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					                               CO OWNERSHIP


                         LECTURE ON 27 JULY 2005


Note:      Students should read Chapter 14 of Land Law by Peter Butt (4th
           Edition) and should also find and read the sections and cases
           referred to in the Subject Guide commencing on page 13. These
           notes are not a substitute for reading the text and considering the
           cases.


There are two ways in which property can be owned by co-owners:

       Joint tenancy
       Tenancy in common.

The incidents of ownership attaching to each of these ways are quite
different and need to be fully understood to appreciate the need for care to
be taken in dealings with both real property and personal property.

Joint tenancy

In a joint tenancy each of the joint tenants has an entitlement to the whole
property. There is no distribution of any particular share of the property to
any of the joint owners and no joint owner can say that any part of the
property belongs to that joint owner.

The 2 features that characterise a joint tenancy and separate it from a
tenancy in common are:

       The four unities
       The right of survivorship

The four unities

Unity of title

The interests of joint tenants must be created in the same instrument or
dealing. It is not possible to create a joint tenancy between co-owners who
acquire their interests by separate instruments or dealings. The creation of
interests by separate instruments or dealings results in the creation of a
tenancy in common.

So if A & B purchase land by a transfer saying that they are joint tenants
then they will be joint tenants. If B subsequently sells to C then A & C will
hold as tenants in common in equal shares. It is not possible without a
further conveyance of an interest in property to have them end up as tenants
in common in unequal shares.

* See Trustee Act s.9 for an exception for Trustees.
                                                                            2


Unity of interest

The interests of the joint owners must be identical in nature, extent and
duration.

Joint owners cannot have unequal shares in the property and must hold
interests that have the same legal status.

An owner of an interest in fee simple cannot be a joint tenant with the owner
of a leasehold interest. An owner of an interest in fee simple cannot be a
joint tenant with the owner of an interest for life.

Unity of possession

This requires that the co-owners be entitled to possession of the whole
property, to be enjoyed together with the other co-owners.

There is no claim for any particular part of the land.

Unity of time

This requires that the interests of all joint tenants vest at the same time.
This is usually satisfied if the interests are created at the same time.

Right of survivorship

This is an essential feature of a joint tenancy. If there is no right of
survivorship then there cannot be a joint tenancy. If a joint tenant dies then
the property remains in the ownership of the other joint tenants because
they have always been entitled to the whole property.

Rather than saying that a surviving joint tenant has acquired the interest of
the joint tenant who died, it is perhaps more correct to say that the interest
of the joint tenant who dies has been extinguished. The interest of a
deceased joint tenant is no interest at all, and there is nothing that forms
part of the estate of the deceased joint tenant.

The right of survivorship in the surviving joint tenant cannot be defeated by
the joint tenant who dies leaving his or her interest by will.

Section 25 of the Conveyancing Act provides that Corporations can hold
interests as joint tenants. If the company is dissolved then the right of
survivorship comes into effect.

Identifying who might be a survivor can be difficult particularly where
several people are killed in one event and it is not possible to accurately
determine who died first (or last!).

Section 35 Conveyancing Act provides that where it is impossible to tell, the
older person dies first and the younger dies second.

There are exceptions to the section.

       Only applies to title to property.
                                                                                 3


        Only raises a presumption, rebuttable by evidence that the deaths
        occurred in a particular order, not according to seniority.
        Only applies where the death of the person is known to have
        occurred, and is not presumed.

The difficulties are considered in the English case of Hickman v Peacey and
the Australia case of Halbert v Mynar.

In Hickman v Peacey [1945] AC 304 a basement air raid shelter was blown
up by a high explosive bomb. At the time of the explosion there were five
persons in the shelter as follows:-

(1)   Mabel Price-Jones, 52, the occupier of the house;
(2)   her daughter;
(3)   Elizabeth Sarah Parke, 70, housekeeper for Randolph Grosvenor;
(4)   Randolph Grosvenor, 73, the first testator; and
(5)   Edward Grosvenor, 66, the second testator

The difficulty in the case occurred because the Will of (4) left property to (5) if
he were “surviving at the date of my decease” and also to (3). The Will of (5)
left property to (1), (2) and (3) if they survived him.

The Court was asked to determine whether under the English Law of
Property Act 1925 the deaths occurred “in order of seniority”. Cohen J at
first instance held that there was no evidence that they died simultaneously
and that they must be presumed to have died in order of seniority. The
Court of Appeal reversed this decision, holding that their deaths were
simultaneous.

The matter was then heard by the House of Lords. The House of Lords held
“that in the absence of such evidence (that is, evidence to show whether any
of the deceased had survived the others) they had died in circumstances
rendering it uncertain which of them survived the other or others within the
meaning of s184 of the Law of Property Act 1925 and that accordingly in the
administration of their estates by the executors of the respective Wills, the
younger of the deceased should be deemed to have survived the elder.

An inference, drawn from the facts, that they died simultaneously would not
make the section inapplicable and in any case would not be justified on the
facts disclosed.”

