SEVERANCE OF JOINT TENANCIES BY A COURSE OF DEALING

SEVERANCE OF JOINT TENANCIES

This article is an update on a recent development of the law in this area subsequent to the author’s previous article entitled “Severance of Joint Tenancies”, and located on disinherited.com.

 

Joint tenancy is a method in which two or more persons may hold property together, with the unique feature that one of the owners dies, his or her interest automatically passes to the survivor(s) by right of survivorship.

 

Severance is the legal process of converting a joint tenancy arrangement into a tenancy in common. The latter method of ownership does not have the automatic right of survivorship that the joint tenancy has.

 

Accordingly there is an increasing trend in both estate and family litigation to carefully examine whether the joint tenants, often spouses, acted in a course of conduct that intimated that the interests of the joint owners were mutually treated as constituting a tenancy in common. The financial rewards of whether or not a parcel of real property devolves on death to a surviving joint tenant, or alternatively that the deceased’s one half portion of the property in a tenancy in common passes to his or her estate pursuant to a will are huge.

 

It may well be, if examined closely, that the parties have even unwittingly indicated at some point in time that the ownership of jointly held property should be treated as a tenancy in common rather than as a joint tenancy with right of survivorship (JTROS)

 

THE ONTARIO CASES

 

Hansenv Hansen Estate 2012 9 RFL (7th) 251,75 ETR (3d) 19, a decision of the Ontario Court of Appeal, is a decision which dictates close observance. As of the date of publication of this article it has not yet been applied or considered in British Columbia, and has only been subsequently distinguished in Ontario by the subsequent Su v Lam decision which follows.

 

The Ontario Court of Appeal followed the chestnut decision relating to the severance of joint tenancies, Williams v. Hensman (1861) 70 E.R. 862 for these three manners in which joint tenancies may be suffered namely;

1.         Unilaterally, by acting on one’s own account, such as selling or encumbering one’s share;

2.         by mutual agreement between the co-owners to sever the joint tenancy;

3.         any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common (the course of dealing rule).

 

Mr. and Mrs. Hansen married for the second time in 1983. Both had children from previous relationships. In 2003 they purchased a property as joint tenants. Financial and marital troubles subsequently ensued with Mrs. Hansen moving out of the home in March 2010.

 

The husband retained a lawyer with respect to this marital breakdown and he was instructed to prepare a new will for him leaving everything to his daughters and nothing to his wife.

 

Mrs. Hansen also retained a lawyer who sent a letter to the husband’s lawyer indicating a desire to negotiate a separation agreement including a division of the property.

 

The parties began to close their joint bank accounts, and prepared financial statements for exchange in furtherance of their settlement negotiations, but before settlement could be finalized Mr. Hansen suddenly died.

 

Mrs. Hansen asserted a right of survivorship in the home and took the position that is a surviving joint tenant she was entitled to the entirety of the property.

 

The executors of the deceased’s will applied to the court for a declaration that the widow was entitled to only an undivided one half interest in the property by reason of the fact that the parties course of dealing had served to sever the joint tenancy.

 

Mrs. Hansen won at trial, but Court of Appeal overturned that decision, and pronounced that with respect to the application of the course of dealing just in Ontario:

 

1.         severance by course of dealing does not require proof of an explicit intention to sever the joint tenancy – the mutual intention can be inferred from the course of dealing between the parties and does not require evidence of agreement;

2.         severance by course of dealing does not require that each owner knew of the others position and that both treated their interest in the property as no longer being held jointly – this could be inferred from communications or conduct;

 

3.         the determination is an inherently fact specific assessment;

 

4.         the purpose of severance by course of dealing is to ensure that one owner does not unfairly obtain the benefit of the right of survivorship where the parties have shown a common intention to no longer treat their interests in the property as an indivisible unified whole.

 

The appeal court in fact stated that the trial judge erred in not appreciating the facts that the parties, amongst other things, prepared a new will, negotiated a division of their assets, and they opened separate bank accounts, acts that were sufficient conduct to sever the joint tenancy.

