 years after the original purchase the remaining investors purchased more land as part of the scheme, omitting C’s father’s name. Upon C’s father’s death C took as heir and executed and brought action against the other investors for a division of the partnership estate

  • Held: Although 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 died first would lose all their investment

    • But a condition was imposed on C’s entitlement to the original purchase – he had an obligation to contribute to the purchase price of the land acquired subsequently as a reasonable condition imposed in the exercise of the courts of equity’s discretion

Money advanced on a mortgage

• When two or more persons advance money on a mortgage there is a presumption at equity they are tenants in common, whether they take in equal or unequal shares (Re Jackson)

  • Reason: Mortgagees generally lend money for investment – its unlikely that co-owners would expect to forego their money if they should die before it was repad

  • Originally this presumption meant that when a mortgagor redeemed, a receipt for money from all co-owners had to be obtained; hence if one died the mortgagor had to look for their legal/personal representatives

    • This led to the introduction fo a joint account clause – making the money belong in law and equity jointly to the mortgagees; hence if one died the money could be repaid to the survivors who held on trust for the personal representatives of the deceased mortgagee.

    • Statute provides that one dealing in good faith...