Burgess v Rawnsley

A beneficial joint tenancy is severed by an agreement between the joint tenants to deal with their shares in a way that involves severance. The agreement need not be specifically enforceable. An oral agreement unenforceable for want of writing under the Law of Property Act 1925 may nevertheless operate in equity, and later repudiation does not undo the severance. On the alternative issue, the majority held that failure of a purpose known only to one settlor does not create a resulting trust; a common purpose is required. Broader questions concerning written notice and negotiations which do not produce agreement were addressed only obiter.

Mr Honick and Mrs Rawnsley acquired a house in joint names under an express trust for themselves as joint tenants. Mr Honick contemplated marriage, while Mrs Rawnsley did not. Their arrangements failed, and in 1968 they were found to have agreed that she would sell her share to him for £750, although the agreement was not performed.

After Mr Honick’s death, his administratrix claimed half the beneficial interest. The Edmonton County Court held that there was a resulting trust and that the beneficial joint tenancy had also been severed by the agreement. Mrs Rawnsley appealed. The central questions were whether the unshared matrimonial purpose produced a resulting trust and whether the oral agreement was sufficient to sever the beneficial joint tenancy.

The appeal was dismissed with costs, and leave to appeal to the House of Lords was refused.

1. Resulting trust. Lord Justice Browne and Sir John Pennycuick held that the County Court judge was wrong to infer a resulting trust from Mr Honick’s uncommunicated intention to marry. Where two people create a trust, failure of purpose requires a common purpose, or at least a purpose communicated and shared by the parties. Lord Denning took the contrary view that each party’s separate failed purpose could produce a resulting trust. This issue was not necessary to the result.
2. Severance by agreement. The court accepted the factual finding that the parties agreed that Mrs Rawnsley would sell her share for £750. Under the second category in Williams v Hensman (1861) 1 J. & H. 546, mutual agreement can sever a joint tenancy where the agreed transaction involves severance. The agreement need not be specifically enforceable. Section 40 of the Law of Property Act 1925 made the oral agreement unenforceable by action, but did not make it void. It remained effective in equity as evidence that the parties no longer intended the tenancy to continue jointly. Mrs Rawnsley’s later repudiation did not restore the joint tenancy.
3. Obiter guidance. Lord Denning considered written notice under section 36(2) sufficient and treated the provision as declaratory. Browne LJ and Sir John Pennycuick treated it as introducing a new statutory method for land and said that pre-1925 authorities had to be read in that light. The separate opinions also considered the distinction between mutual agreement and a course of dealing, but those wider questions were unnecessary once an agreement had been found.

1. Court of Appeal. The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.
2. Edmonton County Court. His Honour Judge Granville Slack’s order dated 21 May 1974 held that Mrs Rawnsley held the legal estate on trust for herself and Mr Honick’s estate in equal shares, and that the joint tenancy had been severed.