In the Australian case of Halbert v Mynar [1981] 2NSWLR 659 the operation
of Section 35 of the Conveyancing act was considered.

In that case a Grant of Probate of the last will and testament of John
Charaus was made on presumption of death only. The Grant stated
“Deceased presumed to have died: On or after 7th June 1972.”. It was
necessary to apply to the Court for leave to distribute the Estate and for
directions as to those parts of the Will that should be complied with in those
directions.

John Charaus was married once only to Emily Charaus in about 1939 there
being one child of the marriage, Blanka Olga, born on 2 June 1945. Blanka
married Mirek Mynar on 3 April 1971.
                                                                            4



On 7 June 1972, John Charaus and Blanka disappeared and have not been
seen or heard since.

The Court considered whether s.35 can be applied where one of the deaths is
presumed under the Common Law. After considering several cases, Waddel
L J found that s.35 did not apply where one of the deaths is presumed under
the Common Law. He said:

     “It is unlikely that the legislature intended the Section to determine
     arbitrarily the order of death of persons whose deaths may have been
     separated by many years.”

As John Charaus and Blanka disappeared in June 1972 and Emily Charaus
(John‟s wife) died in October 1973, it is difficult to see how the Court could
have come to a conclusion that he was presumed to have died between June
1972 and October 1973 when there was no evidence before the Court that
he had died at all and the Grant of Probate of his Will was made on the
presumption of death after a period of 7 years from June 1972 elapsed.

Tenancy in common

In contrast to a joint tenancy, a tenancy in common has the co-owners
owning interests in the land in proportion to their interest. If co-owners are
tenants in common in equal shares then they each own a one half interest in
the property.

If they own unequal shares then they own the property in the proportions
they are stated as holding in the property. Eg three quarters/one quarter.

The share of a tenant in common is said to be an “undivided” share. It is a
separate share but not a physically divided share.

Creation of Co-ownership

Before the Conveyancing Act 1919 the common law presumed that a
conveyance to two or more persons created a joint tenancy. This
presumption could be displaced by specific words such as “a one half
interest to each of A & B”

Section 26(1) of the Conveyancing Act provides that:

     “In the construction of any instrument coming into operation after the
     commencement of this Act a disposition of the beneficial interest in any
     property whether with or without the legal estate to or for two or more
     persons together beneficially shall be deemed to be made to or for them
     as tenants in common, and not as joint tenants.”

Unless the exceptions in 26(2) apply, conveyances or transfers without
words specifying whether the purchasers hold as joint tenants or tenants in
common, are interpreted according to the section. The property will be held
as tenants in common in equal shares.
                                                                             5


At paragraph [1419] Butt discusses the relationship between s.26 of the
Conveyancing Act 1919 and s.100 (1) of the Real Property Act 1900.

It is the practice of the LPI not to register a transfer that does not show the
tenancy. It will be the subject of a requisition.

There has been discussion concerning whether s.26 only applies to
beneficial (equitable) interests in land. In Delehunt v Carmody (1986) 161
CLR 464 the High Court discussed this issue and confirmed that courts
should follow the lead of the legislature and favour tenancies in common
over joint tenancies even if the circumstances are not entirely within the
section.

In Delehunt v Carmody (1986) 161 CLR 464 Francis Carmody and Ethel
Delehunt contributed equally to the purchase price of a property that was
registered only in the man‟s name. They agreed that the land would be
owned in equal shares and that at some time in the future it would be put in
both names. The matter came before the Court after Francis Carmody died
intestate and letters of administration were granted to Heather Carmody, his
estranged wife.

At first instance Wooton J held that there was a trust and that Francis
Carmody held the property upon trust for himself and Ethel Delehunt as
joint tenants in equity. On appeal, the Court of Appeal disagreed and found
that there was a trust but that it was a trust for the parties in equal shares
as tenants in common.

The matter then came before the High Court to consider the question “that
the Court of Appeal erred in holding that s.26 of the Conveyancing Act 1919,
as amended (NSW) displaced the equitable presumption that where two
persons advance equally the purchase monies for a property they hold as
equitable joint tenants”.

In his judgment, Gibbs, CJ made the following comments:

     “There seems to be no authority which decides the precise question
     whether, when a resulting trust was raised in favour of purchasers who
     had contributed to the price in equal shares, the beneficial interest of
     the purchasers would have been that of joint tenants or of tenants in
     common. However, it would seem to follow, by analogy with the case
     where a conveyance is made to all the contributors, that (apart from the
     effect of s.26 of the Conveyancing Act) they would be equitable joint
     tenants, and this conclusion is accepted as correct in Hanbury and
     Maudsley, Modern Equity, 12th ed. (1985), p. 254 and Ford and Lee,
     Principles of the Law of Trusts (1983), p. 966. It would further seem to
     accord with the principle that if there were an express trust in favour of
     A and B who had contributed equally to the purchase price of the
     property the subject of the trust, equity, again following the law, would
     have held (before the amendment effected by s.26) that A and B took
     beneficially as joint tenants. In either case slight circumstances would
     have been enough to indicate that it was intended that there should not
     be a joint tenancy. Equity had a dislike for joint tenancies, because
     their effect was to make the ultimate ownership of the property depend
                                                                                6


     on the chance of survivorship, and, in the words of Snell’s Principles of
     Equity, 18th ed. 1982), at p. 37:

          “There is here no equality except, perhaps, an equality of chance.”

