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Property law: Co-ownership disputes – update

Property law: Co-ownership disputes – update

By Philip Barton

Real Property 

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Disputes between co-owners continue to engage the Supreme Court. Most prolific in a non-statutory context concern whether a joint tenancy has been severed to create a tenant in common. The arcane topic of adverse possession between co-owners is the subject of another decision. And disputes over partition and sale on appeal from VCAT continue.

Snapshot
  • Disputes between co-owners continue to engage the Supreme Court, particularly over whether a joint tenancy has been severed. The recent cases of Hycenko v Hrycenko, Re Wilson and Versaci v Rechichi consider this. 
  • Another recent decision, Fourniotis v Vallianatos, concerns the arcane topic of adverse possession between co-owners involving s14(4) of the Limitation of Actions Act
  • Appeals from VCAT concerning disputes over partition and sale continue In Stewart v Owen the Court particularly considers the limits on VCAT’s jurisdiction to make orders under Part IV of the Property Law Act.

An article by the author in the 2018 LIJ covers the right of a co-owner to sale or partition under Part IV of the Property Law Act 1958.1 This article covers recent Supreme Court cases on co-ownership disputes falling outside Part IV.

Severance of joint tenancy

Foundational principles

On the death of one joint tenant the interest of any surviving joint tenant is correspondingly enlarged. Accordingly, a joint tenant may desire to thwart this by severing the joint tenancy to create a tenancy in common. The classic foundational statement is of Page Wood VC in 1861 in Williams v Hensman,2 the substance of which was that the three methods of severing a joint tenancy are: 

  • an act of a co-owner operating on that person’s own share
  • mutual agreement to sever
  • any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common, but if the severance depended on an inference of this kind without any express act of severance it was insufficient to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. 

There have been three Supreme Court decisions in recent years on severance: Hycenko v Hrycenko (Hycenko),3 Re Wilson4 and Versaci v Rechichi.5 As a necessary background the discussion below commences with a survey based on that of Sifris J in Hycenko of previous cases illustrating the three methods. 

Previous cases: An act of a co-owner operating on that person’s own share

A transfer by a joint tenant of his or her interest to a stranger suffices.6 But a unilateral declaration of intention by one joint tenant, eg execution of documents transferring that tenant’s interest to a third party, uncommunicated to the other joint tenant, does not.

Previous cases: Agreement to sever

An agreement to sever need not be specifically enforceable, nor a binding contract, and its severing operation stands notwithstanding its subsequent repudiation.8 Therefore, a consent order agreed after matrimonial property negotiations sufficiently evidenced the agreement of husband and wife to sever, whether or not the agreement was binding.9

Previous cases: Course of dealing

  • Conduct of the joint tenants not evidencing in an agreement to sever but only showing an unequivocal common intention to sever suffices.10 However, the course of conduct must be inconsistent with a joint tenancy from which one would objectively infer an intention to hold property as tenants in common,11 eg, an intention to sell and divide the proceeds of sale or an agreement to sell.12 
  • The mutual intention to sever may be an expressed intention (underlying intention revealed by agreement) or may be inferred from the conduct and dealings of the parties.13 
  • Sufficing as a course of dealing are:
    • an agreement to divide a deposit paid to vendors “equally between them”14 
    • entry by a husband and wife into an agreement on the dissolution of their marriage including a provision that the wife should have sole use and occupation of the former matrimonial home, on cessation of which the home was to be sold and the proceeds distributed between them15
    • an agreement between former spouses that the proceeds of a bank account in their joint names should be divided between them in particular proportions notwithstanding subsequent withdrawal by one spouse of consent to a Family Court order sanctioning the agreement – the underlying intention was revealed16
    • an agreement between husband and wife, approved by the Family Court, to settle their property claims, in which each acknowledged that the other was legally and equitably entitled to a half interest in each property and that these should be sold on the happening of specified events, and the proceeds should be divided equally.17 Whether the particular event, on the happening of which the parties were agreed that a sale and division of the proceeds be made, occurred is irrelevant18
    • an expression by the parties that their interests be several interests of a kind consistent only with a tenancy in common, eg, that “each” was entitled to a ”one half interest” in certain properties.19
  • But not sufficing as a course of dealing are:
    • negotiations coming to nothing for the purchase of one co-owner’s interest, or for its partition, or for sale to a third party and the division of proceeds, let alone mere correspondence (falling short of negotiations) between the co-owners proposing separation of interests20
    • mere entry by joint tenants into a contract of sale.21 

Hycenko v Hrycenko – no severance

George and Ludmilla Hrycenko had three sons, John now deceased, Nicholas and Victor. Nicholas alleged that: 

  • in late 2000 or 2001 George, in the presence of Ludmilla, Nicholas, his wife, and Victor (“the family”), said at a family dinner in effect: “I've sorted everything out with John’s family. The remainder of the family properties will go to you and Victor”. Ludmilla did not dissent.
  • shortly afterwards at another family dinner George said that he and Ludmilla wanted to sell their residence and find one smaller. Nicholas then located a residence which the parents purchased, the parents paying the entire purchase price and becoming joint registered proprietors 
  • soon after this at another family meeting Nicholas told his parents that he and Victor had agreed to renovate the property; generally described the renovations; and said that funds were limited and the work would be extensive. And George replied in effect: “Well, the house will be yours and Victor’s”. Ludmilla did not dissent; 
  • consequently Nicholas renovated and regularly maintained the house. 

