Burgess v Rawnsley [1975] Ch 429

Facts

• Mr. Honick and Mrs. Rawnsley jointly purchased a property, contributing equally to the price.
• The initial intention was that both would live at the property together; Mr. Honick proposed marriage, which Mrs. Rawnsley declined.
• Mrs. Rawnsley never occupied the property.
• Mrs. Rawnsley orally agreed to sell her share in the house to Mr. Honick for £750 but later sought a higher price before the transaction was completed.
• Mr. Honick died before any final agreement or sale.
• After his death, Mrs. Rawnsley claimed the entire property by right of survivorship under the joint tenancy.
• Mr. Honick’s estate contended that the joint tenancy had already been severed in equity, entitling it to a distinct share in the property.
• The central question was whether the incomplete oral agreement constituted a sufficient “course of dealing” to sever the joint tenancy in equity.

Issues

1. Whether an incomplete agreement or negotiations regarding the division or sale of jointly owned property can amount to a sufficient “course of dealing” to sever a joint tenancy in equity.
2. Whether an express, formal (written) contract or notice is mandatory for severance, or if conduct and mutual intention suffice.
3. How the distinction between mutual agreement and a course of dealing alters the requirements for severance of a joint tenancy.
4. Whether uncommunicated declarations or mere verbal notices by one party are sufficient for severance.

Decision

• The Court of Appeal found in favour of Mr. Honick’s estate, holding that the joint tenancy was severed in equity prior to his death.
• Lord Denning MR, delivering the lead judgment, held that severance by a course of dealing does not require a completed or formal agreement: it is enough if conduct demonstrates both parties intended to hold separate shares.
• The oral agreement to sell the property for £750, even though not completed, alongside subsequent related discussions, constituted a sufficient course of dealing to sever the joint tenancy in equity.
• The other judges, Sir John Pennycuick and Lawton LJ, concurred; Sir John Pennycuick emphasized that acts must evidence mutual intention, not merely personal desire.
• The court clarified that an uncommunicated declaration or a mere verbal notice is insufficient; severance requires clear expression of intent by both parties to treat interests separately.

Legal Principles

• Severance of joint tenancy in equity can occur through a course of dealing that evidences a mutual intention to treat the interests as distinct, rather than as an indivisible whole.
• A formal or completed agreement is not necessary for severance; inferred intention and conduct suffices, provided the conduct clearly reveals intention.
• The Law of Property Act 1925 permits severance by written notice but also recognises severance by course of dealing and mutual agreement, developed through case law.
• The case distinguishes between mutual agreement (requiring an express contract) and a course of dealing (allowing conduct and inferred intention).
• Failed negotiations and incomplete agreements may amount to a course of dealing sufficient for severance if they exhibit intention to treat interests separately.
• Mere unilateral declarations or uncommunicated intentions do not effect severance; shared expression of intention is essential.
• The case was contrasted with Gore and Snell v Carpenter, where reservation of rights and incomplete negotiations failed to constitute a course of dealing.

Conclusion

Burgess v Rawnsley [1975] Ch 429 established that severance of a joint tenancy in equity may occur through incomplete agreements or negotiations, provided the parties’ conduct demonstrates a mutual intention to hold separate shares, without requiring a formal contract or completed transaction. The Court of Appeal endorsed a flexible, equitable approach, emphasising the importance of conduct and intention for severance, and clarifying the boundaries between mutual agreement and course of dealing in this context.