Tenancy in common trumps joint tenancy

  • Author : Robert Hay QC - 26-09-2011

When property is purchased in joint names and one party dies the question of whether the proprietors held the land as joint tenants or tenants in common invariably arises. The answer is significant because if the parties were joint tenants the whole of the land remains with the surviving joint tenant.

The law concerning joint tenancies and tenancies in common was recently reviewed in detail in Sacks v Klein [2011] VSC 451.  In Sacks two brothers purchased a flat as as joint proprietors as an investment. The mortgage loan was made to them jointly and severally. One brother died and the survivor claimed to be entitled to be registered as the sole proprietor and was so registered. The administrator of the deceased’s estate sought a declaration that the survivor held the land on trust for himself and the plaintiff as tenants in common in equal shares. Sacks contains an excellent summary of the relevant legal principles and provides a good example of the analysis that needs to be undertaken in determining what the parties’ intentions were when the land was purchased. In summary the legal principles are:


 

(a)  Where  property is conveyed to two or more persons who are named as transferees without further specification as to whether they hold the title as joint tenants or tenants in common, they are deemed by operation of s.33(4) of the Transfer of Land Act 1958 to hold the legal estate as joint tenants. But that section does not preclude the operation of equity.

(b)  In the absence of evidence that the transferees hold a different intention, equity will follow the law.  However, equity favours tenancies in common and even “slight circumstances” are enough to indicate that the parties do not intend to hold property as joint tenants.

(c)  Prima facie, the provision of purchase money in equal shares is consistent with an intention to hold property as joint tenants. But equity will presume an intention to hold the beneficial interest as tenants in common where, among other things, a mortgage is made to them jointly, or where the property is acquired by partners or participants in a joint undertaking.

(d)  The application of the equitable presumption was not confined to formal business structures; an informal  joint business venture or undertaking would still give rise to equities leaning towards a tenancy in common of the beneficial interest.

(e)  The equitable presumption may be rebutted by evidence of a common intention by the co-owners to acquire the property as joint tenants; the common intention must be actual and not presumed. If there is ambiguity at to the existence of a common intention the court will lean towards a construction which creates a tenancy in common rather than a joint tenancy. 

(f)  If the parties describe their interests in words which suggest distinct shares are to be held, their words prevent the creation of a joint tenancy. The evidentiary threshold needed to establish a division is easily met because:

….anything which in the slightest degree indicates an intention to divide the property must be hold to abrogate the idea of a joint tenancy and to create a tenancy in common” (Robertson v Frazer (1871) LR 6 Ch A 696 at 699).

Hargrave J  held that the brothers purchased the land as a joint business undertaking and therefore the equitable presumption of tenancy in common applied with the consequence that the survivor had to rebut the presumption by “clear and cogent” evidence. Despite finding that the brothers agreed to be registered as joint tenants Hargrave J held that the brothers intended to divide their interests in the flat equally and therefore the administrator’s claim succeeded.

Thanks to Elizabeth Michael for mentioning this case to me.

 

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Robert Hay QC

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