Joint Tenancy and the Right of Survivorship

Joint Tenancy and the Right of Survivorship

McKendry v McKendry 2017 BCCA 48 sets out a good analysis of what a joint tenancy is and the right of survivorship associated with it.

The real property in question was the mother of four children’s home in Vancouver. In 2008, she transferred legal title to the property into joint tenancy with one son John, although it is clear that he was to hold the property in trust.

In 2010, the mother  decided to remove the trust conditions so that John would receive the property absolutely on her death. She informed her lawyer in writing accordingly.

The central issue on appeal was whether the trial judge erred in finding that the mother  was required to execute a written Deed of Gift under seal for the son John to take beneficial ownership when she died. 

The Court of Appeal held that a Deed of Gift was not necessary for the son to take the beneficial interest when the mother died and allowed the appeal.

The appeal court held that the son John held the property in trust for the other siblings.

Joint Tenancy and the Right of Survivorship 

27      Joint tenancy is a form of concurrent property ownership. When the “four unities” of title, interest, time and possession are present, co-owners hold an equal interest in property as a unified whole: Zeligs v. Janes 2016 BCCA 280at para. 38. However, parties may hold legal title to property as joint tenants while beneficial ownership is held differently. For example, a mother and son may own real property as joint tenants in law while the mother alone owns the beneficial interest. In such circumstances, as Rothstein J. noted in Pecore v. Pecore 2007 SCC 17at para. 4:

. . . The beneficial owner of property has been described as “the real owner of property even though it is in someone else’s name”: [citation omitted] . . .

28      The principal characteristic of joint tenancy is the right of survivorship. When a joint tenant dies, his or her interest in property is extinguished. If there is more than one surviving joint tenant, they continue to hold the property as joint tenants. The last surviving joint tenant takes full ownership of the property.

29      So long as the requirements of a binding gift are met, the owner of property may, during his or her lifetime, make an immediate gift of a joint tenancy, including the right of survivorship. This is so regardless of whether the donee of the gift is to hold it for the benefit of the donor while he or she is alive. When gifted inter vivos, the right of survivorship is a form of expectancy regarding the future. It is a right to what is left of the jointly-held interest, if anything, when the donor dies: Simcoff v. Simcoff 2009 MBCA 80at para. 64; Bergen v. Bergen2013 BCCA 492 at para. 37; Pecore at paras. 45-53.

30      A donor may gift the right of survivorship, but continue to deal freely with property throughout his or her lifetime. In Simcoff, Steel J.A. explained why:

64 Simply, and conceptually, the fact that a “complete gift” may have been given and that this gift included a right of survivorship does not, prima facie, prevent a donor from dealing with the retained joint interest while alive. The right of survivorship is only to what is left. Accordingly, if one joint owner drains a bank account (in the case of personal property) or severs a joint tenancy (in the case of real property), there is nothing in the right of survivorship itself that somehow prevents this. In commenting on the issue of survivorship in Pecore, Rothstein J. wrote (at para. 50):

Some judges have found that a gift of survivorship cannot be a complete and perfect inter vivos gift because of the ability of the transferor to drain a joint account prior to his or her death: see e.g. Hodgins J.A.’s dissent in Re Reid [(1921), 64 D.L.R. 598 (Ont. C.A.)]. Like the Ontario Court of Appeal in Re Reid, at p. 608, and Edwards v. Bradley, [[1956] O.R. 225] at p. 234, I would reject this view. The nature of a joint account is that the balance will fluctuate over time. The gift in these circumstances is the transferee’s survivorship interest in the account balance – whatever it may be – at the time of the transferor’s death, not to any particular amount.

Gift of House Upheld Trust

Gift of House Upheld Trust

Franklin v Cooper 2016 BCCA 447 upheld a decision of the Supreme Court that the presumption of resulting trust applied and that the defendant daughter who received gift of house by her mother in joint tenancy, instead held the house in trust for the estate of their mother.

The facts found by the court of appeal were:

In 1989, the deceased transferred title to her home to herself and Ms. Cooper as joint tenants. The deceased died on June 30, 2012, and Ms. Cooper took sole title to the property by survivorship. Ms. Cooper took the position that the 1989 transfer was under an agreement. She claimed that it was in consideration of expenses Ms. Cooper had paid for in the past, and also in consideration of a promise to pay for expenses in the future. Ms. Cooper says that she agreed to support her mother, and to ensure that she was never placed in a nursing home.

