Severance of joint tenancies

 In Probate

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Quigley v Masterson [2011] EWHC 2529 is essential reading.  It adds to our knowledge on severance of joint tenancies but in so doing adds to our woes – how do we estate administrators know when severance has occurred?

The facts

Mr Pilkington’s marriage ended when he was 51 and he began to live with Violet Masterson, who was then aged 35 and herself divorced with children of her own.  They never married and continued living together until 2001.

In 1992 they purchased 173 North Street, Coventry jointly as beneficial joint tenants and were registered as joint proprietors at the Land Registry.  The two of them lived together at the property with Mrs Masterson’s daughter Charlotte, until 2001 when, following the breakdown of the relationship, Mrs Masterson and Charlotte left to live elsewhere.

On 21 December 2002 solicitors acting for Mr Pilkington sent through the post a notice of severance of the joint tenancy, which he had signed, to the solicitors retained by Mrs Masterson.  At the time the solicitors were no longer retained by Mrs Masterson and she did not receive the notice.  A second attempt to serve Mrs Masterson with the notice in February 2003 by sending it to her at her place of work, also apparently failed.

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Shortly afterwards Mr Pilkington’s health started to deteriorate and by 2004 he developed a form of dementia and underwent surgery for bowel cancer.  He was 78.  By 2008 the state of his health was such that he had to move into residential care.  This decline in his health was matched by an improvement in his relationship with Mrs Masterson who visited him regularly between 2004 and 2008 to help with his care.

Following Mr Pilkington’s move into care the house needed to be sold but by then he was unable to manage his financial affairs and had no power of attorney.  His daughter, Mrs Angela Quigley, duly made an application to the Court of Protection on 20 April 2008.  She asked for a financial order authorising her to sell the property which she said he owned in equal shares with Mrs Masterson.

Sadly, there was a disagreement between Mrs Quigley and Mrs Masterson as to who should be Mr Pilkington’s deputy which were resolved in contested proceedings, as a result of which, Mrs Masterson was given conduct of the sale of the house and Mrs Quigley was made her father’s deputy in relation to the rest of his property and affairs.  As so often happens, no sooner had the order been made but Mr Pilkington died.

Subsequently, it became apparent that on the basis of the notices of severance, solicitors acting for Mr Pilkington had arranged for a restriction to be entered on the title to the property in 2003.  Following Mr Pilkington’s death Mrs Masterson applied to have the restriction removed because she argued the notices of severance had not been validly served.  The Land Registry, by mistake, removed the restriction without giving notice to Mrs Quigley.  The cancelled restriction was reinstated and a Land Registry adjudicator had to decide whether the severance had been properly effected.

On the facts the adjudicator did not find that severance by notice had been properly effected.  A second argument suggested that the joint tenancy had been severed by mutual consent as identified in Williams v Hensman (1861) 1 J&H 546: “by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common”.

The Law

The adjudicator reviewed the law on mutual consent and summarised it as follows:

“mutual conduct has been taken to comprise any conduct of the joint tenants which falls short of evidencing an express or implied agreement to sever but which nevertheless indicates an unambiguous common intention that the joint tenancy should be severed.  What is required is a consensus between the joint tenants, disclosed by a pattern of dealings with the co-owned property, which effectively excludes the future operation of the right of survivorship”.

The Land Registry Adjudicator dismissed the arguments that mutual consent could arise because of negotiations between the parties which failed or because it was improbable that a couple no longer together would wish to benefit each other on death.  He said:

  • There was no ‘course of dealings or common intention’ in favour of severance
  • Mr Pilkington lacked capacity
  • Mrs Quigley had no authority in law to speak or act on his behalf until she was appointed as his Deputy.
  • Mrs Quigley may have acted personally in the belief that there had been a severance but until she was appointed Deputy she had no authority to negotiate the division of the proceeds of sale of the property and therefore act on what were her personal views.

Mr Justice Henderson said that he did not feel that mere silence or inactivity by Mrs Quigley between the date of the hearing at which she was appointed Deputy and the date of Mr Pilkington’s death could constitute evidence of a course of conduct by her which it could be presumed she was adopting as Deputy views which were previously her personal beliefs.  Particularly when there was so little time between the hearing and the date of death.

He reviewed the main stages of the Court of Protection proceedings and noted that although instigated by Mrs Quigley, Mrs Masterson made an application to the Court of Protection of her own for permission to deal with the sale of the property and indicating that it was empty and deteriorating and as a result Mr Pilkington remained liable for 50% of all costs on any maintenance work.

He saw no reason why Mrs Masterson’s own application to the Court of Protection could not itself have effected the severance of the joint tenancy.  After all, on three occasions in making the application and submitting her witness statement she was treating the joint tenancy as severed and expecting the net proceeds of sale to be divided between the co-owners.

He reminded us that the giving of a notice of severance under s.36(2) LPA 1925 is a unilateral act and does not depend in any way on the agreement of the recipient.  It does have to be served and could not be said to be served on Mr Pilkington when it came to the attention of Mrs Quigley when first served, because at that stage she did not have authority to act on his behalf; but, once the order was made at the hearing she did have sufficient authority to receive a notice of severance on her father’s behalf.

Although her appointment was couched by certain conditions which were not satisfied by the time of Mr Pilkington’s death, nevertheless all that was necessary was that she should be a person who could properly be treated as the passive recipient of a unilateral notice given to her father.

The decision

Mr Justice Henderson decided that:

  1. The joint tenancy was severed by notice – under s.36(2) LPA 1925 – the application by Mrs Masterson to the Court of Protection for authority to sell the property.
  2. The notice was ‘given’ to Mr Pilkington by virtue of Mrs Quigley being appointed his Deputy and thereby being authorised to act on what was previously her personally held belief that the tenancy had been severed.

Practice points

  1. Notice under s.36(2) LPA 1925 must be in writing but this might be in the form of the contents of a witness statement as part of court proceedings.
  2. Timing is important.  If communications do take place between those trying to be appointed to act on behalf of a person without capacity then any “assumptions” personally held before appointment should for certainty’s sake be actively reaffirmed once appointed if they are to be definitively relied on by the duly appointed Deputy.
  3. Note that trying to serve a notice of severance on a person at their workplace where they are an employee is not their “last known place of business” in the UK as defined in s.196(3) LPA 1925.
  4. The act of severance is a unilateral act but it has to be ‘given’ to the recipient.  If they lack capacity it would seem that to be effective they have to have someone appointed who has authority to manage their financial affairs ie an attorney under a registered EPA; an attorney under and LPA or a Deputy authorised to manage their property and affairs.

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