Memorandum signed by husband and wife empowering husband to sell jointly-owned matrimonial home held to amount neither to an assignment to him of her beneficial interest nor to a severance of the beneficial joint tenancy–Remarks of importance concerning law and practice of severance generally
This was a
claim by Mrs Angela Nielson-Jones, formerly Todd, against Mr Edgar Warwick
Fedden, co-trustee with her of a fund representing the proceeds of sale of the
Old Rectory, Kirby Wiske, Thirsk, Yorkshire, and the three executors of her
late husband, Roger Alexander Todd, for a declaration that she was absolutely
entitled to the fund in question.
Mr R Scott
(instructed by Williams & James, agents for Barber, Robinson & Co, of
Harrogate) appeared for the plaintiff; Mr C Aldous (instructed by Kingsley,
Napley & Co) for the first defendant; and Mr M Essayan (instructed by
Slaughter & May) for the second, third and fourth defendants.
Giving a
reserved judgment, WALTON J said that in 1971 Mr and Mrs Todd were separated and
the marriage was heading for dissolution. But it was a civilised situation, and
there was no question of parsimony on the part of Mr Todd being responsible for
the breakdown; he had given his wife £20,000 in securities and placed the
matrimonial home, the Old Rectory, Kirby Wiske, in joint names, beneficially as
well as legally, although he had provided all of the purchase price. Mr Todd
was then still living in the house and it was obvious that he would have to
find a smaller home. He discussed the question of sale with his wife, and the
result was a memorandum, signed by both, dated August 31 1971:
‘[The
husband] to use his entire discretion and freewill to either sell the Old
Rectory, Kirby Wiske, and employ the proceeds realised to his new home, if it so
is decided to sell, in order to provide a home of substance for his children
when visiting to stay and himself to live in and, perhaps, to work from if it
be not the Old Rectory, Kirby Wiske. Not applicable to domestic contents.’
The first two
questions to be considered, in the light of the family background, were (i) was
that memorandum an assignment by Mrs Todd to her husband of her beneficial
interest as a beneficial joint tenant, (ii) alternatively, did the memorandum
amount to a severance of her interest as a beneficial joint tenant? Whatever else was doubtful, it was clear that
the memorandum was intended to give Mr Todd carte blanche as to selling
the property, and he duly exercised the authority so given him by entering into
an agreement for sale of December 15 1971 at a price of £20,000. Formally, Mrs
Todd was a party to the agreement, but there was no doubt that it was
negotiated entirely by or on behalf of Mr Todd alone.
Whatever the
parties might have intended, and whatever the true construction of the
memorandum, read in the light of all admissible surrounding evidence, might be,
its precise meaning and effect were far from clear to the parties’ legal
advisers, and so, from about mid-September 1971 onwards, the parties’ legal
advisers were in negotiation about the financial affairs of the parties. So far
as Mrs Todd was concerned, she had made it quite clear that she wanted her
financial position entirely separated from that of Mr Todd, and it seemed plain
that he reciprocated that approach to the overall position. Looked at in that
light, both of them had made it perfectly plain that they were looking forward
to an ending of the joint tenancy in the proceeds of sale of the property.
However, there were without prejudice negotiations being carried on between
them all the time, which negotiations it was admitted never resulted in any
actual agreement. During the course of those negotiations, Mr Todd required
some additional finance for removal expenses from the Old Rectory, and by
agreement between himself and Mrs Todd, they each took £200 out of the deposit
paid by the purchaser of the Old Rectory. It had further been stated that out
of this deposit there were also paid two small bills, one of Mr Todd’s and one
of Mrs Todd’s, both for work at the Old Rectory, by agreement of the parties.
The third question arose out of the negotiations and the attitudes taken up by
the parties in the course of those negotiations, coupled with the payments out
of the deposit. Did they, in any shape or form, have the effect of severing the
beneficial joint tenancy, if the memorandum did not have any effect beyond
giving Mr Todd authority to sell on behalf of his wife and himself?
To complete
the history, he (his Lordship) must add that Mr Todd died suddenly on March 21
1972. Mrs Todd appointed the first defendant, Mr Fedden, as a co-trustee with
her in order to enable the sale into which she and Mr Todd had entered to be
completed, and completed in due course it was. The present dispute,
accordingly, related to the purchase-money, or rather, having regard to the
payments out, to the balance of the purchase-money. Probate of Mr Todd’s will
was on October 19 1972 granted to the second, third and fourth defendants.