Nicholas asserted that the joint tenancy was severed in equity when these representations were made. Sifris J granted summary judgment to the defendants. The high point of Nicholas’ case, namely the statement to the effect that “the house will be yours and Victor’s” was insufficient, being entirely consistent with retention of the joint estate – the use of “will” did not suggest that the unity of estate would cease with immediate effect.

Re Wilson - severance 

Leonard and Austral Wilson were joint registered proprietors of interests in various pieces of land. In 1998 Austral, who expected to die before Leonard, executed an enduring power of attorney in his favour. In 2000 she was diagnosed with dementia, and so lost legal capacity. In 2008 Leonard executed instruments of transfer of each property in which:

  • the transferor was expressed as “Leonard Charles Wilson and Austral Jean Wilson”
  • the transferee was expressed as “Leonard Charles Wilson and Austral Jean Wilson . . . as Tenants in Common in equal shares”
  • the consideration was expressed as “Love and Affection”
  • the document was expressed to be executed by Leonard in his personal capacity, and as attorney for Austral pursuant to the power of attorney.

The State Revenue Office stamped each transfer exempt from duty. Leonard died in 2011. Austral died in 2016. Had the joint tenancies been severed?

Derham AsJ held:

  • the execution of the transfers demonstrated a mutual intention to sever the joint tenancies in equity.22 Equity favoured tenancies in common as a form of co-ownership and “requires little by way of evidence to show an intention that joint tenants are to hold as tenants in common”.23 Equity gave immediate effect to a mutual intention to sever.24 Any question of consideration was irrelevant25
  • Leonard and now his administrator could register the transfers, thus severing the joint tenancies at law26
  • Leonard acted lawfully and within the scope of his authority as attorney.27 

Versaci v Rechichi - severance 

Maria and Antonio Versaci were the joint registered proprietors of a residential property. In 1992 a deed of settlement was executed by them as settlors and by them and their living children as donees. The deed provided that Maria and Antonio held the property on trust for the donees as tenants in common and on its sale the net proceeds of sale were to be divided equally between the donees. The property did not sell at auction, remained in the joint names of Maria and Antonio, and on his death in 2010 Maria became sole registered proprietor by survivorship. McMillan J held that the joint tenancy was severed by the declaration of trust28 and, if not so severed, was severed by the intention manifested by the deed for the property to be held on trust for sale forthwith with the proceeds being divided equally between the settlors and the donees.29

Commentary 

These cases show the distinction between precise formal evidence and imprecise evidence. On the one hand Leonard Wilson and the Versacis executed formal documents which although simple were effective and were assisted by equity requiring little by the way of evidence to show the necessary intention. On the other hand, the alleged statement of George Hrycenko to the effect that “the house will be yours and Victor’s” was too imprecise.

Adverse possession between co-owners

In Fourniotis v Vallianatos30 Croft J considered the uncommon topic of one co-owner losing his or her interest to another by adverse possession. In 1970 Andreas Vallianatos purchased a property on which he constructed flats. He transferred shares in the land to himself (two sixths) and his wife and three daughters (one sixth each), registered in 1971. One daughter, then aged 13, was the subsequent plaintiff. Her brother the defendant gradually acquired the other shares by transfer. Neither lived there. Over the years the rent was collected and treated as his own first by Andreas until his death and then (save for partially applying some for his mother’s benefit) by the defendant, with no intervention by the plaintiff. 

Section 14(4) of the Limitation of Actions Act 1958 provides in substance that if one or more of several persons entitled to land or rent as a co-owner has been in possession or receipt of the entirety, or more than that person or those persons’ share or shares of such land or its profits or rent, such possession or receipt shall be deemed adverse possession of the land. 

Croft J held that there had been adverse possession since the 1970s: the plaintiff’s right of recovery expired at the earliest in 1986, being 15 years after she took an interest in the land (this being the limitation period provided by s8 for the right to recover land).31 Section 14(4) did not require continuous letting of all parts of the subject property: the manner in which the rent flowed was irrelevant as long as it was within the control of the “excluding” co-owner(s).32 This is an interesting decision, both because time ran against the plaintiff while she was a minor and so under a disability (s23 of the Limitation of Actions Act, which deals with extension due to disability, did not cover this situation), but more particularly because it is thought that there must be many people letting others collect rent who do not realise that they may be on the way to losing an interest in land.

