Adjusting to the challenges caused by coronavirus has been difficult for all of us. However, for those acting as the executor of the Will during this period, the obligations placed...
Don’t allow assumption to trip you up
The case of Lee v Lee, involving a claim for rectification of a notice of severance concerning a joint tenancy, highlights that following best practices can help avoid potentially tricky situations.
Mr and Mrs Lee purchased a farm, as beneficial joint tenants in 2002, consisting of a bungalow and some surrounding fields registered under three titles numbers, although the third title number was not created until 2008.
In 2007, Mr and Mrs Lee made Wills intending that, on the death of the first spouse, the survivor would take the bungalow and three named fields absolutely and retain a half share in the remainder of the farm, with the other half going to their son. On the death of the second spouse, their son would receive the other half, the bungalow and the three fields. To achieve that, a notice of severance of the joint tenancy in the land was prepared and signed. Unfortunately, it only referred to one of the three title numbers.
The couple revised their Wills in 2011 but retained similar provisions to those contained in the 2007 Wills. Their son was entitled to the half share of the first parent to die, excluding the bungalow and the three fields. The residuary estate would go to the surviving spouse. However, no change was made regarding the severance of joint tenancy.
When Mr Lee died in 2014, the land in the remaining titles passed to Mrs Lee by survivorship rather than by Will. as the notice of severance only referred to one title. This meant that their son received only Mr Lee’s half share of the initial title.
Had the notice referred to all three titles, the bungalow and three fields would have passed to the Mrs Lee under the gift of residue in the Will, and the son would have received Mr Lee’s half share in the remainder of the farm under the specific gift to him.
In 2015, attempts were made to rectify the position by entering into a Deed of Variation to Mr Lee’s estate which attempted to transfer Mr Lee’s half share in the three fields to his son. However, this failed as the land had automatically passed to Mrs Lee and, therefore, was outside Mr Lee’s estate.
The failed gift came to light during the administration of Mr Lee’s estate. Mrs Lee applied to Court for an order rectifying the 2007 Notice of Severance to include all the parcels of land.
The Court referred to the necessary conditions for rectification:
There must be convincing proof to counteract the evidence of a different intention represented by a written document. This was evidenced in a letter recording their instructions confirmed by their solicitor. They believed the notice would sever the joint tenancy in the whole farm when, in fact, it only covered a part of it.
The written document must be flawed so it does not give effect to the parties’ intention, as opposed to the parties merely being mistaken about their intention. The notice did not give effect to the agreement between, and intention of, Mr and Mrs Lee as it only severed the joint tenancies in part.
The specific intention of the parties must be shown. It is not sufficient to show that the parties did not intend what was recorded. They clearly wished to sever the joint tenancies in the whole farm, because that was the method by which they could each leave a half share of the entire property to their son.
There must be an issue capable of being contested between the parties although all relevant parties consent. In this case, if rectification was awarded, their son would take a half share in the entire farm apart from the farm bungalow and the three named fields. If not, he would take a half share only in title included under the notice of severance. That is plainly “an issue capable of being contested between the parties.”
The Court found that all conditions were met and made an order rectifying the notice.
The case highlights the importance of not taking things for granted. In preparing the 2011 Wills, the solicitor made the incorrect assumption that the joint tenancies in all the land which constituted the farm had been severed. By simply reviewing the notice of severance and checking the three registered titles, at minimal cost, this would have been revealed.
The resolution of the conveyancing mix-up involved a transfer of land to Mr and Mrs Lee. Prior to registering this, the question of whether the land was to be held as ‘joint tenants’ or ‘tenants in common’ was never asked, causing serious implications. Therefore, in any property transactions, it is important that individuals liaise with their Will draftsperson and conveyancer to ensure their deeds follow the intentions established in their Will.