Week 4- Concurrent and successive interests in land

Question 1

What factors were in play in Malaysian credit v Jack Chia MPH which rebutted the presumption of beneficial entitlement for joint tenants in EQUAL shares?

What is the presumption of joint tenants in common in equal shares?

Answer 1

1) unequal mortgage payments 2) Unequal purchase contributions 3) business partnerships and other circumstances in which equity may infer unequal beneficial interests.

In the absence of an express agreement to the contrary, there is a rebuttable presumption that joint tenants at law are treated as tenants in common in equity, when the tenants are commercial entities. Having rebutted the presumption and holding that these were tenants in common in equity in unequal shares, the entity with the higher square-footage of property was entitled to a higher proportion of sale proceeds.

Question 2

What is the distinction between a tenant in common and a joint tenancy?

Answer 2

A joint tenancy involves purchasing and holding property equally with one or more other tenant. It is irrelevant how much each party has contributed to the purchase price, the result is still an equal beneficial interest in the property. Unlike tenants in common, joint tenants are entitled to the right of survivorship, whereby

Tenants in common can contribute different proportions to the purchase price and hold the property in unequal shares, although a smaller share does not restrict the use of the property, it is merely indicative of a smaller beneficial interest which attaches to the sale proceeds.

Question 3

How does Goodman v Gallant illustrate how beneficial interests in joint tenancy-owned property operates?

Answer 3

Even though the plaintiff had purchased a larger proportion of the total house price for her and her new partner (75% of the entire property price), the agreement still made her and her ex-partner joint tenants, and thus she was still only entitled to 50% of the property. Her ex-partner was beneficially entitled to 50%.

Question 4

what does s36(2) of the LOPA 1925 say?

Answer 4

(2) No severance of a joint tenancy of a legal estate, so as to create a tenancy in common in land, shall be permissible, whether by operation of law or otherwise, but this subsection does not affect the right of a joint tenant to release his interest to the other joint tenants, or the right to sever a joint tenancy in an equitable interest whether or not the legal estate is vested in the joint tenants:
Provided that, where a legal estate (not being settled land) is vested in joint tenants beneficially, and any tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants a notice in writing of such desire or do such other acts or things as would, in the case of personal estate, have been effectual to sever the tenancy in equity, and thereupon [the land shall be held in trust on terms] which would have been requisite for giving effect to the beneficial interests if there had been an actual severance.

Question 5

What three ways can a joint tenancy be severed, following Williams v Hensman?

what is the main effect of severing a joint tenancy?

Answer 5

1) in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi [law of accruing to the survivor, right of survivorship]. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund—losing, of course, at the same time, his own right of survivorship.
2) Secondly, a joint-tenancy may be severed by mutual agreement.
3) And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. You must find in this class of cases a course of dealing by which the shares of all the parties to the contest have been affected, as happened in the cases of Wilson v Bell and Jackson v Jackson.

the lost right to survivorship is the main impact of severance.

Question 6

What does Re Draper’s conveyance say about court notices operating in conjunction with s36 of the LOPA 1925?

Answer 6

A court summons for an order for sale will suffice as notice capable of severing a joint tenancy for the purposes of s36 of the LOPA

In this case, the joint tenancy had been severed by the court summons for an order to sale, splitting the proceeds 50-50, and thus the right of survivorship was lost prior to the death of Draper. Rather, the wife held the whole property on trust, half for herself and half for her deceased husbands estate as tenants in common in equal shares- the right of survivorship was lost, and this was even more so evidenced by an affidavit.

Question 7

Facts and significance of Nielson-Jones v Fedden regarding whether a severance had taken place by a specific memorandum (prior to the death of the deceased husband)

Answer 7

Facts- Whether or not the wife was beneficially entitled to the proceeds of the sale of a house, which was to be taken by her (now deceased) husband. H was to buy a smaller house with the proceeds of the sale of the old matrimonial home, before the marriage broke down. The wife completed the sale of the house by herself, and she sought a declaration that she was solely entitled to the house and thereby the proceeds by her right of survivorship. H’s executors contended that the tenancy had been severed prior to H’s death either by W assigning her interest to H in the memorandum or by agreement to be inferred from the parties’ whole conduct.

Held, that W was beneficially entitled to the whole interest; that the memorandum did not transfer ownership of W’s interest but allowed H to use the money for a specified purpose; that the parties’ conduct indicated that no final agreement as to severance was reached; that even if H had evinced a wish to sever the tenancy, such unilateral declaration was incapable of effecting a severance.

