Coownership of Property

Coownership of property requires an understanding of concepts of joint tenancy and tenancy in common as this would determine how property would be passed under the right of survivorship.

Legally co-owned property would mean that the owners hold the legal title on trust for themselves as beneficial joint tenants : Goodman v Gallant. They would also hold the property as joint tenants in equity.

Williams v Hensman set out the three ways in which equitable joint tenancy can be severed into an equitable tenancy in common under the old rules of equity (preserved by LPA 1925 S36(2). They are in effect :-

a. alienation of her interest inter vivos by a joint tenant
b. mutual agreement
c. any course of dealing which shows that the interests of all were mutually treated as constituting a tenancy in common. This point would be especially relevant if one party orally agrees to sell the other party his or her shares.

Additionally severance will be effected if a joint tenant serves a notice of severance in writing satisfying S36(2) of the LPA - no requirement to sign. The written notice must contain an unambiguous declaration of an intention to sever with immediate effect; not at some time in the future; or an intention to ask the court to sever : Harris v Goddard and the notice must be given to the other party. LPA 1925 S196(3) equates service with giving and will be effective if left at the intended recipient’s last known place of abode : Re 88 Berkeley Road. In Lord Newborough v Jones the notice would have to be left in a way which could reasonably be expected to bring it to the attention of the recipient.

This follows the requirement of LPA S53(1)(c) a disposition of a beneficial interest would need to be in writing and therefor evidential requirement in writing would have to be produced to show that there was disposition of the interest to prevent fraud on the part of other parties.

Under a joint tenancy interests cannot be passed. However under a tenancy in common interests can be passed under the right of survivorship. Therefor where one party wants to pass on the property after death it is important to determine the act of severance. To claim an interest it will therefor be for the person claiming the interest from the dead person to show on a balance of probabilities that the joint tenancy was severed before death. If not the interest would rest with the other joint tenants.

The second line of argument would be where equity would recognize a severance by mutual agreement even where the agreement which causes the severance is unenforceable in its own right due to lack of formality : Burgess v Rawnsley. As per Lord Denning’s obiter, “It is sufficient if there is a course of dealing in which one party makes clear to the other that he desires that their shares should no longer be held jointly but be held in common…”

If it can be established that there was severance and there existed a tenancy in common then the aggrieved party is sad to hold a beneficial interest in the property. As a beneficiary she will have a right to occupy the land under Trust of Land and Appointment of Trustees Act 1996 (TOLATA 1996) S12. An application of sale of the property could be made under TOLATA 1996 S14 but subject to S15 which sets out the matters to be considered by the court in hearing such an application :-

1. Intentions of the creator of the trust
2. Purposes of the trust
3. Welfare of any minor whose home is in the property
4. Interests of any secured creditor

Under the Trusts of Land and Appointment of Trustees Act 1996 S15(2) asking the court to use its discretion to have regard to the circumstances and wishes. There is wider discretion in favour of families under S15 The Mortgage Corporation v Shaire. However the situation might have been different if the interest in the land had been insignificant : Bank of Ireland Home Mortgages v Bell.

The rules with regard to the evaluation of the interests of parties were recently considered by the Court of Appeal in Oxley v Hiscock. If the claimant has an interest in the house, the value of that interest is ascertained at the time the property is sold. Accordingly, any increases or decreases in the value of the property are taken into consideration. If a party remains in occupation paying the mortgage, rates and other outgoings, he or she is credited with these expenses. Conversely, the party in occupation is debited with occupation rent for using the premises partly owned by the other. In Oxley the court identified three approaches thus:

1. The approach adopted by Lord Diplock in Gissing v Gissing and Nourse LJ in Stokes v Anderson, the respective shares of the parties are not to be determined at the time of the acquisition of the property but are left to be determined when their relationship comes to an end or the property sold. Thus, a complete picture of the whole course of dealing is available to the court in order to determine what is fair.

2. The approach suggested by Waite LJ in Midland Bank v Cooke - the court undertakes a survey of the whole course of dealing between the parties in order to determine what proportions the parties must be assumed to have intended from the outset for their beneficial ownership. Thus evidence of what the parties intended at the time of the acquisition may be inferred from the conduct of the parties while they were living together.

3. The suggestion put forward by Browne- Wilkinson V.C. in Grant v Edwards and approved by Walker LJ in Yaxley v Gotts - the court in its discretion makes such an order as the circumstances require in order to give effect to the beneficial interest in the property of the one party, the existence of which the party with the legal title is estopped from denying.

In Oxley the Court of Appeal expressed a preference for the third approach. The second approach was capable of leading to an artificial or fictional intention of the parties. Likewise, the same point could be made of the first approach i.e. at the time of the acquisition the parties’ intention was that their shares should be left for later determination.