In Zelligs v Janes 2016 BCCA 280 the appeal court upheld the decision of the trial judge who found that a joint tenancy bank account had been severed when one daughter withdrew funds from the joint bank account for her sole benefit, and then used them to acquire property and investments for her and her husband’s sole benefit.
The daughter had used her power of attorney to sell her mother’s property prior to her death, and deposited the net funds into a joint bank account that she held with her mother.
The trial judge held that the joint tenancy survived the sale using the power of attorney, but was severed when the daughter withdrew the funds from the joint bank account for her sole benefit while the mother was alive.
The court held that the withdrawal of the funds automatically severed the joint fund by severing the unity of title, and converted it into a tenancy in common, and extinguished any right of survivorship.
The principal and distinguishing characteristic of joint tenancy is the right of survivorship
When one joint tenant dies, his or her interest in the property is extinguished and passes to the surviving joint tenant. The right of survivorship is, however a revocable expectancy that manifests only upon success in the so-called “ultimate gamble” – survival – and then only if the joint estate has not been previously destroyed by an act of severance. When given inter vivos, a gift of survivorship rights is to be what is left, if anything, when the gamble is won.
The interest of a tenant in common is different with respect to survivorship. Unlike that of a joint tenant, a tenant in common’s interest in property remains intact upon death, and passes to his or her estate. Fuller v Harper 2010 BCCA 421 at para. 53.
Parties may hold legal title to property in one form of co-ownership while holding equitable title in another. For example, a mother and daughter may be joint tenants in law and tenants-in-common in n equity with respect to jointly held property by virtue of a trust or an act of severance. If the mother dies first, the daughter assumes full legal title by right of survivorship, but the mothers equitable interest, being held in common, passes to her estate and the daughter holds legal title, as trustee for the beneficial owners, namely herself and her mother’s estate.
Equity leans against joint tenancies. The relevant maxim is that equity is equality.
When a joint tenant dies, the old belongings to the survivor and the deceased’s estate takes nothing, which favours the tenant of longevity and is thus unequal, except perhaps for an equal chance at survival. For this reason, equity often treats persons were joint tenants at law, such as business partners are unequally contributing co-owners, as tenants-in-common. Mischief Holdings Property LTD v Mischel (2013) VSCA 375 at paras. 60-61
When a joint tenancy is severed, the joint tenancy is converted into a tenancy in common in the right of survivorship is extinguished. In consequence, each affected co-owner becomes entitled to a distinct share rather than an undivided interest in the whole.
In joint tenancy is composed of more than two persons, a blend of interest may be present.ie a mixture of joint tenancy between two parties who hold an interest in tenancy in common with the third.
Severance of a joint tenancy is typically affected in one of three ways:
- By one persons acting unilaterally upon his or her own shares, so as to destroy the few unities i.e. by selling it;
- by mutual agreement, i.e., by written contract
- by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common- for example, conduct which demonstrates all tenants mutually dealt with their interests as several.
- Other possible modes of severance include bankruptcy, partition or an order made under matrimonial property legislation. Tessier estate v Tessier 2001 SKQB 399 at para. 8.
The court in Zeligs agreed with the Tessier decision that the parties conduct may provide an evidentiary basis from which agreement can be inferred.
The question under the third rule is whether, in the absence of agreement, it would be unjust to permit a party to assert survivorship rights, because of the parties mutual treatment of their interests.
Ascertaining whether a joint tenancy has been severed is a factual question, often determined on the basis of reasonable inferences. It requires the application of a legal standard to the facts.
The court found that the joint tenancy bank accounts were severed when the monies were transferred from the joint account of the sale proceeds, into an account for solely herself and her husband, while her mother was still alive.
When the daughter transferred the sale proceeds to herself and her husband, she destroyed the unity of title on the joint bank accounts, and thus converted the account into a joint tenancy in common composed of two equal shares and extinguishing the right of survivorship.