 

As stated by Chief Justice Winkler at paragraph 7:

” the court’s inquiry cannot be limited to matching fact patterns to those in prior cases. Rather, the court must look to the co-owners’ entire course of conduct – in other words the totality of the evidence – in order to determine if they intended that their interests were mutually treated as constituting a tenancy in common. The evidence may manifest itself in different ways. Each case is idiosyncratic and will turn on its own facts”.

 

Prior to Hansen, the Ontario law had been In Re Walters (1977) 16 O.R. (2d) 702, affirmed 17 OR (2d) 592, (Ont. CA), where the court held that a severance had been affected through the couples’ course of conduct where they had negotiated to buy each other’s interests in the matrimonial home in the course of their separation.

 

British Columbia Law

 

Hansen Estateis of notable surprise to British Columbia practitioners by reason of a 1993 BC Appeal Court decision Tompkins Estate v. Tompkins, Vancouver Registry CA 015039,  which had contrarily held that in order to satisfy the “course of dealing” test, one party must detrimentally rely on the others representation that he or she no longer wants to hold the property jointly.

In other words, in British Columbia,  the current law is that the party asserting that the joint tenancy has been severed, must prove not only that both parties treated their interests as separate, but also that they relied on the other parties representations or actions so that it would now be unjust for the other party to assert that joint tenancy.

 

The Ontario court in Hansen, held that such detrimental reliance was not necessary and the test could be satisfied simply by virtue of each party being aware of the other’s intentions and by both parties treating their interests in the property is no longer being held jointly.

 

By BC standards, the Ontario Court of Appeal found severance of the joint tenancy on rather marginal evidence of intention to mutually treat their matrimonial home as a tenancy in common.

 

The Ontario Court of Appeal however has traditionally been regarded as very persuasive throughout the Canadian courts, and it should not be a surprise if the BC Courts adopt the reasoning of Hansen in future, especially if given the right facts to do so.

 

The second Ontario decision of Su v Lam 2012 77 E.T.R. (3d) 278, (Ont. SCJ), applied Hansen and stated that the mutual intention of the parties as demonstrated by their conduct, must be assessed, and that the intention must be mutual.

 

On her death in 2004 the testator left her estate to her two grown children and appointed her estranged spouse as executor. In other legal proceedings, the plaintiff was found to be the testator’s common-law husband and that the testator had a legal obligation to provide support to him upon her death. Prior to the testator’s death she owned to real estate investments in joint tenancy with her estranged husband.

 

The common-law spouse argued that the joint tenancies between the deceased and her estranged husband had been severed prior to her death, and that the value of the properties constituted an undistributed residue of her estate.

 

The court found that there had not been any severance of the joint tenancies, as the testator had not acted on her own share with respect to the joint tenancies, nor had there been any mutual agreement existing between her and her estranged husband to sever the joint tenancies.

 

There is a high threshold that exists to show joint tenancies are severed through a course of conduct between the testator or her estranged husband and the mere fact that the testator and the estranged husband are separated is insufficient to establish severance.

 

When the parties liquidated their real estate holdings after their separation, neither the testator nor her estranged husband conducted their affairs in a way to suggest that in doing that the joint tendencies had been terminated. No evidence existed that the testator or the estranged husband had entered into negotiations the ownership following the test their separation. The fact that the testator maintain the properties without assistance from the estranged husband was not of its own, evidence of severance. Accordingly upon the testator’s death the properties became owned by the estranged husband by right of survivorship.

 

CONCLUSION

 

The continuing meld of estate, real property and family law principles all come to fore when examining whether or not the course of dealings of parties to a joint tenancy ownership have or have not resulted in a severance of a JTROS. It is reasonably common for parties, married or otherwise, to have disputes and perhaps enter into a course of dealings that might appear to treat jointly held properties as tenancies in common, that may subsequently be forgotten about and a reconciliation achieved only to have argued many years later in an estate litigation dispute, that the course of dealings many years prior had the effect of severing the joint tenancy of property now worth millions. Most spousal joint tenants simply do not appreciate the legal consequences that one or more of the following acts, may result in a severance of a JTROS property:

 

1.         closing joint bank accounts and opening separate accounts;

2.         preparing a new will disposing of the property, to the exclusion of the other,

3.         the expression of an intention to negotiate a division of property, including the subject property;

4.         one owner vacating the premises;

5.         the intention expressed to litigate if a settlement cannot be reached;

6.         the requirement of one party buying out the other’s interest as a condition to stay in the property;

7.         the expressed intention to appraise the property for negotiation purposes.

