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TIDE CANADIAN
LA REVUE DU BARREAU
CANADIEN
AR EVIEVV
Vol. LVII^ MARCH 1979 MARS^ No. 1
SEVERANCE ®F JOINT TENANCIES
A.J. McCLEAN* Vancouver
Introdisction
A joint tenancy may be ended by severance, that is, by any act or conduct which, occurring during the lifetime' of a joint tenant, has the effect of turning the joint tenancy into a tenancy in common. 2 The same principles apply to interests in both realty and personalty, 3 but most of the decisions deal with the application of those principles to realty, and that will be the emphasis of this article. Despite the fact that joint tenancies have long been with us, there are still doubts about the operation of the common law rules on severance. In England and Canada these rules have been affected by legislation. The 1925 legislation made changes to the law of joint tenancy generally, and in one instance to severance in particular. 4 Post 1925 English cases are therefore relevant in Canada, and will be considered here, only to the extent that they throw light on the. common law principles. In Canada the common law has been
- A. J. McClean, of the Faculty of Law, University of British Columbia, Vancouver. ' It is well established that severance cannot be effected by an event taking place on or after the death of ajoint tenant. Thus a joint tenancy cannot be severed by will. Rather surprisingly the contrary was argued in Sorenson v. Sorenson, [19771 2 W.W .R. 438, at pp. 451-452 (Alta A .D .) ; not surprisingly counsel could not find any authority to support the argument. This case has been appealed to the Supreme Court of Canada. The judgment of the Supreme Court was not at hand at the date of writing. The case is referred to at various points in the article. As to the effect of joint and mutual wills see infra, pp. 21 et seq. 2 Megarry and Wade, The Law of Real Property (4th ed ., 1975), p. 404, state that strictly speaking severance includes partition, but that the term is normally used to refer to the conversion of a joint tenancy into a tenancy in common. 3 As to a possible exception see infra, p. 27. Megarry and Wade, op. cit., footnote 2, pp. 407 et seq. See further, infra, p. 27.
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modified by legislation, either expressly, or sometimes clearly, sometimes arguably, impliedly, and in some respects there is still uncertainty about the blending of common law and statute.
The starting point for any discussion of the modern law is the well-known passage in the judgment of Sir W. Page Wood V.C. in Williams v. Hensman : A joint-tenancy may be severed in three ways : in the first place. an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under thejus accrescendi. Each one is at liberty to dispose of his own interest in such a manner as to sever it from the joint fund-losing, of course, at the same time, his own right to survivorship. Secondly, a joint tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by 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 an intention, with respect to that particular share, declared only behind the backs of the persons interested.
In Burgess v.^ Rawnsley 6 Sir John Pennycuick called the^ three propositions in this passage the three "rules" and, with the proviso that too much should not be read into the word rule, this is a convenient way of referring to them. The reasons why these rules are effective to sever are clear. The first is based on the fact that generally a joint tenant, without the consent of or even notice to the other joint tenants, is as free to deal with his interest as any other owner, and may deal with it in such a way as to destroy one of the unities. If that happens it follows that the joint tenancy is severed. The second and third turn on the common intention of the joint tenants .' And, if some recent English decisions are to be believed, rules one and three may also operate on the basis of the unilateral intention, express or implied, of a single joint tenant. In theory if one of the unities is destroyed, or if the common or unilateral intentions are shown to exist, there is a severance, and nothing else need be considered. This is generally the attitude taken by the Canadian courts, and in some cases the law is so well settled on this basis that it would be futile to debate the issues further. But there are two other factors which may be thought to be relevant,
5 (l861), 1 John & H. 546, at pp. 557-558, 70 È:R. 862, at p. 867 (V. L)'. s [19751 Ch. 429, at pp. 444 et seq., [l975] 3 All E.R. 142, at pp. 151 et seq. (C .A .). r (^) Or more accurately on the common intention of any two or more or all of the joint tenants. If A, B and C are joint tenants in fee simple, all three may agree that they will henceforth be tenants in common. It is equally valid for only two of them to so agree. Those two will then become tenants in common inter se, but joint tenants vis à vis the third.
