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Concurrent And Successive Interests Notes

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CONCURRENT AND SUCCESSIVE INTERESTS A.

TYPES OF CO-OWNERSHIP

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Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549: P & D entered into joint venture to obtain a lease of an area; agreed that would occupy a portion each and contribute proportionally to their share. Landlord executed a lease in their favour as joint tenants; issue later arose as to whether equity could intervene and presume them to be tenants in common; thought in this case that there were tenants in common in proportion to shares and it did not matter that issue was over lease and not freehold.

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Goodman v Gallant [1986] Fam 106: D was joint beneficial owner of property with her husband. After splitting from husband, P moved in and together they bought out the husband's share, then declaring themselves as joint tenants. After relationship problems D tried to sever tenancy and claimed that she had a 3/4 share. Slade LJ: o If the conveyance contains an express declaration of trust which declares the beneficial interests in the property or its proceeds of sale there is no room for the operation of resulting or constructive trusts unless and until the conveyance is set aside or rectified; until that event the document speaks for itself. o There is a real and important distinction between a conveyance into joint names which contains a declaration of trust of the beneficial interests and a conveyance which contains no such declaration. o As there was no claim for rectification or rescission the declaration as to joint shares had to stand.

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Thompson, [1987] Conv 29: Argues that should abolish equitable joint tenancies. o Little of advantage would be lost if joint tenancies were confined to ownership of the legal estate. In fairness, it should be pointed out that the abolition of equitable joint tenancies would carry one drawback. On the death of one of the tenants in common the sole survivor would need to appoint a second trustee to effect a sale of the property. It could not be assumed that the survivor took under the will of the deceased, thereby terminating the co-ownership.
? While this is a disadvantage, it is suggested that it is outweighed by the advantages. o The advantages can be summarised as including ridding the law of the difficult and technical problem of determining whether severance has occurred and the concomitant possibility that the right of survivorship may operate inappropriately. Instead, the destination of the beneficial interests on death would be determined by each party's will which, one hopes, each would be encouraged to make when the property was acquired. Secondly, potential problems or interpretation of the Forfeiture Act 1982 would be avoided and, finally, each party would be encouraged to agree at the outset what share each would get in the event of a sale.

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Pritchard [1987] Conv 273: Disputes above submission. o Thompson notes the following mischief's as justifying the radical solution:o o

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Problems when the marriage or other initial arrangement goes sour;

* Not clear that one can categorically say that this causes injustice and neglects the fact that many people are genuinely attracted to the survival aspects of joint tenancy.
? The uncertainties as to the manners in which severance may be effected;
? The special problems arising when one co-owner is responsible for the death of another; and
? The unpleasant surprise for a severing co-owner that a severance will create equal beneficial shares, not resurrect the original contribution proportions. This may be an attractive form of landholding both for married couples wishing to demonstrate the full content of their mutual vows and also unmarried siblings anxious to secure the smooth transition of ownership on death of not just the family home but also any family business. Is it unarguably the case that the unsuccessful partnerships should dictate the apparatus of the law? If a relationship turns sour enough, why should not an aggrieved co-owner effect a severance? And are not the powers of the court to divide property on a break-down of a marriage sufficient? And is not the Inheritance (Provision for Family and Dependants) Act 1975 an adequate protection to cover the hardest cases that might occur through the failure to sever? Especially if the law were changed to allow severance by will?

Thompson, [1987] Conv 275: Reform of the method of severance seems to be seeking to suppress the effect of beneficial joint tenancies while retaining the concept. Suggests that simpler to grasp the nettle and abolish them.

1. Severance of a joint tenancy 1

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Law of Property Act 1925 s 36(2): Cannot server a joint tenancy so as to create a tenancy in common at law; but can sever equitable interest whether or not the estate is vested in joint tenants at law; must give notice in writing of the desire to sever, or do things are acts that would amount to severance in equity; land then held on trust. Nothing in the Act affects the right of survivorship for joint tenants.

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Williams v Hensman (1861) 1 J & H 546, 557: A joint tenancy may be severed in one of the three ways which entail that the right to survivorship is lost by that person with respect to the other shares: o An act of any one of the persons interested in operating on his own share may create severance; o Mutual agreement; o Any course of dealing sufficient to intimate that the interests were mutually treated as a in common;?

2 Will not suffice to rely on an intention declared only behind the backs of others interested; Must find a course of dealing which affects all the shares of the concerned parties.

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Re Draper's Conveyance [1969] 1 Ch 486: House was conveyed to husband & wife as joint tenants; following divorce the wife intimated that she wanted to sell it, but the property remained unsold at the time of the husbands death. Issue as to whether or not the right of survivorship was in play. Plowman J: o A declaration by one of a number of joints tenants of his intention to sever will operate as a severance; the joint tenancy was thus ended before the death of H, and so she did not gain his share in survivorship. o Also thinks that issuing of summons coupled with affidavit would amount to severance in writing whether that be effected by equity or s36(2) LPA as the evidence an intention to sell the property and retrieve her share in the proceeds of sale.