 

The Hansen case giv

Joint Tenant Interest Set Aside For Unjust Enrichment

 

Joint Tenant Interest Set Aside for Unjust Enrichment Reasons

Just because a person is registered as a joint tenant in a parcel of property does not mean that the person actually has a beneficial Interest in and to the property, and joint tenancies can be set aside on such a basis.

The BC case of Borkenhagen v Kessler 2012 BCSC 467 is just such a situation. A married couple as plaintiffs made an agreement with their defendant aunt that they would purchase a condo and allow the aunt to reside as a tenant for as long as she wished or was able.

The aunt was registered on title as a joint tenant on title, along with the plaintiffs, in order to satisfy the strata corporation that she was an “owner and not renter.”

The arrangent was satisfactory for many years until the aunt questioned how much longer she had to pay, and asserted a one third interest in the joint tenancy.

The couple brought court action for a declaration that they were the sole owners of the condo, and succeeded on two grounds: One, that it was a resulting trust and the aunt could not rebut the presumption that she held the property in trust as she had not paid for it.

In addition, the parties were not domestic partners and they had no common intention that each of the parties would make a common contribution to the purchase price, and Two, that

disinherited.com cautions families to be very careful about such “loose” arrangements as it would appear that the parties, while well intentioned, seemed to have very different notions as to what the legal situation was to be, with the aunt thinking that since she was registered on title, then all her “rent cheques” should be attributed towards the purchase price A simple requirement of the strata corporation that only ” owners” and not renters could live there undoubtedly contributed to the confusion Both parties should have had independent legal advisors I before the condo was purchased.

Doctors Speak a Different Language

Doctors Speak a Different Language

I had the benefit of recently hearing prominent geriatric psychiatrist Dr. Donnelly.

She discussed various aspects of testing for mental capacity and in particular when dealing with the legal profession in seeking a medical opinion about same.

Mental capacity is  a legal test – did the person have sufficient mental capacity when he or she signed the will or the transfer of land etc.?

To her credit Dr. Donnelly instructed the attending lawyers that they should specify in detail exactly what they want the doctor  to tell them and in response to specific questions pose the physician.

For example, she mentioned that most lawyers do not even instruct the doctor  as to the legal test for mental capacity, when most doctors, especially family physicians, really have no training or experience in understanding the legal concept, and very little training if any in testing for capacity.

If possible, it is highly preferable that the testing for mental capacity be performed by a geriatric psychiatrist in the case of the elderly, or a psychiatrist in the case of non-geriatrics

I will share aspects of her presentation upon my receipt of them in the future.

I pointed out to her and the audience that the problem is even worse than she described, in that lawyers and doctors do not even use the same words to have the same meaning.

I pointed out for example that the word acute, to a medical doctor means a sudden onset while two lawyers in the general public it means severe.

Similarly alert means awake in medical terms but to others is generally considered to be much more almost to the point of being smart

Lucid to a doctor means that the patient is oriented times three, (he or she knows who they are, where they are, and the date),  whereas to the general public the word lucid again usually means much more.

I also pointed out that lawyers deal with the concept of the test in civil proceedings being on the balance of probabilities, “is it more likely than not.”?

Doctors do not understand this concept unless they are instructed by the lawyers, as to the appropriate legal test to apply when providing their medical opinion.

Dr. Donnelly agreed that doctors are typically trained and think  as scientists who use the scientific method.

They do not  understand the legal concept of causation, or  the thin skull rule in tort law, or any other legal concepts, without the lawyer explaining the  concept to the doctor.

In my almost 40 years of experience with dealing with the medical profession I can categorically state that there is often tension.

That tension can often be broken by the lawyer phoning  the doctor, making it clear that the doctor will be paid for his or her time, and asking to speak with the doctor, in person if possible, in a quiet setting after hours.

The lawyer should then review the file and the opinion sought, in person before it is written, and educate the doctor in the legal concepts and test to be applied when considering the preparation of the medical opinion.