Under that will the residue of Mr Todd’s estate went on discretionary trusts
for the benefit of his four children, now aged between fourteen and eight. Mrs
Todd remarried on March 24 1973 and became Mrs Nielson-Jones, but it would be
convenient to continue to refer to her as Mrs. Todd.
On the first
question, there was no dispute as to the law. It depended simply upon the
intention of the parties, or, rather, since this would be an act of pure bounty
on her part, on the intention of Mrs Todd. ‘The language is immaterial if the
meaning is plain’ (per Lord Macnaghten in Wm Brandt’s Sons & Co
v Dunlop Rubber Co Ltd [1905] AC 454 at 462). The vital words alleged to
be dispositive out of the document were: ‘[The husband] to use his entire
discretion . . . to . . . sell the Old Rectory . . . and employ the proceeds
realised to his new home . . . in order to provide a home for . . . himself to
live.’ With considerable hesitation, he
(his Lordship) had come to the conclusion that these words were not
sufficiently clear to constitute an assignment. Doubtless, if one assumed that
the parties had determined to separate out their financial affairs, one could
step by step produce the answers that yes, the intention was that Mr Todd could
have used as much as he required of the proceeds of sale, and yes, there would
be no point in taking the conveyance of the new property into the joint names
since all hope of the marriage continuing had come to an end. But this was, to
his (Walton J’s) thinking, beside the point. It might have been the obvious
thing to do, but it never was done; and in his opinion, all that the memorandum
did, so far as this first point went, was to agree that the
for the purpose of purchasing a new house, but without any agreement as to the
ownership of the new house.
The questions
of severance involved in the other two questions must, to some extent, be dealt
with together. Persons could be joint tenants only if the three unities of
possession, interest, and title were present. It was customary, following Blackstone,
to add the unity of time to the commencement of title, but there were
exceptions to this requirement in the case of conveyances to uses or in the
case of wills (see per Lord Hatherly, then Page-Wood V-C, in Kenworthy
v Ward (1853) 11 Hare 196). In order to effect a severance before the
1925 legislation came into force, it was necessary to destroy one of the three
unities. Section 36 (2) of the Law of Property Act 1925 was a rather elliptic
piece of legislation, but since it was not in dispute that the methods of
severance of a joint tenancy in personal estate before 1926 were precisely the
same as the methods of severance of a joint tenancy in real estate (see Williams
on Personal Property, 18th ed (1926) p 524), the final effect of this
subsection was merely to add another method, the method of notice in writing or
other acts effectual in equity, to the ways in which the severance of a joint
tenancy in real estate might be effected. Why this highly convenient method of
severance was not also extended to personal estate, he (his Lordship) was at a
loss to understand. This disparity led to a highly ingenious argument on the
part of Mr. Essayan to the effect that it would be so highly inconvenient if
this really were the law–because presumably once the real property had been
sold in exercise of the trust for sale it became converted into personal
property–that one must read section 36 (2) as really declaratory of the law, so
that the same methods were available in all cases. From there, counsel went on
to submit that severance in general was much easier than had previously been
thought. While he (Walton J) was unable to accept counsel’s analysis, the point
raised was a very valid one: severance by notice was possible only where a legal
estate, not being settled land, was vested in joint tenants beneficially. Once
there had been a sale, that condition no longer applied, so that severance
after sale apparently could not be effected by notice. This was obviously very
inconvenient.
If, as had
already been held, the memorandum was not an assignment of Mrs Todd’s interest
in the proceeds of sale of the house to her husband, could it nevertheless be
read as a severance of their joint beneficial interests? Was it an agreement to the effect that each
of them thereafter was to be solely entitled to his and her respective one-half
share in such proceeds? With the best
will in the world, he (his Lordship) found himself wholly unable to give the
memorandum such a construction. It was in fact rather easier to read the
memorandum as an assignment than as a severance, so that as he could not give
it the first construction, almost a fortiori he could not give it the
second. It appeared to him that the document dealt solely with the use by Mr
Todd of the whole of the proceeds of sale, and that with regard to ownership,
use was wholly ambiguous: hence, it could not be implied from the fact that Mr
Todd was to have the use of the whole of the money either that title thereto
was assigned to him or that he was entitled to have his own half absolutely,
and Mrs Todd her own half share absolutely.
