125 years; if necessary, we can wait to see whether this happens, similar to the example of Harriet’s grandchildren. In any event, relatively few modern settlors want to tie up land for many generations in the future.
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The operation of the interestsThis area is today the province of trusts of land. One point, however, concerns the rights and duties of the holder of a life interest. The rules governing waste established their rights and obligations. In broad terms, there was no positive obligation to repair (permis-sive waste), though there was liability for not taking proper care of the land (voluntary waste). Today, land is managed by trustees and their obligations are determined by the law of trusts. Some of the old waste rules remain significant because they determine some of the rights of the holder of the life interest. This is seen in rules giving entitlement to timber and mines, though we need not go into the details.
Main issues and rules: concurrent interests
Co-ownership is not as simple as two or more people sharing ownership. English law recognises two forms of co-ownership: joint tenancy and tenancy in common.
Joint tenancy possesses the peculiar feature that, when one of the holders dies, the surviving joint tenants are entitled to the entire property. Indeed the basic concept is that each joint tenant owns the whole; when one dies, there is simply one fewer person to share it. This right of survivorship is useful in a number of situations. When a couple buy a family home together, it is very likely that they will choose a joint tenancy – they will intend the survivor to have the home. They are unlikely to want the survivor to share the home with the deceased’s legatee. The joint tenancy is also the ideal way for trustees to hold property: the survivors are the most appropriate trustees after one has died.
It will be obvious that the joint tenancy is not suitable for all co-owners. Two friends buying a flat together would find it odd, as would businessmen purchasing land for their business. The tenancy in common is available for such cases: the share of a deceased tenant in common passes by will. A tenancy in common can be created either from the start or at any time before the death of a joint tenant. Changing an existing joint tenancy into a tenancy in common is termed severance.
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Joint tenancy or tenancy in common?We will now consider which form of co-ownership is created. It is explained in the fol-lowing chapter that, since 1925, a legal tenancy in common cannot exist as a legal estate. All co-ownership operates under a trust of land; the choice is between equitable joint tenancy and equitable tenancy in common.
There cannot be a joint tenancy without the four unities being present. The very essence of joint tenancy is that each owns the whole and the four unities spell this out in
Main issues and rules: concurrent interests
Successive and concurrent ownership
11
more detail. The four unities are unity of possession, unity of interest, unity of title and unity of time.
Unity of possession is central to any form of co-ownership; it is the only unity required for tenancies in common. Suppose two fields (of identical size) are shared by Emily and Fiona. If they are entitled to one field each, there is no unity of possession and no co-ownership. Alternatively, they might each be entitled to possession of both fields, in which case there would be unity of possession. One point to note is that the rules relate to entitlement rather than physical occupation. Should Emily and Fiona lease the fields to George, that has no impact on unity of possession. Alternatively, Emily might use both fields while Fiona lives a long distance away and never uses them. Again, this is entirely compatible with unity of possession. It might be added that occupation rights are now governed by legislation, dealt with in Chapter 12.
It is the other unities that are really important in distinguishing joint tenancies from tenancies in common.
Unity of interest is the most important. It means that the interest held by the co-owners must be of the same type and the same size. A life interest holder and the holder of a fee simple cannot be joint tenants (how would survivorship work when their interests are different?) and, more important in practice, one cannot have a one-third share and the other a two-thirds share. Though this rule on the size of shares is very clear, it may be doubted whether it should exist. It is not inconsistent for parties to desire survivorship, but to have different size shares. This might be important for taxation reasons and also as regards shares on severance; the present law is clear that joint tenants automatically take equal shares on severance.4
Unity of title requires that the parties derive title from the same immediate document.
This is rarely a problem when co-ownership is set up. More frequently, it explains sever-ance. Suppose that Sara and Theresa are joint tenants under a will; Sara sells her interest to Ursula. Theresa’s immediate title is the will, whereas Ursula’s title is the sale by Sara.