– See more at: http://www.disinherited.com/blog/doctors-speak-different-language#sthash.6NwDhiis.dpuf

Mental State Medical Examinations

disinherited.com recently blogged that the medical profession as a whole is woefully lacking in training and experience in the assessment of testamentary capacity.

The purpose of this paper is to provide a brief overview of some of the criteria that a doctor should utilize when performing a mental state medical examinations.

The doctor should firstly obtain all of the medical and psychiatric notes will him him as well as an outline of the contents of  value of the testator’s estate. This is crucial.

The assessment should always take place face-to-face, and when dealing with the elderly elderly suspected of havinag dementia, it should probably take place in the patient’s own resident so as to reduce anxiety, which can greatly affect the test results..

Many patients have fluctuating capacity scores and the doctor should test on several occasions over a period of time in order to get a more complete diagnosis

The doctor should of course keep detailed contemporaneous notes as well as be informed and instructed by the solicitor as to the legal test for capacity (Banks  v. Goodfellow )

The assessment should definitely be conducted in the absence of anyone who stands to benefit from the will or who might exert influence on the testator.

This is very important in that doctors are typically under a great deal of time pressure and often allow caregivers and other interested parties to provide the history to the doctor, rather than hearing it directly from the patient’s mouth. The patient may very well be unable to express him or herself and thus get lost in the process.

Medications, language barriers, serious depression and general reluctance to be examined are also common problems confronting the physician when conducting a mental assessment of the elderly.

From a legal perspective the standard of proof for court decisions as to whether a person lacks or has testamentary capacity, is on the balance of probabilities, and not beyond a reasonable doubt as is required in criminal cases.

The doctor should understand this and perhaps approach the issue as ” is it more probable than not that this patient lacks or has testamentary capacity?”

During the assessment it is necessary that leading questions, that is questions that suggest the answer, should be avoided as much as possible.

In order to conduct a proper assessment of testamentary capacity, it is necessary to probe the mind and ask detailed questions where the answer is not suggested.

The content of previous wills should be discussed and the reasoning with respect to a new will should be elucidated, particularly where a close family member previously included in a will is now being disinherited.

 

The following table are the various criteria with which the doctor will individually address when performing the mental state examination:

The mental state medical examinations:

Appearance:    posture, dress, personal hygiene, grooming.nonverbal communication, manner, etc

Behaviour:      restlessness, threatening behaviour, degree of cooperation, etc

Mood:          subjective and objective description

Affect:            blunted, inappropriate, appropriate or depressed

Speech:           rate {pressured or slow), volume, tone, quantity, appropriate/inappropriate content, dysarthria, or dysphasia Perception:     hallucinations (auditory, visual, olfactory, gustatory or tactile). depersonalisation or derealisation

Thought:         Stream: slow (psychomotor retardation) or fast (flight of ideas)

Form: illogical, fragmented, logically connected or disjointed

Content : overvalued ideas, delusions, suicidal and homicidal thoughts,  preoccupations, or phobias

 

Insight:                patient’s awareness and understanding of the condition and treatment

Cognition:       Mini Mental State Examination and other cognitive tests Judgement:     response to hypothetical scenarios (e.g. what would you do

if you found a sealed, stamped and addressed envelope on the street

Rapport:         demonstration of warmth, ability to partake in the

doctor-patient relationship

– See more at: http://www.disinherited.com/blog/mental-state-medical-examinations#sthash.RUJr1WKa.dpuf

What Constitutes Testamentary Capacity?

What Constitutes Testamentary Capacity?

Banks v Goodfellow- The “Old Chestnut” Is Still The Leading Case

The most commonly cited criteria for testamentary capacity were established in the English case of Banks v Goodfellow.3 In this case, Lord Chief Justice Cockburn outlined his understanding of a “sound disposing mind”:

“It is essential that a testator shall understand the nature of the act and its effect; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties: that no insane delusions shall influence his will in disposing of his property and bring about the disposal of it which, if his mind had been sound, would not have been made.”

These essential elements of the judgement are paraphrased and summarised in Table 1. These criteria represent the standard reference in the assessment of testamentary capacity and are repeatedly invoked in the international literature on the subject They form a reference base for most American and English commonwealth courts.