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of the article where severance based upon the presumed intention of a joint tenant is discussed. The rules in Williams v. Hensman 1° cover at least four and perhaps up to six methods of severance. It^ These can be conveniently considered by reference to the reasons for their operation. In addition, it is important to consider exactly when severance takes place. Where there is a system of registration of title, registration may be a necessary prerequisite. Either apart from or in combination with registration, it might, contrary to the general current law, be desirable to require the consent of, or at least notice to, the other joint tenants before severance can take place; and in one province consent is indeed needed. It is proposed, therefore, to proceed under the following four headings :
I. Destruction of the Four Unities-Severance at Law and in Equity. A. Dealing with the Legal Title.
'0Supra, footnote 5.
(1) Acquisition by One Joint Tenant of a Greater Interest than the Other Joint Tenants. (2) Alienation by One Joint Tenant of All or Part of His Interest. B. The Creation of Equitable Interests.
II. Agreement of the Joint Tenants-Severance in Equity. A. (^) Express Agreement, Implied Agreement, and Course of the Dealing. B. Proving the Agreement.
III. Intention of One Joint Tenant-Severance in Equity. A. Declaration of Intent. B. Presumed Intention.
IV. When is Severance Effective? A. Consent and Notice. B. Registration of Title.
11 It has also been held that there is a severance when one joint tenant murders another;Novak v. Gatien (1975), 25 R .F.L. 397 (Man .Q .B .) .It is suggested however that this issue is best seen as a problem in constructive trusts : Schobelt v. Barber (1967), 60 D .L.R. (2d) 519, [196711 O .R. 349 (H .C .) ; Re Gore (1971), 23 D .L .R. (3d) 534, (197211 O .R. 550 (H .C .) ; Re Dreger (1976), 69 D .L .R. (3d) 47, 12 O .R. (2d) 371 (H .C .).
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I. Destruction of the Four Unities--Severance at Law and in Equity. It is trite law that for a joint tenancy to exist the four unities of title, interest, time and possession must be present. If, therefore, a joint tenant deals with his interest in such a way as to destroy one of the unities, it follows that a tenancy in common has been created. 11 In some respects the law here is well settled and does not need extended discussion ; in others, while the principles are clear, their application in particular cases is a matter of debate.
A. Dealings with the Legal Estate. (1) Acquisition by One Joint Tenant of a Greater Interest Than the Other Joint Tenants. If one joint tenant acquires a greater, interest than his fellow joint tenants then the unity of interest is destroyed and a tenancy in common is created. Thus, if land is conveyed to A for life, remainder to B and C as joint tenants, and A subsequently conveys his life estate to B, (^) one moiety of the life interest will merge in B's fee simple and the other moiety will vest in B for a separate estate pur autre vie. (^) The joint tenancy in remainder in fee simple will be severed because B and C have now different interests. 13 (2) Alienation of the Joint Tenant's Interest. (i) Total Alienation. At common law when a joint tenant conveys his interest to a third party the joint tenancy is severed. The reason is that unity of title is broken. 14 If A and B are joint tenants in fee simple, and A conveys his interest to. C, B and C, taking under (^) different
1E (^) When one joint tenant disposes of his interest, in whole or in part, or acquires a greater interest than the other joint tenant, as between those then holding interests the unities that are broken are either those of title or interest. It is unlikely that the unities of time and possession can be broken by themselves. For example the mere granting of a licence to occupy, without any alienation of title, probably does not sever: cf. Re McKee and National Trust Co. Ltd (1974), 49 D .L .R. (3d) 689, at p. 694, 5 O .R. (2d) 185, at p. 189 (H .C .), rev'd on other grounds (1975), 56 D .L .R. (3d) 190, 7 O .R. (2d) 614 (C .A .). (^13) Co. Litt, 183a ; Challis, Real Property (3rd ed ., 1911), p. 88 ; Megarry and Wade, op. cit ., footnote 2, p. 407. According to these authorities a distinction needs to be drawn in the example given between a conveyance and a surrender by a life tenant. In the latter case the life estate would be destroyed, permitting an acceleration of all the remainder interests, so that the fee simple in joint tenancy would continue to exist unimpaired. (^14) This is trite law. It applies to all types of interests, legal or equitable, freehold or leasehold, and to both voluntary transfers and transfers by operation of law. Cf., as to assignments in bankruptcy Re White, [1928] (^1) D .L .R. 846 (Ont .H .C .) ; Re Chisick (1967), 62 W.W .R. (N .S .) 586 (Man .C .A .).
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doing it radically changes the nature of a joint tenancy by depriving a joint tenant of his power to sever it unilaterally. 22 (ii) Creation of Other Possessory Interests.