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Nielson-Jones v Fedden [1975] Ch 222 : Husband & wife were beneficial and joint legal tenants of home. Following split wife signed a memorandum which permitted the husband to sell the property at his discretion and use proceeds to obtain a home for himself. Each had money from deposit for sale. Whilst negotiations were underway to separate their financial interests no agreement ever reached; although husband had indicated that he wished to sever; husband died before completion. o A beneficial joint tenancy cannot be severed by a unilateral declaration of an intention to sever. o The memorandum only sought to deal with the proceeds of sale and that question is wholly unambiguous to ownership. Here there was no sufficient course of conduct by the husband and wife to imply an agreement to sever, and so even a unilateral declaration by the husband was not enough to sever. o No conduct is sufficient to sever a joint tenancy unless it is irrevocable.

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Harris v Goddard [1983] 1 WLR 1203: Husband & wife were joint tenants of property used as home and place of business for the husband. Following separation wife served petition of divorce in which she requested that an order be made by way of transfer of property or settlement in respect of her share in the home. Just before hearing husband died. Lawton LJ: o When severance is said to arise under section 36 (2) , not from the giving of a notice in writing, but from doing other acts or things which would, in the case of personal estate, have been effectual to sever a joint tenancy in equity, the fact that the parties were married may make the drawing of inferences easier; but that is the only relevance which the existence of the married state has. o Unilateral action to sever a joint tenancy is now possible; was done so in this case. o When a notice in writing of a desire to sever is served pursuant to s36 (2) it takes effect forthwith. It follows that a desire to sever must evince an intention to bring about the wanted result immediately. o A notice in writing which expresses a desire to bring about the wanted result at some time in the future is not a notice in writing within s36 (2). Further the notice must be one which shows an intent to bring about the consequences set out in s36 (2) i.e. that the net proceeds of the statutory trust for sale shall be held upon the trusts which would have been requisite for giving effect to the beneficial interests.

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100 LQR 161, JMT: It is expected that the CA will adopt the above approach when these sort of cases go up. o Submits that severance occurs if and only if, the parties have either disposed of their interests, or they have agreed in such a manner that equity can compel them to so dispose or alter their interests; this is the third category of case referred to in Williams v Hensman.
? Old cases clearly required some act;
? Effect of s36 was to mitigate the need for some act where intention declared in writing.

o Cases also concerned dispute as to effect of serving court documents which express the intention to sever given that they were revocable; finds it surprising that the court considers these given that they are not served for the purposes of that section and do not purport to be so.

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Burgess v Rawnsley [1975] Ch 429: H&D bought house as joint tenants each providing half of the purchase price; H bought home in contemplation of marriage to D; D having no such intention. Did not marry and D chose not to move in; evidence of oral agreement for D to sell her share in the house to H; later refused. Denning MR: o Third head of severance is indeed separate from the second; not a sub-class of it. o Operation of s36 is such as to allow persons to sever by notice in writing where personal estate. o It is sufficient if there is a course of dealing in which one party makes it clear to the other that he desires that their shares should no longer be held jointly but in common. o Thinks that Nielson-Jones v Fedden was wrongly decided as H&W entered upon a course of dealing sufficient to sever the joint tenancy; receipt of separate sums and declaration in correspondence enough; judge had mistakenly treated the third head of severance as an incidence of the second.

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[1976] CLJ 20, Hayton: Notes that Lord Denning's approach seems to be contrary to the previous case law since it seems to be a condition of severance through a course of dealing that both parties agree. Also thinks that wrong in using pre-1926 authorities in relation to writing given that the section was clearly intended to be something of a new approach. Now seems to be approval that serving of Court documents will amount to severance.

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Gore and Snell v Carpenter (1990) P & CR 456: Where a husband and wife were involved in protracted negotiations following the breakdown of their marriage, as there was no agreement at any point (on the judge's findings), in spite of being 'very near it' the judge held that there had been no severance; 'negotiations are not a course of dealing'. Here there was no finality or mutuality. o An uncommunicated declaration or a mere verbal notice cannot amount to severance. o Qualification: Where one tenant negotiates with another for some rearrangement of interests, it may be possible to infer from the particular facts a common intention to sever, even though the negotiations break down. Whether such an inference can be drawn must, I think, depend upon the particular facts'.

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Davis v Smith [2011] EWCA Civ 1603: Following separation both parties advised by solicitor to sever interests although nothing actually served; was a proposal that the house be placed on the market as soon as possible such that shares could be divided as one party in hardship; there was agreement that the house would be sold. Was a continuing dispute as to size of shares but not as to the fact that each had shares. Neuberger LJ: o Thinks that there is force in the submission that neither the proposal nor the agreement to put the house on the market, nor even the acceptance of a subject to contract offer, could have severed the joint tenancy on their own. Even a sale could be said to have been entirely consistent, on the face of it at least, with the joint tenancy continuing and applying to the proceeds of sale. o However, they had embarked on an exercise whereby they had not merely indicated to each other, but had actually acted on the basis that, the various properties that they owned, in particular the policy and the house, would be sold and the proceeds divided equally between them. o What went on in a party's mind, what a party was advised, or what a party said to a third person is normally irrelevant to the issue of what the parties between them intended or understood.