The essential elements of the Banks v Goodfellow judgement paraphrased from

Lord Chief Justice Cockburn.3

  1. The testator/testatrix must be capable of understanding the nature of the act of making a will and its consequences, (i.e. the person understands what a will is. when it comes into effect, that it can be changed at a later date, the role of the executor, etc)
  2. The testator/testatrix must be capable of understanding the extent of his/her estate, (i.e. property jointly or solely owned by them, other assets, insurance policies, etc)
  3. Whilst the competent testator/testatrix will ultimately decide who the beneficiaries shall be, he/she must demonstrate understanding of the logical claims of those who might expect to benefit from his or her will. This applies to both those being included and those being excluded from the will.
  4. The testator/testatrix must be capable of understanding the practical effect of the wilL (i.e. who receives what, the impact of the will on the beneficiaries and on those who are excluded, the impact on any previous will, the impact of any changes from a previous will, the impact of any conditions attached to the will, that a beneficiary might pre-decease him/her, etc)
  5. The testator/testatrix must be free of any disorder of mind or delusions (i.e. mental illness) that shall influence his/her will and bring about a disposal of his/her property which, if his/her mind had been sound, would not have been made.

– See more at: http://www.disinherited.com/blog/what-constitutes-testamentary-capacity#sthash.oA7Hewcj.dpuf

The Medical Profession Is Woefully Unprepared to Assess Mental Capacity

The test for mental capacity to prepare a will is a legal test and not a medical one, although the court will always be interested in the opinion of the medical practitioners, particularly those who were treating the deceased.

Accordingly, family doctors have been occasionally requested to provide opinions on typically an elderly patient’s ability to handle his or her financial or personal affairs, and to make a will.

I was flabbergasted the first time I cross-examined a family physician as to how much training he had undergone in medical school as to the evaluation of a person’s mental capacity, and he answered none.

Since that was 20 years ago, I have asked many doctors since then, and the answer never appears to be much more than about an hour, maybe.

The fact of there is no standardized tool for medical practitioners to which to refer in the assessment of mental capacity speaks volumes.

Most family doctors are simply too busy to make the proper inquiry and often fall into the trap of asking the caregiver accompanying  the patient as to the problem, treatment etc. rather than taking the time to ask  or explain to the patient him or herself.

Times are changing dramitically, and it is important for the medical profession to literally pull up its socks and learn more about the assessment and proper documentation of the early signs of dementia and to instigate the proper referral and/or treatment at an earlier time.

The population is not only aging, with a greatly increased amount of accumulated wealth, but has also grown multi-fold in its complexities as a result of divorce, remarriage, common-law relationships, same-sex relationships, deliberate single parents, multiracial/religious blending of families, etc., all of which is not only going to lead to an increase in estate litigation, but will also put greatly increased demands on the medical profession to provide opinions on their patients mental capacity.

From a legal perspective, a doctors understanding of mental capacity may very well be different from the legal test, and is important for the lawyer when asking the doctor for an opinion as to a patient’s mental capacity, to properly instruct the doctor as to the legal test.

 

More will be said on this topic in subsequent blogs.

Severance of Joint Tenancy By Power of Attorney Upheld

Severance of Joint Tenancy by aseverance, the movie Power of Attorney Upheld

 

Houston v Houston Estate 2012 BCCA 300 upheld the severance of the joint tenancy through the use of a power of attorney despite the fact that the attorney.

stood to gain financially in a subsequent wills variation action which he only had by reason of the severance of the joint tenancy, thus creating a tenancy in

common of half the house, which formed the only asset in the estate of the deceased.

disinherited.com finds the decision somewhat surprising and opines that this is because of two reasons:

A. The findings of fact by the trial judge which will be set out here after;

B. The fact that the principal of the power of attorney agency agreement was mentally competent and the court found that the attorney was carrying out his estate wishes.

disinherited.com further opines that had the deceased not been competent, that the court would have decided the decision differently and upheld the joint tenancy.

 

A Central Issue Was the Use of the Power of Attorney a Breach of Fiduciary Duty?

 

“The trial judge noted the following passage from Egli v. Egli 2004 BCSC 529, in which Madam Justice Garson (then of that court) had stated:

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage {Chapman). The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor (Robertson, Mental Disability and the Law in Canada at 183). I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members.”

