Written by: Brittany Sud, Associate at Fasken Martineau DuMoulin LLP
We know from Pecore v Pecore, 2007 SCC 17 that when a parent gratuitously transfers title into joint tenancy with the parent and adult child as joint tenants, there is a presumption of resulting trust. Where there is sufficient evidence to prove on a balance of probabilities that the intention of the parent was a true joint tenancy with a right of survivorship, the presumption of resulting trust is rebutted. Even where a true joint tenancy with a right of survivorship exists, a unilateral action by a co-owner may sever the joint tenancy.
In Zeligs Estate v Janes, 2016 BCCA 280, an aging widow, Dorothy, transferred her home in British Columbia into joint tenancy with her daughter, Diana, after Diana and her family moved into the home with Dorothy. Years later in January 2010, Diana, who was also the donee (analogous to attorney in Ontario) under an enduring power of attorney for her mother, sold the property, acting personally and in her capacity as donee for her mother, for CAD $2.7 million. Diana put the proceeds from the sale into a joint bank account in both of their names, and within a few weeks, she withdrew the full amount of the sale proceeds for her and her husband’s exclusive benefit. Dorothy died in April 2010. Dorothy’s other daughter, Barbara, died in 2011.
In Dorothy’s last will, she appointed Diana as the sole executor and her other daughter, Barbara, as the alternate executor. Under the terms of the will, Dorothy’s three grandchildren would each receive gifts of $50,000, with the residue of her estate being divided equally between her two daughters.
Barbara’s husband, as representative of Barbara’s estate, brought an action against Diana and her husband alleging that:
- Diana was holding the property on resulting trust;
- Dorothy was unduly influenced to transfer title into joint tenancy with Diana; and
- if there was a true joint tenancy, it was severed following the sale of the property when Diana withdrew the sale proceeds from the joint bank account for her and her husband’s own benefit.
The Court of Appeal of British Columbia upheld the Supreme Court of British Columbia’s decision that:
- the presumption of resulting trust was rebutted with a handwritten note by Dorothy outlining her intention and wish that Diana receive the property upon Dorothy’s death;
- the presumption of undue influence was rebutted on the basis that Dorothy had independent advice with respect to the transfer of the property into joint tenancy with Diana, despite being in her 90’s, Dorothy was lucid, assertive, and capable, and there was no evidence that the defendants actually influenced Dorothy; and
- the joint tenancy was severed when Diana withdrew the sale proceeds for her and her husband’s exclusive use, as the unity of title, one of the four “unities” for a joint tenancy, was destroyed. At this point, the property was converted into a tenancy in common, thereby extinguishing the right of survivorship.
As a result, Diana was not entitled to the full proceeds of the sale of the property. Fifty percent (50%) of the sale proceeds were thereby distributed in accordance with Dorothy’s will.
We learn from this case that joint tenancy between a parent and adult children is fraught with issues. Nevertheless, where the intention is clear, a true joint tenancy may exist. It is the obligation of the transferor/parent to ensure a true joint tenancy exists, if that is the intention. Once established, in order to maintain a true joint tenancy and the right of survivorship, the responsibility is that of the transferor/parent as well as the transferee/adult child. As seen in this case, it was by the adult daughter’s unilateral action that the joint tenancy was severed and the right of survivorship ended.