Complexities of Joint Tenancy and Beneficial Interests

Question 1:

This question will need understanding of the elements of a beneficial joint tenancy; the manner of severance including declaration, notification, and death or bankruptcy of a co-owner; claims of a third party (Mary) who directly contributed to purchase price; and application to the court for relevant order considering severance.

The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996), s1 provides that where multiple owners concurrently own a land, it creates a trust of land. The legal and equitable ownership are separated as all the owners are the legal owners, trustees as well as the beneficial owners. The the Law of Property 1925 (LPA 1925), s34 (2), allows legal estate to be vested in a maximum of four individuals. Section 36 provides that in case of joint tenancy over legal estate, which is beneficially limited to or held in trust for joint tenants, the estate shall be held in trust. In the current case, Apollyon, Gaius and Rahab are the four required owners and they hold the property, Baphomet House on trust for themselves and for Christiana and Demas, who hold the beneficial interest in Baphomet House.

The LPA 1925, s1(6) provides for joint tenancy co-ownership of legal title. Joint proprietors are owners registered as proprietor of the land. The common intention of the owners presume a joint tenancy even though they made unequal contribution. They possess equal rights to Baphomet House. The unities of title, interest and time creates a joint tenancy in equity, with the same kind of interest of the same nature; titles of co-owners created by the same instrument; and their interest vested at the same time. The concerned conveyance is a conclusive proof of their joint tenancy.

The parties’ mutual agreement or a party acting on their share can sever the joint ownership. A unilateral act of a party is final and irrevocable. An express declaration or conduct with an intent to sever the joint tenancy. It can be a written or oral agreement. Severance can be by a notice served to joint tenants. Relevant notice is unilateral and does not require the consent of the other joint tenants. Notice must be in writing. There is no mandatory means of delivery or service. The intention to sever must be immediate and not be planned for some future date. The co-owner serving the notice must intent that he or she wants the severance to take place from the moment of serving the notice. To be effective, there must be proof that the notice is delivered, which does not require the notice to be read or received by the other co-owners.

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1. The Trusts of Land and Appointment of Trustees Act 1996, Section 1.
2. The Law of Property Act 1925, Section 36.
3. H.M. Land Registry, ‘Legal estates and beneficial interests: what's the difference?’ accessed on 6 April 2021 .
4. Marr v Collie [2017] UKPC 17.
5. GOV.UK, ‘Joint property ownership’ accessed 6 April 2021
6. Martin Dixon, Modern Land Law (Cavendish 2005) 130.
7. Ibid.
8. Goodman v Gallant [1986] Fam 106.
9. The Law of Property Act 1925, Section 36(2).
10. Harris v Goddard[1983] 1 WLR 1203, CA.
11. Goodman v. Gallant, [1986] Fam 106.
12. The Law of Property (Miscellaneous Provisions) Act 1989, Section 2(1)).
13. The Law of Property (Miscellaneous Provisions) Act 1989, Section 2(1)).
14. The Law of Property 1925, Section 36(2).
15. Sandra Clarke and Sarah Greer, Land Law Directions (Oxford University Press 2020) 236.
16. Harris v Goddard[1983] 1 WLR 1203, CA.
17. Sandra Clarke and Sarah Greer, Land Law Directions (Oxford University Press 2020) 235.

Apollyon notified the other co-owners to sell the property through a letter using standard post mailed to Baphomet House. This constitutes an express written declaration showing his intent to sever the joint tenancy. The proof of the delivery of the letter is when the letter was found by in the bin and when Christiana mentioned about the content of the email in an email she mistakenly sent to all employees at everyone at Hades plc. Apollyon’s intent to sever the joint tenancy was immediate as he wanted to sell Baphomet House and ‘take his 25%’. In furtherance, based on the requirement of a valid severance notification, Christiana’s wish to sell mentioned in the email cannot be considered a notification or an express declaration to sever the joint tenancy.

