Legal Principles and Key Points

  • In the case of Davis v Smith 2011 EWCA Civ 1603, it was found that it was clear from the conduct of parties that they had agreed to sever a joint tenancy of a former matrimonial property and that it had been severed in equity.

Facts of the Case

  • The appellant (S) appealed against a decision that a joint tenancy of a former matrimonial property had been severed in equity.
  • S had been married to the mother (M) of the respondents (D) and they had jointly purchased a property that M had previously occupied as a council tenant.
  • The marriage later broke down resulting in S moving out of the property and issuing divorce proceedings against M.
  • M and S’s joint assets consisted of the property, some cash, and an endowment policy.
  • It was agreed that the property should be sold, and that the policy would be surrendered.
  • Correspondents through the parties’ solicitors indicated that S would get all the proceeds from the policy and that M would get the lion share of the sale of the property to make up for S receiving the policy proceeds.
  • An offer was received for the sale of the house; however the exchange of contracts was delayed.
  • S’s solicitors wrote to M mentioning the offer and a need to agree division of the proceeds of sale.
  • A couple of days later M executed a will appointing D as executors of her estate.
  • After a few days, M unexpectedly died on the day she had intended to visit her solicitors to service notice of severance of the joint tenancy pursuant to the Law of Property Act.
  • Both parties had been advised to serve a notice of severance, but neither had prior to M’s death.
  • The judge held that the joint tenancy had been severed by mutual agreement between M and S or by the course of dealings between them which led to the same end result.
  • S contended that the judge had erred in finding that the joint tenancy had been severed.

Issues in Davis v Smith 2011 EWCA Civ 1603

  • Could S claim that the tenancy had not been severed.

Held by Court of Appeal

  • Appeal dismissed

Lord Neuberger

  • It was found that it was clear the joint tenancy could service a proposal and an agreement to put a proper on the market and a subject to contract offer, even eventual sale could b complaint with a joint tenancy continuing to exist.
  • In this case however, it was clear from the correspondence between M and S that the parties had common intention that the property be sold and that the proceeds be divided equally. The parties had embarked upon the division of their assets on the basis that their assets would be divided equally. Accordingly, the judge had reached the right conclusion on the severance of the property, Burgess and Marshall applied. 
  • “The parties must have understood and assumed between themselves, irrespective of what they knew or did not know about the law, that they had negotiated and actually acted on the basis that their assets — and in particular the house, by far the biggest component of their assets — would be realised and the proceeds divided equally between them.
  • “In my view, therefore, applying the principles laid down in Burgess, the Judge reached the right conclusion. Whether one would reach the same conclusion on the basis of what was said in the correspondence, without any action having been taken in relation to the policy, need not been decided, but I would incline to the view that there was enough in the correspondence taken as a whole to justify the same result. Whether one can go even further, as was postulated during argument, and say that simply by agreeing that the property would be sold in the context of the divorce which was under way, in circumstances where both parties must have appreciated that there would be a fifty-fifty split of proceeds, is not a point that needs to be decided. It may be enough of a reason for distinguishing Marshall and giving effect to the intention of the parties; on the other hand, it may be a step too far.” [20-21]