 

[54]  ”  There can be no doubt that a fiduciary who engages in ‘self-dealing’ or who receives a secret benefit or profit from a transaction carried out on the donor’s behalf, is accountable to the donor for such profit: see generally Fridman, supra, at 106-110. An obvious exception exists, however, where the donor consents to or authorizes the attorney’s acting as he or she has. This concept is encapsulated in s. 27 of the Property Law Act, which was quoted by the trial judge at para. 70 of her reasons:

Attorney cannot sell to himself or herself

27       A sale, transfer or charge to or in favour of himself or herself by an attorney

named in a power of attorney, of land owned by the principal and purporting to be made under the power of attorney, is not valid unless the power of attorney expressly authorizes it or the principal ratifies it.[Emphasis added.]

[55]    The trial judge found, correctly, that James Houston did not carry out a transfer “to or in favour of himself within the meaning of these provisions. The plaintiff argues, however, that by severing the tenancy, he “created an estate” for his father, since by the time he died, Dr. Houston Sr.’s only asset was the interest in the condominium. Title having been severed, that interest passed to his estate when he died. As the trial judge noted at para. 71 of her reasons, James Houston and his siblings have commenced an action under the Wills Variation Act- which they could not have done except for the severance. Obviously, they might benefit from James’ exercise of the authority granted to him.

[56]    The question of whether James Houston had his father’s authorization or consent to “create an estate” for him was again one of fact. In this case, the question was a delicate one that depended greatly on the credibility of James Houston and his sister, who also participated in the critical conversation with their father. The brother and sister were extensively examined and cross-examined about that conversation, and the trial judge realized its importance in the context of the law applicable to fiduciaries. She found that although the father had not specifically directed his son to use the power of attorney to sever the joint tenancy, he had “clearly instructed Dr. James Houston to use the power of attorney so that his estate would be preserved and his ultimate wishes fulfilled.” (Para. 89.) The trial judge has not been shown to have been wrong in reaching this conclusion or in finding that James acted so that his father’s wishes would be respected. The trial judge also accepted that before he made the appointment for his father to see Mr. Humphries in the fall of 2008, James had told Dr. Houston Sr. that if he, the father, was happy to “let things go the way they [were] going”, the Houston children were “happy with that. We were all well enough off.” But, he said, “Dad wasn’t. He said he [had] always been a man of fairness. He wanted things to go six ways to the family.” To be blunt, the fear of what Ms. Fowler and Mrs. Houston would do after Dr. Houston Sr.’s death put this plan into serious jeopardy.”

Second Medical Examination of Elderly Man Refused

Second Medical Examination of Ederly Man Refused

The BC Court of Appeal dismissed an application that an elderly man undergo a second mental assessment examination

On February 12, 2012 I blogged the Supreme Court  decision in Temoin v Martin 2011 BCSC 1727

The Court of Appeal in reasons for judgment cited at  2012 BCCA 250, dismissed the appeal.

The application concerned the mental incompetency of an 87-year-old wealthy businessman.

The businessman’s daughter commenced an incompetence proceeding stemming from her discontent with changes made by her father to his will and estate plan.

She obtained the medical opinion of one geriatric psychiatrist who diagnosed her father with a mild uncomplicated dementia..

He considered the businessman to be incompetent.

It is a requirement for an application of comitteeship under the Patient’s Property Act that there be two medical examinations and medical opinions before the court

The petitioner brought an application that her father be ordered to attend two medical examinations on certain terms and conditions.

As such, she had not filed the requisite two medical affidavits attesting to her father’s incapacity to manage himself or his affairs.

The Supreme  court dismissed the application but held that it did have the inherent  jurisdiction to make the order sought, but this was not a case where that jurisdiction should be exercised.

The Supreme court noted that it had been well settled law for many years that the court cannot order a medical examination under the Patient’s Property act unless two

medical affidavits, stating that the proposed patient is incapable of managing himself for his affairs, because of mental infirmity, have been produced.

The court does have inherent jurisdiction, however but it can only be exercised where legislation has not “occupied the field”, and where the exercise would not conflict with the governing statute.

The court noted that there had been a legislative gap in that one medical affidavit had been produced, but there was also in addition lay evidence attesting to the proposed patient’s memory and cognitive problems.

