Presumption of tenancy in common when business property is co-owned?
Is there a presumption of an equitable tenancy in common when land is acquired by partners for the purposes of their partnership business?
This question had to be considered by the English Court of Appeal in Williams v Williams ([2024] EWCA Civ 42).
Facts of Williams v Williams
An elderly couple and one of their sons, Dorian, carried on a farming business as partners. They were, for a long time, tenants of the farm. They bought the freehold when the opportunity presented itself.
The freehold of the farm was transferred into their joint names. In England, this means that they are necessarily legal joint tenants holding on trust (because of sections 34 and 36 of the Law of Property Act 1925 and see also Baroness Hale in Stack v Dowden at [55]).
The only question was as to the terms of the trust. It would, of course, have been sensible for the ownership intentions to be formally recorded in the transfer, but this was not done.
The parties to the dispute accepted that the parents and Dorian were equal beneficial co-owners.
The dispute was whether they were equitable joint tenants or tenants in common in equal shares.
This mattered because of the right of survivorship associated with the joint tenancy.
The parents died and Dorian claimed to be the sole owner by virtue of the right of survivorship.
This was disputed by his siblings.
The judgment
Nugee LJ gave the principal judgment.
The Court of Appeal referred to the decisions in Stack v Dowden and Jones v Kernott. In the ‘domestic consumer context’ there would be a rebuttable presumption of an equitable joint tenancy.
This, however, was not the domestic consumer context. The farm was not only a home, but also a business ([54]).
The farm provided a home for Mr and Mrs Williams and their children. It was, however, also used for the partnership business.
In this respect, the relationship between Mr and Mrs Williams and Dorian was a business relationship. As business partners, the parties were under a duty to account to each other ([55]).
Nugee LJ pointed out that, ‘there is a very longstanding and well-established principle that equity will usually assume that co-owners acquiring for business purposes do not intend survivorship’ ([58]).
This position was not altered by Stack or Jones ([62]) and there was no reason why the well-established principle should not apply in the present case ([64]).
The Court of Appeal saw no reason to interfere with the outcome in the court below where it had been found that the parties were equitable tenants in common.
The right of survivorship did not apply.
Relevance of post-acquisition statements by the parties as an aid to discovering intention
Interestingly, the Court of Appeal took into account the fact that the parents left their shares to each other in their wills as a relevant and admissible indicator of their ownership intentions at the time of acquisition. These statements had been made near (but, of course, after) the time of acquisition and before any disagreement had arisen ([73]).
Michael Lower
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