Question 8

Facts and significance of Harris v Goddard regarding s36(2) of LOPA?

Answer 8

Facts- A prayer in a divorce petition for an order in relation to the matrimonial home and property does not operate of itself so as to sever the spouses’ joint tenancy. H and W were equitable joint tenants of the matrimonial home and shop premises. W petitioned for divorce. The petition included a prayer for such order in relation to the property by way of transfer or settlement as should be just. H was killed in a car accident before the hearing of the petition. H’s executors claimed that the joint tenancy had been severed by the prayer in the petition, and that his estate was entitled to half the property. The judge rejected that claim.

Held, dismissing the appeal, that although a notice in writing of a desire to sever a joint tenancy took effect forthwith, the desire to sever must itself be immediate. The prayer in the petition was merely an invitation to the court to decide at some future time whether or not to exercise its jurisdiction in any one of a number of ways in relation to the property. Accordingly, W was beneficially entitled to the whole of the property
-Applying the 3 ways in Williams v Hensman 1861 by which a joint tenancy can be severed, which is affected and utilised by s36(2) of the LOPA 1925 regarding written notice of severance of an interest (other than that of an estate)
Lawton LJ: “Unilateral action to sever a joint tenancy is now possible. Before 1925 severance by unilateral action was only possible when one joint tenant disposed of his interest to a third party. When a notice in writing of a desire to sever is served pursuant to section 36 (2) it takes effect forthwith. It follows that a desire to sever must evince an intention to bring about the wanted result immediately.

Question 9

How can the importance of Harris v Goddard be summarised in one sentence?

Answer 9

A notice in writing of a desire to sever is served pursuant to s36(2) LPA 1925 must evince an intention to bring about the wanted result immediately

Question 10

What did Burgess v Rawnsley have to say about Nielson v Fedden regarding severance of a joint tenancy by a course of dealing (following methods expounded in Williams v Hensmen?)

Answer 10

Facts- A house was bought by D and C’s father with each providing half of the purchase price
D orally agreed to to sell her share in the house to C’s father but she subsequently refused to sell
C’s father died leaving C as his administratrix
C claimed that the joint tenancy had been severed in equity, D claim that house was hers by survivorship

Held- C’s claim failed, she was only entitled to a half share of the house
The beneficial joint tenancy had been severed by D’s oral agreement to sell her share to C

Lord Denning MR:
Severance by course of dealing- Severance by course of dealing need not amount to an agreement, express or implied, since it is a separate method from mutual agreement
- It is sufficient if there a course of dealing in which one party makes clear to the other that he desires their shares to be held in common
- Similarly, is sufficient if both parties enter on a course of dealing that evinces an intention to sever
- Nielson-Jones was incorrectly decided, the couple had entered upon a course of dealing sufficient to sever their joint tenancy

Question 11

MAIN PRINCIPLE IN GORE AND SNELL V CARPENTER?

Answer 11

A joint tenancy cannot be severed merely by a an agreement in principle to sever, and thus the right of survivorship remained in operation to the benefit of the remaining spouse.

Question 12

Significance of Davis v Smith regarding the extent to which the sale of property can sever a joint tenancy/ whether the beneficial interests in the property apply to the sale proceeds when only an agreement in principle to sever was reached?

Answer 12

Sale of property held under beneficial joint tenancy can be entirely consistent with a joint tenancy of the proceeds of sale unless there is an agreement on the division of proceeds

Facts- A couple was going through divorce and agreed that the property they held as joint tenants in equity should be sold and to divide the proceeds equally
Both parties had been advised by their respective solicitors to serve a notice of severance of the joint tenancy but neither had done so when the woman died suddenly
Issue

Held (Court of Appeal)
Severance was effected by the course of conduct and clear evidence of an intention to sever. They had intended that the sale proceeds be split, even though agreements in principle alone will not suffice for a severance.
The man and the woman’s estate were entitled to equal shares in equity of the property

Question 13

Facts and significance of Bull v Bull regarding trust co-ownership?

Answer 13

Facts
C with his mother jointly purchased a house for themselves, C provided greater part of purchase money and conveyance was in his sole name

The house was later shared by the mother and her daughter in law
Due to difference between mother and daughter in law, the son sued for possession of the 2 rooms his mother occupied

Denning LJ
Order for possession not granted
Mother was an equitable Tenant in common with son and until the house was sold each of them was entitled to possession
When there a 2 equitable TiCs, until the place is sold, each of them is entitled concurrently with the other to the possession of the land and the use and enjoyment of it and neither of them is entitled ot turn the other out
The son who held the property on a statutory trust for sale could not sell it without consent of the mother because he is unable to give valid receipt for the proceeds

Question 14

What does the settled land act 1915 s36(4) say?