There is no unity of interest between Theresa and Ursula and accordingly they are tenants in common.
Unity of time means that the interests must vest at the same time. There are several situations in which this unity is not required: its significance is minimal.
There cannot be a joint tenancy without all four unities. However, it has always been the case that a tenancy in common will exist if intended by the settlor (or purchasers, if co-ownership arises on property purchase). The tenancy in common may be express, but it suffices for the parties to use language indicative of their having separate shares. The nature of a tenancy in common is that the parties are regarded as having separate shares rather than jointly owning the whole. The term undivided shares, an alternative name for the tenancy in common, captures this well. Thus, a reference to ‘equally’, ‘in equal shares’,
‘amongst’, ‘divided’ or ‘participate’ will result in a tenancy in common. It may be thought
4 Goodman v Gallant [1986] Fam 106.
Main issues and rules: concurrent interests
that the courts are leaning over backwards to find a tenancy in common; laymen are likely to use these words (often called ‘words of severance’) in a wholly haphazard manner.
There is a presumption of a joint tenancy once all the unities are present and there are no words of severance. However, there are several types of situation in which courts of equity have found the presumption rebutted. This illustrates the suspicion with which they viewed the joint tenancy, going so far as to describe it as ‘odious’.5
The first example of such an equitable presumption is where the parties contribute differing amounts to a purchase: a tenancy in common is necessary for them to hold in unequal shares. Also important is the presumption that business partners desire a tenancy in common. Even if their contributions are equal, it is very unlikely that they will want survivorship to operate. This is applied in a realistic manner. Thus businessmen who acquire property for their separate businesses will be within the rule, even though there is no joint business enterprise.6 Conversely, if the business partners happen to be a couple who desire survivorship, then a joint tenancy will result. A final example of a presumed tenancy in common relates to joint mortgagees. Two people lending money are similar to partners and, for similar reasons, survivorship is inappropriate.
Although the preference for the joint tenancy may seem odd, the scope for finding a contrary intention is very wide. We will consider three types of case in evaluating these rules in the modern world. The first concerns the purchase of land in joint names. We saw in Chapter 9 that a joint tenancy is presumed in family home purchases in joint names, regardless of unequal contributions. The present land registry forms require the trans-ferees to state the nature of their equitable interest: there is an explicit choice between joint tenancy and tenancy in common. As a statement of beneficial interests is generally conclusive,7this means that problems are unlikely to arise in recent purchases.
Next is the situation where land is purchased by one person, but a resulting or con-structive trust means that there is co-ownership in equity. This will usually be where a couple (whether or not married) share ownership of property under the Gissing v Gissing8 and Stack v Dowden9principles. The transfer form does not cover such cases, as no co-ownership is apparent on the face of the transfer. If the shares are unequal, there can be only a tenancy in common, but what if they both have a 50 per cent share so that the four unities are present?
The cases, perhaps surprisingly, provide no clear answer. A joint tenancy might seem appropriate because most couples opt for a joint tenancy when they address the ques-tion. It would make sense to replicate this where they have not expressed their beneficial interests. However, in Stack Baroness Hale observed that the cases lend no support to there being a joint tenancy. In many cases the shares are not equal, so there can only be a tenancy in common. It may be inappropriate to have a different outcome where the shares happen to be equal.
5 York v Stone (1709) 1 Salk 158 (91 ER 146).
6 Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] AC 549.
7 Goodman v Gallant [1986] Fam 106. The forms do not guarantee the absence of problems: Stack v Dowden [2007] 2 AC 432 at [52].
8 [1971] AC 886.
9 [2007] 2 AC 432.
Main issues and rules: concurrent interests
Successive and concurrent ownership
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The third situation in which co-ownership arises is where there is a settlement or will.
It is in this setting that the presumptions and words of severance are most likely to be relevant. The initial preference for the joint tenancy is most likely to apply, as the equitable presumptions are not designed for this sort of case. Is the joint tenancy appropriate?
