To determine how the proceeds of sale of the property should be divided, it is essential to look at the law on co-ownership in particular, joint tenancy and tenancy in common. From the information given, we are told that Arnie, Bruiser, Carmen and Dominique all contributed equally to the purchase price and the house is transferred into their joint names. This shows that it is a joint tenancy as the four unities are present19, which are the unity of possession20, unity of interest, unity of time and lastly, unity of title.
Also, there were no sign or words that amounted to severance such as ‘equally’21, ‘in equal shares’22, ‘amongst’23 ‘divided’24, and ‘participated’. 25 Thus, the right of survivorship jus accrescendi would operate in this joint tenancy. So, initially, Arnie, Bruiser, Carmen and Dominique are holding the property jointly for the benefit of four of them and it is important to note that the maximum number of trustees is four. 26 For a joint tenancy to exist in equity there must be all four unities and no words of severance.
If lack of one of any four unities or there is any words of severance, the court will treat the co-ownership as tenancy in common in equity. Secondly, in case where one of the above parties decides not to continue the survivorship, this can be done through severance. There are three ways in which the joint tenancy may be severed27 and they are; an act which is operating upon his own share, by mutual agreement and any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.
Severance can be done by written notice. 28 29 So, in the case where Bruiser decided to take out a mortgage on the property behind the other’s backs is considered as acting upon his own share and furthermore, a mortgage affects a severance30. Thus, this has ‘destroyed’ the unities of title. Therefore, it would be that Arnie, Carmen and Dominique together would hold three fourth of the legal estate as joint tenants while Bruiser will hold one fourth share as a tenant in common.
Another minor point is that forges another constituted fraudulent and Bruiser would have committed a criminal offence. When Arnie agrees in writing to sell his beneficial interest in the property to Dominique and the agreement is duly executed, this severs Arnie’s share by shattering the unity of title. Therefore, this amounted to a severance where there was a mutual agreement between Arnie and Dominique. 31 Hence, the legal estate will remain as before, but Dominique will now hold his equitable interest in two capacities.
He will hold the one fourth share which he bought from Arnie as a tenant in common, and, together with Carmen, he will hold the remaining two fourth share as a joint tenant while Bruiser will also hold one fourth of the share as tenancy in common and Arnie has none. Meanwhile, Carmen had asked Dominique if she will buy her share in the house and through the information given, we are being told that their negotiation got ‘heated’. So, assuming that there was a course of dealing between them, this would then constitute to ‘..
a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common”32 between Carmen and Dominique which in result amounted to severance. This would then make Dominique himself having three fourth of the share altogether while Bruiser having one fourth of the share as tenancy in common. However, on the other hand, if there was no severance, in regards to Carmen’s share, of which she is still a joint tenant, her interest would disappear and go by right of survivorship upon her death and Dominique alone is the only survivor left.
Unlike tenancy in common, in joint tenancy, the joint tenant cannot leave his or her share by will or allow it to pass on intestacy. Thus, Manuela will not be able to get Carmen’s share in the legal estate. Lastly, the bankruptcy of a joint tenant will sever the equitable joint tenancy. Thus, when Dominique is declared bankrupt and her trustee in bankruptcy becomes entitled to all her property, which simply means that whilst Dominique has got three fourth of the share in the house, his equitable interest are vested upon his trustee who have “all the powers of an absolute owner” but only “for the purpose of exercising their power of trustees”.
This is because bankruptcy vest Dominique’s property in the trustee in bankruptcy and this clearly affects a severance. 34 To sum up, Dominique will wholly own the legal estate while his equitable interests in the legal estate will be vested upon his trustee in bankruptcy and Bruiser has one fourth of the share as tenancy in common. Both Manuela and Arnie will own nothing.