[3] Ms. Franklin denied the existence of any such agreement. She contended that her mother’s decision to place the property in joint title was primarily to prevent her mother from being defrauded into transferring title away to a third party. She gave evidence to the effect that she had been offered the opportunity to go on title, herself, but that the offer was contingent upon her dissolving her marriage, as her mother also wanted to ensure that Ms. Franklin’s husband would not gain any matrimonial interest in the property.

[4] There were a number of issues at trial. The trial judge ultimately found that the 1989 agreement contended for by Ms. Cooper did not exist. She found the transfer of the home into joint tenancy to be a gratuitous transfer, and applied Pecore v. Pecore, [2007] 1 S.C.R. 795, holding that there was a presumption that the transfer was not a gift, and that Ms. Cooper held her interest in trust for her mother during her mother’s life, and now holds it in trust for her mother’s estate.

[5] The judge recognized that the issues before her turned largely on findings of credibility:

[6] The evidence of Ms. Franklin and Ms. Cooper is conflicting in virtually every aspect. Both present diametrically opposing pictures of their mother’s life, her needs and wants, and their relationships with their mother and each other. Accordingly, the resolution of this case will depend largely on findings of credibility.

Gifts In Contemplation of Marriage

Gifts In Contemplation of Marriage

Gifts In Contemplation of Marriage. P.S. v H.R. 2016 BCSC 2071 involves a claim for the return of a gift ( a $17,000  engagement ring) made in contemplation of marriage arising from a whirlwind relationship of three months that abruptly ended due to the plaintiff’s abusive behaviour.

During the brief relationship, the plaintiff was a wealthy man and also paid down the defendant’s mortgage in the amount of $85,000 in November without any prompting by the defendant .

The plaintiff alleged that the gifts were conditional gifts, in contemplation of marriage and should be repaid. The defendant said the gifts were absolute and not conditional and that she is entitled to retain them. The ring was purchased on October 30,2013 and they became engaged on Christmas day that same year.

The defendant later returned the ring to the jewellery store and exchanged it for several pieces of jewellery.

The Court held that the gifts were absolute and that the defendant may keep them as there were several reasons why the plaintiff paid the debts and gave her the ring, and that marriage was probably the least important of the several reasons.

The court found they were not firmly committed to marriage when the debts were paid off , not did the purchase of the ring in October signify a firm commitment to marry.

The Engagement Ring

[69]          In British Columbia, the law relating to engagement rings is reasonably well-settled.

In Hitchcox v. Harper, [1996] B.C.J. No. 1861, the court pondered competing lines of authority, one which treated engagement rings as absolute gifts not returnable upon a termination of the engagement, and another which treated the gift of an engagement ring as being conditional on marriage and therefore returnable upon the failure of the condition. The court followed the latter line of authority.

[70]          Hitchcox was followed in Sperling v. Grouwstra, 2004 BCSC 330 [Sperling] and Zimmerman v. Lazare, 2007 BCSC 626 [Zimmerman]. For this reason I consider the law on this point to be settled in this jurisdiction.

[71 ] Fault for the termination of the engagement does not enter into the analysis: Sperling, at para. 24, and Zimmerman, at para. 9. Parenthetically, I note that in other jurisdictions the issue has been dealt with by way of legislation, such that fault for a termination of an engagement is not relevant there either: Manitoba – Equality of Status Act, C.C.S.M., c. E130, s. 5; Ontario – Marriage Act, R.S.O. 1990, c. M.3, s. 33; and Alberta – Family Law Act, S.A. 2003, c. F-4.5, s. 102.

[72]          The general approach in British Columbia to the question of the return of engagement rings, which I have described above, is still subject to evidence of a contrary intention on the part of the donor. This is the real issue here because Ms. R. maintains that Mr. S. gave her the engagement ring as an absolute gift at their final meeting.

[73]          For his part, Mr. S. emphasizes that the onus is on the recipient to prove the transferor intended the transfer to be a gift and that the evidence of gift must be very clear, citing Bath v. Bath, 2002 NLCA 21 [Bath] and Veitch v. Rankin, [1997] O.J. No. 4642 (Ont. C.J.) [Veitch].

Gifts in Contemplations of Marriage

[87]        In Fediuk v. Gluck (1990), 26 R.F.L.(3d) 454 (Man. Q.B.), aff’d [1991] M.J. No. 354 [Fediuk], the court suggested that a transfer of property cannot be considered to have been made in contemplation of marriage unless the parties “have agreed on, or committed themselves to, marriage and where the transfer or gift can be said to have been made in that context”: Fediuk, at para. 19. However, I consider it unwise to rely on that fact alone and instead find it preferable to consider the degree to which the parties had committed to marry as being part of the context from which the donor’s intent may be ascertained or inferred.

