THE NEED FOR REFORM
4.1 The law relating to unilateral severance of a joint tenancy has several undesirable features. First, the methods by which unilateral severance may be achieved are unecessarily complex. To effect severance a joint tenant is required to either transfer his or her interest to a third party or back to himself or herself; create a trust in his or her favour; or institute proceedings, either in the Supreme Court for sale or partition, or in the Family Court for property settlement. Secondly, each method may involve substantial delay before being achieved. Delays often occur in conveyancing, obtaining the certificate of title, registration, court proceedings and finalising orders. They may serve to defeat the intentions of a tenant who is aged or terminally ill. Thirdly, each existing method is costly, requiring legal services and, often, court proceedings.
4.2 The Commission has therefore reached the tentative conclusion that the law should be altered to allow the introduction of a speedy and inexpensive means of unilaterally severing joint tenancies.
OPTIONS
4.3 Two options for reform are proposed:-
Option 1 - Severance by registration of a declaration of severance
4.4 If a provision similar to s63 of the Land Titles Act 1980 (Tas) were introduced in New South Wales, a joint tenant could sever a joint tenancy by registering a declaration of severance. On registration, a joint tenant would hold his or her interest as a tenant in common in equal shares. The partition in equity prior to registration would remain unchanged.
4.5 The Courts in Freed v Taffel and Corin v Patton demonstrated a reluctance in equity to construe severance as having taken place prior to registration. The problem in these cases has been that a non-transferring joint tenant or a mortgagee has had possession of the certificate of title and the transferring joint tenant has died prior to obtaining the certificate of title and registering the transfer. One way to overcome this problem if a s63 provision were introduced would be to dispense with the requirement that a certificate of title be presented with a declaration of severance. This has been the practice of the Tasmanian Recorder of Titles. The position in equity is then less relevent because a joint tenant would merely be required to lodge a prescribed form for a declaration of severance. Registration and severance would ensue shortly thereafter.
4.6 The provision recommended by the Queensland Law Reform Commission is similar to its Tasmanian counterpart.
4.7 An analogous provision to achieve severance with respect to old system title could be inserted in Part 23 of the Conveyancing Act 1919 which deals with registration of instruments.
Option 2 - Severance by notice
4.8 Given that s36(2) of the Law of Property Act 1925 (UK) operates in England to sever a joint tenancy in equity only, if such a provision were introduced in New South Wales it would need to be expanded to cover severance at law. Severance under old system title would therefore be effected in law and in equity when a notice of severance is served on a joint tenant(s). Under Torrens title two factors would need to be considered. First, to effect severance, that is, to change the nature of the holding from a joint tenancy to a tenancy in common in equal shares, procedures for registering notices of severance under the Real Property Act would need to be devised. Secondly, a potential argument against allowing severance by notice is that it may lead to situations where the Register no longer effectively reflects the state of affairs between persons holding land as joint tenants. Where one joint tenant serves a notice of severance of another joint tenant but does not register the notice promptly, severance would be effected in equity but not at law. The conclusiveness of the Register may therefore be seen as threatened.
PROPOSAL
4.9 The Commission proposes that a provision similar to s63 of the Land Titles Act 1980 (Tas) should be introduced in New South Wales. The effect of this provision would be to allow a joint tenancy to be severed by registering a declaration of severance. The Commission considers that this option would provide joint tenants in New South Wales with a relatively speedy and inexpensive means of unlilaterally severing joint tenancies. The Commission is concerned, with respect to the terminally ill property owner, at the fact that some transactions can take several weeks to become registered. The mechanism should exist to expedite registration in such circumstances.