A joint tenant, rather than disposing of the totality of his interest, may create out of it lesser possessory interests. If he does so, in one respect only is the law certain. If a leasehold interest is held in joint tenancy and a joint tenant sublets, this severs the interest .11 If, however, a joint tenant who holds a fee simple interest grants either a life estate or a lease, the law is unclear, and is further complicated (^) by the (^) appearance of the ambiguous doctrine of suspension. Littleton stated that if a joint tenant created a life estate, and either the grantor or his co-owner died during the currency of that estate, the right of survivorship did not operate, and the heirs of the deceased co-owner succeeded to his interest. 24 Coke agreed,^ but added the^ comment^ that if the^ life tenant^ died before the joint tenants, the right of survivorship is revived on his death. This is sometimes described as a temporary suspension of the joint tenancy, and therefore of the right of survivorship, during the term of the inferior estate. 25 Such modern authority as there is favours the view that there is a severance when the life estate is granted, but the texts do not squarely face the issue of whether it is total or temporary.
(^22) There is room for debate about the precise scope of the section. Subsection (2) requires consent for the registration of an instrument which purports to "transfer the share or (^) interest" of a joint tenant. Even having regard to the (^) definition of "transfer" in s. 2(t), the language of the subsection may not extend to the following transactions : (i) the creation of legal interests other than by way of the transfer of the total interest of the joint tenant (infra, pp. 7 et seq .) ; (ii) the creation of equitable interests where there is no transfer of legal title (infra, pp. 13 et seq .) ; (iii) declarations of intent or presumed intent, so far as either of these is effective to sever at all (infra, pp. 33 et seq .). I understand that the Land Registry practice in Alberta and Manitoba is not to accept for registration a transfer by a joint tenant of his interest, unless the other tenants consent or at least are notified.^ There is no legislation authorizing this procedure, and by implication it is at odds with some of the cases: cf. (^) Sorenson v. Sorenson, supra, footnote 1; Schofield v. Graham (1969), 6 D.L.R. (3d) 88, 69 W.W .R. 332 (Alta S.C .) 23Sym's (^) Case (1584), Cro. Eliz. 33, 78 E .R. 299 (Q .B .) ; Pleadel's Case (1579), 2 Leon. 159, 74 E.R. 441 (Q .B .). (^24) Litt. 302, 303. (^25) Coke on Litt. 193a. (^) Cf. Power v. Grace, [1932) 2 D.L .R. 793, at p. 796, [19321 O.R. 357, at p. 360 (C .A .), per Grant J.A ., citing Halsbury's Laws of England (1912), Vol. 24, pp. 204-205, para. 389; see now (3rd ed., 1960), Vol. 32, p. 335, para. 523. (^26) See the cases on leases infra, footnote 29 ; Wright v. Gibbons, supra, footnote 16, at p. 330. Challis, op. cit ., footnote 13, p. 367, states that there is a complete severance, but the example given is of the death of a joint tenant during the life estate. Cheshire, Modern Law of Real Property (9th ed., 1962), p. 299, also states
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On the other hand, in the most recent Canadian decision, Sorenson v. Sorenson,"the Appellate Division in Alberta decided that at least in the case of a grant of a life estate by one joint tenant to the other there was no severance. There is a similar divergence of authority on the effect of the grant of a lease by a joint tenant in fee simple. First, Coke was of the opinion that there was no severance, but if the lessor died during the term, the surviving joint tenant took subject to the lease. "That view is supported by some of the older English authorities, which, without dealing with the question of severance as such, decide that the lease is binding on the survivor^. 29^ In Canada there has only been passing reference to this view of the law by way of dicta. 30 This doctrine is also sometimes described as involving a suspension of the right of survivorship, 31 the suspension not being a failure of the operation of the right at any time, but a delay of its full operation because of the binding nature of the lease. To distinguish it from suspension in the sense in which it was used earlier, we will hereafter refer to it as a modification of the right of survivorship. Second, it is possible that the right of survivorship is in fact suspended, that is the right will not operate at all during the currency of the lease, but if the lessee dies before any of the joint tenants, the right will be revived.^32 Third, the preponderance of the later authorities supports the view that the granting of the lease effects a complete severance. 33 In attempting to resolve these uncertainties a preliminary matter to be decided is whether like effect should be given the grant of a lease and of a life estate. Without explanation, the court in Sorenson
