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Lecture

6. Co-ownership

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Department
Law
Course
JSB171
Professor
All Professors
Semester
Spring

Description
Co-ownership Classification of relationship • Co-owners must be registered as tenants in common or joint tenants: s56(1) • Where not provided, registrar will register as tenants in common: s56(2) Four CL types of tenancy reduced to two— (s33(1) PLA) • Joint tenants o ← own the property as a group o On death, share in property passed with estate • Tenants in common o ← own a distinct individual share that is undivided: Nullagine v Western Australian Club Inc. o On death, share in property extinguished—other tenants in common retain • In both cases— o Not physical shares—no one tenant can claim a particular portion | each tenant has a right to physical possession. General Rule—Tenants in Common: s35(1) • At CL—presumption of joint tenancy unless— o Absence of 4 unities o Words of severance used o Clear intention to create a tenancy in common • Statute—even if in equal shares—held as tenants in common rather than joint tenants: s35(1) PLA (disposition of beneficial interest in property to two or more persons = tenancy in common) unless— o Joint tenancy is expressly created: s35(2)(a) (This section does not apply … in any case where the disposition provides that persons are to take as joint tenants or tenants by entireties)  Must have the four unities o Land held by executors, trustees, mortgagees or administrators: s35(2)(a) (This section does not apply … to persons who by the terms or by the tenor of the disposition are executors, administrators, trustees, or mortgagees) o A partnership exists: s35(2)(b) • Equity—Where several people contribute to the purchase price but only one is the registered owner, the legal interest will be held on constructive trust for the persons who paid the price, in the proportion of their contributions: Delehunt v Carmody (De facto couple buy house | equal contributions—registered only in man’s name—man dies—on death property would go to widow on rules of intestacy (separated for the last 35yrs)  property held as tenants in common between man (→ widow) and de facto partner) Partnerships: s35(2)(b) (2) This section does not apply— (b) to a disposition for partnership purposes in favour of persons carrying on business in partnership. (3) Subject to the provisions of the Partnership Act 1891, a disposition for partnership purposes of an interest in any property in favour of persons carrying on business in partnership shall, unless a contrary intention appears, be construed as— 1 (5) Co-ownership Andrew Trotter LWB244 Property B (a) a disposition (if any) of the legal interest to those persons as joint tenants; and (b) a disposition (if any) of the beneficial interest to those persons as tenants in common. • Partnerships are an exception to s35(1) and unless a contrary intention appears— o Disposition of legal interest → joint tenants o Disposition of beneficial interest → tenants in common • May be altered by contrary intention Contrary Intention: s35(2)(a) • It is unclear exactly what formula the courts will accept to displace the statutory presumption. • Four unities at common law to create a joint tenancy (all required)— o Possession (same with tenancy in common)  Each of tenants entitled to possession of entirety of land o Interest  Nature—must have the same interest (eg fee simple ↔ life estate)  Extent—equal shares  Duration—life tenant does not hold temporary joint tenancy o Title  Same conveyance from same source o Time  Simultaneously (eg gift to A & to B on turning 18 → may not be unity of time)  Transfers by will & trust are an exception • Words of severance: o not conclusive—will look at all the facts: Re Barbour (1967) Qld (“share and share alike” as joint tenants  joint tenancy—passed only to surviving siblings, not to beneficiaries of deceased siblings—otherwise too fragmented, unworkable) o Words which indicate division even in the slightest degree must be held to abrogate a joint tenancy: Robertson v Fraser (1871); Re Rose (1962) (“in equal shares” as Joint Tenants  tenancy in common) Eg—  in equal shares: Re Rose (1962) (“in equal shares” as Joint Tenants  tenancy in common)  to be divided between  to be distributed in joint and equal proportions  Respectively  Among  as joint legatees  participate as o Contradiction in words → court likely to favour joint tenancy: s35(1)(a); Robertson v Fraser • Nature of property is relevant: Re Barbour (agricultural land worked by