     “It would be indeed surprising if the rules of equity required the courts
     to follow a rule of the common law that no longer existed and in doing
     so to reach a result which equity generally tried to avoid. However the
     doctrines of equity are not so inflexible. If equity follows the law, it will
     follow the rules of law in their current state. Where, as a result of
     following the law, a beneficial joint tenancy would formerly have been
     created, now a beneficial tenancy in common will (in New South Wales)
     come into existence. In other words, although s.26 of the Conveyancing
     Act has no direct application to the present case, its indirect effect is to
     require it to be held that there was a resulting trust for the purchasers
     in an interest of the same kind as that which would have resulted if the
     land had been conveyed to them at law, i.e. as tenants in common. Of
     course if these views are wrong, and if it was only when there was a
     conveyance to purchasers who had contributed in equal shares that
     equity presumed that there was a joint tenancy, the result would be the
     same, for equity would then favour a tenancy in common and the
     beneficiaries would hold as tenants in common accordingly.”


Severance of a joint tenancy

Alienation

Severance of a joint tenancy occurs when one of the joint tenants deals with
his or her interest in the property. If A & B hold property as joint tenants
and A sells the interest in the property then B and C hold as tenants in
common in equal shares. They cannot hold as joint tenants as there is no
unity of title or unity of time.

The absence of any one of the four unities means that a joint tenancy cannot
exist.

Severance can also occur in the following cases:

        A sale or conveyance for no value of the interest of a joint tenant to
         another person

        The bankruptcy of one of the joint tenants. This causes a severance
         in equity only as the trustee in bankruptcy becomes entitled to the
         property of the bankrupt upon the making of a sequestration order.
         For the trustee to be entitled in law it is necessary for the trustee to
         register as proprietor on the title.

Upon the alienation of the share of a joint tenant the new owners hold as
tenants in common. The shares held are undivided as previously discussed
but the extent of the share can be dependent upon the number of joint
tenants and the interest alienated. If there are 3 joint tenants and one of
them sells an interest then that purchaser owns a share as tenant in
common in an undivided one third share with the remaining 2 joint tenants.
                                                                            7


The remaining joint tenants remain joint tenants, there relationship with
each other does not change.

If it were intended to have that arrangement from the start then the following
wording would be necessary in the conveyance or transfer.

     “A and B as joint tenants of a two thirds share as tenant in common
     with C”

In Wright v Gibbons (1949) 78 CLR 313 three sisters, Olinda Gibbons, Ethel
Rose Gibbons and Bessie Melba Gibbons were registered as joint tenants in
land at Hobart. By a Memorandum of Transfer Ethel Rose Gibbons
transferred to Olinda Gibbons her one-third share and Olinda Gibbons
transferred to Ethel Rose Gibbons her one-third share in the land.

Upon registration the Certificate of Title was endorsed to show that the three
owners were registered as tenants in common in equal shares. Bessie Melba
Gibbons who survived both Olinda and Ethel Rose, approached the Court for
a declaration that the Memorandum of Transfer did not sever the joint
tenancy and that she became solely entitled to the land as proprietor.

The matter came before the High Court on appeal and the Court held that
the Transfer did effect a severance of the joint tenancy and that Olinda,
Ethel Rose and Bessie Melba were tenants in common upon registration of
the Transfer.

In Corin v Patton (1990) 169 CLR 540 Ronald John Patton and his wife
Annette Patton owned land as joint tenants. On 12 July 1984, Mrs Patton,
who was terminally ill signed a Memorandum of Transfer by which she
purported to transfer to her brother, John Geoffrey Corin, her interest in the
land. The transfer was expressed to be subject to a mortgage to a bank
which held the Certificate of Title. Mrs Patton also executed a Deed of Trust
and a new Will leaving her estate to her children in equal shares.

On 17 July 1984 Mrs Patton died at which time the transfer had not been
registered. Mr Corin claimed a one-half interest in the property pursuant to
the transfer and Mr Patton claimed the property as surviving joint tenant.
Various matters were considered by the High Court which held that the
execution of the transfer did not sever the joint tenancy. The majority of the
Court found that “she had not done all that was necessary for her to have
done to effect a transfer, because she had not authorised the mortgagee to
hand the Certificate of Title to the Transferee”.

The Court then considered the effect of s.96 of the Conveyancing Act which
entitles a mortgagor to have the relevant Certificate of Title lodged at the
office of the Registrar General to allow the registration of any authorised
dealing by the mortgagor with the land. „Mortgagor‟ is defined as including a
person entitled to redeem a mortgage.