Property Law Act, Part IV – Supreme Court update

The most important33 Supreme Court case on Part IV of the Property Law Act in the past two years has been Stewart v Owen34 in which Forbes J allowed an appeal from VCAT.35 Mr Stewart and Ms Owen were registered proprietors of land in shares of one third and two thirds respectively. He applied for an order for sale and division of proceeds in accordance with such shares with an adjustment in his favour for his expenditure and occupation rent. She counterclaimed seeking a declaration that he held his registered interest on trust for her and for an order that he execute a transfer accordingly. VCAT held that Mr Stewart held his interest on a joint endeavour constructive trust for Ms Owen and that it had power to adjust interests in the land under the Property Law Act

  • s233(1)(c) – limited to where there were “amounts payable by co-owners to each other during the period of the co-ownership”
  • s228(1) which empowered VCAT to make any order it thinks fit “to ensure that a just and fair sale or division of land”, eg, where an order for physical division would be ineffective without a further order that one co-owner transfer one part of the land to the other.

VCAT declared that the parties held their respective registered interests in trust for Ms Owen and ordered Mr Stewart to execute a transfer of his interest to her on her repayment of his financial contributions to the joint endeavour, secured by a charge over the land. 

Forbes J held that VCAT had erroneously held that the trust existed but, of more general application, that VCAT’s second proposition concerning its power to adjust interests was unsound. Her Honour held (subject to what is stated in the next paragraph) that: if there was no application contemplated by Part IV on foot VCAT lacked jurisdiction to make a declaration as to the interest of a co-owner;36 any order transferring title as between co-owners must derive from the statutory power to order sale, physical division, a combination of both, or by a determination that the adjustment of interest in an application between co-owners requires the transfer;37 and there was no power to impose the charge.38 

However, her Honour dampened the impact of her holding as to adjustment of interests by noting that in exercising its adjustment power one co-owner’s interest may be adjusted to nil or 100 per cent of the value, so terminating the co-ownership.39 This produces a similar result to a transfer. Further, as to her first holding, her Honour also stated that it was unnecessary to determine whether there was jurisdiction to grant a remedy by way of declaration of the equitable interest of a co-owner pursuant to s124 of the Victorian Civil and Administrative Tribunal Act (which confers a general power on VCAT to make a declaration).40 However, there is recent VCAT authority for making such a declaration.41


Philip H Barton practises at the Victorian Bar in commercial, property, and probate law. He is the author of the caveatsvictoria.blog.

  1. August 2018 LIJ p26. 
  2. 70 ER 862 at 867.
  3. [2016] VSC 247; 50 VR 726.
  4. [2019] VSC 211. 
  5. [2019] VSC 727.
  6. Wright v Gibbons [1949] 78 CLR 313 at 323.
  7. Corin v Patton [1990] 169 CLR 540.
  8. Abela v Public Trustee [1983] 1 NSWLR 308 at 315.
  9. Abela v Public Trustee [1983] 1 NSWLR 308.
  10. Note 8 above. 
  11. Saleeba v Wilke [2007] QSC 298 at [38].
  12. Note 11 above, at [25].
  13. Public Trustee v Pfeiffle [1991] 1 VR 19 at 29 – 30 per McGarvie J.
  14. Kingsford v Ball [1852] 66 ER 294.
  15. Re Pozzi [1982] Qd. R. 499.
  16. Calabrese v Miuccio (No. 2) [1985] 1 Qd. R. 17.
  17. Public Trustee v Pfeiffle [1991] 1 VR 19.
  18. Note 17 above, at 24-5 per Kaye J.
  19. Note 17 above, at 35 per Ormiston J.
  20. Note 11 above, at [48].
  21. Allingham v Allingham [1932] VLR 469.
  22. Note 4 above, at [47]-[48], [59], [66], [74].
  23. Note 4 above, at [47] quoting Mischel Holdings [2013] VSCA 375 at [66]. 
  24. Note 4 above, at [45], [46], [61].
  25. Note 4 above, at [63], though in fact there was valuable consideration in the mutual relinquishment of the joint interest and the right of survivorship [56].
  26. Note 4 above, at [60]. 
  27. Note 4 above, at [67]-[73]. 
  28. Note 5 above, at [109]-[110].
  29. Note 5 above, at [112].
  30. [2018] VSC 369; 56 VR 85.
  31. Note 30 above, at [101]-[102]. 
  32. Note 30 above, at [109]. 
  33. Other cases are: Trani v Trani [2019] VSC 2, [2019] VSC 294 -VCAT’s jurisdiction does not cover claims arising from a fraudulent transfer; Miller v Martin [2018] VSC 444, [2020] VSCA 4 – the fact that the source of the purchase monies of the land in question was a partnership between the parties did not deprive VCAT of jurisdiction. 
  34. [2020] VSC 175. 
  35. [2019] VCAT 140. 
  36. Note 34 above, at [20].
  37. Note 34 above, at [42]. 
  38. Note 34 above, at [47].
  39. Note 34 above, at [44]. 
  40. Note 34 above, at [48]. 
  41. Grech v Richardson [2019] VCAT 363.

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