that there is a severance, but gives the same example. There is no reference to the point in the subsequent editions of Cheshire : see the 12th edition, 1976. Megarry and Wade, op. cit ., footnote 2, p. 405, simply state that there is a severance, with a reference to both Littleton and Coke. 2'Supra, footnote 1. (^23) Coke on Litt. 185a. See also Challis, op. cit., footnote 13, p. 367; Halsbury, op. cit., footnote 25 (3rd ed ., 1960), Vol. 32, p. 335, para. 523. 29 Anon. (1560), 2 Dyer 187a, 73 E.R. 412 (Q .B .) ; Harbin v. Barton (1595), Moore (K .B .) 395, 72 E.R. 650 (Q .B .) ;^ Whitlock v. Horton (1605), Cro. Jac. 91, 79 E.R. 781 (K .B .) ;Smallman v. Agrobrow (1617), Cro. Jac. 417,79 E.R. 356 (K .B .) ; Harbin v. Loby (1629), Noy. 157, 74 E.R. 1118 (K .B .). "Power v. Grace,^ supra, footnote 25, at pp. 796 (D .L .R .), 360 (O .R .) ; Sorenson v. Sorenson, supra, footnote 1, at p. 446. Both cases refer to the first edition of Halsbury, op. cit., footnote 25 (1912), Vol. 24, p. 205, para. 389. "Cf., e.g. Freize v. Unger,[1960] V .R. 230, at p. 243 (S .C .). (^32) This was apparently the opinion of Dixon J. in Wright v. Gibbons, supra, footnote 16, at p. 330.^ See the comment in In re Shannon's Transfer, [1967] Tas.L .R. 245 (S .C .). (^33) Clark v. Clark (1694), 2 Vern. 323, 23 E.R. 809 (Ch.) ; Cowper v. Cowper (1865), 6 B. & S. 464, at p. 472, 122 E.R. 1267, at p. 1270 (Q .B .) ; In re Armstrong, [19201 1 I.R. 239 (Ir. C.A .) ; Megarry and Wade, op. cit., footnote 2, p. 405.
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continue to operate easily is beside the point. Nor should intention be looked at, for severance by destruction of one of the unities operates as a matter of law. It is suggested, therefore, that on a purely conceptual analysis the grant of a life estate or a lease should bring about a severance. If one were to speculate about intent it affords no clear guidance. On the one hand a joint tenant who grants a life estate or a lease may not have intended to sever, and it could be argued that it is unjust to nonetheless decide a severance has taken place, particularly if the joint tenancy has been expressly created in the first instance. On the other hand if the life estate or lease is granted to a third party it may be argued that to protect the grantee the right of survivorship must be effected in some way, and that it is not therefore unfair to attribute an intention to sever to the joint tenant in order to achieve that end.
The point is obviously a fine one. It is submitted, however, that the grant of a life estate or a lease by a joint tenant ought to bring about a complete severance. That result flows from a conceptual analysis and arguments based on intent or unfairness do not clearly offset it. Sorenson v. Sorenson" should be regarded as either wrongly decided on this point, or as being confined to its particular facts.
(iii) Creation of Non-Possessory Interests. At common law a distinction has to be drawn between the effect of the granting of a mortgage and the creation of other non- possessory interests. In jurisdictions where there is a system of registration of title that distinction may have disappeared, but it is still convenient to accord mortgages separate treatment.
The creation of non-possessory interests, other than a mortgage, does not affect the four unities and so does not sever. This is the case, for example, where a joint tenant creates against his interest such common law encumbrances as rent charges 37 or easements. The only unity which could possibly be affected is that of interest,
"Ibid. It should be noted that the court did decide that the joint tenancy was severed by a declaration of trust made by one of the joint tenants; see infra, p. 13. The case is a veritable encyclopedia of the law of severance for it also deals with severance by alienation of title, by the creation of a charge, by a course of dealing and by a declaration of intent, including the commencement of a partition action. As we have already seen, counsel argued that a joint tenancy could be severed by a will ; supra, footnote 1. The case might also have discussed severance by the acquisition of a greater interest for it could have been argued that that was the effect of one joint tenant granting a lease to the other. (^37) Litt. 286. 3' (^) Smith, Real and Personal Property (6th ed ., 1884), pp. 268-269 ; Re McKee and National Trust Co. Ltd, supra, footnote 12, at pp. 196 (D .L .R .), 620 (O .R .).