The Court considered that s.96 did not enable the transferee (Corin) to
compel the mortgagee to produce the Certificate of Title because he was not
a person entitled to redeem the mortgage until there had been a transfer of
the joint tenant‟s interest. As Mrs Patton had not requested the bank to
produce the Certificate of Title before her death, the transfer could not be
                                                                               8


registered and Mr Patton was entitled to the whole of the property as the
surviving joint tenant.

Alienation in equity

Where a joint tenant enters into a legally binding contract to sell or alienate
the joint tenant‟s interest in property then the contract itself severs the joint
tenancy in equity. The legal interest is not severed but the beneficial interest
is.

Gift

An alienation of the interest of a joint tenant by gift also severs the joint
tenancy. The gift must be complete. In law this occurs when a conveyance or
transfer is registered and the legal estate passes. In equity, this occurs when
the donor of the gift has done everything the donor needs to do to convey or
transfer the interest. If the donor has handed to the donee a signed, stamped
conveyance or a transfer signed, stamped and in registrable form then equity
says that the gift is complete in equity and the proprietors must hold the
land in trust for the remaining proprietors and the donee.

Corin v Patton (see above)

Partial interests

A mortgage by one joint tenant of the interest of that joint tenant may sever
the joint tenancy depending on whether the land is under old system title or
Torrens title.

Old System

A mortgage under the old system is a conveyance of the legal estate to the
mortgagee and accordingly as a conveyance of a legal interest must sever the
joint tenancy and mean that the mortgagor is a tenant in common with the
other joint tenant or joint tenants.

If the joint tenant who has given the mortgage dies then under old system
the estate of the deceased is entitled to the interest held by the mortgagee
under the mortgage (subject to repayment).

Real Property Act

Under Torrens title the granting of a mortgage is only the creation of a
charge and does not bring about any transfer of the legal interest of the joint
tenant.

If a joint tenant of Torrens land dies then the doctrine of survivorship applies
and the interest over which the mortgage was held fails and the mortgagee
as has no interest in land to pursue.

In Lyons v      Lyons [1967] VR 169 the Court considered a claim by the
executors of   the estate of William Lyons that they were entitled to an interest
as tenant in   common with Hazel Lyons as a result of a severance of the joint
tenancy by      the conduct of the applicant and her late husband or by
                                                                             9


agreement or by William granting a mortgage over his estate and interest in
the land to Adelaide Gray.

After considering the issues, the Court held that where land is held under
the Victorian equivalent of the Real Property Act a joint tenancy is not
severed by a mortgage given by one of the joint tenants and the mortgagee‟s
security in the land lapses if the mortgagor dies before the surviving joint
tenant.

Leases

The grant of a lease by one joint tenant does not sever the joint tenancy. It
creates a situation where the joint tenancy is “suspended” until the
expiration of the lease. The lessee cannot preclude the other joint tenant or
tenants from access to the property as the lease does not amount to a lease
by the other joint tenants.

If a joint tenant who has leased an interest to a lessee dies during the term
of the lease then the rent is payable to the executors of the estate of the
deceased joint tenant.

Upon the expiration of the term the reversion passes to the surviving joint
tenant or tenants. This issue was also considered in Lyons v Lyons (see
above).

Agreement

A joint tenancy may be severed by agreement between the parties. In equity
the severance is complete as soon as the agreement is made, but at law the
need for registration of a document exists.

It is often the case that there is no formal document entered into and the
courts have consistently held that the existence of a formal document is not
necessary to effect a severance.

This question was considered in Corin v Patton (see above) where the effect
of s.41 (1) of the Real Property Act 1900 was considered. This section
provides “no dealing, until registered …, shall be effectual to pass any estate
or interest in any land under the provisions of this Act…” The High Court
held that the provisions of s.41 (1) did not prevent the passing of an
equitable estate to the donee under a completed transaction. Having already
decided that Mrs Patton had not done all that was necessary to affect a
transfer because she had not authorised the mortgagee to hand the
Certificate of Title to the transferee, the Court found that no equitable
interest had passed to Corin.

In the factually confusing case of Williams v Hensman (1861) 70 ER 862,
Sarah Creak died leaving £4,000.00 to her trustee to fund a legacy of
£200.00 per year for a Mrs Hensman and providing for the principal sum to
be divided between Mrs Hensman and eight children on her death.

The question for determination by the Court was whether the joint tenancy
created by the gift in the Will had been severed by the various events that
                                                                            10


occurred following the death. Vice-Chancellor Sir W. Page Wood said in his
judgment:

     “The question here is whether the circumstances in evidence are
     enough to justify the Court in holding the interests of the legatees to
     have been severed.

     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. The right of each joint tenant is a
     right by survivorship only in the event of no severance having taken
     place of the share which is claimed under the jus accrescendi. 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 dealing sufficient to intimate that the interests of all
     were mutually treated as constituting 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
     effected, as happened in the cases of Wilson v Bell and Jackson v
     Jackson.”

