Re Pavlou (A Bankrupt)

Re Pavlou (A Bankrupt) [1993] 1 WLR 1046, ChD

Severance of a joint tenancy in common in a matrimonial home.

Facts

A husband and wife bought a home in 1973 as beneficial joint tenants, with part of the cost assisted by a mortgage. They co-habited the house until the husband left the home in 1983. The wife continued as the sole occupant, paid the mortgage payments, and paid for improvements in the house. In 1986, she obtained a divorce on grounds of desertion. In 1987, a bank obtained a bankruptcy order against the husband. The appointed bankruptcy trustee who claimed, against the wife, for an order for sale and claimed that there is no equitable division of the proceeds between beneficial joint tenants. 

Issue

The question arose as to the division of the shares in the proceeds of sale between beneficial joint tenants, considering the greater contribution made to the property and property repairs by the wife. 

Held

The Court held that, in the division of equitable shares, there is no distinction between beneficial tenancy in common and beneficial joint tenancy. Accordingly, the Court stipulated the principle that the proportions of the property to be divided between former co-owners “must have regard to any increase in its value which has been brought about by means of expenditure by one of them.” (1048). In this case, the wife increased the value of property by her expenditure on repairs and improvements to the home. She also contributed by paying the mortgage instalments, which will be calculated from the point at which the husband left the property in 1983 and not since his declared bankruptcy in 1987. Thus, the bank must inquire as to the amount in expenditure that she contributed to the property and, upon sale, must take that expenditure into account when equitably dividing the shares in the property.