Facts:

Mr and Mrs Williams had four children. He first took the tenancy of Cefn Coed Farm in 1943 where he farmed initially as a sole trader before changing it into a partnership with his wife and son Dorian in 1985. The partnership deed provided that profits and losses should be divided and borne between his parents and himself in equal one-third shares. Dorian has been farming at Cefn Coed since leaving school at 16.

The freehold of Cefn Coed was acquired in the joint names of the three of them in 1986 – when Dorian was 23. One of the issues was that the transfer of the farm did not contain any express declaration as to whether the land was to be held by them beneficially as joint tenants or tenants in common. Various wills were drafted some containing complex arrangements. In 2013, Mrs Williams died and her estate passed to Mr. Williams. 

Upon Mr. Williams’ death in 2018, Dorian did not exercise the option in the will which would have made him the owner of the new house at Cefn Coed, as Cefn Coed Farmhouse would be owned by Susan and Gerwyn, while Cefn Coed Farm would be owned by Dorian and Gerwyn, and Dorian would take Gerwyn into partnership as an equal partner. As a result, according to the will, "all the share and interest in" both the new house and Cefn Coed Farmhouse passed to Gerwyn and Susan, while all the share and interest in Cefn Coed Farm was bequeathed to Gerwyn.

Dorian brought an action against two of his siblings and the executors of Mr. Williams’ estate in 2021 in relation to the ownership of the farm. The High Court decided that Dorian and his parents owned the farm as beneficial tenants in common. Dorian appealed the decision. 

Decision:

The Court of Appeal dismissed the appeal after considering how land is held beneficially when transferred into joint names without an express declaration of trust. Lord Justice Nugee agreed with the High Court’s conclusion that the property was acquired by the appellant and his parents as beneficial tenants in common in equal shares. He reached this decision based on the nature of the partnership, the various wills, and the reason for purchasing the farm. 

It was not disputed that Mr. and Mrs. Williams and Dorian acquired the farm on trust for themselves as equal co-owners. The question was whether it had been intended that they should be joint owners with the right of survivorship, or tenants in common in equal shares with no right of survivorship. As the farm was acquired for business purposes, some of the principles established in Stack v Dowden [2007] and Jones v Kernott [2012] did not apply, even if the farm also provided a home for the family. 

Based on a well-established principle of equity, the Court agreed that co-owned property acquired for business purposes is presumed to be held beneficially as tenants in common rather than as joint tenants. The Court of Appeal also refused to equate the relationship between Dorian and his parent to that of a married or unmarried couple. Dorian could not, therefore, rely on survivorship. 

Although accepting the argument that the principle of the onus being on the person seeking to show that the beneficial ownership was different from the legal ownership was not confined to the domestic context, the Court made clear that it was only the starting point. Where property was acquired for business purposes, courts would assume that survivorship was not intended. This presumption could be displaced although it was deemed ‘fairly unusual’. 

Implication:

This case makes it clear that properties acquired for business purposes and registered in joint names are presumed to be held as tenancies in common. The case is a reminder of the importance of an express declaration of trust and declaration of joint ownership with the right of survivorship if that is what the person intended. Failure to address those issues alongside succession issues can result in lengthy litigations.