whole family— passed to surviving siblings  joint tenancy—passed only to surviving siblings, not to beneficiaries of deceased siblings—otherwise too fragmented, unworkable) (5) Co-ownership 2 Andrew Trotter LWB244 Property B Trustees: s36 Where— • 2 or more persons • entitled beneficially as tenants in common • to an equitable estate in any property • are or become entitled in their own right, whether as joint tenants or tenants in common, to the legal estate in such property equal to and coextensive with such equitable estate both the legal and equitable estates shall be held by them as tenants in common unless such persons otherwise agree. • CL—Beneficiaries holding equitable title as TiC | acquire legal estate as joint tenants → equitable interest merges, and take property as joint tenants in law and equity: Re Selous • Statute—Where holders of an equitable estate become entitled to the legal estate, it is held as tenants in common unless otherwise agreed: s36 o IE—beneficial interest as tenants in common → hold as tenants in common when legal title transferred irrespective of whether legal title transferred as TIC or JT. Claims by Co-owners • Co-owners must account to other co-owners for any interest in the property above their just and proportionate share: s43(1) • When an application has been brought for sale of the property under s 38(1) PLA The court also has the power under s 42 PLA to make accounts for the purpose of adjusting each parties contribution. Occupation Fee (claim by non-occupying owner) = claim by one co-owner from another who is in sole occupation for a fee in respect thereof • Each co-owner has the right to use and occupy the whole of the land: Thrift v Thrift (1975) o extends to people on property with consent of co-owner • General rule—no duty to pay rent or an occupation fee: Luke v Luke • Exceptions— o Where one co-owner has ousted another off the land: Mariott v Franklin; Luke v Luke  ← wrongfully excluded from or prevented from using the property • Changing locks on doors: Forgeard v Shanahan (changing locks on doors is exclusion—but left voluntarily  no ouster); Ryan v Dries • Violence towards the co-owner causing them to leave due to fear: Dennis v McDonald • Threat to call the police: Thingood  No ouster where— 3 (5) Co-ownership Andrew Trotter LWB244 Property B • person voluntarily leaves: Forgeard v Shanahan; Henderson v Eason (brother leaves farm voluntarily, then seeks proceeds of crop sales  not divisible ← involved risk of capital); • Excluded due to domestic violence order: Biviano v Natoli o Unless denied title during proceedings for the commencement of appeal → ouster: Biviano v Natoli (liable for occupation rent but for the period of the DVO— half the rental value for remaining period) o The occupying owner is seeking contributions for expenses and improvements: Forgeard v Shanahan; Rickwood v Young; Ryan v Dries (← he who seeks equity must do equity) o An agreement as to fee payable—under contractual principles: Rees v Rees • Assessment— (Biviano v Natoli) o Ousted owner can claim mesne profits—fair market rent of the premises o Reflects share in property o For relevant period Account of rent or profits: s43 PLA (claim by non-occupying owner) A co-owner shall, • in respect of the receipt by the co-owner of more than the co-owner's just or proportionate share according to the co-owner's interest in the property, be liable to account to any other co-owner of the property Co-owners are entitled to recover proportionate share in revenue from property: s43 Assessment— • Rent received from third party to be shared in proportion: s 43(1); Henderson v Eason (1851) • Profit obtained by own labour → not divisible (s43 applies only to ‘more than fair share’): Henderson v Eason (bought crops—invested time and skill—harvested—sold them  not divisible ← involved risk of capital); Squire v Rogers o Income from property: mine, quarry, lease, etc o Income from labour: farm, business etc • Adjustment allowed where improvements to property increased profits: Squire v Rogers (providing accommodation, improvements, outgoings—spent $100k but increased only by $15k due to cyclone Tracey  improvements leading to profits taken into account) • Also consider claims by occupying owner against non-occupying owner Compensation for Outgoings • Joint debts are recoverable from other owner: Forgeard v Shanahan o Mortgage payments  Mortgage payments can be characterised as improvements: Forgeard v Shanahan per Meagher JA; Ryan v Dries  Claim made for improvements → counterclaim may be made for occupation fee: Forgeard v Shanahan; Rickwood v Young; Ryan v Dries (← he who seeks equity must do equity) o Rates o Taxes (5) Co-ownership 4 Andrew Trotter LWB244 Property B • Pest control & insurance cannot be recovered—not joint debts or improvement: Forgeard v Shanahan o Unless a condition of mortgage, etc (obligation) Compensation for expenditure Depends on classification: • Ordinary maintenance & repairs → cannot be claimed: Forgeard v Shanahan; Ryan v Dries o Unless increase the value of the property: Forgeard v Shanahan ↓ • Improvements → cannot be claimed: Leigh v Dickeson  Replacements if better or newer etc  Pest control & insurance are not improvements: Forgeard v Shanahan Unless— (Brickwood v Young (improvements made by predecessor in title— resumed by council  subsequent title holder could claim allowance)) o Agreement to the contrary o there is a common obligation to effect repairs: Leigh v Dickeson (statutory authority requiring something to be done) o end of the tenancy → an equitable lien may be asserted  Successors in title may claim for improvements made by previous co- owner, since they would have paid more for their share because of the improvements: Brickwood v Young (improvements made by predecessor in title—resumed by council  subsequent title holder could claim allowance) Calculation of Allowance • Whichever is lower— Birdwood v Young o Cost of making the improvement (eg McMahon v Public Curator) o The enhanced value of the land • Where ‘improvements’ decrease value of the land → co-owner making alterations liable for devaluation: Marriot v Franklin (Converted house into 2 units—value ↓ $5k  Loss recoverable from co-owner making alterations) • Adjustment allowed where improvements to property increased profits: Squire v Rogers (providing accommodation, improvements, outgoings—spent $100k but increased only by $15k due to cyclone Tracey  improvements leading to profits taken into account) • Claim made for improvements → counterclaim may be made for occupation fee: Forgeard v Shanahan; Rickwood v Young; Ryan v Dries (← he who seeks equity must do equity) Termination [I] CONVERSION TO T ENANCY IN SEVERALTY • Tenancy in common—[A | B  X] o transfer to a single person o Court order  sale of property and proceeds → distributed according to shares or physical subdivision of the land and certain co-owners registered; or  order for partition • Joint tenants—survivorship [A—B  X] 5 (5) Co-ownership Andrew Trotter LWB244 Property B = Where joint tenants die → remaining joint tenant has tenancy in severalty o Murder → murderer holds estate on trust for the beneficiaries of the deceased joint tenant: Re Thorpe; Public Trustee v Hayles o Effect of mortgages— Shannon’s Transfer  Mortgaging co-tenant dies → joint tenants take land free of mortgage || mortgagee has claim against estate [A[←M]—B  B]  Non-Mortgaging co-tenant dies → joint tenants take land free of mortgage || mortgagee has claim against estate [A[←M]—B  A[←M]] o Effect of lease— Wright v Gibbons  Death of JT—normal rule of survivorship | lease survives the death [(A—B)←L  B(←L)] [II] EVERANCE OF JOINT TENANCY [A—B  A | X] There are three methods of severance that will terminate a JT: Williams v Hensman 1. Alienation 2. Mutual Agreement 3. Course of dealings 1. Alienation rd (a) Alienation to a 3 party o If one party sells their interest in a JT to a third party → JT severed [A—B  A | X] o If there are 3 or more parties, remaining parties hold as JT [A—B—C  A—B (⅔) | X (⅓)]  If co-tenant dies, rule of survivorship applies [A—B (⅔) | X (⅓)  A (⅔) | X (⅓)] o Formalities—  At law—evidentiary writing: s59 PLA; and registration: s181 LTA  In equity—Part Performance: Regent v Millet (b) Alienation to another co-owner o Alienation to a co-owner destroys unity of time & title → severs JT: Wright v Gibbons [(A→B)—B—C  B (⅓) | B—C (⅔)] o Can achieve complete severance if A transfers to B and B back to A. [B (⅓) | (B→A)—C (⅔)  A (⅓) | B (⅓) | C (⅓)] o Formalities—  At law—evidentiary writing: s59 PLA; and registration: s181 LTA  In equity—Part Performance: Regent v Millet (c) Alienation by gift • If registered → Valid assignment at law → severs JT: s181 PLA • If not registered → equity will not perfect an imperfect gift: Milroy v Lord (5) Co-ownership 6 Andrew Trotter LWB244 Property B BUT equity will give effect to the assignment if— o Consideration has been provided: Everett o Donor has done everything that needs to be done—remaining can be done by donee: s200 PLA; Corin v Patton (wife transferring joint tenancy interest to
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