     “But I think that the deed of May 1835 was a dealing which cannot be
     reconciled with any view, except that of the parties to it thenceforth
     holding their interests as tenants in common.”

     “I am of opinion, therefore, that the continuance of a joint tenancy is
     not reconcilable with the covenant of indemnity to which I have
     referred; and I must, therefore hold that all the shares were severed.”

In Burgess v Rawnsley [1975] 1 Ch 429 a property was purchased by a Mr
Honick and a Mrs Rawnsley. While the property was purchased by Mr
Honick in his name, the purchase price was paid by Mr Honick and Mrs
Rawnsley equally. The house consisted of 2 flats, an upstairs flat and a
downstairs flat, with Mr Honick occupying the downstairs flat. It was Mrs
Rawnsley‟s intention that she would occupy the upper flat. Shortly after the
Contract was signed Mr Honick instructed his solicitor to have the property
conveyed into the joint names of himself and Mrs Rawnsley and this
occurred. At this point the legal estate and the beneficial interests were both
held as joint tenants. The following summary of the facts is set out in the
judgment of Lord Denning, M R:

     “In July 1968, being disappointed in his hopes of marriage, Mr Honick
     wanted Mrs Rawnsley to sell him her share in the house. He came to
     an agreement with her, as he thought, to buy it for £750. He went to
     his solicitor and said to him “Mrs Rawnsley is not going to marry me,
     but she has agreed to take £750 for her interest.” He handed the
     conveyance to the solicitor for him to draw up the necessary document.
                                                                            11


     The solicitor thereupon wrote to Mrs Rawnsley on July 1, 1968, this
     letter:

          “Dear Mrs. Rawnsley.
          “re 36 Queens Road, Waltham Cross.

          “Mr. Honick called to see us today stating that you are agreeable to
          convey to him your interest in this property for the sum of £750.
          Will you please confirm that this is so and we will then finalise the
          matter and ask you to call upon us to collect those moneys and to
          sign the final deed.”

     Next day, however, Mrs Rawnsley went to the solicitors and said she
     was not willing to sell. She was not satisfied with £750 but wanted
     £1,000. Mr Honick told his daughter that Mrs Rawnsley was going “to
     ask a thousand which he was not going to pay.”

     A few days later Mr Honick went to the solicitor and told him to leave
     things as they were. He asked for the conveyance back and got it.
     From that time onwards things went on as before, with Mr Honick in
     his house alone, and she in hers; but both visited one another, being
     quite friendly. He paid all the rates and outgoings of his house. This
     went on for three more years until he died on October 26, 1971.”

Considering the law and earlier cases at some length, Lord Denning came to
the following conclusion:

     “I think there was evidence that Mr Honick and Mrs Rawnsley did come
     to an agreement that he would buy her share for £750 . That
     agreement was not in writing and it was not specifically enforceable.
     Yet it was sufficient to effect a severance. Even if there was not any
     firm agreement but only a course of dealing, it clearly evinced an
     intention by both parties that the property should henceforth be held in
     common and not jointly.”

Conduct

A joint tenancy may be severed by conduct sufficient for the courts to
determine that the parties no longer consider themselves to hold the
property as joint tenants.

This is illustrated by Burgess v Rawnsley [1975] 1 Ch 429 where the
negotiations for H to purchase the interest in the property of R were
undertaken but did not lead to a finalisation.

Court Order

An order of the court can effect a severance if the order is that one joint
tenant must sell or transfer his or her interest to the other joint tenant.

Where the court order is by consent the true position is that the severance is
by agreement.
                                                                                12


ENDING CO-OWNERSHIP

Partition

A partition of property severs a joint tenancy. The partition can be the result
of an agreement of the parties or as a result of an application to the Court
for an order that trustees for sale be appointed under s.66G of the
Conveyancing Act.

This section enables the Court to order that the property be sold or divided
between the co-owners with any consequential adjustment of money.

The section gives a discretionary power to the Court to order that a sale or
partition take place. The Court does not have to exercise that discretion and
may decide to leave things as they are.

It is important to note subsection (1A). This provides for proceedings to stay
on foot even if the co-owner who has commenced the proceedings dies
during the course of the proceedings. The section is expressed to apply
“despite, in the case of a joint tenancy, the rule of survivorship.”

Trustees for sale appointed by the Court have certain obligations:

       To sell at the best price possible, usually after obtaining a valuation.
       To sell the property expeditiously, given the obligation to obtain the
        best price

Section 66H of the Conveyancing Act imposes a mandatory duty to consult
the co-owners and give effect to their wishes as far as possible.