Severance can also take place through a bankruptcy order or unlawful killing of a co-owner. Severance occurs automatically when a bankruptcy order is made and not the back-dated to a co-owner’s act of bankruptcy. It occurs when trustee in bankruptcy is appointed; or on the event of an act of bankruptcy and by a later adjudication of bankruptcy. Gaius ultimately became insolvent in December 2019. The facts do not show an order was passed.Apollyon must accordingly check and verify whether or not there is an order considering that Gaius had a bankruptcy hearing at the Royal Courts of Justice. Apollyon can make an application under Section 14 of TOLATA 1986 to the court to declare the nature or extent of Gaius’s interest in Baphomet House.

In regard the killing of Gaius by Rahab, the Forfeiture Act 1982 will be considered here. Section 1(1) precludes Rahab from taking benefit of survivorship as he killed another co-owner. This means unlawful killing causes severance and Rahab cannot claim survivorship. The courts can vary in regard to severance under Section 2(1) FA, but they cannot, under Section 5, if the homicide is murder. Unlawful and dangerous act manslaughter involves an unlawful act involving a danger of some harm resulting in death. Murder involves unlawfully killing with intent to kill or cause grievous bodily harm. In the current case, Rahab was enraged by Gaius’s beliefs that led him to fatally stabbing Gaius. This act constitutes unlawful and dangerous act manslaughter and as such the courts can use their discretion regarding severance. The law is not clear on whether or not killing automatically causes severance. However, the legal joint tenancy will be held on trust as unlawful killing does not expressly cause severance. This issue may not be relevant in regard to severance as Apollyon has severed the joint tenancy already.

In this case, Lillith died in a car crash, which transfers her interest in the property to other co-owners. However, the fact shows that her Will has left all of her property to Gaius. It also shows that Mary, Lillith’s mother gave the 15% of purchase price upon Lillith’s promise that Mary could live in the Baphomet House. This presents competing claims between Mary and Gaius. According to the doctrine of detriment, Mary can establish a common intention with Lilith regarding her contribution of the purchase price and the promise that Mary could live in the Baphomet House. The facts show that. Mary relied on Lilith’s promise relied to her detriment on such intention and accordingly gave Lilith the purchase price. Thus, the promise has impacted Mary and there will be question of unconscionability if the promise is not kept. The evidence of detriment indicates a presumption of reliance.

1. Sandra Clarke and Sarah Greer, Land Law Directions (Oxford University Press 2020) 236; The Law of Property 1925, Sections 196(3) and 196(4); Kinch v Bullard [1998] 4 All ER 650.
2. Re Pavlou [1993] 1 WLR 1046.
3. Re Palmer [1994] Ch 316
4. Dennis v Goodman [1995 unreported] (Re Dennis (a bankrupt) [1996] Ch 80.
5. The Crown Prosecution Service, ‘Homicide: Murder and Manslaughter’ (2019) accessed on 7 April 2021 .
6. Re Crippen [1911] 1 P 108.

Mary’s case is that of a resulting trust, which is created when she made the direct financial contribution to the purchase price on behalf of Lilith. Law will presume that the property was held by Lilith on trust for herself and Mary as Mary gave the 15% of the purchase price. There is a “presumed” resulting trust created when the property was purchased using her money in the name of Lilith as co-owner. Essentially, the money given by Mary was not a loan but purchase money, which gives rise to the presumption of a resulting trust.

The severance of joint tenancy converts the ownership in tenancy in common, which is characterised by corresponding percentage of ownership as per the different levels of contribution. The current case now shows different levels of contribution to the purchase amount, which gives rise to presumption of tenants in common. Accordingly, Mary will get her corresponding share of 15% ownership and so does other owners as per their purchase price contribution.

