Co-Ownership - Enjoyment Inter Se

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This article is a topic within the subject Property, Equity and Trusts 2.

Contents

Required Reading

Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 642-658 [6.26-47].

Introduction

This article deals with the various rights which a co-owner enjoys.

Rights of Occupation

[1] All co-owners (whether joint tenants or tenants in common) have a right to possess and enjoy all of the property. This means:

  • Actions of trespass cannot be brought against a co-owner unless he did something to prevent common enjoyment of the land or excluded the of the co-owner from possession.[2]
  • Co-owners can invite others to come live on the premises.[3]

Occupation Rent

[4] The general rule is that a co-owner who has chose not to exercise his right of possession (ie, live on the property) cannot seek any compensation from the other co-owner. This is because of the principle of unity of possession - each co-owner has the right to occupy the entire property and they should never have to pay for that right.

There are, however, two situations where the party in possession will owe an occupation fee to the part not in possession:

  1. If the co-owner was ousted by the other co-owner.
    • This amounts to a denial of the of other co-owner's right to possession and thus the other co-owner can bring an action for trespass. The trespass is resolved by way of an occupation fee.
  2. If the parties have agreed on occupation rent.
    • Sometimes, the parties might agree that one party will vacate the land in exchange for an occupation fee.
  3. If the co-owner in possession has made improvements to the land and wishes the co-owner not in possession to contribute.
    • If party is making improvements, equity allows them to claim contribution ('allowance for improvement') because it would unjust for the non-occupying co-owner (who still owns the property) to benefit. However, the improving co-owner will then have a duty to pay an occupation fee in order to get that allowance (this is discussed more below).

Ouster

[5] 'Ousting' or 'ouster' refers to when a co-owner prevents the other co-owner from exercising their right to possess the entire property. An 'ousted party' may be claim occupation rent from the other co-owner. This was discussed in Biviano v Natoli:

  • Ousting is 'an express denial of the title and the right to possession of fellow tenants, brought home to the latter openly and unequivocally'.
  • However, the removal of a party from the premise in accordance with a statute will not constitute an ousting.

Allowances for Improvements

[6] Sometimes, the co-owner who is in possession of a property has made several improvements to the land (with the co-owner not in possession not contributing to the costs of the improvements). There is a general principle that, if a partition claim is brought (to divide up the land between the co-owners), the co-owner who had made improvements may be entitled to compensation from the other co-owner for those improvements.[7]

  • This is a right in equity, and it is defensive (meaning it can only be exercised when another co-owner is trying to exercise his own rights, eg, actions for partition or administration).
    • The rationale behind this is that if the right to compensation was exercisable at any time, a co-owner could be forcing the other co-owner to contribute to improvements who the other co-owner doesn't want to make.
  • This right in equity attaches to land. This means that a successor in title of the co-owner who made improvements will still be able to exercise this right (because presumably the successor in title paid extra because of the improvements)
  • However, like other equitable rights, it will not be enforceable against a bona-fide purchaser without notice, or a purchaser who has registered his interest (since they take free of equitable interests).

Allowances for improvements were discussed in Forgeard v Shanahan:

  • An allowance can be made for improvements, but not mere repairs or maintenance.
  • An allowance for improvements in turn make one liable for occupation rent.
    • This is because 'he who seeks equity must do equity' - if one seeks equity in the form of an allowance for improvements, he must do equity by paying occupation rent.
  • The amount of allowance is calculated by choosing the lesser sum out of (a) the expenses of the improvements and (b) the increase in value of the property). That is then divided according to the proportion of the co-ownership (ie, depending on what shares the co-owners have in the property).
  • An allowance can be made for a payment of joint-debt, but this is under the equitable doctrine of contribution and not property law. Such an allowance would not make one liable for an occupation fee.

And also in Ryan v Dries:

  • Rejects the distinction between mere repairs and improvements set in Forgeard v Shanahan - rather, anything which increases the value of the property (including repairs) merits an allowance.
  • A party has a legal (and not just equitable) cause when it seeks a co-owner's contribution to a joint-debt. If it acts in law as opposed to equity, it will not need to 'do equity' (won't need to pay occupation rent).


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Accounting for Rents and Profits

[8] Often, the co-owner in possession might make a profit from the co-owned property (either by renting it out or by other means). The question arose whether the co-owner not in possession is entitled to receive some of these profits (ie, whether the co-owner in possession has to 'account for rent and profits').

  • In the ancient case Strelly v Winson,[9] it was held that the occupying co-owner does need to account for profits.
  • This was then enacted in the Statute of Anne twenty years later. However, the Statute of Anne was repealed in NSW.
  • In Forgeard v Shanahan, the court noted that no other case but Strelly makes a reference to that principle and thus it was not an accepted principle of the common law. Since the Statute of Anne was repealed in NSW, the position goes back to the common law, and thus there isn't a duty to account for profits.
  • However, in Ryan v Dries, the court held that the only reason why there was no more common law mentions of Strelly was because the statute was enacted so soon after it. As a result, that principle was accepted into common law, and the current common law position (which is applicable after the repealing of the statute) is that a co-owner must account for profits.
  • Note: the Statute of Anne was held not to apply to a situation where the co-owner in possession obtained profit by doing basically all of the work himself (this has special application in agricultural profits etc). In such a case, he will not need to account for profits.[10] This exception probably applies to the common law position today.

Liability for Waste

[11] A co-owner bring an action against another to prevent him from 'wasting' the property (destroying it etc).

  • In Ferguson v Miller,[12] an injunction was granted to stop the removal of ornamental trees (which was considered waste), but not for re-sealing and windening the driveway (which was considered repair).

Dispositions of Interests by Co-Owners

[13] A co-owner may sell his interest in land, provided it does not interfere with or exclude rights of other co-owners in possession of land.[14]

  • One co-owner may encumber the land with an encumbrance (such as easement) that binds the other co-owner only if the encumbrance does not interfere with the other co-owner’s right to possession.[15]


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End

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References

Textbook refers to Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008.

  1. Textbook, p. 642 [6.26].
  2. Steadman v Smith (1857) 8 E1 & B1.
  3. Thrift v Thrift (1975) 10 ALR 332.
  4. Textbook, pp. 642-3 [6.27-6.29].
  5. Textbook, p. 643 [6.30].
  6. Textbook, pp. 655-7 [6.39-6.43].
  7. Brickwood v Young (1905) 2 CLR 387.
  8. Textbook, pp. 653-4 [6.37-6.38].
  9. (1685) 1 Vern 297.
  10. Henderson Eason (1851) 17 QB 701.
  11. Textbook, p. 657 [6.44].
  12. [1978] 1 NZLR 819.
  13. Textbook, pp. .
  14. Frieze v Unger [1960] VR 230.
  15. Hedley v Roberts [1977] VR 282.
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