In order to advise Phillip, Claire and New Ventures plc in relation to enforceability of their rights in the property (the Property), it will be necessary to consider the complex legal system governing co-ownership of land.With regard to property ownership in law, section 1(6) of the Law of Property Act 1925 (LPA) asserts that "a legal state is not capable of subsisting or of being created in an undivided share in land". Accordingly, the sole mechanism for legal co-ownership of land is by joint tenancy. A valid joint tenancy in law must satisfy the ancient requirements of the four unities namely; unity of possession, unity of interest, unity of title and unity of time .
[...] Although subsequently, both Claire and Samuel invested in undertaking improvements to the Property, they still have unity of interest under the joint tenancy rule and as such and have equal shares in the Property unless it can be established that the joint tenancy can be rebutted by the equitable presumption of a tenancy in common. It is clear that an express agreement to create a tenancy in common will be effective to negate a legal joint tenancy[8] and as asserted by Lord Hatherley LC in the case of Robertson v Fraser,[9] anything “which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy.”[10] There does not appear to be any such express agreement between Claire and Samuel however there are three other situations where equity will presume a tenancy in common, namely property held by business partners, co-mortgagees and unequal contributions to the purchase price. [...]
[...] However, as stated above, in the absence of further information to the contrary, the severance of the joint tenancy leads to a presumption that both Claire and Samuel have equal shares as tenants in common[26]. In light of the fact that both Claire and Samuel have beneficial interests in the Property without an express declaration of trust, the Trust of Land and Appointment of Trustees Act 1996 (TLA) imposes a trust of land, which substitutes the previous system of trusts for sale. [...]
[...] (1861) 1 J&H 546 Williams v Hensman., ibid at pg. 557-588. R J Smith., op. cit. Megarry and Wade., op.cit. [1981] CH 129. See also First National Securities Limited v Hegarty [ 1985] QB 850. See also Charles Mitchell., (1995) The Law of Subrogation. Oxford University Press. See commentary of R J Smith., op.cit. [1975] Ch 429 Ibid at pg.447. [1975] Ch 222 (1990)60 P & CR 456. Section 36(2) of the LPA prohibits the severance of a legal joint [...]
[...] KEY WORDS: Co-ownership, joint tenancy, Law of Property Act 1925, LPA 1925, Unity of Possession, Unity of Title, Unity of Time, Unity of Interest, The four unities, Survivorship, severance, Tenants in Common, Trust of Land and Appointment of Trustees Act 1996, Trust of Land, Overreaching. Blackstone, Commentaries on the Laws of England, 1765-1769. Published by University of Chicago Press. Reiterated in Stack v Dowden [2007] UKHL 2 WLR 831. Goodman v Gallant [1986] Fam 106. An express agreement for different shares on severance is effective. [...]
[...] With regard to the rights of New Ventures plc, as mentioned above the mortgage of Samuel's share in the Property constituted severance of the joint tenancy and the charge was created over Samuel's beneficial share in the Property. Claire's beneficial interest in the Property however remains unaffected by New Ventures plc[31]. Accordingly, in respect of their charge, New Ventures will become a creditor of Samuel's estate. In summary, in light of the applicable law Claire and Samuel's joint tenancy in law was severed into a tenancy in common in equity. [...]
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