The court rectifies a notice of severance of a joint tenancy.
Where land is transferred into joint names, the legal and beneficial interests are held separately. The legal estate vests in the co-owners as joint tenants, but they may have different beneficial interests in the land. The co-owners may hold the property on trust for themselves as joint tenants, in which case the property will automatically vest in the survivor. Alternatively, they may hold the land on trust for themselves as tenants in common, in which case, the parties will each own distinct shares in the property, which may or may not be equal, which will pass in accordance with the parties’ wills or under the rules that apply on intestacy.
Lee v Lee [2018] EWHC 149 (Ch) concerned an application to rectify a notice severing a joint tenancy, which was given to enable a married couple to make wills leaving half of their farm to their son. The farm bungalow and other land was to pass to the survivor under the rules of survivorship and, on the death of the survivor, the remaining half share of the farm would pass to their son, with the bungalow and other land.
In order to achieve their wishes, the owners of the farm, who were joint tenants, needed to turn themselves into beneficial tenants in common of the land that was to be disposed of by their wills. The landowners relied on their solicitors to prepare the paperwork – and did not realise that it fell short, leaving parts of the farm, registered under different title numbers, unsevered. As a result, on the death of the farmer, several parcels of land accrued to his wife by survivorship, outside the will.
Where land is transferred into joint names, the legal and beneficial interests are held separately. The legal estate vests in the co-owners as joint tenants, but they may have different beneficial interests in the land. The co-owners may hold the property on trust for themselves as joint tenants, in which case the property will automatically vest in the survivor. Alternatively, they may hold the land on trust for themselves as tenants in common, in which case, the parties will each own distinct shares in the property, which may or may not be equal, which will pass in accordance with the parties’ wills or under the rules that apply on intestacy.
Lee v Lee [2018] EWHC 149 (Ch) concerned an application to rectify a notice severing a joint tenancy, which was given to enable a married couple to make wills leaving half of their farm to their son. The farm bungalow and other land was to pass to the survivor under the rules of survivorship and, on the death of the survivor, the remaining half share of the farm would pass to their son, with the bungalow and other land.
In order to achieve their wishes, the owners of the farm, who were joint tenants, needed to turn themselves into beneficial tenants in common of the land that was to be disposed of by their wills. The landowners relied on their solicitors to prepare the paperwork – and did not realise that it fell short, leaving parts of the farm, registered under different title numbers, unsevered. As a result, on the death of the farmer, several parcels of land accrued to his wife by survivorship, outside the will.
Was it possible to put things right by rectifying the notice of severance? The court confirmed that it was. There have been numerous cases involving rectification of bi-partite transactions. However, it is possible to rectify unilateral transactions as well, and there was no reason why the rules should not apply to a notice of severance that did not correctly record the true intentions of the notice giver(s). In fact, the notice in this case had been signed by both joint tenants and could, therefore, properly be regarded as the product of a bi-partite agreement.
The judge noted that several conditions must be satisfied before the notice could be rectified: Racal Group Services Ltd v Ashmore [1995] STC 1151. First, there must be convincing proof to counteract the evidence of a different intention represented by the document itself. Secondly, there must be a flaw in the written document such that it does not give effect to the grantor’s intentions, as opposed to the grantor merely being mistaken as to the consequences of what he has signed. Thirdly, the specific intentions of the grantor must be shown; it will not suffice to show that he did not intend what was recorded. And, finally, there must be an issue capable of being contested between the parties (even if all relevant parties consent).
Consequently, the court will not order rectification as between a grantor and a beneficiary if their rights will be unaffected and the only effect of the order will be to secure a desired fiscal objective. However, there was clear evidence showing that all these conditions had been met in this case, and there was no reason not to grant rectification.
Allyson Colby is a property law consultant
