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Week 9 reading notes on coownership
Property Law (LAW 2112)
Monash University
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Week 9 – Co-ownership – (SN pp 511-556)
Joint tenancy – Where two or more persons simultaneously hold an interest in the same parcel of land or item of personality, they do so either as joint tenants or tenants in common. Joint tenancy as a form of co-ownership has two distinguishing features: the right to survivorship and the four unities.
The right of survivorship – ( jus acrescendi ). When one tenant dies, the whole of the estate remains with the surviving joint tenant(s). Survivor is not regarded as succeeding to the deceased, as survivor has interest at time of transfer.
The four unities:-
Unity of possession – Each co-owner is entitled to possession of the whole of the property, not exclusively for themselves but together as joint tenants. Unity of interest – The interest of each joint tenant must be the same in nature, extent and duration. Unity of title – All the joint tenants must derive their interest from the same document or the same Act. Unity of time – the interest of all joint tenants must vest at the same point of time – exceptions: conveyance executed to a trustee for beneficiaries or any disposition in a will may give rise to joint tenancy in grantees.
Tenancy in common – Distinct and undivided share in the property which can be dealt with by each tenant in common.
CREATION OF CO-OWNERSHIP
A default consideration is joint tenancy in equity is preferred – Delehunt v Carmody (1986) 161 CLR 464.
s30(2) – TLA – presumption of joint tenancy relationship
Roberson v Fraser (1871) 6 Ch App 696 at 699, Lord Hatherly LC – ‘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’.
In Re Leaver [1997] 1 Qd R 55 – A will provided that the residue of the estate was to be held on trust for A and B absolutely as joint tenants. Laster, the testator made a codicil providing that he wished to include C to share equally as a joint tenant with A and B. Derrington J held at 57-8, that the use of the word ‘equally’ indicated that A,B and C should take as tenatnts in common.
Business partners
Joint tenants as business partners. Lead case – Lake v Craddock (1732) 3 P Wms 158 – In 1695, Defendant (C), C’s father and the plaintiff (L) and three others took a conveyance of a certain marshland. Price was 5,145 pounds. C’s father paid 1,025. Purpose was to drain the land to increase its value and make a profit. No indication of interest severance, all partners
took interest in land as joint tenants. C’s father abandoned this and left the enterprise. Remaining 4 partners purchased neighbouring land. C’s father died leaving his estate to C. L brought a bill to all the partners for an account and division of the partnership estate.
Held that 5 partners were joint tenants at law and were tenants in common in equity. Main reason is that it would be unfair to permit principle of survivorship to operate in an undertaking designed to produce a profit since the partner who had died first would lose all his investment. Held that C’s entitlement to a 1/5 share in the original purchase and an obligation to contribute 1/5 of the purchase price of the neighbouring land. Held: The absent owner was re-admitted. They were held to be tenants in common in equity
Money advanced on mortgage
Another case where equity will presume a tenancy in common, despite the position at common law where two or more persons advance money on mortgage, whether in equal or unequal shares – Re Jackson (1887) 34 Ch D 732. Reason is mortgagees usually lend money only as an investment and it is unlikely that co- owners would expect to forego their money if they should die before it was repaid.
Unequal contributions to the purchase price
If two or more people acquire an interest in the land, having contributed unequally to the purchase price, presumed in equity to hold as tenants in common in proportion to their respective contributions – Robinson v Preston (1858) 4 K & J 505.
Applied in Bull v Bull [1955] 1 QB 234 – where a mother and son purchased a dwelling house. The son contributed most of the purchase price and taking the conveyance in his own name. IT was held that mother and son were tenants in common in equity in proportion to their contributions and that the son could not evict the mother from the house since she was entitled to concurrent possession of the premises.
In Foundas v Arambatzis [2020] NSWCA 47 – a sister contributed more than her brother to the purchase price in the form of stamp duty payments. Entitled to a proportionately grater share. Presumption extends to joint liability under a mortgage, rather than making a contribution to the purchase price ( Ingram v Ingram [1941] VLR 95).
Presumption is rebuttable, will not arise whether a conveyance to the parties expressly indicates their beneficial interest in the property – Contract where parties contribute equally to purchase price, equity presumes joint tenancy ( Delehunt v Carmody (1986) 161 CLR 464, 472-3).
Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549
Facts
Two persons leased a property for the purposes of their separate businesses. The parties pre- determined the areas of occupation of the premises as 2,306 square feet for one and 3, square feet, dividing the rent, service charges and other invoices accordingly. A dispute arose as to their beneficial interests in the property.
Issues
- S26(2) would apply to them only in their capacity as executors.