Most commonly, settlements and legacies are in favour of close family members and survivorship may be appropriate. Even so, the arguments in favour of the joint tenancy are not overwhelming. If a beneficiary dies, would not the grantor intend that that beneficiary’s family (principally children) should benefit from that share, rather than the other co-owners? The arguments are finely balanced, though very few cases have arisen in this context in recent decades. It is scarcely a matter of pressing concern!
After looking at these examples of concurrent interests, it may be concluded that joint tenancies will rarely be found contrary to the true intentions of the parties. There is some attraction in the rule applied in some countries that a tenancy in common is the preferred form of co-ownership. However, its practical effects would be few, at least outside settle-ments and wills.
It is more likely that intentions will be thwarted where survivorship is intended, but a joint tenancy cannot exist because the four unities are lacking. Arguably, the law should take the pragmatic approach that a joint tenancy should exist whenever it is intended by the parties and is workable. This requires the unity of possession (necessary for all forms of co-ownership) and probably that the parties possess the same type of jointly owned interest (fee simple or lease, for example). The remaining aspects of unity of interest (shares must be the same) and the unities of title and time are more difficult to justify.
Their absence might indeed be a pointer against a joint tenancy, but their absence should not be conclusive. Whereas it is true that the four unities fill out the idea of each joint tenant owning the whole, a pragmatic modern response is that the joint tenancy should be important only for the application of survivorship.
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Severance of joint tenanciesJoint tenants may wish to prevent survivorship. The most common example is that survivorship will be inappropriate when a couple buy their family home as joint tenants but then break up. Survivorship is the last thing they now desire! Virtually all the modern cases arise from this setting.
Conversion into a tenancy in common – severance – has always been allowed. One long-standing example is that sale by one joint tenant of his or her share severs that share.
As has been seen, the transferee does not have unity of title: this means that there can no longer be a joint tenancy. The law might have said that a joint tenant has no ‘share’
capable of transfer, simply being entitled to the whole together with the others. No such argument has been seriously put forward in recent centuries.
Today, severance is governed by the Law of Property Act 1925 (hereafter LPA), section 36(2). As a tenancy in common can never exist as a legal interest, it is never possible to sever a legal joint tenancy. This is explicitly stated by section 36(2).
Section 36(2) provides two routes to sever an equitable joint tenancy. The first is a new form of severance: notice in writing. This is designed to be a simple method for one joint
Main issues and rules: concurrent interests
tenant to sever the joint tenancy unilaterally. Previously that was possible only by the artificial route of transferring one’s share. It should be noted that section 36(2) requires a notice in writing to be sent to the other joint tenants; it cannot be secret. A recent deci-sion has confirmed the statutory rule that notices are effective on delivery, even if never received by the intended recipient.10
The notice in writing provides an easy route to severance. The main problems arise when a letter is sent without any thought being given to section 36(2). Explicit words, like ‘I sever our joint tenancy’, are clearly effective. In practice, however, the layman is more likely to say ‘I want the property sold’ rather than to refer to severance. Even lawyers may write letters without thinking about severance. Though nobody would wish to see notices of severance limited to formal legal documents, there is a real danger of having to sift through correspondence on the off-chance that there is some reference to ‘shares’
or other language indicative of a joint tenancy.
So far the courts have taken a fairly narrow view of what suffices. Most cases have involved the wording of court applications. Although Re Draper’s Conveyance11held a request for sale and division of the proceeds to be effective, more recent cases (notably Harris v Goddard )12have stressed the need for the notice to have immediate effect and to refer fairly explicitly to severance: a request for the court to exercise its discretion will not suffice.
