In most instances where two or more people take an interest in land, they must register whether they hold as joint tenants or tenants in common. Additionally, if they register as tenants in common they must state the share each person holds.
The interest of a deceased joint tenant passes to the surviving joint tenant(s) via a right of survivorship. Essentially, a joint tenant cannot transfer an interest in the land through a will unless all other joint tenants predecease them.
Tenancy in common occurs in circumstances where two or more people own an asset in defined shares which may or may not be equal.
The interest of a tenant in common forms part of their estate and can be transferred according to their will; the tenancy continues, with a new tenant in common. If a tenant in common dies without a will, their estate is distributed under the rules of intestacy
Background
Catherine Whitty and her husband, Mario Caruso, were the registered joint tenants of their marital home. Mario borrowed money to purchase the property from his brothers and sister-in-law. At the same time, he and Catherine signed a deed appointing Mario as her agent if a ‘trigger event’ were to occur. The deed also gave Catherine a right of first refusal.
One ‘trigger event’, was a default by Mario in making payments owing under the loan agreement with his siblings. Under the arrangements between the parties, if Mario were to die, the amount he had borrowed from his siblings would become immediately payable, and his estate would obtain the right to sell the marital property with Catherine having a right of first refusal.
These matters indicate an intention that the parties would hold the marital property as tenants in common, rather than as joint tenants. Catherine and Mario intended that Mario would retain an interest in the marital property after his death. Accordingly, notwithstanding their registration as joint tenants, in equity, the parties are to be treated as tenants in common.
The deed
The arrangement set out in the deed makes sense if the parties are tenants in common. Mario’s estate would be entitled to half the sale proceeds to repay its liabilities, and the right of first refusal would allow Catherine to purchase Mario’s interest in the marital home from his estate.
However, as joint tenants, Mario’s estate ceases to have any interest in the marital property as by right of survivorship it would be held by Catherine absolutely. Similarly, Catherine’s right of first refusal, with the deed anticipating that Mario’s estate would act as Catherine’s agent offering to sell the property that she would already own.
Mario died intestate unexpectedly after falling into arrears under the loan agreement.
The matter
In Re Caruso [2022] VSC 242 the administrator ad litem sought to address whether equity should treat Mario and Catherine as tenants in common, rather than as joint tenants.
Although Catherine and Mario agreed to have their interests recorded in the register as joint tenants, they will be treated as tenants in common, in equity, if there is
‘a course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.’
Corin v Patton (1990) 169 CLR 540,547
Mario’s estate had insufficient assets to pay the money owed to his siblings. His siblings submit that Mario and Catherine held the marital property in equity as tenants in common. If correct, that would mean that Mario’s estate’s half interest would then be available to meet the estate’s obligations to his siblings.
Catherine, on the other hand, contends that the marital property hers absolutely due to the right of survivorship. Mario’s siblings will not be able to recover the moneys owed to them out of the proceeds of any sale of the marital property.
The decision
The Court noted that, whilst equity favours tenancies in common, that principle does not apply in the circumstances of a matrimonial relationship at [4]. The fact that Catherine and Mario contributed different amounts to the purchase price of the property is no reason to consider that they intended anything other than a joint tenancy.
Similarly, if the court were to conclude that the parties held the marital property as tenants in common, then they would hold it in equal shares, even though they had contributed different amounts to the purchase price.
The Court held that read in context the deed reveals an intention that Mario retain an interest in the home after his death and this was consistent with owning the property as tenants in common. Accordingly, in equity, the parties were to be treated as tenants in common, notwithstanding their registration as joint tenants at [9].
The relevant right that Mario obtained under the deed was a contractual right to sell the marital property in certain circumstances. It did not amount to an interest in the property itself and did not differ in any relevant way from Catherine’s interest in the property.
heirs & successes 