Impact of Scenario Events on Legal and Equitable Interests in Baphomet House

Qu.1:

The issue is related to the effects of the events in the scenario on the legal estate and equitable interests in the Baphomet House.

The first issue here relates to the nature of the ownership in the Baphomet House. The applicable rule is found in the Law of Property Act 1925, Section 34 (2), which allows legal estate to be vested in a maximum of four individuals. This means that the first four individuals, Apollyon, Gaius, Rahab, and Lillith, have legal estate vested in them and Christiana and Demas have beneficial interest along with the first four

The contribution of the parties towards the purchase price is not equal. The principle of Malayan Credit Ltd v Jack Chia-MPH Ltd, may be applied here to say that where individuals do not buy property by contributing to the purchase price equally, the nature of the ownership is not joint ownership. However, the principle of Marr v Collie may be applied to assume a joint tenancy based on common intention of the parties even though the property is purchased with unequal contribution. If there is a statement expressing a common intention of joint tenancy then the nature of ownership may be presumed to be that of joint tenancy even if the contribution is unequal. In this case scenario, the house was conveyed to the owners as beneficial joint tenants, therefore, the principle of Marr v Collie will apply to give beneficial joint tenancy to the owners. The express declarations as to the nature of beneficial interests in the property are said to be decisive in nature. Joint tenancy involves the four unities of title, which are, interest, possession and time. The owners own the property together as a whole and they do not have separate interests in the property. Severance of ownership is through mutual agreement or one party acting on their share.

The second issue is regarding the interest of Marr, Lillith’s mother in the property. Mary contributed 15% of the purchase price on Lilith’s promise that she could live in the property. Lillith, however, in her will left all of her property to Gaius. The relevant issue is to determine whether Mary has an equitable interest in the property. Mary is not mentioned in the conveyance of the property. However, she relied on the promise made by Lilith, which was to her detriment when she contributed the purchase price on behalf of Lilith. Her direct contribution towards the purchase price creates the resulting trust. Thus, the property would be considered to be held on trust by Lilith on behalf of Mary. Mary has now a beneficial interest in the property. Such direct payment cannot be counted as a loan as the payment is part of the purchase price. The law will presume that Mary has a resulting trust. Mary can, thus, claim her share of 15% ownership by arguing that Lilith cannot dispose of

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1. Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549
2. Marr v Collie [2017] UKPC 17.
3. Goodman v Gallant [1986] Fam 106.
4. Judith-Anne MacKenzie, Textbook on Land Law (Oxford University Press 2016) 297.
5. Law of Property Act 1925, Section 36(2).
6. Lloyds Bank plc v Rosset [1990] UKHL 14 , at 132.
7. Martin Dixon, Modern Land Law (Taylor & Francis 2021) 184.
8. Dyer v Dyer (1788) 2 Cox Eq 92.
9. Curly v Parks (2004) EWCA Civ 151.

her interest by making a provision in a will, because severance of interest can only be inter vivos.

The third issue is if whether or not Rahab can claim survivorship given that he caused Gaius’ death. This is based on Rahab being a joint owner in the property and the rule of jus accrescendi. It can be said that this event has led to the severance by death and according to Section 2(1) of the Forfeiture Act 1982, Rahab cannot benefit from his act of homicide of Gaius by claiming. The perpetrator forfeits his share in the property. Therefore, the interest of Rahab is severed from the joint tenancy.

The fourth issue is whether or not Apollyon has effectively severed the joint tenancy. Severance of joint tenancy is allowed by a notice of severance that must be served to joint tenants under LPA 1925, Section 36(2). The notice should make the intent to immediately and effectively severe joint tenancy clear. Apollyon wanted Baphomet House to be sold immediately so that he could ‘take his 25%’, which shows his intention to sever immediate and effectively. His intent to sever, considering the letter he posted, shows the immediate intent to sever and not a future plan to sever. His notice was unilateral, and it does not require the consent of the other co-owners. The only requirement is that his notice was in writing in the form of the letter and a proof of delivery of the notice, as provided by the LPA 1925, Sections 196(3) and 196(4), which the facts of the case show that Lillith opened the letter and Christiana found it in a bin. It does not matter whether or not his letter was read or received by other joint tenants.

Applying the requirements of a valid notification, Christiana’s email to everyone at Hades plc expressing her decision to sell her share of Baphomet House is not a valid notice of severance. With regard to both Appolyon and Christiana, the rule of survivorship is applicable.

