House bought by man and woman as joint tenants with the idea on his side of marriage, on hers of distinct homes for each–She refuses to marry him, he will not let her into the property–Majority hold no resulting trust arises, but whole court holds that an agreement for sale of woman’s share, though unenforceable, constitutes a severance–Important points on law of severance generally
This was an
appeal by Mrs Sophie Rawnsley, of Downton Avenue, Streatham, London SW2, from a
decision of Judge Granville-Smith at Edmonton County Court on May 15 1974
declaring that a freehold house in Queen’s Road, Waltham Cross, was held on
trust by her for herself and for the respondent, Mrs Ruth Priscilla Rose
Burgess, daughter and administratrix of Albert Hector Honick deceased, in equal
shares.
Mr B K Levy
(instructed by Ellis & Fairbairn) appeared for the appellant, and Mr J F
Mummery (instructed by Bates, Son & Braby) represented the respondent.
Giving
judgment, LORD DENNING said that at Whitsun 1966 Mr Honick, a widower of 63,
went to a scripture rally in Trafalgar Square. Mrs Rawnsley, a widow of about
60, also went. He introduced himself. She said he was not much to look at. He
looked like a tramp and he had been picking up fag-ends. However, they
exchanged addresses. Next day, Mr Honick turned up at her house in Streatham
with a gift of a rose wrapped in newspaper for her. Their friendship grew
apace. She said that she was sorry for him. She smartened him up with better
clothes and went to his house. They exchanged letters which counsel described
as love letters. A few months later, Mr Honick had the opportunity of buying
the house in Queen’s Road, of which he was the tenant. He told Mrs Rawnsley
that the owner wanted £800. She said that she would go half-shares. She would
have the upper flat, he the lower flat. On December 2 1966 a contract was
signed by which the owner agreed to sell the house to Mr Honick. It must be
noticed that it was to Mr Honick alone. The price was £850. Mrs Rawnsley paid
the deposit. A little later Mr Honick instructed his solicitor to have the
house conveyed into the joint names of himself and Mrs Rawnsley. The judge
found that the reason for the house being in joint names was because Mr Honick
‘firmly believed that he was going to marry Mrs Rawnsley and that the property
would be the matrimonial home.’ But it
was clear that she was not minded to marry him. The judge accepted her evidence
that he never mentioned marriage to her and that she never contemplated
marriage. She was minded to join in the purchase so as to have a place of her
own–the upstairs flat–while he occupied the lower one.
On January 23
1967 the conveyance was executed to them both as ‘purchasers in fee simple’ to
hold ‘upon trust for themselves as joint tenants.’ Mrs Rawnsley paid £425 for her half-share of
the purchase price. The expectations of each, however, were not fulfilled. Mr
Honick’s hopes of matrimony failed, because she would not marry him, and her
hopes of the upstairs flat failed, because he would not let her have it. But
they remained good friends. 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, and told his
solicitor to draw up the necessary deed. The solicitor wrote to Mrs Rawnsley,
who went to see him and said she was not willing to sell. She was not satisfied
with £750. She wanted £1,000. From that time things went on as before, he in
his house and she in hers, but both visiting one another. He paid all the rates
and outgoings of the Queen’s Road house. On October 26 1971 he died. The
respondent, his administratrix, claimed that his estate was entitled to a
half-share in the house. But Mrs Rawnsley claimed that the property belonged to
her for her own benefit. It had been sold for £5,000, so there was a
considerable sum in dispute. There was no doubt that the legal estate in the
house was vested in Mrs Rawnsley alone. Since 1925 a legal joint tenancy could
not be severed, so on Mr Honick’s death the legal estate survived to Mrs
Rawnsley alone. The question
Rawnsley on trust for Mr Honick’s estate and herself in equal shares. She
appealed, claiming entitlement to the whole beneficial interest.
The judge
found that the conveyance was taken in joint names in contemplation by Mr
Honick that the house would be the matrimonial home. If both parties had
contemplated marriage, and the house had been taken in joint names with that
object, then when that object failed there would have been a resulting trust
for each according to their respective contributions to the purchase-price: see
Ulrich v Ulrich and Felton [1968] 1 WLR 180, 185. When the object
of a trust failed there was a resulting trust for those who contributed to it:
see Essery v Cowlard (1884) 26 Ch D 191. But what was the
position where one party contemplated marriage and the other did not? Mr Honick contemplated marriage and that the
house should be a matrimonial home; Mrs Rawnsley contemplated that they would
live in it as separate flats. But her contemplation also failed. She said: ‘I
mentioned the upper flat, but he was a man of his own laws. He made it clear that
I was not going into that house and that possession was nine-tenths of the
law.’ So the object of each failed. He
(his Lordship) thought that in such a case the result should be the same as if
a common object had failed. Where each party was disappointed, the foundation
of the trust was gone, and there should be a resulting trust in favour of each
according to their respective contributions.