In Pannizutti v Trask (1987) 10 NSWLR 531 the Court of Appeal dealt with
an Appeal from an Order made by Young, J striking out a cross-claim for
partition of certain property. In his judgment Kirby, P said:

       “Although it might be said, with his Honour, that this cross claim as
       the other, has difficulties of a practical kind any may not succeed,
       especially in the face of the plainly expressed desire of one of the equal
       co-owners that that the property be sold, it cannot be said that the
       claim has no proper basis in law. Nor can it be said that, with proper
       evidence to support the assertion, the appellants‟ endeavour to prove
       that partition would be beneficial to both co-owners is so “hopeless” or
       “misconceived” that the court would be authorised now to strike it out
       without ever allowing the appellants the opportunity of litigating their
       claim.

       The respondent complains that this will mean that any co-owner, no
       matter how small his interest, will always be able to delay the sale of
       property which is co-owned by making application for partition, thereby
       frustrating or delaying the wishes of all other co-owners for sale. The
       answer to this complaint is twofold. First, if, as I believe, the statute so
       provides, it is the duty of the court to give effect to its requirement. In
       any case, if parties have the association of co-ownership in relation to
       the property that fact is itself a practical protection, in the normal case,
       against needless delay in a sale which is to clearly the benefit of the co-
                                                                              13


     owners. Secondly, the court always retains its power to deal with
     frivolous or vexatious proceedings or proceedings which are an abuse of
     process. Where appropriate the court can also expedite the hearing of
     matters in dispute. Peremptory dismissal without a hearing on the
     merits is reserved for exceptional circumstances. The present was not
     a case for such relief.”

Agreement

Co-owners may at any time end the arrangement by agreement.
This is similar to severance by agreement .

Alienation to self

Paragraph [1453] of Butt deals with this matter. It is essential for a deed if it
is intended to sever an interest in old system land and also for notice to be
given.

For Real Property Act land a transfer may be prepared and registered
pursuant to s.97 of the Real Property Act 1900.


RIGHTS BETWEEN CO-OWNERS

Improvements

At common law a co-owner who spent money on improving the property
could not compel the other owners to contribute to the cost or to reimburse
the co-owner incurring the expense.

In equity the courts will enforce rights for payment against other co-owners
if the result of not making an order is that the other co-owners benefit
unfairly from the expenditure.

An action for partition or sale can include an application for an adjustment
to be effected. It is common for an action for partition or sale to be met by a
cross claim for contribution for work carried out or money expended on the
property.

Where a claim can be proven the amount of the adjustment can never be
more than the depreciated value of the improvements made to the property.
This is referred to in paragraph [1423] of Butt as being “the lesser of (1) the
amount actually expended or (2) the „present value‟ of the improvements or
repairs. By „present value‟ is meant the amount by which the improvements
or repairs enhance the value of the land at the date the co-ownership is
terminated (or the suit is brought, as the case may be).” It is pointed out
that no account is taken of inflation. The amounts to be claimed are the
actual amounts at the date of the work being carried out and not the
present-day value of that amount.

In McMahon v Public Curator of Queensland [1952] St R Qd 197
Macrossan C.J. referred to the case of Leigh v Dickeson and said:
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     “The principle was thus stated by Cotton, L.J. in Leigh v Dickeson
     ([1881] 15 Q.B.D. 60, at p.67):

     “No remedy exists for money expended in repairs by one tenant in
     common, so long as the property is enjoyed in common; but in a suit
     for a partition it is usual to have an inquiry as to those expenses of
     which nothing could be recovered so long as the parties enjoyed their
     property in common; when it is desired to put an end to that state of
     things, it is then necessary to consider what has been expended in
     improvements or repairs: the property held in common has been
     increased in value by the improvements and repairs; and whether the
     property is divided or sold by the decree of the court, one party cannot
     take the increase in value, without making an allowance for what has
     been expended in order to obtain that increased value; in fact, the
     execution of the repairs and improvements is adopted and sanctioned
     by accepting the increased value.”

Macrossan C.J. then referred to a later English case that referred to Leigh v
Dickeson and said:

     “It is clear, I think from this, that the amount to which a co-owner
     making improvements may be entitle against another co-owner in
     taking the accounts in a partition action, is limited to the actual cost of
     the improvements, and if the present value of the increment to the
     property is less than the actual cost of the improvements, he is further
     limited to that present value.”

In this case the Judge refused to award the remaining co-owner an
occupation rent against the deceased co-owner‟s estate as the house had
been totally constructed at the cost of the deceased co-owner and the area
occupied by the house was very small when compared to the total area of the
lands occupied as a diary farm.

This issue was further considered in the matter of Squire v Rogers (1979)
39 FLR 106 where Squire and Rogers were co-tenants of land in Darwin
under a perpetual lease. The lease required that in one year there be
buildings on the land of a total value of not less than $15,000.00. In June
1963 Rogers left Australia and voluntarily left the land in the occupation of
the Squire with the expectation that Squire would spend the money
necessary to comply with the covenant contained in the lease. Squire did so
by constructing flats and other improvements and carried on a business of
providing accommodation in flats, rooms and caravans and by letting
caravan sites. Rogers returned to Australia in 1976 and commenced
proceedings for the sale of the estate of the appellant and the respondent
and that an account be taken. The Court found as follows:

     “(3) The receipts for which the appellant (Squire) would be liable to
          account are limited to those receipts which can properly be
          regarded as rents and revenue of the common property itself as
          distinct from profits which the appellant may have made by his
          use and occupation of the common property.

