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Property: Resolving co-ownership

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Cite as: December 2011 85(12) LIJ, p.76

The distinction between joint tenancy and tenancy in common arises with the death of one of the owners.

The recent decision in Sacks v Klein [2011] VSC 451 considered the well- known distinction between joint tenancy and tenancy in common and the impact of the death of a co-owner. It confirmed that while co-owners may be registered as joint tenants (legal joint tenants), equity may nevertheless impose an equitable tenancy in common by way of a trust.

Generally speaking, VCAT has almost exclusive jurisdiction over applications relating to co-owned land under Part IV of the Property Law Act 1958. However, pursuant to s244C(2) the courts retain jurisdiction in relation to co-ownership disputes in de facto property situations, testator’s family maintenance claims and partnership disputes. This dispute potentially came within one or both of the latter two categories, although the issue of jurisdiction was not discussed in the judgment. Indeed, no reference was made to the Property Law Act and the proceedings were conducted as an application for a declaration of trust.

The important distinction between joint tenancy and tenancy in common presents on the death of one of the co-owners. In a joint tenancy, the deceased’s interest in the property passes to the surviving owner pursuant to the right of survivorship. In a tenancy in common, the deceased’s interest passes to the deceased’s estate.

In Sacks v Klein, two brothers (D aged 30 and M aged 29) purchased a property in 1994 as an investment and were registered as joint tenants. M died in 2005 and D lodged a survivorship application and became registered as sole proprietor by survivorship. M’s administrator issued an application on behalf of M’s estate for a declaration that D held the property on trust for himself and the plaintiff as tenants in common in equal shares.

Hargrave J set out various principles discerned from previous cases:

1. where property is conveyed to two or more persons who are named as transferees without further specification as to whether they are to hold the title as joint tenants or tenants in common, they are deemed by operation of s33(4) of the Transfer of Land Act 1958 (Vic) to hold the legal estate as joint tenants. However, s33(4) of the Act does not preclude the operation of equity;

2. unless there is evidence to indicate the transferees held a different intention, equity will follow the law;

3. irrespective of the position on the certificate of title, equity may intervene to impose a tenancy in common;

4. equal provision of purchase money points to a joint tenancy;

5. where the co-owners are partners or participants in a joint undertaking, tenancy in common will prevail; and

6. a common intention by the co-owners to acquire the property as joint tenants is not conclusive.

Analysing the evidence, Hargrave J concluded that the brothers had purchased the property as a joint undertaking. The mortgage loan was made to them jointly and severally. The fact that it was D’s idea to invest in the flat was not to the point. He chose to invite M to participate in a joint purchase of the flat with the express purpose of long-term profit being made by each of them. Likewise, the fact that D assumed responsibility for the investment and arranged for the property to be leased, maintained and renovated was not to the point. Notwithstanding that M had lived overseas the entire time the property was jointly owned, he was to be regarded as a “silent partner” in a joint undertaking, a conclusion that would point to a tenancy in common, even if no formal partnership existed.

However, Hargrave J accepted that there was evidence that at the time of purchase the difference between joint tenancy and tenancy in common was explained to D and that he in turn explained it to M, who agreed that the property should be purchased as joint tenants. On this basis his Honour concluded that at the time of purchase the co-owners intended to hold the property as joint tenants.

Thus his Honour was faced with a subjective joint tenancy, based on the stated preference of the co-owners as revealed by their registration on the title, as opposed to an objective tenancy in common, based on the nature of the relationship between the co-owners. In such a situation the stated intention (as revealed on title) of the parties will prevail unless “there is evidence, even slight evidence, to indicate an intention to divide the property between the joint tenants”. His Honour found that there was evidence of such an intention, being :

1. the property was an investment;

2. the income and expenses were divided equally; and

3. M had acknowledged a “moral obligation” to D’s family in the event of D’s death.

The plaintiff’s application for a declaration of trust was successful.



Russell Cocks is the author of 1001 Conveyancing Answers. For more information go to www.russellcocks.com.au.

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