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but although encumbrances do touch on interest, they do not destroy it as would, for example, the creation of a life estate. This general principle has been adopted by the^ courts^ in applying legislation on registration and execution of judgments. In Re Young 39 the issue before the court was whether a judgment registered against one of two joint tenants severed the joint tenancy. Section 35 of the British Columbia Execution Act^40 provides that, on registration, ajudgment forms a lien and charge on all of the lands of the judgment debtor in the same manner as if he had charged them under his hand and seal. The British Columbia Court of Appeal decided that it followed from this section that there is no alienation of title on the registration of the judgment, but merely the creation of an encumbrance, and consequently there is no severance. Therefore, when the judgment debtor dies the surviving joint tenant takes by right of survivorship, free from the effect of the judgment.^41 In Power v. Grace" the Ontario Court of Appeal decided that the delivery of a writ of execution to the sheriff did not sever a joint tenancy. The Execution Act 43 in Ontario^ provided that the^ writ bound the land when delivered to the sheriff, and the sheriff was thereby authorized to execute, that is to seize and sell the land. It was held that the delivery, while it bound the land, in the sense that the sheriff now had the right to sell it, did not in itself destroy any of the unities. The Court of Appeal in effect adopted^ and^ applied^ the principle stated by Widdifield Co. Ct J. in the court below:^44
39 (1968), 70 D.L .R. (2d) 594, 66 W.W .R.^ 193 (B .C .C .A .). See also Re Brooklands Lumber & Hardware Ltd and Simcoe (1956), 3 D.L .R. (2d) 762, 18 W.W .R. 328 (Man .Q .B .) ; Re McDonald and The Queen (1969), 8 D.L.R. (3d) 666, 71 W.W .R. (N .S .) 444 (B .C .S .C .). 4o R.S .B .C ., 1960, c. 135. (^41) Re Young, supra, footnote 39, overruled Re Application of Penn (1951), 4 W.W .R. 452 (B .C .S .C .) which had held that the registration of a judgment brought about a temporary suspension of the joint tenancy. (^42) Supra, footnote 25. 43 R.S .O ., 1927, c. 112, s. 9. See now R.S .O ., 1970, c. 152, s. 10. (^44) [19321 1 D.L .R. 801, at p. 802 (Ont. Co. Ct). These cases leave unsettled the question of when in the process of execution severance takes place. In Power v. Grace, supra, footnote 25, at pp. 798 (D .L.R .), 362 (O.R .), GrantJ.A. said that severance takes place either at the commencement of the execution process by the sheriff advertising the sale or by the actual seizure of the lands. In Re Brooklands Lumber & Hardware Ltd and Simcoe, supra, footnote 39, at pp. 766 (D .L .R.), 332 (W .W .R .), it was also suggested that the appropriate date was the commencement of proceedings under the Judgment Act.The point may turn on the provision of relevant legislation and rules of court. As a matter of general principle it may be argued that there is no severance until the land is sold. Until that date the judgment debtor could arrest the execution process: cf. British Columbia Law Reform Commission, Working Paper No. 22 : The Execution of Judgments: Execution Against Land (1976), p. 46.
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mortgage is now simply a charge and not a conveyance, there is no destruction (^) of the unities (^) when it is (^) granted, and therefore no severance. In so deciding, it rejected two other arguments based on the language of the Act. First, it was argued that because, under section 74(2), a mortgage still creates an interest in land severance must take place. But there are interests which sever, and interests which do not; simply to say that a mortgage creates an interest in land is not in any way decisive of the issue. Second, section 81 of the Act, as does other comparable legislation, provides that, despite the change of form, the mortgagee is still to have all the rights and remedies which he would have had at common law. It was argued that this meant that the mortgagee was still in substance vested with title, and therefore it followed that the mortgage severed the joint tenancy. The court held that the section did not go as far as vesting title in the (^) mortgagee, and that that was the crucial question in deciding (^) if there had been a severance. The decision (^) is, it is suggested, a correct application of the common law rules based on the destruction of one of the four unities. In these cases on non-possessory interests (including mortgages) the Canadian courts have generally been content to do no more than ask whether or not one of the unities has been broken. They have not enquired into the relation between their decisions and the intent, expressed or implied, of the joint tenant,^ or into the impact of the decision on third parties. These are, however, matters which do require consideration, and they will be dealt with later. 49
B. The Creation of Equitable Interests. In the first instance, in deciding when the creation of an equitable interest will effect a severance, equity follows the law. If there are created equitable interests, corresponding to legal interests whose transfer or creation will sever at law, there will be a severance in equity. In Re Mees° a father who was a joint tenant in fee simple, declared himself trustee for his son of his interest. The British Columbia Court of Appeal held that this brought about a severance. If the father had transferred his interest directly to the son, or had created the equitable interest by transferring legal title to a third party as trustee, there would have been severance at law. The court decided that the same result should follow in equity if the equitable interest were created by way of a personal declaration of trust. But equity goes even further than the common law. It is well established that a contract or a covenant which is specifically
49 Infra, pp.^33 et seq. so (1971), 23 D .L .R. (3d) 491, [197212 W.W .R. 424 (B .C .C .A .); followed, Sorenson v. Sorenson, supra, footnote 1.