- We need to treat them as different persons
- They’re wearing those hats as executors and beenficiaries
- Harry’s share was to be dealt with under intestacy rule. (half of harry’s shares if he had survived) Mitchell v Arblaster [1964-65] NSWR 119
- Testator leaving his residual estate to Mitchell
- Mr and Mrs Mitchell were also executors of the will
- Harry Mitchell predeceased the testator
- Question for court: whether nelly took the whole of the gift of the will by reason of survivorship or was harry’s part of the gift to be dealt within intestacy rules
- If we interprete the gift to harry and nelly as tenants in common, they can use survivorship.
- Intestacy rules comes into play if we take tenants in common for harry ( deal in favour of the next of kin)
- Is the effect of s26 that joint tenant should be presumed as a gift
- Harry and nelly were executors and beneficiaries in respect of the will
- S26(2) would apply to them only in their capacity as executors.
- We need to treat them as different persons
- They’re wearing those hats as executors and beenficiaries
- Harry’s share was to be dealt with under intestacy rule. (half of harry’s shares if he had survived) Two beneficiaries nominated as executors in a will take their interests as tenants in common in equal share rather than as joint tenants.
Delehunt v Carmondy (1986) 161 CLR 464 Principle that tenancies in common should be favourited over joint tenancies. -- A man and woman lived together as de facto partners for 31 years with house in the man’s name. Both contributed equally to purchase price. In equity, where equal contributions, person with legal title holds that title on trust for themselves and other contributors as joint tenants. Held that property was held on trust as tenants in common. On death of man, half share went to estate and estranged wife.
Co-ownership and the Torrens System
If 2 or more people are registered as joint proprietors of an estate or interest in land – deemed to be entitled as joint tenants (TLA s 30(2)).
RIGHTS OF ENJOYMENT INTER SE OF CO-OWNERS OF LAND
Each co-owner has the right to possess and enjoy the whole of the land. Co-owner cannot bring an action for trespass against another co-owner except in the case where the co-owner’s occupation has excluded the other co-owner from possession, or possibly where a co-owner does something preventing common enjoyment of the land ( Stedman v Smith (1857) 8 E1 & B1, 1, 7).
The right to possess and enjoy the whole of the land includes the right to invite someone to live on the premises ( Thrift v Thrift (1975) 10 ALR 332).
Occupation rent
Entitled to claim compensation from occupying co-owners. Two exceptions: 1. If a co-owner was ousted by a co-owner, an occupation rent could be charged. 2. Where the parties agreed on payment of an occupation rent. The principle that a co-owner is in sole occupation of the property is not normally chargeable for occupation rent was applied in Luke v Like (1936) 36 SR (NSW) 310 – rent not chargeable as no exclusion of co-owners.
In Jones v Jones [1977] 1 WLR 438 – Use of propriety estoppel re: co-owner relationship.
- D bought a house in his father’s name. D contributed ¼ of purchase price and understood that his father intended to give him the house. After Father’s death, widow brought proceedings to claim the house. Held that D had ¼ beneficial interest as tenant in common and refused to make an order of possession against him. Widow then sought to claim ¾ interest in the house or sale of the property – Held that one tenant in common could not claim rent from another even through that other occupied the whole. Plaintiff could not obtain an order for sale of the property and division of the proceeds, since the father’s conduct led the son reasonably to believe he coud stay in the house for his lifetime. The son, acting on this expectation, could not be turned out of possession or subjected to an order for sale.
Ouster
If one co-owner prevents another from exercising right to possess, the ‘ousted’ party may sue for an occupation of rent, or fee. This rent is in the nature of mesne profits because ouster Is an instance of ‘ejectment’ ( Chieco v Evans (1990) 5 BBPR 11,297).
Merely telling one co-owner to ‘get out’ does not constitute ouster in the event that the addressee leaves ( Cardinaels-Hooper v Tierney (1996) NSW ConvR 55,887 (SC (NSW)). Inconvenience caused by renovations does not constitute ouster ( Ferguson v Miller [1978] 1 NZLR 819).
Courts may impose obligations to pay rent where is it not feasible/unreasonable to expect parties to live together ( Chhokar v Chhokar [1984] FLR 313).
- Present in English Courts, Australian Courts have not gone this far as of yet.
Biviano v Natoli (1998) 43 NSWLR 695
B and N were tenants in common of a property. Lived with B’s daughter. N excluded from home due to an AVO taken out. Relationship broke down, prohibiting N from going near B, child and residence. N commenced proceedings and sought occupation rent during period which he was excluded from property.