[96]          Although Robinson v. Cumming has been cited in modern cases and in at least one modern textbook (J. Crossley Vaines, Personal Property, 4th ed. (London: Butterworths, 1967), which itself is cited in Lummer v. Frohlich, 2007 ABQB 295), I prefer to analyse the issue using more contemporary sources. Courting behaviour and relationships between men and women are vastly different today than in the days of Mrs. Robinson and Mr. Cumming, whose case came to court nearly 70 years prior to the publication of Jane Austen’s first novel, itself a study in quaint (and outdated) manners and customs.

[97]          One of those contemporary sources is Voglerv. Matzick (1988), 33 B.C.L.R. (2d) 82 (C.A.) at 84-85, where the court said:

I add this comment about gifts made “in contemplation of marriage”. Any gift may be made conditional, or subject to revocation. A term to that effect may be expressed or it may be implied. If it is implied, the factual matrix that gives rise to the implication must make the implication obvious, in accordance with the requirements of the officious bystander test. Where a household item is given by one prospective marriage partner to another, at a time when they are engaged but not sharing a household, the implication of a term that the gift was intended to be revocable if the marriage did not take place and the household never came into being, without any change of heart on the part of the donor, would be straightforward. As a form of shorthand, such a gift could be said to be “in contemplation of marriage”. But if the household is already in being, and if, as in this case, the donor may have had some motive for making the gift other than, or as well as, a prospective marriage, then the implication of a term that the gift is intended to be revocable if the marriage does not take place becomes much more problematical. A gift made “in contemplation of marriage” is not merely a gift between an engaged couple, with a marriage clearly in the offing. Nor is it a gift for use by both parties in a joint household. At the very least it requires that the gift would not have been made but for the impending marriage itself.

[Emphasis added.]

[98]          Although the passage just quoted is obiter dicta (because the case turned on relief granted by the trial judge that had not been claimed in the pleadings), the discussion of the law relating to gifts in contemplation of marriage is instructive and carries weight.

Importantly, the Court of Appeal noted that a motive or motives for making a gift other than, or as well as, a prospective marriage would make an implied term of revocability “problematical”. Indeed, that is the very situation presented in this case.

Donor’s Intention -Evidence After Transfer Admissible

Evidence of Donor's Intention After Gratuitous Transfer Admissable

Evidence of a donor’s intention after a gratuitous transfer as to whether a gift or a trust was intended  may be admissable if relevant as per  Wong v Chong 2016 BCSC 953

Evidence Subsequent to the Transfer

[56] The traditional rule is that evidence adduced to show the intention of the transferor at the time of the transfer “ought to be contemporaneous, or nearly so”, to the transaction: see Clemens v. Clemens Estate, [1956] S.C.R. 286, at p. 294, citing Jeans v. Cooke (1857), 24 Beav. 513, 53 E.R. 456. Whether evidence subsequent to a transfer is admissible has often been a question of whether it complies with the Viscount Simonds’ rule in Shephard v. Cartwright, [1955] A.C. 431 (H.L.), at p. 445, citing Snell’s Principles of Equity (24th ed. 1954), at p. 153:

The acts and declarations of the parties before or at the time of the purchase, [or of the transfer] or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration . . . . But subsequent declarations are admissible as evidence only against the party who made them . . . .

The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts. As noted by Huband J.A. in Dreger, at para. 33: “Self-serving statements after the event are too easily fabricated in order to bring about a desired result.”
…

[59] … I am of the view that the evidence of intention that arises subsequent to a transfer should not automatically be excluded if it does not comply with the Shephard v. Cartright rule. Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer: Taylor v. Wallbridge (1879), 2 S.C.R. 616. The trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention.
[Emphasis added.]

[73] In Schultz v. Landry, 2007 BCSC 994 at para. 18, the B.C. Supreme Court noted three potential presumptions that can arise when a spouse gratuitously transfers property into joint tenancy:

  1. The presumption of resulting trust. This would arise in favour of the spouse who provided all of the funds for the purchase of a property.
  2. The presumption of advancement. This would arise in favour of the spouse whose name has been gratuitously put on title by the contributing spouse.
  3. The presumption of indefeasibility, i.e. that the holder of legal title is presumed to hold both legal and equitable interest in the property. This presumption arises by virtue of the doctrine of indefeasible title within the Land Title Act, R.S.B.C. 1996, c. 250. Sub-section 23(2) of that act establishes that registration of an indefeasible title is conclusive evidence at law and in equity that the person named is indefeasibly entitled to an estate in fee simple. Thus, the burden is on the party seeking to challenge the state of title to prove otherwise (see Bajwa v. Pannu (2006), 57 B.C.L.R. (4th) 161, 2006 BCSC 921 at ¶ 11-12).
    [Emphasis added.]