Answer 14

Settled Land Act 1925- s36(4): An undivided share in land shall not be capable of being created except under a trust instrument or under the M1Law of Property Act, 1925, and shall then only take effect behind a [F3trust of land].

Question 15

What does the trust of land and appointment of trustees 1996 s12 and 13 say?

Answer 15

S12 provides the statutory right for a beneficiary to occupy the land, so long as the purpose of the trust makes it available for his use, and is held by trustees in a way which makes it available.

S13- provides statutory restrictions on exclusion to one of two or more beneficiaries, so long as it isn’t unreasonable, or restricted to an unreasonable extent.
The trustees may impose reasonable conditions on beneficiaries eg payments of expenses regarding the land. A non-excluded beneficiary may be imposed a duty to forgo any financial benefit which he would otherwise accrue in the absence of the excluded beneficiary.

Question 16

What does Davis v Jackson say about the operation of excluding beneficiaries under s13 of the TLATA and the potential for a subsequent payment of occupation rent?

Answer 16

That occupation rent is not payable to a beneficiary who voluntarily excludes himself, such as in this case where the estranged husband decided not to live with his wife before she chose to exclude him, under her trustee powers. Also, having failed to continue to pay towards the mortgage, the trustee in bankruptcy for the husband would be unfairly enriched if he was entitled to proceeds out of the sale fund.

As there was no prior agreement, the trustee in bankruptcy for the estranged husband was not entitled to occupation rent.

The default position where a trustee in bankruptcy was not in occupation and the co-owner was should be that no occupation rent was payable, there had to be some conduct by the occupying party, or some other feature of the case, to justify a court concluding that it was appropriate or fair to depart from that default position

Question 17

What do s14 and 15 of the Trust of land and appointment of trustees act 1996 say?

Answer 17

s14- Trustees of land may make an order to the court relating to the exercise of the other trustees functions of imposing obligations, or declaring the nature and extent of a persons interest in the property subject to the trust.

s15- sets out the mattress which the courts must have regard for when determining orders under s14. These include- (a)the intentions of the person or persons (if any) who created the trust,

(b) the purposes for which the property subject to the trust is held,
(c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and
(d) the interests of any secured creditor of any beneficiary.

However, the section does not apply if section 335A of the Insolvency act 1986, relating to applications made by trustees in bankruptcy. These are general factors which the court will consider in the absence of bankruptcy, to which the insolvency act applies.

Question 18

What does Mortgage Corp v Shaire illustrate about the effect of TLATA 1996 compared to the LPA?

Answer 18

There is greater discretion for the courts to balance the interests of competing parties (trustees and beneficiaries), potentially providing better protection to families as against chargees or mortgagee.

The husband had forged the signature of his wife which granted a charge over his 25% share in the home in favour of the bank. The bank brought forth an order for summons for the sale of the property to discharge the debt. Rather, having regard to the circumstances in s15 of the TLATA, the interests of the secured creditor was one of four non-exhaustive factors to take into consideration when determining an application under s14, and the charge was converted into a loan for the wife to pay, failure of which would result in an approved order for sale.

Question 19

Significance of First national bank v Achampong 2003 regarding undue influence inducing a trustee to grant a charge/ mortgage over their property?

Answer 19

An order for sale was made, and the interests of the children, all of which had reached adulthood, were not sufficient to outweigh those of the creditor. The creditor was successful in bringing about an order to sale, although the charge only related to the husbands share of the house because the joint beneficial tenancy had been severed. The house was no longer used as a matrimonial home as the relationship was effectively over. The extent of the disability of one of the children was not such that it outweighed the interests of the creditor.

The charge severed the tenancy as it was made under undue influence, so as to only be effective against the husband.

Question 20

What does White v White clarify about the prior intentions of all trustees when determining an application under s14?

Answer 20

That the relevant intention is that of an intention common to all trustees when the trust was created

Where more than one person created the trust, the intention for the purposes of section 15(1)(b) TLATA must be the common intention of all the persons who created the trust prior to its creation
This is because the s15(1)(a) speaks of “the intentions of the person or persons … who created the trust”, in contrast with the reference in section 15(1)(c) to the welfare of “any minor”
A change in the purpose of the trust can only be obtained by the consent of all the parties
In the present case the purpose with which the house was bought was to provide a matrimonial home, the man had not consented to the use of the property as a family home after the birth of their daughter

Question 21

What does Bagum v Hafiz deal with regarding the rights of trustees to make orders for sales, and how can the court deal with such an order/ what did the court do, in exercising its wide discretion under s14 TLATA?

