BACKGROUND TO THE REFERENCE
1.1 On 14 November 1990, the then Attorney General, the Honourable JRA Dowd QC, MP, asked the Commission to inquire into and report upon:
(i) whether and in what respect the law relating to the unilateral severance of a joint tenancy should be altered; and
(ii) any related matter.
1.2 The reference arose under the Commission’s Community Law Reform Program. The Program allows the Commission to give preliminary consideration to proposals for law reform made by members of the legal profession and the community at large and, where it is thought appropriate, to seek a suitable reference from the Attorney General.1
1.3 The matter under consideration was first raised in correspondence from Professor John Wade (then of the University of Sydney, now of Bond University), and author of a number of texts on the subject of family law and property division upon marriage breakdown. Professor Wade identified a number of difficulties involved in the unilateral severance of joint tenancies especially in the context of estranged couples holding property as joint tenants.
1.4 In marriage and de facto relationships, couples frequently own property, both real and personal, as joint tenants. According to material supplied by the Land Titles Office, joint tenancy is the most common form of real estate co-ownership in NSW. If one tenant dies the property automatically passes to the surviving tenant. On the breakdown of the relationship, one party may try to end the joint tenancy to prevent his or her estranged or former spouse taking the property by survivorship. However, due to the cumbersome and complex means available to end a joint tenancy unilaterally and effect property settlements, this process may take several years to complete. If the joint tenant seeking to sever the joint tenancy dies in the meantime a severance may not be effected at all.
1.5 An examination of this topic is timely considering the rise in the incidence of marital breakdown.2 The problem has been highlighted in three reported cases in New South Wales3 in which unilateral severance was attempted as a means of preventing property passing by survivorship to an estranged spouse. In each case a joint tenant had executed a transfer to sever the joint tenancy but for various reasons registration of the transfer under the Real Property Act 1900 (NSW) had not taken place at the time of the severing joint tenant’s death. The Court held in each case that unilateral severance of the joint tenancy had not occurred because there was no registration of the transfer. The deceased joint tenant’s share consequently survived to the remaining joint tenant.
CONSULTATION
1.6 In September 1991 the Commission distributed a Discussion Paper entitled “Unilateral Severance of a Joint Tenancy” in which the Commission invited comment on whether the law relating to unilateral severance of a joint tenancy should be changed to provide a speedy and effective way to sever unilaterally a joint tenancy, and if so, the manner in which such reform may best be achieved.
1.7 Submissions in response to the Discussion Paper were received from the New South Wales Land Titles Office, Mr Brendan Edgeworth (Senior Lecturer in Law, University of NSW), the Victorian Bar Council, Mr Michael Reymond (from the law firm Sly & Weigall), the Property Law Committee of the Law Society of New South Wales and the Senior Assistant Land Registrar at HM Land Registry, England. All but one of the submissions which addressed the issue supported the introduction of a simpler method of effecting a unilateral severance of a joint tenancy.
1.8 The single dissenting submission, from the Property Law Committee of the NSW Law Society rejected the proposal completely, arguing that the concerns raised by the Commission in the Discussion Paper would be more appropriately addressed by other means, such as enlarging the Supreme Court’s jurisdiction for sale or partition and amplifying the powers of the Family Court.
1.9 In August 1992 the Commission invited a number of persons with interest and expertise in the area to participate in a discussion on the issues raised both in the Discussion Paper and in the submissions received in response to the Discussion Paper. The Commission gratefully acknowledges the assistance and contribution provided on this occasion by Mr Bernard Coles QC, Ms Margaret Stone (consultant, Freehill Hollingdale and Page), Mr Brendan Edgeworth and representatives from the New South Wales Land Titles Office and the Law Society’s Property Law Committee.
1.10 A more extensive analysis of the operation and implementation of the three possible models, developed in outline at that meeting, and a detailed consideration of associated matters were undertaken by the Commission and the further observations of Ms Margaret Stone and Mr Brendan Edgeworth were received. The views of Ms Diane Skapinker from the Law Faculty of the University of Sydney were also received with appreciation.
ORGANISATION OF THIS REPORT
1.11 This Report consists of eight chapters.
Chapter 2 - Background. This chapter provides a brief summary of the present state of the law in relation to joint tenancies. The discussion in this chapter elaborates on the material contained in DP 23. It examines the defining features of a joint tenancy and provides a historical overview to illustrate the context in which joint tenancies developed.
Chapter 3 - Existing methods of unilateral severance. This chapter reviews the presently available methods of unilaterally severing a joint tenancy.
Chapter 4 - Shortcomings of the existing modes of effecting unilateral severance. The various obstacles to severance presented by the existing methods and which may be encountered by a joint tenant seeking to sever the joint tenancy in a timely fashion are examined in this chapter.
Chapter 5 - Why should unilateral severance be simplified? This Chapter draws together the reasons for supporting the introduction of a simpler method of unilaterally severing a joint tenancy.
Chapter 6 - Reform in other jurisdictions. This chapter outlines the legislative provisions existing in other jurisdictions enabling unilateral severance of a joint tenancy by notice.
Chapter 7 - Recommendation: Unilateral severance by registration of a declaration of severance. This chapter contains the Commission’s central recommendation for the introduction of unilateral severance by registered declaration. The reasons for preferring this method over other possible options for reform are set out.
Chapter 8 - Features of the system of severance by registration of declaration. The Commission’s recommendations for reform with supporting commentary are presented in this chapter.
FOOTNOTES
1. The nature and progress of the Community Law Reform Program is discussed in detail in the Commission’s Annual Reports.
2. For recent statistics refer to Australian Bureau of Statistics Divorces Australia 1992 Catalogue no 3307.0.
3. McNab v Earle [1981] 2 NSWLR 673; Freed v Taffel [1984] 2 NSWLR 322; Corin v Patton (1990) 169 CLR 540; (1990) 64 ALJR 256; (1990) 92 ALR 1; (1988) 13 NSWLR 10; (1988) 13 NSWLR 15.