     (4)   Upon the taking of the account the appellant should be allowed:
           (a) an amount to recompense for his work and labour in deriving
                                                                            15


          any receipts included in the amount; (b) an amount in respect of
          any receipts of rent and profits which had been applied to the
          making of improvements in accordance with a general
          arrangement, if any, between the appellant and the respondent.

    (5)   Upon sale the appellant was to be allowed full reimbursement of
          all expenditure upon capital improvements whose use had
          contributed to the receipts the subject of the account, to the extent
          that a credit for such expenditure had not already been allowed
          upon the taking of an account.”

In Forgeard v Shanahan (1935) 35 NSWLR 206 the Court of Appeal
determined that the rights of one co-owner against another should be as
follows:

    “(2) (By Meagher JA with whom Mahoney JA agreed; Kirby P
         dissenting) In common law partition and similar cases, the rights
         of one co-owner against another co-owner of real property, when
         one has been in occupation and the other has not, include:

          (a)   the payment of an occupation fee by the co-owner in
                possession but only where:

                (i)    the other co-owner has been excluded from occupation;
                       or

                (ii)   the owner in occupation claims an allowance in respect
                       of improvements

          (b)   the entitlement to an allowance in favour of a co-owner in
                occupation who effects improvements (which is more than
                mere repairs and maintenance) is for the lesser of the value of
                the enhancement of the property and the cost of effecting the
                repairs, where the non-occupying owner seeks an occupation.

    (3)   Accordingly, in determining the rights of joint tenants for the
          purposes of making orders pursuant to the Conveyancing Act
          1919, s 66G, where one owner has left the jointly owned property
          but has not been excluded from occupation:

          (a)   insurance premiums and expenses for pest control incurred
                by the occupying co-owner cannot be claimed as
                improvements which are recoverable from the other owner;

          (b)   an occupation fee should be charged to any occupying owner
                but the fee should not exceed the value of improvements
                made by the occupying owner; and

          (c)   an allowance should be made in favour of the owner making
                mortgage repayments, water and council rates, but such
                allowance arises from a claim for contribution for payments
                made by one debtor of a debt jointly owed and not because of
                the co-ownership of real estate.”
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Occupation fee

Each co-owner is entitled to occupy the whole of the property along with any
other co-owner who also chooses to do the same. Accordingly, there is
generally no right for one co-owner to claim an occupation fee against
another co-owner who is in possession of the property. The situations in
which an occupying co-owner is liable for an occupation fee are set out in
paragraph [1426] of Butt.

There are 2 cases specifically dealing with this issue. In the first of these,
Luke v Luke 36 SR (NSW) 310, John Luke died leaving his estate subject to
a life tenancy in favour of his widow with the remainder to his two daughters
in equal shares as tenants in common. John Luke‟s widow died in 1915 and
Laura, one of the daughters, died in 1920. From that date until the trial in
1936, Ada (the other daughter) occupied the property. In 1929, Ada was
removed as a trustee of the estate and the Public Trustee appointed. In
1932, Ada Luke became a bankrupt and in the case before the Court an
order was sought that the Public Trustee be authorised to sell the real estate
and that Ada Luke be charged an occupation rent. After considering
numerous authorities Long Innes C J in Eq. cited the matter as follows:

     “The conclusion to which I have come is that the contention that the
     defendant Ada Luke should be charged with an occupation rent in this
     case is neither supportable on principle, nor established by authority,
     and that , in fact, the balance of authority is to the contrary.

     I make the order for sale as asked, and declare that the defendant Ada
     Luke is not chargeable with an occupation rent.”

The matter had also been considered in the case of Leigh v Dickeson (1884)
15 QBD 60 referred to earlier. In this 1884 English case a tenant of three-
quarters of a property acquired the remaining one-quarter of the property as
owner. He then became a tenant in common with the lessor of the three-
quarters share and continued on that basis until the lease expired some 10
years after he became a tenant in common. Correspondence took place
concerning the basis of his continued occupation but no agreement was
reached. After the death of the owner of the three-quarter‟s share, her
executors sought to recover rent from the expiration of the lease. One of the
Appeal Judges, Cotton, L.J. expressed his view as follows:

     “The plaintiffs have brought an action to recover rent, and the
     defendant by his counter-claim raises the question whether one tenant
     in common is liable to another for the cost of repairs.

     I think that the plaintiffs are entitled to succeed in their claim for rent.
     It has been urged that one tenant in common cannot recover against
     another for rent, for either of them may enjoy the possession. But in
     the present case the defendant, although he himself was tenant in
     common, had possession of the whole of the house by virtue of a lease
     from his co-tenant in common. A correspondence ensued, as to the
     terms under which he should remain in occupation of the house.
     Under these circumstances, I think that the defendant must be
     considered as holding exclusive possession of the house upon the terms
                                                                             17


     of the lease, and therefore, that he is liable for rent at the same rate as
     was reserved by the lease.”

