Secret Trust Severed Joint Tenancy

Secret Trust Severed Joint Tenancy

Bergler v Odenthal 2020 BCCA 175 found that a secret trust would have severed the joint tenancy between a husband and wife, when the husband instructed his wife surviving to transfer various assets to his brother and family from the joint tenancy property between them, and the wife agreed to do so.

The court held that there is no doubt that a valid declaration of trust, although not registered in the appropriate land registry office, could effectively sever a joint tenancy to the same extent as a transfer made to a trustee would do.

The principle that a declaration of trust has the same binding effect as a transfer to a trustee has long been the law and is set out in the often cited case of Milroy v Lord (1862), 45 ER 1185 at 494.

The land registry act did not change the common-law principle that a joint tenancy is destroyed by the alienation, even though not registered, by a joint tenant of his or her interest, thus ending the unity of title.

Bergler cited the decision of British Columbia Public Trustee v Mee (1971) 23 DLR (3d) 491 BCCA which stated:

“I fail to see any distinction in case where a joint tenant alienated his interest in the property director the person he wishes to benefit to one where he alienated it to a trustee to hold, and deal with for the benefit or interest of that person.

Both would affect the severance of the tenancy, so long as the owner of the interest binds himself by his dealings and therein, in my opinion, lies the main factor as to whether a severance is effected.”

The court saw no difference in principle between an ordinary declaration of trust, like occurred in the Mee decision, and the acceptance by a trustee of an obligation of a secret trust.

The trustee becomes the legal owner of the subject assets immediately, holding for the benefit of the beneficiaries.

A secret trust may be established where, in addition to the usual requirement for the three certainties for creating a trust, two elements are made out on the usual civil standard of proof: a communication by the deceased to their devisee, legatee, or intestate heir, and acceptance by that person of the request that they will hold the property in trust.

In addition the three certainties necessary for any express trust must be exhibited:

  1. The words making the trust must be imperative;
  2. The subject matter of the trust must be certain;
  3. The object or person intended to take the benefit of the trust must be certain, and those certainties must be exhibited at the time the trust is created. Waters, Law of trusts In Canada at 107

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