Issue as whether, in these circumstances, appellant had ousted the respondent from the premises as to entitle the payment of occupation fee.
Held: Ouster is a legal wrong, so person applying for an AVO is not a legal wrong, is an exercise of legal rights. AVO won’t give rise to ouster. However, in the case the woman went further. The man applied for sale of the land and woman denied that he was a joint tenant and had title. This could amount to ouster. Held that he could get occupation rent from the point
o Mr Rupchev rented the property for 8 months in 2005 (during which he was not in residence) § Ms Callow claimed that Mr Rupchev was liable to pay an occupation fee for the period in which he otherwise occupied the premises, such occupation fee to be set off against the mortgage contributions. o Each party contributed to the payment of household expenses. o Several discussions between the parties: § Ms Callow: “I’ll pay the household expenses and you pay the loan”. Conducted their financial affairs in accordance with this arrangements in the succeeding three months. § After separation, Ms Callow: “I can’t service the loan, so you keep the house, and you pay the mortgage”. Mr Rupchev: “That’s fine, I agree to that”. § Ms Callow told Mr Rupchev that she wished to “get off the loan”. However, Mr Rupchev said that the property would have to remain registered in both names until they could get some money to transfer her interest to him. Claim for set off by way of occupation fee o Ms Callow claimed that she left the property because she was in fear of Mr Rupchev. o Claimed that he had become angry at her and put his hands around her throat, he punched holes in the walls, did not consult her before purchase of ceiling fans which resulting in an argument. o Mr Rupchev denied that he had put his hands around her throat. Conceded that they had frequent fights, said that she would sob and scream at him, and that he had put his hands on her collarbone either side of her neck, pushed her on the bed and left the room. o Also denied that he had punched holes in the wall. o Trial judge found that the relationship was tempetious, but preferred the evidence of Mr Rupchev over that of Ms Callow. She considered her argumentative and defensive in giving her evidence. 5
Findings Claim for contribution
- Ms Callow claimed that Mr Rupchev had not made any mortgage payments and was not entitled to contribution. She claimed that the repayments had been made by RUP Construction Pty Ltd.
- Argument rejection – Mr Rupchev entitled to contribution from Ms Callow for mortgage repayments.
In Callow v Rupchev , the Court accepted as the amount of the occupation rent the figure of $210 per week which had been promised by C.
- Held an occupation fee is charged where it is unreasonable to expect co-owners to continue to live under the same roof once relationship has collapsed. If neither party is using the residence, it may not be appropriate to impose an occupation fee.
M v D (2012) 115 SASR 61 – occupation fee value should bear the same proportion to the market rent as the absent co-owner’s proportionate interest in the land.
In VIC – s228(1) PLA – Gives VCAT power to make orders it thinks fit. S233(1) and (2) have factors to be considered.
PROPERTY LAW ACT 1958 - SECT 233
Orders as to compensation and accounting (1) In any proceeding under this Division, VCAT may order— (a) that compensation or reimbursement be paid or made by a co-owner to another co-owner or other co-owners; (b) that one or more co-owners account to the other co-owners in accordance with section 28A ; (c) that an adjustment be made to a co-owner's interest in the land or goods to take account of amounts payable by co-owners to each other during the period of the co- ownership. (2) In determining whether to make an order under subsection (1), VCAT must take into account the following— (a) any amount that a co-owner has reasonably spent in improving the land or goods; (b) any costs reasonably incurred by a co-owner in the maintenance or insurance of the land or goods; (c) 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; (d) damage caused by the unreasonable use of the land or goods by a co-owner; (e) 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; (f) 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. (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— (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 to occupy the land with the other co-owner. (4) VCAT must not make an order requiring a co-owner who has used goods to pay an amount equivalent to rent to a co-owner who did not use the goods unless— (a) the co-owner who has used the goods is seeking compensation, reimbursement or an accounting for money expended by the co-owner who has used the goods in relation to the goods; or (b) the co-owner claiming an amount equivalent to rent has been excluded from using the goods; or (c) the co-owner claiming an amount equivalent to rent has suffered a detriment because it was not practicable for that co-owner to use the goods with the other co-owner. (5) This section applies despite any law or rule to the contrary.
ACCOUNTING FOR RENTS AND PROFITS
In Vic – Forgeard v Shanahan – Non-occupying owner can claim rents and profits.
Compensation for repairs and improvements to land by one co-owner
certificate of title to her brother and sever the joint tenancy. The Court also held that a statement of intention to transfer is not sufficient to effect a unilateral severance of joint tenancy. Accordingly, the Court held that the transfer was not effective and the joint tenancy was not severed.