A further
point was the judge’s finding that there was an agreement in July 1968 by which
Mrs Rawnsley promised to sell her share in the property for £750. There was
evidence on which this conclusion could be based, and the only question was its
effect in law. In Nielson-Jones v Fedden [1974] 3 WLR 583 Walton
J had expressed the view that no conduct was sufficient to sever a joint
tenancy unless it was irrevocable, founding himself on In re Wilks
[1891] 3 Ch 59. He (his Lordship) took a different view from Walton J’s. Equity
leaned against joint tenancies and favoured tenancies in common. The courts had
got past the old law of the four unities of interest, title, time and
possession. In Williams v Hensman (1861) 1 J & H 546 at 557
Sir William Page-Wood V-C, afterwards Lord Hatherley LC, said that a joint
tenancy could be severed in three ways, including mutual agreement and ‘any
course of dealing sufficient to intimate that the interests of all were
mutually treated as constituting a tenancy in common.’ It was sufficient if there was a course of
dealing in which one party made clear to the other party that he desired that
their shares should no longer be held jointly but be held in common. The
decisions of Havers J in Hawkesley v May [1956] 1 QB 304 and of
Plowman J in In re Draper’s Conveyance [1969] 1 Ch 486 were correct, and
that in Nielson-Jones v Fedden was incorrect. 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 was not specifically
enforceable, yet it was sufficient to effect a severance. On this ground also, the
appeal should be dismissed.
BROWNE LJ said
that in his opinion the judge was wrong in holding that the express trust in
the conveyance had been displaced and that a resulting trust had arisen. It was
impossible to say that there was a total failure of consideration where a trust
was created by two people and the purpose of one of them, not communicated to
the other, failed. Nevertheless he (his Lordship) would uphold the judgment
below on the ground that the joint tenancy was severed by Mrs Rawnsley’s agreement
to sell her share for £750, despite her subsequent repudiation and despite the
fact that the agreement might not be specifically enforceable. He (Browne LJ)
agreed with the Master of the Rolls that Lord Hatherley’s third category in Williams
v Hensman was a separate category, so that an appropriate course of
dealing was enough to constitute a severance.
SIR JOHN
PENNYQUICK said that it was plain commonsense that where a person made a
disposition in contemplation of an intended marriage and the marriage did not
in fact take place, he was entitled to have the disposition set aside on the
ground that the purpose of the disposition had failed. But where two persons
made a disposition and one only made it in contemplation of an intended
marriage there was no common purpose. Although Mrs Rawnsley’s whole expectation
failed, as Mr Honick did not allow her to occupy the upper floor of the house,
the common purpose was to occupy the house not as two tenements but as a single
tenement, the accommodation being shared in a particular manner. Accordingly
one could not treat Mrs Rawnsley’s purpose in making the settlement as having
failed in any relevant sense so as to enable Mr Honick to treat the settlement
as avoided. The judge’s second ground, however, was valid. He found as a fact
that Mr Honick and Mrs Rawnsley agreed upon the sale by her to him of her share
for £750. Once that finding was accepted the case fell squarely within Lord
Hatherley’s second rule in Williams v Hensman, mutual agreement.
He (his Lordship) saw no sufficient reason for importing the qualification that
the agreement must be specifically enforceable. The significance of an
agreement was that it served as an indication of a common intention to sever,
which it was indisputably within the parties’ power to do.
It was
submitted that Mr Honick’s mere proposal to purchase Mrs Rawnsley’s share would
operate as a severance within the third rule in Williams v Hensman,
which was stated by Lord Hatherley as follows: ‘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
intention . . . declared only behind the backs of the other persons interested.
You must find . . . a course of dealing by which the shares of all the parties
to the contest have been effected . . .’
Whether such an inference could be drawn depended on the particular
facts. The facts here fell far short of such an inference. One could not
ascribe to joint tenants an intention to sever merely because one offered to
buy out the other for £X and the other made a counter offer of £Y.
Once it had
been determined that an agreement was made, as in the present case, anything
more said on the authorities cited must necessarily be obiter, but it might be
helpful to state very shortly certain views formed in the light of the
authorities. The third rule in Williams v Hensman was not a mere
subheading of the second rule. Section 36 (2) of the Law of Property Act 1925
had radically altered the law with regard to severance by introducing an
entirely new method, namely notice in writing given by one joint tenant to the
other. Pre-1925 judicial statements, and particularly that of Stirling J in In
re Wilks, had to be read in the light of that alteration of the law. The
policy of the law as it stood today was to facilitate severance at the instance
of either party and the court should not be over-zealous in drawing a fine
distinction from the pre-1925 authorities.
The appeal
was dismissed. Leave to appeal to the House of Lords was refused.