Question 2

Section 12(1) provides rights to occupy to Apollyon and Christiana as they are beneficially entitled to an interest in possession in land as the purposes of the trust, which is to use the house by the co-owners to stay in London during the week, is available (Section 12(1)(a)) or the land is available (Section 12(1)(b). Thus, this right to occupy will not exist when the property is not available or suitable for occupation Section 12(2). This is not the case so far with the current ownership of the property. On the other hand, Section 13(1) of TOLATA will allow the trustees to restrict the right of occupation if it is reasonable. This means that, according to Section 13(2), trustees may not unreasonably exclude any beneficiary’s right to occupy land (Section 13(2)(a)), or restrict the right to an unreasonable extent (Section 13(2)(b)). TOLATA imposes restriction on the exercise of powers by the trustees. Section 6 of TOLATA gives the trustees “all the powers of absolute owner” in relation of land. While exercising the power, the trustees, according to Section 11, will consult with the beneficiaries and consider the general interest of the trust while giving effect to wishes of the beneficiaries who have the majority of equitable interest. Further, equitable ownership resides solely in the main provider of purchase price. In this case, since Apollyon, Gaius and Rahab each contributed 25% and Lillith with 15% of the purchase price, they could be taken as the main providers of the purchase price. Thus, Christiana and Demas with each 5% do not have an equitable title in the property. According to Section 15(1) of TOLATA 1996, the court will consider the wishes of the beneficiaries (majority value), or whether the purpose of trust is ongoing or ended. Looking for further insights on Understanding Lease Termination? Click here.

1. Martin Dixon, Modern Land Law (Taylor & Francis 2021) 184.
2. Lloyds Bank plc v Rosset [1990] UKHL 14 , at 132.
3. Martin Dixon, Modern Land Law (Taylor & Francis 2021) 184.
4. Ibid
5. Greasley v Cooke [1980] 3 All ER 710.
6. Midland Bank v Cooke [1995] 4 All ER 562.
7. Dyer v Dyer (1788) 2 Cox Eq 92.
8. Malcolm James Finney, Wealth Management Planning: The UK Tax Principles (John Wiley & Sons 2010).
9. Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549.
10. Martin Dixon, Modern Land Law (Cavendish 2005) 131.

In this case, Demas thinks that the joint tenancy is redundant. This is correct as it is severed by the letter of Apollyon. Demas may make a Section 14, TOLATA application for an order of sale. However, the right of Apollyon and Christiana to occupy, which is the purpose of the trust, and the property itself are still existing. Thus, his application will fail. Accordingly, Apollyon can make the Section 14 to declare the nature or extent of Demas’s interest in Baphomet House. Further, Demas cannot restrict their right to occupy as according to Section 13(2) it will be unreasonable. Demas with only 5% contribution does not an equitable title or majority value as compared with Apollyon as a main provider. Further as per Section 11, the wishes of Apollyon with majority of equitable interest together with that of Christiana will be considered.

Legislations

The Law of Property Act 1925

The Law of Property (Miscellaneous Provisions) Act 1989

The Trusts of Land and Appointment of Trustees Act 1996

Cases

Dennis v Goodman [1995 unreported] (Re Dennis (a bankrupt) [1996] Ch 80

Dyer v Dyer (1788) 2 Cox Eq 92.

Goodman v Gallant [1986] Fam 106

Greasley v Cooke [1980] 3 All ER 710.

Harris v Goddard[1983] 1 WLR 1203, CA

Kinch v Bullard [1998] 4 All ER 650

Lloyds Bank plc v Rosset [1990] UKHL 14

Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549

Marr v Collie [2017] UKPC 17

Midland Bank v Cooke [1995] 4 All ER 562.

Re Crippen [1911] 1 P 108

Re Pavlou [1993] 1 WLR 1046

Re Palmer [1994] Ch 316

Books

Clarke S and Sarah Greer, Land Law Directions (Oxford University Press 2020)

Dixon M, Modern Land Law (Cavendish 2005)

Dixon M, Modern Land Law (Taylor & Francis 2021)

Finney MJ, Wealth Management Planning: The UK Tax Principles (John Wiley & Sons 2010)

Others

GOV.UK, ‘Joint property ownership’ accessed 6 April 2021

H.M. Land Registry, ‘Legal estates and beneficial interests: what's the difference?’ accessed on 6 April 2021 .=

The Crown Prosecution Service, ‘Homicide: Murder and Manslaughter’ (2019) accessed on 7 April 2021