Anderson v Anderson (2017) 94 NSWLR 591
The right of survivorship is not a “right” in any legal sense. Nor is there any vesting or transfer of ownership of a deceased joint tenant’s interest. When a joint tenant dies his, or her, interest simply ceases to exist.
When a joint tenant dies, his or her interest is extinguished, and the interest of the surviving joint tenant/s is correspondingly enlarged.
Severance by transfer to a stranger
In Wright v Gibbons (1949) 78 CLR 313 – Three sisters, the Gibbons, jointly owned a property and subsequently two sisters tried to sever the tenancy by creating and registering a document where they transferred their interests to each other. The tenancy was thus presumed to become a tenancy in common. When the two sisters who had transferred their interests later died, the remaining sister sought to invalidate this earlier presumption, claiming that a joint tenancy had endured.
When a joint tenant alienates their interest to another party, does this operate to sever the original joint tenancy.
The High Court found against the Gibbons sister, and held that where a joint tenant transfers their interests to a third party, the third party becomes a tenant in common of the property, rather than a joint tenant. Moreover, this is so regardless of whether the joint tenant transferred their entire interest or part of it. Thus, the effect of registration of the transfer of a joint tenancy interest is to sever the tenancy, making both parties tenants in common in cases with two joint tenants, or in circumstances with three or more joint tenants, then it is the tenant who has had their interest severed that becomes a tenant in common alone, whilst the others retain their status as joint tenants. The implication of this is that the effect of a joint tenant dying is that their interest is thus extinguished whilst the remaining joint tenants experience a proportionate enlargement of their interests.
Declaration of trust
In Lyons v Lyons [1967] VR 169 – Held that a mortgage of torrens system land by a JT did not of itself severe the JT.
Severance by agreement
A JT will be severed if co-owners agree to sever. ( Williams v Hensman (1861)).
Lyons v Lyons – Statutory formalities apply to agreement to sever. Some recent decisions advise they do not – Abela v Public Trustee [1983] 1 NSWLR 308 – Agreement will sever the JT as that the co-owners will be TIC in equity. Status will remain as JT at law until formalities are met.
Question of whether JT has been severed and right of survivorship terminated. Re Pozzi [1982] Qd R 499 – divorced husband and wife were JT of home and made agreement wife has right to sole occupation until occurrence of sale of property. Husband died while wife was in occupation of the home. Held JT can be severed by agreement and half-share to husbands estate. -- Calabrese v Miuccio (No 2) [1985] 1 Qd R 17 – oral agreement sufficient to sever JT.
Abela v Public Trustee [1983] 1 NSWLR – Can sever despite agreement on particulars of price share in the property.
Slater v Slater (1987) 12 Fam LR 1 – discussions b/w lawyers re: JT severance did not amount to severance.
In Public Trustee v Pfeiffle [1991] 1 VR 19 – Parties following the dissolutions of marriage – entered into agreement that on either party remarrying, property held in JT to be sold and split. Wife did not remarry and died. Her estate claimed ½ interest in the land. Held that agreement did not sever JT. On appeal held agreement of the JT to sever brought about immediate severance and that the mechanisms for sale and division of funds were consequential to JT severance.
Severance following a course of dealing
In Williams v Hensman (1861) 1 John & H 546 – recognised that JT could be severed by an act of JT operating on one’s own share. Will occur if parties conduct indicates they treated themselves as TIC. Eg. payments of proceeds of sale of a JT into separate bank accounts represent a course of dealings sufficient to sever.
Magill v Magill (1997) – negotiations exploring the termination of JT are insufficient to sever.
Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375 – severance was effected by general understanding that mortgage repayments by one party were based on notion that each had distinct shares.
Not affected where JT occupy separate floors and pay individual maintenance and improvement costs as long as parties evinced intention that the right of survivorship could continue ( Greenfield v Greenfield (1979) 38 P & C R 570).
-- Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549 – JT treated property as part of a partnership for assets and taxation purposes does not of itself bring about a severance.
Severance following homicide
If one JT is killed by another – principle the wrongdoer should not benefit from their own crime via survivorship.
Rasmanis v Jurewitcsch [1968] 2 NSWR 166 – x3 JT, husband, wife and 3rd party. H was convicted of manslaughter for killing his wife. Husband and 3rd party remain JT at law, taking wife’s interest by survivorship. However, in equity, husband should not benefit from survivorship from wife. Husband and erd party both held 1/3 and 2/3 with husband with 1/ interest.
Week 9 reading notes on coownership
Course: Property Law (LAW 2112)
University: Monash University
