Category Archives: Joint Property

Brothers had operated all family properties and businesses as co-owners

The recent case of Bhushan & Ors v Chand [2015] concerned a family property dispute.

In the early period it was a traditional family under the close control of the head of the household, initially the husband and after his death his wife. All the sons of the family continued to pay over their wages to their mother who controlled the family’s money. The family home was transferred into her name, and it’s successor was bought in her name.

The mother received money from various sources and simply mixed it and applied it as she thought fit for the family’s benefit, either for daily expenses or in acquiring assets she expected to benefit her sons later.

The High Court said the mixing of funds under her control would make her the beneficial owner of the money each of her sons paid to her.

When an asset such as a house was bought with that money, the ownership of that asset would depend on her intention as expressed at the time, and was not to be treated as relating back to the respective contributions to the mixed fund.

It was the defendant brother’s case that he was or had been entitled either to the whole or some ascertainable share of the beneficial interest in the assets purchased from that fund merely because of his having paid an indeterminable part of the price out of his wages. The High Court said that was insufficient.

But neither had the claimant brothers established a general intention that there be common ownership of all the assets bought from the outset.

The High Court said insofar as assets were bought in his name from that fund, the prima facie position would be that they were legally and beneficially his, if no contrary intention at the time of purchase was proved.

However, if such a property was later sold and the money paid back to the mother, then ownership of that money would vest in her, again, subject to a contrary intention at that time being proven.

In that early period, there was no sufficient evidence of a contrary intention.

But later as the children grew older the evidence of what the family actually did overwhelmingly supported them having agreed to work together in business and build up assets in common.

All of the claimant brothers worked in the joint enterprise family clothes business much more consistently with being owners than with them being four unpaid employees dependant on generosity from a lead family member.

Investments were purchased from the funds of the family business for each brother without regard to their ostensible ownership of the business. The proceeds of those investments were used to buy properties which were not always owned by the same family members. Rental income from properties and cash accumulated were aggregated and applied without distinction as to their origin.

Whatever the distinctions as to ownership presented to outsiders, these did not correspond with the way the properties, businesses and their income were treated between the family members.

The nominal ownerships of the family businesses and the rental properties bore no relationship to the way in which the income and proceeds derived from them were used.

The decisions to use those funds were taken by family members other than the ostensible owners. Those members did not do so as assistants or secretaries to any lead family member.

When a major financial issue arose from the compulsory purchase of one of the properties, it was described to the professionals acting as being owned by all five and the proceeds obtained were predominantly reinvested in a club owned on the same basis.

Finally, there was evidence of arrangements between the brothers, supporting the existence of a common intention trust in that the defendant had acknowledged the existence of such an arrangement by discussing the division of assets, and, by beginning to compile his own list of the assets to be divided.

Anyone wanting to show a common intention constructive trust must have relied to his detriment on the agreement he, or she, argues existed.

That was easy here as each of the brothers himself worked in the various businesses bought or established, in circumstances where, prima facie, he would not otherwise be entitled to any reward from those businesses or interest in the assets.

In the circumstances it was unnecessary to go on to consider the doctrine of proprietary estoppel or the precedents set by the court decisions based on the previous case of Pallant v Morgan.

In any case the facts would not fit easily with Pallant v Morgan since there was no suggestion that one or more brothers had the opportunity to acquire particular properties but had instead stood back in favour of another.

An agreement for joint ownership fitted more easily with a common intention trust than a promise of an interest in the property of another.

Their respective cross entitlements under that ownership remained to be settled – being complicated by the fact that for some time the defendant had been operating the club and the other brothers had been operating the other businesses.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Ongoing partnership: all partner tenants need to apply for statutory lease renewal

Where joint tenants want to renew their lease under the Landlord & Tenant Act 1954, the word “tenant” prima facie means all the joint tenants in whom the lease is vested.

So where the lease is vested in partners, the request and claim for a new tenancy would have to be made by all the tenant partners and cannot be validly made by one alone.

However section 41A of the 1954 Act permits an exception to the rule in the case of partnerships where not all of the joint tenants continue to use the leased premises for the purpose of the partnership business.

So, under section 41A(1), there are four conditions which require to be fulfilled:

1. the lease up for renewal must be vested in at least two joint tenants;

2. the property must include premises occupied for the purposes of the business;

3. the business must at some time during the tenancy have been carried on by all the joint tenants as partners; and

4. the business must now be carried on by at least one of the joint tenants, either on their own or in partnership with one or more other people AND no part of the property held under that lease may be occupied under the tenancy for a business carried on by the other joint tenant or tenants.

In the Court of Appeal case of Lie v Mohile [2014] the freehold was owned by the defendant who was one of the two partners. The claimant was the other. The defendant had leased the property to himself and the claimant for the partnership business.

