Harris and Another v Goddard and Others

This appeal from a judgment of Mr. Gerald Godfrey, Q.C., sitting as a deputy judge of the Chancery Division, given on January 21, 1983, raises this question—does a divorce petition which, when served, includes in its prayer a request in general terms for the exercise of the jurisdiction given to the Court by section 24 of the Matrimonial Causes Act 1973 constitute a notice in writing of a desire to sever a joint tenancy in equity within the meaning of section 36(2) of the Law of Property Act 1925? Answering this question has required the Court to construe the word "sever" as used in that section. Section 36 provides as follows:

"36 (1) Where a legal estate (not being settled land) is beneficially limited to or held in trust for any persons as joint tenants, the same shall be held on trust for sale, in like manner as if the persons beneficially entitled were tenants in common, but not so as to sever their joint tenancy in equity.

(2) No severance of a joint tenancy of a legal estate, so as to create a tenancy in common in land, shall be permissible, whether by operation of law or otherwise, but this subsection does not affect the right of a joint tenant to release his interest to the other joint tenants, or the right to sever a joint tenancy in an equitable interest whether or not the legal estate is vested in the joint tenants:

Provided that, where a legal estate (not being settled land) is vested in joint tenants beneficially, and any tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants a notice in writing of such desire or do such other acts or things as would, in the case of personal estate, have been effectual to sever the tenancy in equity, and thereupon under the trust for sale affecting the land the net proceeds of sale, and the net rents and profits until sale, shall be held upon the trusts which would have been requisite for giving effect to the beneficial interests if there had been an actual severance.

Nothing in this Act affects the right of a survivor of joint tenants, who is solely and beneficially interested, to deal with his legal estate as if it were not held on trust for sale.

(3) Without prejudice to the right of a joint tenant to release his interest to the other joint tenants no severance of a mortgage term or trust estate, so as to create a tenancy in common, shall be permissible".

The plaintiffs are the executors and children by his first marriage of Dudley Jack Watson Harris (Mr. Harris) who died on September 24, 1980. The third defendant Alaide Harris (Mrs. Harris) was his second wife. He married her on August 17, 1972. The first and second defendants are the trustees of a fund which has come into existence following the sale of a property known as 93/95 The Street, Fetcham in Surrey. That property had on purchase been conveyed into the joint names of Mr. and Mrs. Harris. It was admitted at the trial that they held it as joint tenants in equity. The first and second defendants want to know how to distribute the fund. The plaintiffs claimed that they, as Mr. Harris's executors, were entitled to be paid half the fund. Mrs. Harris counterclaimed that she was entitled to the whole of it by the right of survivorship on her husband's death.

Mrs. Harris at all material times after the marriage had been employed by a bank. She had been paid a modest salary which had provided the greater part of the family income. Mr. Harris had worked as a photographer but his earnings had been small and irregular. For a short time after their marriage this couple lived in rented accommodation. They then in their joint names bought a house at River Lane, Fetcham, with the help of a loan, secured by a mortgage, made to them by Mrs. Harris's employers. The loan was protected by a life policy on the life of Mr. Harris. The interest on the loan and the premiums on the policy were deducted by Mrs. Harris's employers from her salary. The trial judge accepted Mrs. Harris's evidence that she regarded this property as providing some security for her if her husband died before she did which seemed a likely possibility because of the difference in their ages. In 1978 Mr. and Mrs. Harris decided to sell the River Lane property and buy 93/95 The Street, Fetcham. Part of it was to be used as their residence, part as shop premises for Mr. Harris's photographic business. The further money required for this purchase was once again provided by Mrs. Harris's employers by way of a loan secured by a mortgage and protected by a policy on Mr. Harris's life; and once again the property was conveyed to them in their joint names. It was agreed by all parties at the trial that they held it as joint tenants in equity. As with the River Lane property Mrs. Harris regarded it as providing some security for her if her husband died first.

About 1979 the marriage began to break down. Mrs. Harris told her husband that she wanted a divorce. He did not want one. She left him on or about June 22, 1979 and consulted solicitors. By letter dated August 8, 1979 her solicitors told Mr. Harris that in due course she wanted to petition for divorce. They raised the problem presented by the joint ownership of 95/95 The Street and the fact that she was paying the interest on the bank loan and the premiums on the life policy. At that time the equity in the property after repayment of the loan was estimated to be worth about £13,500. The letter contained this sentence: "The property is in joint names and it would appear therefore that you are entitled to half each of the balance left over". Before this Court it was accepted by Mr. Berry on behalf of the plaintiffs that this letter did not amount to a severance notice for the purposes of section 36(2) of the Law of Property Act, 1925.

On or about December 28, 1979 Mrs. Harris's solicitors caused a divorce petition of that date to be served on Mr. Harris. It was alleged that the marriage had broken down irretrievably and that Mrs. Harris could not reasonably be expected to live with her husband. The prayer of this petition asked for the dissolution of the marriage, maintenance, and in paragraph 3, the words which the plaintiffs have submitted should be construed as a notice of a desire to sever the joint tenancy. They were as follows:

"That such order may be made by way of transfer of property and/or settlement of property and/or variation of settlement in respect of the former matrimonial home at 95 The Street, Fetcham aforesaid and otherwise as may be just".

They echo the words of section 24(1)(a), (b) and (c) of the Matrimonial Causes Act 1973.

On August 18, 1980, three days before the date fixed for the hearing of the petition Mr. Harris was injured in a car accident. He was rendered unconscious and remained in a coma until his death on September 24, 1980. On August 22, 1960 Mr. Harris's solicitors sent Mrs. Harris's solicitors what purported to be a notice of severance of the joint tenancy in equity of 93/95 The Street. They did so on the instructions of Mr. Harris's accountant. Having regard to the trial judge's findings that the accountant had no authority from Mr. Harris to give the instructions he did, the plaintiffs accepted in this Court that this notice had no effect in law and that Mrs. Harris on her husband's death took the whole interest in the fund which represented the balance of the sale price of 93/95 The Street after the repayment of the loan unless paragraph 3 of the prayer of the divorce petition took effect as a severance notice. In a long and careful judgment, and after discussion of a number of authorities, the trial judge decided that it did not.

Counsel on both sides in this Court went through the authorities again, starting with Blackstone's Commentaries, 8th edition, volume 2 at page...