The court was of the opinion however that the evidence was lacking and in particular, there  was little evidence that he was incapable of managing his affairs, or that anyone was taking financial advantage of him.

The Court of Appeal commented and agreed, that with regard to the particular case, the judge found an order compelling medical examinations of the elderly man for the purpose of section 3 of the Patient’s Property act, could only be made if there is a prima facie  proof of incompetence, and a compelling need for protection.

The Appeal Court held that the Supreme Court judge did not err in requiring prima face the evidence of incompetence and the compelling need for protection before she would exercise her parens patriae jurisdiction to make the order sought.

Finally the court held, the trial judge did not err in her assessment of the evidence, in particular in finding it was insufficient to establish prima facie  incompetence or that the elderly man was in need of protection.

Joint Tenancy In Matrimonial Home Severed By Owners “Course of Dealing”

Joint Tenancy In Matrimonial Home

The Ontario Court of Appeal decision Hansen v Hansen Estate 2012 CarswellOnt 2051 is an excellent example to illustrate how co-owners of a property, held as joint tenants with a right of survivorship, can through a course of dealing, legally convert the joint tenancy ownership into one of tenancy in common, that has no right of survivorship.

disinherited.com has blogged about this topic previously and this case is  a Court of Appeal decision in Ontario that is pursuing a line of court decisions that disinherited.com previously opined would expand.

The facts in this case are reasonably simple:

A husband and wife after 17 years of marriage separated with the wife moving out of the joint tenancy home.

The wife advised her husband that she wished to negotiate a separation agreement to divide the property quickly and that he could remain in the home while it was being appraised, if he’d bought her out.

The husband made a new will giving the estate to his daughters from a prior marriage and appointing them executors, and change the utilities to his own name.

The parties executed financial statements.

The husband died unexpectedly.

The wife claimed ownership of the home by way of joint tenancy.

The daughters brought an unsuccessful application at the trial level for a declaration that the father’s estate was entitled to an undivided one half interest in the home.

The trial judge reviewed the various methods of severing a joint tenancy, including a course of dealing, and referred to the definition of “course of dealing” in a law dictionary as “clearly recognizable pattern of conduct established or series of transactions or implementation of decisions”

The trial judge noted that there was no exchange of offers, discussion of division of proceeds of divorce, actions against each other, or exchange of correspondence regarding interests or otherwise formal severance of the joint tenancy such as in other cases, and accordingly the judge determined that a severance had not occurred in law.

The daughters appealed and the appeal was allowed by the Ontario Court of Appeal

The Appeal court held that the trial judge correctly enunciated the appropriate principles and correct legal test for severing a joint tenancy, but erred in restricting the application of severance by “course of dealing” to cases which followed patterns of conduct established in prior cases.

The test for severance by course of conduct required determination of whether the parties intended to mutually treat the interests in the property as constituting a tenancy in common, and the party asserting that joint tenancy was severed did not have to establish that co-owners conduct fell into the formulation found to have had effect of severing joint tendencies in other cases.

The court had to look at to the totality of the evidence to determine if the parties intended that the interest be treated mutually as constituting a tenancy in common.

The wife’s assertion of a right of survivorship was entirely inconsistent with the couples mutual intention to divide the property interests and hold interests in common rather than jointly.

disinherited.com is of the view that this is a very significant case in the expanding case law of severance of joint tenancy by a “course of dealing”.

Delusions Towards Next of Kin

Re Fawson Estate 74 ETR (3d) 86 is an interesting Nova Scotia case to do with mental delusions that voided the deceased’s last will on the basis that she lacked testamentary capacity as her delusions towards her siblings , her next of kin, affected her reasoning.

The deceased had no children or spouse and executed her will disinheriting two of her brothers, being her next of kin.

One of the brother sought to have her will proved in solemn form and declared invalid on the basis that the testatrix lacked testamentary capacity when she executed her will.

The evidence was that the testatrix was generally speaking not obviously on or bizarre and in fact functioned in most respects with little impairment and continued to carry out the responsibilities of her job.

However when it came to her mother and her brothers, the testatrix had irrational beliefs which affected her interaction with her brothers which ultimately affected the dispositions in her will.