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enforceable will sever in equity.^51 This is an example of the application of the^ general principle that if a decree of specific performance is available the promisee will be regarded as having acquired an equitable interest from the date of the making of the contract or covenant. Therefore, even though the relationship of the parties rests in contract or covenant and not in conveyance, equity will regard severance as having been effected at that date. It can also be argued that this conclusion (^) is in accord with the probable intention of the parties. For example, in a case of a contract to sell, in order to give effect to the contract and to prevent the purchaser from being affected by the operation of the right of survivorship, the joint tenancy needs to be treated as severed.
On this basis the decision in Foort v. Chapman 52 is open to question. In that case two sisters owned property as joint tenants, and in addition had expressly agreed that there would be a right of survivorship. Nonetheless one sister entered into an agreement for sale with her son, under which he was to purchase her interest by making three annual payments to her. The mother forgave these payments in advance, and died before the expiration of the three year period. The agreement for sale was registered after her death and before the other sister had applied to register by virtue of her right of survivorship. The court decided that the agreement for sale had not severed the joint tenancy.
The decision may be attributable to the fact that the court's attention appears `to have been drawn to cases dealing with agreements for the sale of the property entered into by all of the joint tenants, and it is well established that in such cases there is no severance. 53 Prima facie, the agreement for sale ought to have severed because the appropriate remedy for breach of the agreement would have been a decree of specific performance. There may be a justifiable hesitancy on the part of the court in arriving^ at this conclusion in the case of an agreement for sale where payment is extended over a long period of time. If a vendor died soon after the agreement was entered into, it would be purely a speculative matter as to whether or not a decree^ of specific performance would eventually be awarded. But if there is an agreement to sell to be completed within a short time, and the vendor dies before completion, there still may be some speculation about whether a decree will issue. It is suggested that technically speaking the length
"Brown v. Raindle (l796), 3 Ves. 256, 30 E .R. 999 (M .R .) ; Caldwell v. Fellowes (1870), L .R.^ 9 Eq.^ 410 (V.C .) ; Re Hewett, [l894] 1 Ch. 362 (Ch .D .) ; Goddard v. Lewis (1909), 101 L .T. 258 (K .B .). (^52) (l973), 37 D .L .R. (3d) 730, [197314 W .W .R. 461 (B .C .S .C .). " Infra, p. 18.
