Alby, Bertie and Carlo were old friends from their days at the College of the Arts. When Alby received his share from his parents' deceased estate, he proposed a business venture to Bertie and Carlo.

In December 2018, the three friends were registered as joint proprietors in the fee simple of 42 Maribyrnong Drive, a dilapidated warehouse near Footscray. It was decided that Alby would use half of the property for a bar and music venue, and the rest would be divided equally between Bertie's caf and Carlo's music and bookstore. That way there would be money coming in from early morning until late at night. It also combined their respective talents, as Alby had been doing well in online music promotion, Bertie had a lot of experience as a barista (and occasional actor), and Carlo had always worked in book and music shops.

Of the purchase price of $1.6 million, Alby contributed a deposit of twenty five percent. The balance of the purchase price was secured by a mortgage loan from Western Alliance Bank at an interest rate of five percent per annum for a period of twenty five years, for which they were jointly liable.

Without specifically discussing the matter, they tacitly agreed to avoid complicated and tedious meetings with lawyers and accountants. Other than employing a licensed conveyancer for the purchase, they did not seek legal or financial advice.

In order to finance the conversion of the warehouse, Bertie and Carlo each obtained loans of $200,000 from Swift Mortgage Loans Ltd, at an interest rate of ten percent per annum repayable over ten years. Both loans were secured by mortgages over Bertie and Carlo's interests in 36 Maribyrnong Drive. Only Bertie and Carlo signed their respective mortgage agreements. Alby funded the conversion of his share of the warehouse from the remainder of his inheritance.

Over drinks at a nearby bar, they made an informal agreement to pool their funds to pay off the West Alliance Bank loan and the two Swift Mortgage Loans Ltd loans from the profits of the three businesses.

Alby's venue took off quickly, thanks to his savvy online marketing. It was packed out from mid-week to Saturday night, with patrons paying a modest cover charge and consuming drinks and snacks far into the night. Bertie's caf was doing quite well at a more modest scale, with a regular clientele from morning coffees through to early afternoon. Carlo's store was struggling, which he attributed to various forms of online competition. The profits from each of the three businesses was paid into the personal bank accounts of each of them.Accordingly, the informal agreement was for each of them to contribute to a separate account, held jointly by them. This joint account was used to fund the warehouse conversion, and to pay off the three loans on the basis of minimising the total interest payments across the three loans.

Carlo's daughter Stella has been working in his store since it opened in May 2019, for the minimum wage for an eighteen year old.She has also been doing some shifts at Alby's venue, since January 2020. Alby has been very impressed by her practical initiative and people skills, and her acumen about the music business. He mentioned to Carlo that he was thinking about offering her an expanded role in his business.

Carlo didn't see much future for himself at the store. It was taking up more time than working for a wage, that he would rather be spending on his creative pursuits. Until now Stella has struggled to find any direction in life, and Carlo has been delighted to see how well she is doing now. In May 2020 he said to her: 'You're doing a great job. If you show me that you can work nights and weekends for six months working for Alby, I'll be happy to give you my share of the business and the warehouse here.'

Stella was delighted by the prospect, and was more than happy to work the two jobs. What's more, within a few weeks Alby was paying her fifty percent more than her dad, for her expanding roles in his business.

After six months, Carlo arranged to give her his share of the business. He decided not to worry about his continuing liability for the loans. They were being paid off steadily as things stood. This was a great opportunity for Stella, and that was worth any risk involved. He arranged an appointment with Mr Soames, his solicitor, who was in possession of the certificate of title to the property. Soames duly prepares a transfer for Carlo to sign. Unfortunately, the day before Carlo's appointment with Mr Soames, there was a severe storm over Melbourne. The Maribyrnong River flooded, extensively damaging the warehouse. Carlo, became deeply immersed in the floodwaters. His body was found floating near Victoria Docks next morning. In his will, Carlo left all his real and personal property to Stella.

Alby and Bertie discovered that the insurance policy on the property only covered storm damage, defined as water moving downwards onto the property, not upwards as was the case with the flood waters. Due to the extensive damage, they couldn't continue trading. They are unable to obtain any further loans, or to service the existing loans without any cash flow from trading.

By 25 March 2021, Alby had contributed $400,000 to the joint account used for the warehouse conversion and loan repayment. Bertie has contributed $100,000 to the joint account. Carlo has not been able to contribute to the joint account.

There is a combined total of $700,000 outstanding on the three loans. After the unrepaired flood damage, 42 Maribyrnong Road has been independently valued at $1.2 million.

Alby, Bertie and Stella are unable to agree on their respective entitlements. Alby has asked you to advise him as to his legal rights in relation to the premises at 42 Maribyrnong Drive.

You should consider all arguments relating to the interests of Alby, Bertie and Stella in law and in equity, including any available remedies.

Using Joint tenancy elements and principles advise Alby as to his legal rights in relation to the property. (Victoria law)

Is it a joint tenancy or a tenancy in common?

Position in law: (joint tenants in law)

Four unities

possession:

Interest:

Title:

Time:

The right of survivorship (Carlo dies so his right is transferred to surviving tenants)

Equity

• Unequal contribution to purchase price, mortgagee purchase or partnership purchase (Alby has paid 400,000, Bertie has paid 100,000 and Carlo has not contributed)
• Mortgagees/Business partners: investment objectives
• Other circumstances where beneficial entitlement intended.

Reasonable reliance/detriment (joint tenants/ did Alby, Bertie and Stella reasonably rely? did they suffer any detriments

Incomplete gift (Corin v Patton HCA 1990) (Carlo attempting to transfer his share to his daughter Stella but dies and transfer of title has not gone through, it is imperfect)

Severance (has Carlo severed in law by attempting to transfer his share to Stella?)