     “As to the claim for improvements, it has been urged that no tenant in
     common is entitled to execute improvements upon the property held in
     common, and then to charge his co-tenant in common with the cost.
     This seems to me the true view, and I need not further discuss the
     question as to improvements. As to the question of repairs, it is to be
     observed that when two persons are under a common obligation, one of
     them can recover from the other the amount expended in discharge or
     fulfilment of the common obligation; but that is not the position of
     affairs here: one tenant in common cannot charge another with the
     cost of repairs without a request, and in the present case it is
     impossible even to imply a request.”

Improvements are not limited to physical improvements and can include
mortgage payments because mortgage payments increase the equity in the
property and the amount available for distribution.

Rates

Section 560 of the Local Government Act provides that co-owners are jointly
and severally liable for the payment of rates. Also applies where there are
lessees.

Rents and Profits

In equity, an account for profits lies as part of a suit for partition.

There is also an argument that the equity court can still exercise an inherent
jurisdiction for an account between co-owners. If this jurisdiction still exists
then the court can order only an account of those profits received from third
parties. The fact that one co-owner has had a greater benefit from actual
occupation of the property does not found an action.

In an action for an account of profits, a claim for the cost of improvements
will be dealt with by the court making an order for the whole of the cost of
the improvements made to earn the income.

I have already mentioned the cases of Squire v Rogers (1979) 39 FLR 106
and Forgeard v Shanahan (1935) 35 NSWLR 206.

In Henderson v Eason (1851) 117 ER 1451 considered the issue of an
account for profits earned by Edward Eason during his sole occupancy of a
property he owned as tenant in common in equal shares with Robert Eason.
It was held by the Court of Exchequer Chamber as follows:

     “That, if there be tenants in common, and one tenant alone occupy the
     property, he is answerable as bailiff to his cotenant in an action of
     account, under stat. 4 Ann. c. 16, s.27, if he receive more than comes
     to his just share, but not otherwise. And he is answerable only for
     what he receives more than comes to his just share. He receives more
     than comes to his just share, within the meaning of the statute, if he
     receives money or something else, given or paid by another, which the
                                                                          18


    cotenants are entitled to simply by their being tenants in common, and
    if the amount which he so receives and keeps is more than in the
    proportion to his interest as such tenant. He does not receive more
    than comes to his just share within the statute if he merely has the sole
    enjoyment of the property, even though by the employment of his own
    industry and capital he makes a profit by the enjoyment, and takes the
    whole of such profit. Therefore, in an action of account, proof of such
    enjoyment and receipt of the whole profits is not evidence of the
    occupying cotenant being bailiff within the meaning of the statute, nor
    presumptive evidence of his having received more than came to his just
    share.”

In a much more recent Australian case of Rees v Rees [1931] SASR 78, four
brothers owned a farm in equal shares as tenants in common. Two of the
four brothers farmed the land and sought an order that they were entitled to
the whole of the produce from the land and the money derived from that
produce and that they were not liable to account for any portion thereof to
the defendants. The judgment of Richards, J referred to Leigh v Dickeson
and also to Henderson v Eason and explained the judgment in Henderson v
Eason as follows:

    “In delivering the judgment of the Court of Exchequer Chamber in that
    case Parke B. fully explained the statute of Anne and pointed out that,
    in circumstances such as those of the present case, the occupying and
    cultivating co-owner does not “receive more than comes to his just
    share or proportion.” In such a case “he receives in truth the return for
    his own labour and capital, to which his co-tenant has no right.” The
    point raised by the defence in the present action; that in farming the
    land the plaintiffs did so as trustees for themselves and the defendants,
    is dealt with in the note in Lindley on p. 37, “nor can one co-owner, by
    leaving the management of the property in the hands of the other,
    impose upon him an obligation of a fiduciary character.” The authority
    cited for this proposition is Kennedy v de Trafford, [1897] A.C. 180 (see
    especially per Lord Herschell at p. 189), which is cited by Collins M.R.
    in In re Biss, [1903] 2 Ch. 40, at p. 57, for the statement that “tenants
    in common do not stand in a fiduciary relation to each other.” There is
    nothing in the circumstances of the present case giving rise to any such
    relationship concerning the management of the farm or the produce
    thereof, and it seems clear that the plaintiffs were entitled to the
    declarations and order for which they asked.”


In Ryan v Dries [2002] NSWCA 3 (6 February 2002) the Court of Appeal
considered issues of accounting in respect of occupation, accounting in
respect of repairs, maintenance, and outgoings, including mortgage
repayments.

The judgment in this case refers to Luke v Luke, Forgeard v Shanahan and
Brickwood v Young, all of which are on our case list and many other cases
that are not.