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directed to severance as such, but from which an inference of severance could be drawn. s9 Rule 3 on the other hand covered circumstances not involving any agreement, but where it could be inferred that the parties formed a "common intention" to hold their property as tenants in common. so These distinctions are difficult to follow. In every case under rules 2 and 3 the issue is whether the parties did something from which it can be inferred that they intended to treat their interest as a tenancy in common. Whatever the supporting evidence, one is really looking for an agreement, and it is nonetheless an agreement if it is referred to as a "common intention". The language of rule 3 would seem to recognize this. It refers to "a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common". What else is this other than an implied agreement? The validity of the distinctions is rendered all the more doubtful because, having made them, all of the members of the Court of Appeal did not consistently follow them. Thus, Browne L .J. said of the "course of dealing" that "there would in such a case ex hypothesi (^) be no express dealing but only an inferred, tacit agreement.. ." .61^ It is difficult to see why the court felt compelled to draw these distinctions (^) in the first instance. One possible explanation was to avoid difficulty with the Statute of Frauds but, as we shall see, that really does not succeed. In any event for our purposes we will proceed on the basis that rules 2 and 3 both cover severance by agreement, and that the only difference between them is the basis upon which this agreement is proven. 62
The applicability of the Statute of Frauds 63 appears to have been raised in only one Canadian case, Ginn v. Armstrong. 64 The court
"Ibid., at pp. 439, 444, 446-447 (Ch.),^ 147,^ 151,^ 152-153 (All E.R .). "Ibid., at pp. 439, 446-447 (Ch.), 147, 153-154 (All E.R .). "Ibid ., at pp. 444 (Ch.), 151 (All E.R .). (^62) See to this effect Lyons v. Lyons, supra, footnote 35, at p. 171. es Statute of Frauds : R.S .B .C ., 1960, c. 369, s. 2; R.S .N .B ., 1973, c. S-14, s. 1 ; R.S .N .S ., 1967, c. 290, s. 6; R.S .O ., 1970, c. 444, s. 4. The English statute is probably in force in those jurisdictions where legislation has not been expressly enacted: see Côté, An Introduction to the Law of Contracts (1974), p. 55 ; Fridman, The Law of Contract (1976), p. 201;Delima v. Paton (1971), 1 Nfld. & P.E .I .R. 317 (P .E .I .S .C .) ; Balaberba v. Mucha (1960), 25 D.L .R. (2d) 760 (Sack. C.A .). (^64) (1969), 3 D.L .R. (3d) 285 (B .C .S .C .). The point was also taken in : (1) Wilson v. Bell (1843), 5 Ir .Eq.R. 501, at p. 508 (Eq.Ex.), where the difficulty was avoided because the court was able to rely on the doctrine of part performance; (2) Lyons v. Lyons, supra, footnote 35, at p. 171, where it was stated that the agreement must comply with the Statute of Frauds and that, so far as Williams v. Hensman, supra, footnote 5, did refer to an agreement arising from conduct, it had to be remembered that that case concerned personalty, and not realty.
1979] Severance ofJoint Tenancies 17
thought that it was doubtful whether writing was required as a matter of law, but decided that, in any event, on the facts of that case, there was sufficient evidence in writing to comply with the Statute. The other cases have either involved personalty, or if they have involved realty, it has been assumed that writing was not needed. But in principle it does seem that the Statute ought to apply. An agreement to sever is an agreement concerning an interest in land, and it would appear to fall squarely within the terms of.^ the Statute. This conclusion may be avoided in one of two ways, neither of them perhaps being particularly convincing.^ In^ Burgess^ v. Rawnsley" Browne L.J. seemed to rely in some measure on the distinction between express agreement and^ a course^ of dealing showing a common intention. He said:s 6 An agreement to sever can be inferred from a course of dealing and there would in such,case ex hypothesi be no express agreement but only an inferred, tacit agreemnt, in respect to which there would seldom. if ever be writing sufficient to satisfy section 40. It seems to me that the point is that the agreement establishes that the parties no longer intend the' tenancy to operate as a joint tenancy and that automatically effects a severance.
But that passage if anything underlines the dilemma. The course of dealing is an agreement and an agreement relating to an interest in land ; yet by its very nature it is unlikely to be evidenced in writing. But one surely- cannot take an agreement out of the Statute by calling it a "common intention". The other possible way of avoiding the application ofthe statute is to rely on the constructive trust. s' If the parties do agree to sever, then severance takes place in equity. To give effect to that agreement equity will require that the legal title, still held in joint tenancy, be held by way of constructive trust for the co-owners as tenants in common. Even this is none too satisfactory, particularly where there is an express agreement to sever. If the courts have not been prepared to use the constructive ,trust to avoid the Statute in the case of, for example, contracts for the sale of land, it is difficult to see why they should do so here. Where there has been a course of dealing, with little possibility of writing ever coming into existence, it is perhaps easier to see the constructive trust being used, and it is probably the case that the courts will rely on it in all circumstances. But it is still a difficult question as a matter of principle. The third issue is one which appears to be well settled. Where severance is brought about by a course of dealing the parties may
6s (^) supra, footnote 6. (^66) Ibid ., at pp. 444 (Ch.), 151 (All E.R .). 67 Constructive trusts are, of course, expressly exempted from the requirement of writing; see. the legislation cited, supra, footnote 63.
