Property – Beneficial joint tenancy – Severance – Deceased parents purchasing family home as joint legal owners – Rebuttable presumption that property held on trust for themselves as joint tenants in equity – Parents making “mirror wills” providing for treatment of property in their deaths – Issues arising between claimant beneficiaries and defendant executor as to beneficial interests in property – Whether joint beneficial tenancy severed on making of wills – Claim allowed
A and J were married for over 60 years and had four sons. In 1983, they bought a property known as 29 Beverley Place, Springfield, Milton Keynes, Buckinghamshire. The conveyance was silent as to the beneficial interests but the rebuttable presumption was that equity followed the law and the joint legal owners held on trust for themselves as joint tenants in equity.
In 2003, A and J executed “mirror” wills, which appointed the surviving spouse as executor, with a trust of the family home for the surviving spouse for life with remainder on trust for the four sons and the residue to the surviving spouse or, in the event of the second death, as an accretion to the remainder of the property trust.
A died in 2016. Thereafter, J made a new will appointing the defendant as sole executor and giving 75% of J’s residuary estate to him, the rest being shared among the other sons. J died in April 2020, aged 91. Probate of his estate was granted to the defendant and the property was sold in March for £500,000.
Issues arose relating to the beneficial interests in the property. The claimants said that, in making their 2003 wills, A and J had severed the beneficial joint tenancy; thereafter they held the legal title as joint tenants upon trust for themselves as tenants in common in equal shares. Accordingly, when A died, her half share devolved according to her own will, instead of passing automatically to J by survivorship and her half share was divided between the four sons. If there was no severance of the beneficial joint tenancy, then the entire beneficial interest in the property survived to J on the death of A, and the defendant would in effect obtain 75% of the value of the house as well as the rest of J’s residuary estate.
Held: The claim was allowed.
(1) Since 1925, a joint tenancy might be severed in equity in the following ways: in the same manner as a joint tenancy of personal estate could have been severed prior to 1926; by notice in writing to the other joint tenants; by the act of some third party; by the acquisition of another estate in the land; and by unlawful killing: see Megarry and Wade: The Law of Real Property, 9th edition at paragraph 12-036.
A joint tenancy of personal estate could be severed before 1926 by: an act of any one of the persons interested operating upon his own share creating a severance as to that share; by mutual agreement; and by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.
In the present case, the claimants relied on: (i) notice in writing under section 36(2) of the Law of Property Act 1925; (ii) a mutual agreement between A and J to achieve severance; and (iii) a course of dealing between A and J treating their beneficial joint tenancy as severed.
(2) The physical absence at trial of a notice of severance was not fatal to the claim that severance was effected by such a notice. It was simply a question of fact, whether the court was satisfied on the evidence that the notice was in fact signed and given in accordance with section 36(2).
The court was not required to reach a conclusion of fact on the basis of certainty but of simple probability, that is, that it was more likely than not (more than 50% likely) that such and such a thing happened. Here the evidence of the claimants was cogent in support of the proposition that A and J did sign a notice of severance. The absence of any such notice to be found after death was a matter to take into account, but it was not decisive.
Taking all matters into consideration, there was no doubt that the balance of probability came down in favour of holding that A and J signed a notice of severance, which could not now be found.
(3) In any event, there were indications that A and J actually agreed to sever their joint tenancy, whether they signed a notice or not. It was not necessary that such an agreement be in writing. The evidence was more than sufficient to satisfy the court that on the balance of probabilities A and J agreed, at about the time of making the 2003 wills, to sever the beneficial joint tenancy in their house: Burgess v Rawnsley [1975] 2 EGLR 107 applied.
(4) Although a joint tenancy might be severed by a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common, it would not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. The course of dealing did not have to be between the joint tenants themselves but it had to be sufficient to intimate to the other joint tenants that the one engaged in that course of dealing intended henceforth to treat the joint tenancy as a tenancy in common: Williams v Hensman (1861) 1 John & H 546 applied.
On the evidence, the court was satisfied that there was a course of conduct, in particular, the making of the mirror wills, which showed that each party made clear to the other that that one desired that their property should no longer be held jointly but in common.
Therefore, the beneficial joint tenancy in the property was severed before the death of A in 2016, and the property was thereafter held by them as joint tenants at law on trust for themselves as beneficial tenants in common. On A’s death, the legal title vested entirely in J by right of survivorship, but still on trust for himself and his wife’s estate as tenants in common. That meant that her half share passed under her will. During J’s lifetime, he had a life interest in that half share, but on his death that half share passes to their four sons in equal shares.
Alex Troup (instructed by Hugh James LLP) appeared for the claimants; The defendant appeared in person.
Eileen O’Grady, barrister
Click here to read a transcript of Dunbabin and others v Dunbabin
