Trust of Land

Question 1

Trusts of land

Answer 1

• A trust only arises when there is a freehold or a leasehold
• The reforms of 1925 reduced the different forms of co-ownership of land at law to the joint tenancy
  
  • The tenancy in common is allowed in equity only [s1(6) LPA]
• All co-ownership takes place in a trust [Trust of Land Appointment of Trustees Act 1996]
  
  • The number of legal co-owners was reduced to 4 [s34(1) Trustee Act] – if more than four persons are named in a conveyance, then the first four are the. trustees and the remaining number take in equity only [s34(2a) TA]
• After 1926, only one form of co-ownership at law: joint tenancy s1(6) LPA
  
  • Treats all parties as one owner

Question 2

TLATA s1

Answer 2

• Sets out the rules governing the trust of land
• Trust of land: any trust of property which consists of or includes land – a trust of the estate

Question 3

Joint Tenancy

Answer 3

• Can exist at law or in equity
• Only four joint tenants at law [s34(1) Trustee Act]
• JTs hold as a single entity and not as individuals
• “Severance” cannot take place at law [s36(2) LPA]
  
  • The act of severing an equitable JT into a tenancy in common
• Right of survivorship: joint tenancy cannot be passed by will

Question 4

Four unities

Answer 4

PITT – AG Securities v Vaughan: for a joint tenancy to exist, the parties must show unity of:

• Possession: each co-owner is as much entitled to any part of the land as the others
  
  • Refers to the entirety of the land subject to the trust – you cannot physically subdivide land in this concept
• Interest: each co-owner’s interest must be the same in extent, interest and duration
  
  • Thus, one joint tenant cannot act by himself, e.g. to surrender a lease or give a notice. For by himself, he does not have the whole estate
• Title: each joint tenant must claim his title to the land under the same act or document
• Time: interest of each tenant must vest at the same time

Question 5

Right of survivorship

Answer 5

• If one of the co-owners dies, nothing changes (it would be as if they never existed)
• Under a joint tenancy, each person is deemed to own 100% of the property
  
  • Each is entitled to the whole as if the others did not exist
  • It is not a share – a share is a tenancy in common in equity
• If the trust comes to an end and the property is sold, each tenant gets a greater share of the proceeds than they would have if the dead tenant were still alive and all of them brought the trust to an end
• The right of survivorship vests immediately in the surviving joint-owner

Question 6

Severance

Answer 6

• Severance of a joint tenancy can occur in equity, thereby disrupting the four unities, whereupon the severing joint tenant holds a share under a tenancy in common
• Severance can only occur inter vivos: a will does not sever (a will only takes effect after death and the death of joint tenant leaves nothing behind
• Severance cannot take place at law [s36(2) LPA]
  
  • Because tenancy in common cannot exist at law [s1(6) LPA]

Question 7

Tenancy in common

Answer 7

• The undivided shares: no right of survivorship (shares become divided when the trust comes to an end)
• Only unity of possession needs to be present
• Cannot exist at law [s1(6) and s36(2) LPA]
• TCs can act on their interests independently
• When you sever an existing joint tenancy into a tenancy in common, it always gives equal shares (the prima facie position) unless there is a mutual agreement to vary that
  
  • Notwithstanding what the contributions were, severance always gives equal shares

Question 8

Goodman v Gallant

FACTS

Answer 8

• A couple contributed equally to their hold, and they held expressly as equitable joint tenants from the outset. On divorce, JT severed and the wife & boyfriend purchased H’s now severed share. Property then conveyed from H&W to W&BF as express JTS in equity. When W & BF split, the JT was severed and W took 50% despite having contributed 75% to acquisition of house. The fresh declaration is conclusive, and the wife got half

Question 9

Goodman v Gallant

HELD

Answer 9

• “If the relevant conveyance contains an express declaration of trust which comprehensively declares the beneficial interests in the property or its proceeds of sale, there is no room for the application of the doctrine of resulting, implied or constructive trusts unless or until the conveyance is set aside or rectified”

Question 10

Declarations about how interests are held in equity

Answer 10

• Rebuts all presumptions and are conclusive [Goodman v Gallant]
• If there is an express declaration, do not apply Stack v Downden
• Still conclusive even in a domestic context [Pankhania v Chandegra]