Answer 21

The court has no power under s14(2) TLATA to direct the sale of beneficial interest to another beneficiary but it does have the power to give another trustee the right of pre-emption before a sale to the market. Right to pre-emption in order for sale
The court has no power under s14(2) TLATA to direct one beneficiary to sell or transfer their beneficial interest to another beneficiary since the direct disposal of a beneficial interest is not a function of trustees of land
However, the court does have the power under s14(2) TLATA to order the trustees to sell the property, preceded by an opportunity for the sale of the property to one of the beneficiaries at a court determined price (despite it having the same economic effect as the transfer of beneficial interests between beneficiaries)
The order was made by the judge after taking into account intentions and purposes of the trust, which was to secure the property as a home for C and Hafiz and to secure a financial interest for Hai whose impending departure was then already known

Question 22

What does s335A of the Insolvency act say with regards applications made by trustees in bankruptcy under s14 of the TLATA?

What is the effect of an application made one year or more after the bankrupts estate is vested into the trustee?

Answer 22

(2) On such an application the court shall make such order as it thinks just and reasonable having regard to—
(a) the interests of the bankrupt’s creditors;
(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the [bankrupt’s spouse or civil partner or former spouse or former civil partner]—
(i) the conduct of the [spouse, civil partner, former spouse or former civil partner], so far as contributing to the bankruptcy,
(ii) the needs and financial resources of the [spouse, civil partner, former spouse or former civil partner], and
(iii) the needs of any children; and
(c) all the circumstances of the case other than the needs of the bankrupt.
(3) Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt’s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt’s creditors outweigh all other considerations.

Question 23

Facts and significance of Re Citro regarding insolvency act?

How might this decision be different following the introduction of the TLATA?

Answer 23

Two brothers were adjudged bankrupt and their beneficial interest in their respective matrimonial homes was vested in their trustee in bankruptcy
The trustee in bankruptcy ordered a sale of the house
The trial judge had ordered postponement of sale until the youngest child of each brother attained the age of 16
Held (Court of Appeal)
Appeal allowed, the postponement is shortened to 6 months
The interest of creditors should be allowed to prevail over the bankrupt’s family
Nourse LJ
Creditors usually prevail over the family
Where a spouse with beneficial interest in property is adjudged bankrupt, the rights of creditors will usually prevail and an order of sale granted in a short period of time outside of exception circumstances: p. 157A
The fact that the brothers’ wives and children will suffer is not exceptional
Being unable to buy a comparable home in the same neighbourhood with the proceeds, having to move and problems with schooling are “melancholy consequences of debt and improvidence with which every civilised society has been familiar”: p. 157B

Question 24

How does Barca v Maers show the emerging attitudes of the courts to tip the balance in the favour of families against creditors, following the TLATA?

Answer 24

C sought postponement of the order for sale until his son completed his education as his son as it would cause disruption to his special needs education

Held (High Court)= Sale was not to be postponed.

Deputy Judge Strauss
Creditors’ interest is preferred over the child’s
Absent exceptional circumstances, s.335A prefers the interests of the creditors over all other considerations
The categories of exceptional case are not circumscribed by the statutory wording or by earlier case law
There is a requirement that the circumstances be inherently unusual to be exceptional: Re Citro
The cases show that where there is substantial postponement there must be some sort of terminal illness of the bankrupt or the bankrupt’s spouse
In this case, the boy’s problems were not exceptional, he would not have to leave his school since he could live with his mother the entire week

Question 25

What is the wider significance of the case of Barca v Mears regarding the balance between insolvent parties and creditors under the insolvency act?

Answer 25

Following the case of Barca v Mears, a case which brought in human rights considerations to decide whether the appropriate weight was given to parties other than the creditor, it seems that the court is willing to leave the door open for such interests to override those of the creditor, even if they did not do so in that case in particular.

Question 26

What does Nourse LJ say regarding the policy reasons in favour of protecting secured creditors?

Answer 26

‘melancholy consequences of debt and improvidence with which every civilised society has been familiar’

Question 27

Why might one agree with Nourse LJ, especially after the qualifications given by the court in Barca v Mears?

Answer 27

The apparent harshness of the case law up to Re Citro is sufficiently consistent, and indeed resonated throughout Barca v Mears, but Barca v Mears recognises that a shift in emphasis is welcomed to leave the door open to the courts to recognise the potential for exceptional interests of those other than the creditors to take priority.