[74] The trial judge is obliged to examine the totality of the evidence, both direct and circumstantial, for the purpose of determining, if possible, the intention of the parties at the time of the purchase: Fuller v. Harper, 2010 BCCA 421 at para. 42.

[75] The Supreme Court of Canada in Pecore was addressing the issue of resulting trust in relation to a joint bank account. The Court noted, at para. 48, that “the rights of survivorship, both legal and equitable, vest when the joint account is opened and the gift of those rights is therefore inter vivos in nature.”

[76] More recently, in Bergen v. Bergen, 2013 BCCA 492, the B.C. Court of Appeal applied Pecore to joint tenancy in land. In that case, a couple transferred one-third of a property to their son in joint tenancy, saying they wanted to bypass probate when they died. They supplied all funds for the purchase of the property and toward the construction of a house. When the relationship deteriorated, the couple severed the joint tenancy and brought a claim that the son held his one-third interest in trust for them. The Court discussedPecore and then stated:

[40] Where a joint tenancy in land is concerned … either of the joint tenants is at liberty to sever the joint tenancy at any time – a fact that clearly undermines the notion that as a matter of law, a joint tenant receives a “full and perfect” inter vivos gift of the “survivorship”…. Severance, which occurs automatically upon the destruction of the four unities, ends the jus accrescendi, with the result that each co-owner becomes entitled to a distinct share in the land rather than an undivided interest in the whole…. As observed by Steel J.A. in Simcoff v. Simcoff, 2009 MBCA 80, a case involving land, “the fact that a ‘complete gift’ … included a right of survivorship does not, prima facie, prevent a donor from dealing with the retained interest while alive. The right of survivorship is only to what is left.” In the case of real property (and personalty, for that matter) nothing remains of the right of survivorship./

[41] Of course it remains true that once a gift has been made of an interest in real property or any other type of property, the gift cannot be revoked whether the transferee takes as a joint tenant or tenant in common. As stated by D. Smith J.A. in Fuller v. Harper, “The gift of a joint interest in real property is an inter vivos rather than a testamentary gift and cannot be retracted by the donor. It is a ‘complete and perfect inter vivos gift’ …”. (At para. 53.) At the same time, in cases where the property was provided by the transferor, the transferee must still prove that a gift was intended i.e., he or she must rebut the presumption of resulting trust. Pecore cannot be read as suggesting that the Court intended to do away with the presumption or the necessity of rebutting it with reference to the transferor’s intention: that was the crux of the majority’s reasons. To quote again para. 53 of Pecore:

Of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will.

Watch Out For Phony Joint Tenancies

Watch Out For Phony Joint Tenancies

One of the problems with joint tenancy ownership is that while the registered title might reflect joint ownership, the true beneficial owner might be one of the registered owners are in fact another unregistered owner in trust– as such, watch out for phony joint tenancies.

For many years estate planners have advised their clients to transfer their assets into joint tenancy ownership with loved ones so they may inherit by right of survivorship and avoid paying legal and probate fees.

The rationale has been that the surviving joint owner, by right of survivorship automatically becomes sole owner of the entire property including the deceased’s share. Thus the asset does not fall into the deceased’s estate but instead passes to the surviving joint owner. As a result, legal costs and probate fees are avoided.

The thinking has been: No muss, no fuss and, what is more, no delays!

Better yet- no lawyers. (Wrong)

Indeed for many years, joint tenancy arrangements have been used by families and very close friends. Most often they are used for home ownership or for financial assets such as bank accounts and investment accounts. Indeed, other than a will, this type of arrangement is probably the commonest form of estate planning.

It is very important to understand, however, that such ownership can lead to hotly contested legal disputes. This is particularly the case where only one of the joint owners has contributed most or all of the funds to the investment account or to the purchase of the property.

Fortunately such disputes rarely arise in cases where both of the joint owners have made substantial contributions to the acquisition of the assets –for example in the case of joint ownership by spouses who have been long married.

A relatively common fact pattern, however, involves an elderly parent, let us suppose a mother, who transfers her home into joint tenancy with only one of her children. She may well think that she is being prudent in avoiding the payment of probate fees upon her death and believe that the one “favoured” child will do the right thing and share the home with the other siblings.

By the time this mother dies, however, the favoured child has convinced himself or herself that the other siblings have no claim to the home because mother intended to leave it for him or her alone- after all, “mom always loved him best”.

The legal remedy is called Resulting Trusts and there are several blogs about iit on this website.