Question 11

Pankhania v Chandegra

FACTS

Answer 11

• Nephew P joins with aunt C to purchase house in joint names with express declaration as TCs in equal shares. P tries to force C to sell; C argues that she owns the entire beneficial interest because the intention, notwithstanding the declaration, was that she own the house as her home. Judge at first instance applies Stack to find for C

Question 12

Pankhania v Chandegra

HELD

Answer 12

• P’s appeal allowed: Patten LJ at [16]: “The judge’s imposition of a constructive trust in favour of the defendant was therefore impermissible unless the defendant could establish some ground upon which she was entitled to set aside the declaration of trust contained in the transfer. He seems (in paragraph 2) to have misunderstood the significance of the transfer which not only made both claimant and defendant legal owners of the property _but also spelt out their beneficial interests_. The whole of his judgment proceeds upon the footing that he had a free hand to decide what was the common intention of the parties at the relevant time but that inquiry was simply not open to him unless the defendant had established a case for setting the declaration of trust aside”

Question 13

Presumptions about how interests are held in equity

Answer 13

Arise only where no declaration, these are always rebuttable

Question 14

Where is a joint tenancy presumed

Answer 14

• All unities are present and…
• No words of severance are expressed, and…
  
  • e.g. no reference to ‘shares’
• Equal contributions and no expression of contrary intention;
  
  • Where A and B have contributed 50 50 and they don’t say how they hold it
• Property conveyed into both names of cohabiting couple/family members + domestic setting + NO express declaration = JT is presumed: Stack v Dowden
  
  • Only applies where property being conveyed to people in a family like relationship for their own occupation as a home and they are both on the legal title and they do not say how they hold it in equity

Question 15

Where is a tenancy in common presumed

Answer 15

• JT impossible because a unity is missing (AG Securities v Vaughan), or…
• Words of severance are expressed, or…
• On the construction of the deed, clear that TC was intended, or…
• Purchase money provided in unequal shares: Lake v Gibson (but now see Stack for domestic trusts), or…
• Property acquired by business partners: Malayan Credit v Jack Chia Ltd

Question 16

Stack v Dowden

Answer 16

• Where domestic property conveyed in joint names, but there is no declaration as to how the equity is held, the rebuttable presumption is over a joint tenancy. The court looks at
  
  • Advice or discussions at time of transfer the reasons why the home was acquired in their joint names (now see Jones, below, and the ‘ambulatory trust’);
  • Reasons why the survivor authorised to give a receipt for the capital moneys (see Huntingford, above)
  • Purpose for which home was acquired;
  • Nature of parties’ relationship;
  • Children for whom they both had responsibility
  • How purchased and financed, both initially and subsequently;
  • How parties arranged finances;
  • Parties’ individual characters and personalities may also be factor in deciding where their true intentions lay
• Baroness Hale: “At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.”

Question 17

Stack v Dowden

Dissenting opinion

Answer 17

• Lord Neuberger, dissenting: “where the parties have chosen not to marry, their close and loving relationship does not by any means necessarily imply an intention to share all their assets equally”
  
  • This case closed one of the arrangements that people who choose not to marry

Question 18

Stack v Dowden

Query

Answer 18

Is a JT appropriate for any couples, married or otherwise?

• Removes the choice of from people who wish to cohabit but do not wish to share the value of their assets;
• Partner paying more is presumed to have made a substantial gift to the other, despite not expressing intention;
  
  • *Equity prefers bargains not gifts
• Cannot pass their property through their will to others (e.g., children from a previous relationship).
  
  • It is better to choose to declare a tenancy in common, as this is possible

Question 19

Stack v Dowden

LEGACY

Answer 19

• Laskar v Laskar (2008): mother and daughter – within domestic context, Stack can apply outside of intimate relationship (but not here on the facts).
• Jones v Kernott (2011): similar to Stack:
  
  • Baroness Hale: “the presumption of a beneficial joint tenancy is not based on a mantra as to “equity following the law … the starting point is that equity follows the law and they are joint tenants both in law and in equity”