There remained
the third point: was it possible, either from the correspondence alone, more
particularly from the determination therein manifested by both parties that their
respective financial affairs were going to be kept separate, whether or not
coupled with the fact that they were both negotiating as to what precise share
of the proceeds of sale each should take, and whether or not coupled with the
actual distributions out of the deposit paid by the purchaser of the Old
Rectory, to say, in accordance with the established authorities, that there was
a sufficient course of conduct by Mr and Mrs Todd as to lead to the implication
either (i) of an agreement to sever, and hence a severance, or (ii) of a
declaration by either of them of an intention to sever, which declaration,
submitted Mr Essayan, was also an established method of severance? As to (i), he (Walton J) thought that when
parties were negotiating to reach an agreement, and never did reach any final
agreement, it was quite impossible to say that they had reached any agreement
at all, certainly not an agreement to sever, merely because they had, in the
course of those negotiations, reached an interim agreement for the distribution
of comparatively small sums of money. As to (ii), he assumed in favour of Mr
Essayan that the correspondence did indeed disclose an unequivocal declaration
by Mr Todd to the effect that he wished to sever the joint tenancy so as to make
himself master of a one-half share of the net proceeds of sale of the property.
The question then was, could such a declaration–a unilateral declaration–ever
be effective to sever a beneficial joint tenancy? It appeared to him (his Lordship) that, in
principle, there was no conceivable ground for saying that it could. So far as
he could see, such a mere unilateral declaration did not in any way shatter any
one of the essential unities. Moreover, if it did, it would appear that a
wholly unconscionable amount of time and trouble had been wasted by
conveyancers of old in framing elaborate assignments for the purpose of
effecting a severance, when all that was required was a simple declaration.
The question
was not untouched by authority. In Moyse v Gyles (1700) Prec Ch
124 one joint tenant made a deed of gift of his moiety to his wife, with the
expressed intention of severing the joint tenancy, in order to make provision
for her. As the deed was made in favour of the wife, it was void at law; and
the deed being made without consideration, it was held that equity could not
relieve. Again in Partriche v Powlet (1740) 2 Atk 54 it was quite
clear that Lord Hardwicke LC regarded severance as only effected (if one left
out of account the acquisition of a mergeable interest) by either (i) an
agreement to that effect, or (ii) actual alienation. Down to Re Wilks: Child
v Bulmer [1891] 3 Ch 59 it was fair to say that the whole current of
authority was against severance by means of such declaration as was now
envisaged. With great respect, he (Walton J) felt that in Hawkesley v May
[1956] 1 QB 304 Havers J had, in deciding as he did that a letter written by
the plaintiff’s sister was a sufficient act on her part to constitute a
severance of a joint tenancy, entirely misapprehended the judgment of Lord
Hatherly (then Page Wood V-C) in Williams v Hensman (1861) 1 John
& H 546. The first method of severance of which Lord Hatherly was talking
was actual alienation, or something equivalent thereto. Havers J appeared to
have been very poorly assisted by counsel on this point, for they did not cite
any of the relevant authorities to him, so far as the report showed. It was
also very difficult to understand the reasoning on which his conclusion was
based, in that having regard to the decision in Walmsley v Foxhall
(1870) 40 LJ Ch 28 which he himself quoted, it appeared that as soon as any
income became payable to joint tenants of corpus, there was an automatic
severance as regarded such income. Hence, how a mere direction to trustees to
pay such already automatically-severed income into a separate bank account
could conceivably relate to a severance of corpus, he (his Lordship) failed to
understand. Of course, this was, so far as the judge was concerned, a merely
minor matter, because he immediately proceeded to put the severance on an
entirely irreproachable footing, namely the payment-out to the sister of her
share of the funds in September 1942, which obviously smashed the unity of
possession.
In Re
Draper’s Conveyance [1969] 1 Ch 486, Plowman J unfortunately applied the
dictum of Havers J to a case between husband and wife. In those proceedings the
wife issued a summons under section 17 of the Married Women’s Property Act
1882, asking for a determination of all questions between herself and her
husband in respect of the interest of each of them in the property, which was
of course the former matrimonial home, and an order that the property be sold
and the proceeds distributed in accordance with their respective interests.
Plowman J held that the summons, coupled with the wife’s affidavit, operated in
equity as a severance. Once again, none of the relevant cases were cited to the
judge; Re Wilks, in particular, should have been drawn to his attention.
Since he (Walton J) had already concluded that Havers J’s dictum
when blandly repeated in Re Draper’s Conveyance. In the result, he held
that Mrs Todd, now Mrs Nielson-Jones, had become, by survivorship, beneficially
entitled to the whole of the net proceeds of sale of the former matrimonial
home, the Old Rectory, Kirby Wiske, save to the extent to which such proceeds
had already been distributed. He answered question 1 posed by the originating
summons accordingly.