Before leaving written notices, two limitations must be mentioned. First, they are effective only for land. Next, the wording of section 36(2) seems to require that the same persons be both trustees and beneficiaries. If Rosalind and Sam hold on trust for them-selves as beneficial joint tenants then either can give written notice. However, if Andrew and Brenda hold on trust for Catriona and Davina then this is outside the written notice provisions. These limitations are almost impossible to justify, though it would be appro-priate to require notice to be given to all trustees and beneficiaries.
The second route to severance is provided by the old equitable severance rules, which section 36(2) keeps in operation. These rules are articulated in the 1861 decision in Williams v Hensman,13still routinely cited:
A joint tenancy may be severed in three ways: 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 . . . 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. Secondly, a joint tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of deal-ing sufficient to intimate that the interests of all were mutually treated as constitutdeal-ing 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 . . .
10 Kinch v Bullard [1999] 1 WLR 423, applying LPA, s 196(3). On the facts, the giver of the notice had got hold of it and destroyed it; the intended recipient could still claim severance.
11 [1969] 1 Ch 486.
12 [1983] 1 WLR 1203.
13 1 J&H 546 at pp. 557–8 (70 ER 862 at p. 867).
Main issues and rules: concurrent interests
Successive and concurrent ownership
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Of the three heads of severance identified, the second and third cause the greatest difficulty. They are considered below, under ‘Critical and controversial issues’, together with an assessment of the severance rules as a whole. The first head covers the transfer of a beneficial interest in a joint tenancy; this has already been mentioned. Several points about its application may be noted. Most straightforward is that a contract to sell the interest will be as effective as an immediate transfer. This is because equity enforces contracts relating to land and treats the purchaser as having an immediate equitable interest. However, it must be remembered that contracts relating to land have to be in writing;14without writing the first head will not apply.
More difficult is the effect of transactions short of outright transfer. The effect of leases and charges (mortgages) has given rise to debate, though there is a dearth of recent English authority. It seems most likely that leases effect a severance for at least the dura-tion of the lease, while most authorities assume that charges cause severance. Less prob-lematic is bankruptcy. The bankrupt’s assets vest in the trustee in bankruptcy and this is considered to effect severance.
The first head permits unilateral severance: there is no need for notice to the other joint tenants. This is well settled: severance follows from the shattering of the unity of title. However, it is more questionable as a matter of policy, especially where (as the law permits) there is a transfer to oneself. First-head severance can lead to a situation where other joint tenants believe that survivorship will operate, though in fact there is a tenancy in common. One danger15is that the severing joint tenant may be tempted to suppress the severance if the others die first – a situation in which the severing joint tenant would benefit from survivorship.
Next, we will consider the effect of severance. If Martina and Olivia are joint tenants and Martina sells her interest to Paula, then the answer is clear: Olivia and Paula are tenants in common. More complex is the position where there are three or more joint tenants. An example would be Martina, Olivia and Xavier, with Martina again selling her interest to Paula. This doubtless severs Martina’s share, but what effect does it have on Olivia and Xavier? The answer is that they remain joint tenants as between themselves:
it is only Martina’s share that has been severed. If Paula dies, then her purchased share passes under her will. If Olivia dies, however, her share passes by survivorship to Xavier, who will then have a two-thirds share.
Does it make any difference if Martina transfers her interest to Olivia, already one of the joint tenants? Though this effects severance, again the answer is that Olivia and Xavier remain as joint tenants.16This is shown in Figure 11.1. We may ask how a joint tenancy can exist if Olivia has two shares. The answer is that the joint tenancy is over the two-thirds share, not the property as a whole. Olivia has two separate interests: a severed one-third share under a tenancy in common and a joint tenancy in the other two-thirds.
If Olivia were to be the next to die, her estate would take the severed one-third share.
The other two-thirds would be held outright (through survivorship) by Xavier.
14 Law of Property (Miscellaneous Provisions) Act 1989, s 2.
15 Crown (2001) 117 LQR 477 at p. 491 (in the context of declarations of trust as severing acts).
16 Co Litt 193a.