The defendant had attempted to dissolve the partnership by notice of dissolution in 2011 but the notice had been ineffective and the partnership had continued.

The Court agreed with the County Court that the first three of those conditions were satisfied, but the fourth was not because in fact, the partnership continued to subsist and to operate from the premises so that the premises continued to be occupied by both partners for the purposes of the partnership business.

So it could not be said that the business was carried on “by one or some only of the joint tenants” (section 41A(1)(d)).

The claimant said that the defendant was estopped from raising the validity of the claimant’s renewal application on this ground late in the proceedings when he could and should have raised it much earlier.

However the Court said this preliminary issue went to the root of the Court’s jurisdiction to grant a new tenancy and so could not be barred out by an estoppel on the grounds the claimant relied on.

So the Court dismissed the claimant’s claim for a lease renewal.

Circumstances of unlawful killing did not displace Forfeiture Rule’s application to Joint Property

Where a person is a beneficial joint tenant of a property, or the beneficiary to that property under the owner’s will, it will normally pass to them by “survivorship” or under that will on the death of the other joint tenant or of the owner.

However under the common law “Forfeiture Rule” a person who has unlawfully killed another is barred out from acquiring a benefit as a result of the killing. This is subject to the Court’s power under the Forfeiture Act 1982 to modify the application of the Rule in individual cases.

In the recent High Court case of Chadwick v Collinson & Ors [2014] the Claimant and the Deceased had been beneficial joint tenants of a house at Bolton-le-Sands, Lancashire (“the Property”).

The Deceased had made a will in which the Claimant was the residuary beneficiary. The net value of her estate was £79,098.87. £60,000 of this had been referable to the Deceased’s interest in the Property.

The Claimant had been referred for a mental health assessment after describing feelings of paranoia and hearing voices. In the early morning just prior to the scheduled assessment, the Claimant stabbed the Deceased and their six year old son repeatedly killing them both. The Claimant was arrested and charged with murder. His guilty plea to manslaughter on grounds of diminished responsibility was accepted and he was detained under a Hospital Order under Section 37 of the Mental Health Act 1983.

But for the Deceased’s killing, the Deceased’s interest in the Property would normally have passed to the Claimant on the Deceased’s death under the beneficial joint tenancy.

The issues here were:

i) Did the Forfeiture Rule apply in the circumstances of this case; and

ii) If it did, did the justice of this case require the effect of the Rule to be modified?

On point i) the Claimant said the Forfeiture Rule did not apply to some cases of manslaughter and that it ought not to apply here because of the mental health of the Claimant.

The Court said the Rule might be disapplied where the crime involved such a low degree of culpability or such a high degree of mitigation that the sanction of forfeiture would have been contrary to the public interest. But here whilst the mental disorder might have significantly reduced the degree of culpability it had not been eliminated or reduced to such a low level that to give effect to the Forfeiture Rule would be contrary to the public interest.

Under the partial defence of diminished responsibility the “abnormality of mind” merely impacted on the Claimant’s capacity to form a rational judgment and, reduced, but did not eliminate, his ability to control his behaviour. These did not derogate from the fact that the Claimant had decided to kill his partner and son, knew that it was wrong and had some residual self control.

Apart from the question of culpability, which was sufficient to justify the application of the Forfeiture Rule, the nature and gravity of the offence also weighed, with the Judge, against disapplying of the Forfeiture Rule. Included were (a) the number of fatal and non fatal wounds inflicted by the Claimant and (b) the number of times he returned to attack each victim.

The evidence also lacked anything that could begin to explain what occurred.

The conduct of the victim might have militated against the rule applying had they subjected the assailant to years of intolerable physical or mental abuse. In fact the couple’s relationship seemed entirely stable, loving and long lasting. The deceased’s will had been consistent with this since she left him the entirety of her estate and only to her children if he did not survive her more than 28 days.

Another factor substantially against disapplying the Forfeiture Rule was that most if not all her interest (and the Claimant’s interest) in the Property had been funded by inheritance from the Deceased’s late mother.

On the Claimant’s attempt to modify the application of the rule mentioned at ii) above:

The financial position of the Claimant was also relevant. He would still have his share of the Property but it may be difficult for him to again earn his living as a self employed gardener whenever he was released. This factor favoured modifying the effect of the Forfeiture Rule but was outweighed by the other factors militating against such modification.

Another factor to be borne in mind was that those who would benefit under the Forfeiture Rule were largely aunts and cousins of the Deceased who she did not intend to benefit in the event of her death. That weighed against applying the Forfeiture Rule but not heavily. That factor, whether alone, or in combination with the Claimant’s future financial position, was outweighted by the other factors referred to above. So the application of the Forfeiture Rule should not be modified in the circumstances of this case.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.