 

Basically the deceased refused to accept that their mother had dementia despite  the of overwhelming evidence that she did, which resulted  in very disruptive behavior  on the part of the deceased daughter and an intense hatred of her brothers  for opposing her,

 

These irrational beliefs resulted in the testatrix leaving nothing to her brothers in the will.

 

After a lengthy discussion about the burden of proof for testamentary capacity, suspicious circumstances, and delusions themselves, the court came to the conclusion that the deceased did in fact lacked testamentary capacity when it came to her brothers, being her next of kin, and thus the will was declared invalid.

Delusion

 

207        In Theobald on Wills (16th ed., London, Sweet & Maxwell, 2001), the authors set out the test for testamentary capacity in para. 3-02:

 

3-In order to have testamentary capacity a testator must understand:

 

(i) the effect of his wishes being carried out at his death, though it is not necessary that he should view his will with the eye of a lawyer and comprehend its provisions in their legal form;

 

(ii) the extent of the property of which he is disposing; and

 

(iii) the nature of the claims on him. The testator must have “a memory to recall the several persons who may be fitting objects of the testator’s bounty, and an understanding to comprehend their relationship to himself and their claims upon him” so that he can decide whether or not to give each of them any part of his property by his will.

 

208        The authors then consider the effect of delusions on testamentary capacity saying in the following paragraph:

 

3-03A delusion in the mind of a testator deprives him of testamentary capacity if the delusion influences, or is capable of influencing, the provisions of his will. But a delusion does not have this effect if it cannot have had any influence upon him in making his will.

 

A testator suffers from a delusion if he holds a belief on any subject which no rational person could hold, and which cannot be permanently eradicated from his mind by reasoning with him.

 

. . .

 

In practice it may be difficult to distinguish between grave misjudgment and delusion, particularly in relation to a testator’s assessment of the character of a possible beneficiary under his will….

 

A will is not invalid merely because in making it the testator is moved by capricious, frivolous, mean or even bad motives. If he has testamentary capacity he ‘may disinherit …his children, and leave his property to strangers to gratify his spite, or to charities to gratify his pride.

 

209        In Royal Trust Corp. of Canada v. Saunders[2006 CarswellOnt 3478(Ont. S.C.J.)], 2006 CanLII 19424, Blishen, J. said at para. 62:

 

[62] In order to affect testamentary capacity, a delusion must:

 

1. be one of ‘insanity’; and

 

2. be in relation to the testator’s property or expected beneficiaries.

 

and

 

199        In Keddy Estate, Re, 2002 CarswellNS 451(N.S. Prob. Ct.), Hall, J. referred to the burden of proof and suspicious circumstances at para. 25 as follows:

 

25 The profounder of a will has the burden of proving on a balance of probabilities, among other things, that the testator had the mental competence or capacity to make a will. Once due execution of the will is established, the profounder has the benefit of a rebuttal presumption that the testator had the capacity to make a will. Where ‘suspicious circumstances’ are present, however, the presumption may not be relied upon. The question then becomes, what constitutes suspicious circumstances and how do they affect proof of the mental capacity of the testator.

 

200        He then quoted the above passages from Vout v. Hay. That passage was also quoted by Murphy, J. in Willis Estate, Re, 2009 NSSC 231(N.S. S.C.). He said in para. 10:

 

[10]The Supreme Court noted, at para. 25 in Vout, that the suspicious circumstances which will rebut the presumption in favour of a will’s validity may relate to various issues. The Court identified (1) circumstances surrounding the preparation of the will, (2) circumstances tending to call into question the capacity of the testator, or (3) circumstances tending to show that the free will of the testator was overborne by acts of coercion or fraud.

 

It is the second category which is in issue here.

 

201        Murphy, J. continued in para. 16:

 

[16]To resolve the issues raised in this case, the Court must therefore determine:

 

(a) whether suspicious circumstances are present so that the initial presumption of the Second Will’s validity ceases to operate;

 

(b) if suspicious circumstances surrounding the preparation of that will are established, whether the Respondents as proponents of the Second Will have met their civil burden to establish execution;

 

(c) if the Respondents establish that Jams Willis executed the Second Will but circumstances raise a suspicion that the testator’s free will was overborne by coercion, whether the Applicant who attacks the Second Will satisfies the burden to establish undue influence.