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Quigley v Masterson [2012] 1 All ER 1224: After couple had split, one tried to serve notice of severance on the other but was sent a firm which was no longer acting for W; further notice was sent to place of work but addressed to wrong person; neither notice was actually received. Proceeded to deal with house on basis that was either severed or not. Issue as to whether summons by representative could then constitute severance; thought that could on the basis that court leans in favour of tenancies in common; therefore thought that had been served within the meaning of the Act.

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Luther, 15 LS 219: Looks at background to the Williams decision and makes comments on that basis. o Williams v Hensman merits attention in two distinct ways:3

There is still uncertainty as to what is required of a course of dealing;

* Neither the facts or the decision of the case shed much light on this as there was only one deed deemed relevant which alone constituted the requisite dealing; seems to be lacking a ratio as link between principle and facts was not noted.

* Note that seem to look at acts rather than intentions; quite remarkable.

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o o

o

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There is a tension in the interpretation of the case between a textual approach and one that looks beyond it i.e. more as an academic treatise; the fact that the case has been relied on to reach very different results may lend support to those who are sceptical of the role of a supposed ratio decidendi in any case; some view it as a veil for decision being made. Notes that the judge in Williams v Hensman did not adopt the practice of preparing textual judgements. Seems that the main aim of the judgement was to facilitate the severance of agreements; this will lead those who adopt a historical approach to construction to apply the rules in a more liberal fashion. The textual approach on the other hand will work to stifle further development:
? Contrast Nielson Jones and Burgess v Rawnsley. Thinks that old approach is better as more transparent; submissions on the basis of inferred agreements, intentions and courses of dealing only conceal the attempt to do brad equity; something which the earlier cases were much more comfortable and upfront about dealing with. Williams was simply a marked step towards the more liberal approach to do justice in severance.

Tee, [1995] Conv 105: Considers the Law Commission three proposals for reform in this area. Three suggestions: o No substantive reform; incorporation of all methods of severance into clear statutory provision:o

The proposal seems sensible; there is no controversy about the intention of section 36(2) to refer to Page-Wood V.C.'s categories, and there seems no good reason why the methods of severance should not expressly be indicated.
? However, while the proposal does not intend to reform the methods of severance, it still, within its own terms, seems incomplete, because it does not address the more pressing problem of section 36(2); that it is unclear when the provision concerning written notice takes effect.
? There are a sufficient number of cases concerning severance coming to the courts to suggest that the methods themselves need re-evaluation. Restriction of methods of severance into written notice:o

There is indeed uncertainty about the scope of the first of Page-Wood VC's categories.

* Acting upon one's share is commonly understood to refer to an act which destroys the substantive identity of joint tenancy or destroys one of the unities. Thus a sale or mortgage of a beneficial interest severs; the sale inevitably destroys the joint tenancy and creates a tenancy in common in order to transfer a separate interest.

* There is more doubt about the effect of a lease granted unilaterally by a beneficial joint tenant, but the problem is unlikely to arise outside an examination paper.

* The pressing question is whether a mere declaration of intent is sufficient to sever under this head. The matter is still not free from doubt and has been considered in successive cases.
? The other common law methods of severance are by mutual agreement and by a mutual course of conduct. The first does not seem to cause too many difficulties, though it is uncertain whether an oral agreement to sever would now be effective in view of the Law of Property (Miscellaneous Provisions) Act 1989.
? Mutual course of conduct, however, seems a rather elusive method. It seems that it is easier to explain what does not amount to severance under this head than otherwise.
? But it does not follow from the recognition of definitional difficulties concerning the three methods that abolition is the only answer. An absolute requirement of written notice would complicate an already difficult area of the law and could result in unfairness to creditors where the bankrupt held property as a beneficial joint tenant.
? An absolute requirement of written notice would complicate an already difficult area of the law and could result in unfairness to creditors where the bankrupt held property as a joint tenant.
? The advantage of permitting informal methods, in terms of fairness to lay people, has to be weighed against the disadvantage of the uncertainty engendered by the possibility of informal severance having taken place. Introduction of severance by will:?4

A rogue beneficial joint tenant could secretly sever by will and then enjoy the possibility of the right of survivorship without any risk to his estate. If he survived his co-tenant, he would take all, and if he pre-deceased, his chosen beneficiaries would inherit his share; unfair. A sophisticated argument that the unfairness is more apparent than real is not the basis upon which to apply legislative reform, especially one which directly affects so many people. The other difficulty with severance by will is a practical one--the construction of the will.

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