The BC Court of Appeal in Bergler v Odenthal 2020 BCCA 175 confirmed that both a declaration of trust and a secret trust would have the effect of severing a joint tenancy.
The court referred to it’s previous appeal decision in Re Mee (1971) 23 DLR (3d) 491 where the court stated:
“There is no doubt— that a valid declaration of trust, although not registered in the 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.”
The court further discussed the seminal case of Stonehouse v AGBC (1962) SCR 103 in which it was held that the land Registry act did not change the common-law principle that the 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.)
The court stated that they saw no distinction in a case where a joint tenant alienated his or her interest in the property directly to the person he or she wishes to benefit, to one where he or she alienated to a trustee to hold, and deal with it for the benefit or interest of that person.
Both situations would affect the severance of the tenancy, so long as the owner of the interest binds himself or herself by his or her dealings and therein- this is the main factor as to whether a severance of a joint tenancy is affected.
The court in Stonehouse went so far as to declare that just because the beneficiary was an infant, that the infant could not compel the settler to transfer the undivided interest to him or her, and thus would still effect a severance of the property.
The Bergler case ended with the courts stating that it saw no difference in principle between an ordinary declaration of trust, like discussed in the Mee decision, and the acceptance by a trustee of an obligation of a secret trust. Both have the effect of severing a joint tenancy.