Severance of a Joint Tenancy – When Parties Blend the Commercial and Familial

Whitty v Talia [2023] VSCA 246


A married couple purchased a property. They took advice from their solicitor about the implications of being registered as joint proprietors and were duly registered as joint proprietors. Prior to settlement, the husband, but not the wife, entered into a loan agreement with two of his brothers and a sister-in-law (the siblings). The purpose of the loan agreement was to assist the husband and the wife to purchase the property. The loan funds were applied to the purchase price of the property. The wife was not a party to the loan agreement.

Simultaneously, the couple signed a deed as between themselves which gave the husband the option, but not the obligation, to sell the property in certain circumstances, including default on the loan agreement or the husband’s bankruptcy, subject to a right of first refusal retained by the wife. Importantly, the option could be exercised after the husband died, by his executor. Neither the loan agreement nor the deed contained any requirements as to how the proceeds of sale were to be used. The arrangements were heavily negotiated and the married couple and the siblings were advised by solicitors. The wife, in correspondence, resisted any arrangement which would see the siblings take a security interest which would interfere with her proprietary rights, and resisted any suggested that she would guarantee her husband’s loan.

The husband died intestate. The wife applied for a grant of administration upon intestacy. One of the siblings lodged a caveat over the property. McMillan J appointed an independent administrator ad litem to act for the husband’s estate and to commence proceedings seeking judicial advice. The ultimate issue in the proceeding was whether the tenancy was joint or whether it had been severed in the circumstances outlined above. The consequence of a finding that the joint tenancy had been severed would be that, on the sale of the property (which could be compelled by the husband’s administrator), half of the proceeds of sale of the property would have flowed to the husband’s estate, and enabled the estate to pay back the siblings pursuant to the loan agreement. The evidence established that otherwise the husband’s estate would not have had funds sufficient to repay that debt. Gorton J at first instance held that the tenancy had been severed in equity. The wife appealed.


Two or more persons who are jointly registered on title are deemed joint tenants at law.

The two principal characteristics of joint tenancy are the four unities (possession, interest, title and time) and the right of survivorship. If one joint tenant dies, their interest in the land is extinguished and the interest of the surviving joint tenant is correspondingly enlarged.

Even though persons are registered on title jointly, equity may treat the beneficial interests as being held by the owners as tenants in common. Severance in equity is one circumstance in which equity will intervene.

The Court of Appeal held that it is unhelpful (and even confusing) to start an analysis of a possible severance in equity by deciding whether one of the four unities has been destroyed. They did not accept an argument the subject of a notice of contention filed by the siblings which sought to do so. Instead, they started with the classic statement about the three modes of severance from Page Wood V-C in Williams v Hensman (1861) 1 J & H 546, 557-8; 70 ER 862, 867:

A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund – losing, of course, at the same time, his own right of survivorship. Secondly, a joint tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested.

The first method of severance was irrelevant in this case. The second method – mutual agreement – did not arise. Whilst the deed conferred a right on the husband to sell the property on the happening of certain events (for example, his bankruptcy or death), the parties did not agree to divide the proceeds of sale (which was a feature of case law concerning agreements to sell jointly held property). Accordingly, the case was argued on the basis of the third method of severance.

The third limb calls for an inquiry into whether the joint tenants objectively intended to hold the property as tenants in common. In general, equity leans against joint tenancies. However, this presumption does not apply in circumstances involving a matrimonial home. To prove that there has been a severance in equity, little is required by way of evidence. That is, the evidence does not need to disclose a long course of conduct consistent with severance. The evidence can be of a relatively limited set of circumstances. That said, the evidence must still estimate a definite intention and it must be unequivocal.

Joint tenants may be parties to mutual conduct of a kind which, while falling short of evidencing an express or implied agreement to sever a joint tenancy, indicates a common intention that the joint tenancy should be severed. The Court of Appeal recognised the possible overlap in the second and third methods of severance. A common intention to sever a joint tenancy (the third method) could be evidenced by an agreement (in which case the second method might also be enlivened). However, the third method encompasses a broader range of conduct as a common intention could bind the consciences of the parties regardless of whether that course of conduct amounted to an implied agreement.


This was not a case about construction of the deed and loan agreement. The key question was what the deed and loan agreement, seen as part of the course of conduct on the part of the couple, revealed about their intention with respect to the joint tenancy.

On the wife’s case, she always intended to hold the property as a joint tenant. The deed was designed to give the siblings comfort in that, if the husband defaulted on the loan, he would be able to force the sale of the jointly held property, put himself in funds, and pay out the siblings. However, the arrangements did not contain a provision which required that the husband apply the proceeds of sale to discharge the loan. Nor did it confer a security interest in the property. In effect, the arrangements involved a degree of trust that the husband would do the right thing by his siblings and use the power under the loan agreement in a way advantageous to the siblings. Their only other option would have been to resort to attempt to bankrupt their brother. Accordingly, whilst the siblings took comfort from the arrangements, their understanding of the arrangements could not bear on the question of the married couple’s mutual intention.

The Court of Appeal rejected this analysis. They held that a finding that the joint tenancy had been severed was the only way to give this arrangement any commercial utility. They focussed on a number of factors which, combined, clearly pointed to a finding that the husband and wife had decided that they would hold the property as tenants in common.

First, the arrangements contemplated that the property could be sold upon the husband’s death at the behest of his executor. This would put the estate in funds to enable it to repay the siblings. This arrangement could only be meaningful if the estate did not vest solely in the wife (by reason of the continued operation of the right of survivorship).

Second, if the property was held as a joint tenancy, there would be no need for the wife to have a right of first refusal as it would in effect give her the right to purchase a property that she already owned.

Third, the Court of Appeal conducted an exhaustive analysis of the pre-contractual negotiations. Contrary to the wife’s submissions, they held that these negotiations revealed that the married couple agreed to an arrangement to enable the executor of the husband’s estate to exercise the power conferred by the deed, to sell the property subject only to the wife’s right of first refusal, after the death of the husband.

Accordingly, the married couple must be regarded as having intended to hold the property as tenants in common.


This case neatly illustrates the pitfalls with arrangements concerning property which blend the commercial and the familial. Where, as here, a married couple elects to be registered as joint tenants, the ordinary inference that this reflects a considered arrangement as to the transfer of property on their death. This would be reinforced where the evidence points towards an intention that, subjectively, at least one of the joint tenants intended that this arrangement continue.

However, the third method of severance requires an investigation into whether there has been a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. Given the objective nature of this inquiry, the probability is that a Court will readily draw an inference that a joint tenancy has been severed whenever the married couple uses the property as part of a commercial arrangement. Practitioners should take great care when advising clients about the consequences of such arrangements.

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