The fifth issue is to assess the effect of Gaius’ bankruptcy on his beneficial interest and his bankruptcy. The Insolvency Act 1986, Section 306 provides that the bankruptcy of a joint owner has the effect of severing the joint tenancy. The interest of the bankrupt owner would be vested in the trustee in bankruptcy. This leads to the severance of joint tenancy and the interest in the property becomes vested in the trustee in bankruptcy with immediate effect. However, severance only occurs once a court pass the bankruptcy order or on occurrence of an act of bankruptcy followed by an adjudication of bankruptcy. In Gaius’

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10. Judith-Anne MacKenzie, Textbook on Land Law (Oxford University Press 2016) 297.
11. Gould v Kemp (1834) 39 ER 959
12. Re K [1985] Ch 180.
13. Re Draper's Conveyance [1969] 1 Ch 486, ChD.
14. Harris v Goddard[1983] 1 WLR 1203, CA.
15. Sandra Clarke and Sarah Greer, Land Law Directions (Oxford University Press 2020) 236.
16. Ibid; Kinch v Bullard [1998] 4 All ER 650.
17. Judith Gray, Unlocking Land Law (Routledge 2016) 232.
18. First National Bank v Achampong [2003] EWCA 487.
19. Re Pavlou [1993] 1 WLR 1046.
20. Dennis v Goodman [1995 unreported] (Re Dennis (a bankrupt) [1996] Ch 80.

case, there is no order or an adjudication and if there is one, Gaius’ interest will be severed and the rule of survivorship will not apply to him.

The end result is that Apollyon has severed the joint tenancy. Christiana and Demas hold the legal estate on trust for Gaius, Rahab and Lillith in equity. With regard to the extent of interest in the property, due to the severance of joint ownership in property of Rahab and Gaius, it is not possible for severing joint tenant to try to claim any larger share on the basis of their contribution unless there is an express agreement to take unequal shares. That is not so in this case.

Qu.2: Can Demas exclude Apollyon and Christiana from living there and is there is anything Apollyon can do to prevent a sale.

Demas has told him that, since being made redundant, he wishes Baphomet House to be sold to Sorath, although Christiana is currently refusing to move out. Demas cannot exclude Appolyon and Christiana from living on the property because they have beneficial joint interest in the property and the right to occupy the property (TOLATA 1996, Section 12(1)). Appolyon and Christiana have this interest and right as long as according to Section 12(1)(a)), the purposes of the trust, which in this case is to stay in the property by all the joint tenants; or according to Section 12(1)(b) the property is available. Accordingly, it would be unreasonable to exclude or restrict their right of occupation (Section 13(1) and (2)).

With regard to sale, there is a right to sell land for a trustee (TOLATA 1996, Section 6), but the trustee must take into consideration the wishes of the beneficiaries with the majority of the equitable interest (Section 11). Apollyon and Christiana have majority of the equitable interest as compared with Demas’ 5%. Court will consider the wishes of Apollyon and Christiana with majority value (Section 15(1)). Take a deeper dive into Assessing Proprietary Estoppel in Property Rights with our additional resources.



Under the TOLATA 1996, Section 14, a property owner may apply to the court for an order that declares the extent of the parties’ individual ownership of the property and orders that the property be sold. This would amount to forcing a sale and this can be forced only when the joint tenancy is severed. If there is a sale, then the beneficial interest of Mary under the implied trust has to be taken into account and this would be a potential overriding interest under Schedule 3, para. 2 of the LRA 2002. In this situation, Mary’s interest will attach to the sale proceeds. Mary’s interest arises out of a resulting trust as she contributed to the purchase of the property. At the time of the sale, Mary’s interest will be quantified on the basis of the proportion of her contribution to the acquisition cost of the property.

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21. Goodman v. Gallant [1986] 2 WLR 236.
22. City of London Building Society v Flegg [1988] AC 54, HL.
23. Dyer v Dyer (1788) 2 Cox Eq 92.
24. Ibid.

Table of cases

City of London Building Society v Flegg [1988] AC 54, HL.

Curly v Parks (2004) EWCA Civ 151.

Dyer v Dyer (1788) 2 Cox Eq 92.

First National Bank v Achampong [2003] EWCA 487.

Goodman v Gallant [1986] Fam 106.

Gould v Kemp (1834) 39 ER 959.

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.

Re Draper's Conveyance [1969] 1 Ch 486, ChD.

Re K [1985] Ch 180.

Re Pavlou [1993] 1 WLR 1046.

Books

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

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

Gray J, Unlocking Land Law (Routledge 2016).

MacKenzie J, Textbook on Land Law (Oxford University Press 2016).