1979] Severance of Joint Tenancies 19
The prima facie result of such an agreement is that the property acquired is held in joint tenancy in lieu of the property sold^. (2) Cases where there will be severance. Second, there are situations where the courts are very likely to hold that a severance has taken place. This will be the case if the joint tenants enter into an agreement to divide the property in specie, or to sell and divide the proceeds of the sale, or where one joint tenant agrees to sell his interest to the other. In such cases severance takes place on the making of the agreement. This result is easily understood where the agreement is to be put into effect immediately. It has also been held that the agreement itself brings about a severance where it has not been put into effect before the death of one of the joint tenants, where it is for a division or sale at a future date, where it is unenforceable and where the parties later expressly agreed not to carry it out. All of these, and in particular the last two, require some, explanation.
Schofield v. Graham" is an example of the situation where an agreement for immediate sale and division of the proceeds was never carried out. One joint tenant commenced an action against the other regarding property owned by them in joint tenancy, but that action was stayed on the basis of an agreement that the property would be sold and the proceeds divided equally between them. Although it was listed for sale, the property was never sold. It is not clear from the càse~ why no-sale took place, but' the court apparently did not think that the failure - to sell the property was in any way relevant. The agreement in itself sufficiently indicated a^ common intention^ to sever. It followed that from the date of the making of the agreement the parties were tenants in common.
In Re McKee and National Trust Company Limited's by a separation agreement a husband and wife dealt, inter alia, with property owned by them in joint tenancy. The agreement provided that the wife was to have exclusive occupation of the property over a certain specified period of time, that there was eventually to be a sale and equal division of the proceeds between the parties, and that the wife was to have the option of purchasing her husband's interest. The husband died before the time for sale had arrived, and the option had
(^72) Similarly a lease by all of the joint tenants will not sever: Palmer v. Rich, supra, footnote 35. 's Supra, footnote 22. " The case does not state the exact lapse of time between the date of the making of the agreement and the death of the joint tenant. The agreement was made in 1961. The case was decided in 1969. It would appear that there was adequate time for the sale to have taken place. (^75) Supra, footnote 12.
20 THE CANADIAN BAR REVIEW [VOL. LVII
not been exercised by the date of his death. The Ontario Court of Appeal held that the manner in which the parties had dealt with the property in the agreement indicated a mutual agreement to sever. A major consideration was the provision for sale and division of the proceeds. Although this was not to take effect until a future date, its existence indicated the joint tenancy was regarded as severed at the date the agreement was made.'s Burgess v. Rawnsley" is a case where an unenforceable agreement formed the basis of an inference that the parties intended to sever. In that case two joint tenants entered into an agreement by which one of them was to sell her interest to the other. The agreement was not in writing, and therefore not enforceable. It was conceded that, as a matter of general principle, an inference of an agreement to sever could be drawn from an express contract to sell; the issue then was whether the inference could still be drawn when the contract, as an agreement to sell, was unenforceable. The court decided that it could. The agreement to sell was unenforceable but not void," and it therefore could have an effect on the relationship between the parties to it. On the facts of the case, the court saw no reason why it should not draw the usual inference that an agreement by one joint tenant to sell to another severed. The case therefore is authority for the general proposition that an inference may be drawn from, inter alia, a contract which, in respect to its main object, is unenforceable. But the case goes even further than this, for the parties, after making the agreement to sell, agreed that it would not be carried out. The court held that this too was irrelevant.^79 Logically one can see that conclusion. If the agreement to sell formed the basis for the inference of severance, the later joint repudiation of it does not necessarily destroy the inference. But it can be argued that if one is drawing inferences one should look at all the circumstances. If the parties agreed not to proceed with the contract of sale it is not too clear that one should assume that the inferences which one might otherwise draw from that agreement should stand. The issue is one of fact, and the willingness of the court to draw the inference may be explained by the preference in England for the tenancy in common. The acceptance of the argument that no such preference should be
's The court also relied on the option to purchase, although, as we have seen, it held that the option in itself did not sever: supra, p. 15. "Supra, footnote 6. 's This is, of course, a well-established interpretation of the Statute of Frauds, and equivalent legislation, in England, Law of Property Act, 1925, 15 & 16 Geo. 5, c. 20, s. 40. "Supra, footnote 6, at pp. 444, 446 (Ch.), 151, 152 (All E.R.). According to Sir John Pennycuick's judgment the point was in fact conceded.
