The Law of Joint Ownership: Navigating Key Legal Development

Mallory Hendry  00:00:00

Mallory, Hello everyone, and thanks for joining us today. I'm Mallory Hendry, Content Specialist manager with Canadian Lawyer, and I'm pleased to introduce today's webinar the law of joint ownership we have with us today. Ian Hull of Hull & Hull, LLP, as well as Kimberly Whaley and Brian Gilmartin from well partners ready to discuss this hotly litigated topic from its historical significance and case law developments to the potential pitfalls of using it as an estate planning vehicle. At the end of the presentation, our panelists here will participate in a question and answer period, so be sure to type any questions you have into the Q and A box within the webinar software. I'll turn the things over to the host now to begin the presentation. Thank you.

Kimberly Whaley  00:00:44

Thank you, Mallory, welcome. Welcome and thank you for joining Ian, Brian and I today for our review of the complexities surrounding joint ownership across Canada. Unfortunately, Susannah had a last minute conflict and is no longer able to join us, and so we will improvise to the best of our ability to provide you with susannas content. I'm going to start us off with the basics, and without the basics, you can't build upon and draw upon the complexities and divergent treatment. So bear with me, because I know that most of the attendees will know these basics. We're going to initially focus on two common forms of joint ownership, that being joint tenancy and joint accounts. And later on, the emerging case law that we're seeing across the country. So one of the most common forms of joint ownership is joint tenancy. It's the source of a vast amount of litigation in our offices, and as it turns out, in courts across Canada, it's a form of ownership concerning real property, where to be effective, two or more individuals must own the property in equal proportions with identical interests and rights concerning the whole of the property join it. Joint tenancy always requires the maintenance of the four unities that being the unities of title, the interest for each tenant must be created under the same instrument. It must be identical in nature, extent and duration, each tenant must have an identical interest in the whole of the property, and each must hold their interest for the same period of time. So a central characteristic of joint tenancy is obviously the Right of Survivorship. When one tenant dies, their interest in the property is extinguished and passes to the surviving tenant, simple right or not. And notably, a joint tenancy can be, in some jurisdictions, converted into a tenancy in common, unilaterally by any joint tenant. So now, what about joint accounts. Joint accounts, too have also become an almost unlimited source of litigation. Often, joint accounts are created between an older parent and an adult child to assist the parent in the management of their finances. We all know of the core and core and sailor and Madsen decisions, which came out in or about 17 years ago in the core the Court cited McClure, and McClure, and that was a decision from over 25 years ago now. And that decision was openly critical of the reasons behind the creation of joint accounts, and noted in the courts words, joint accounts often lead to confusion, especially as courts struggle with the determination of the intentions of the parent during their life and after death. And like many cases in our offices, that is true, there is confusion as to the intention. So despite the allure as an effective and convenient estate planning tool which many use. Joint assets can come with unintended consequence, consequences which continue today. So now let's move to the difference between the types of ownership being legal and beneficial. Legal ownership involves the right to the legal interest in a property where it concerns real property, as opposed to an account. The legal owner owns legal title of the land, which is registered at the land registry on title to the property. And we know that a legal owner has the right to control of a property or the asset and can sell it or transfer it, deal with it, and the like. And beneficial ownership involves an interest in the economic benefits. So that's the distinction. The interest belongs to the beneficial owner who's entitled to the financial value of the four. Property in question. So by way of example, with real property, the beneficial owner is entitled to live in the property, to receive a share of any rental income and a share of the proceeds of any potential sale of the property. So joint ownership is appealing, most likely, because of its convenience and benefits. We know that joint owners can each manage property without the written consent of another, that probate taxes on jointly owned property are only payable on the death of the final joint owner. And just a note on that, because this is a Canada wide conference, the some jurisdictions obviously don't have probate, and so this is a jurisdictional and difficult specific comment, also jointly owned assets can pass without needing to be probated. In some instances, within this allure of convenience, we see with increasing frequency, bitter disputes, protracted litigation, and contextually, we're also seeing the dangers of joint ownership being used as a financially abusive tool increasingly and so now Ian's going to provide us with a bit of insight into what's happening with the vulnerable.

Ian Hull  00:06:24

Thanks. Kim, yeah, I'm just pointing out some statistics here that are obviously a rapidly aging population. But you know, while aging allows us to sort of get again, it got gain multitude of life experiences and forming strong relationships with those we love, we create a collection of problems that can also attach to the to that time in life, and that is really things like our decreased ability to manage assets in our financial affairs. So luckily, in a way, we have tools such as joint accounts as a tool to adjust to this, adjust to our daily lives and to our dynamic capability. So in particular, the joint account provides an efficient means for older adults to receive assistance with finances. And as we've already heard, we've got this sort of two Cornerstone elements of ownership. Generally, we've got joint ownership of property, and we've got tenancy in common, tied with the concepts of beneficial interest and legal title. So those as Jordy eight, my good friend, always describes for 600 years, we haven't been able to do it any more complicated than this, you either give away property outright, or you give it with a but with a trust or an attached aspect to the to the ownership. The concerns with joint accounts, though, of course, is that they can be vehicles for abuse. And the obvious is financial abuse, and that's something that we struggle with on a little litigation. The loss of control is another key element in my view, that I like to make sure that our my clients, have considered before they enter into an arrangement of a joint account arrangement. And then, of course, the the curse of it all is who is the owner on death and what what issues arise as a consequence of that determination to be made. So of course, we have to go back to first principles in terms of this. And there's a famous case that justice collidy cited hurt decided many years ago. I think it's called Choki Yawa state, but in it, he described joint accounts and reminded us that when we're looking at the delineation between join, between beneficial ownership and legal title, the banking records, in and of itself, don't tell the whole story. So we have to be mindful of that, and we have to be concerned with that when we're considering situations where we have to come to the ultimate determination of a of ownership and the presumption of resulting trust. Although PCORI has been a, you know, obviously the leading cases, Supreme Court of Canada case in this regard, I kind of laugh a little bit, because, as it says, this is traced back to the 15th century. These aren't new concepts. And what I've described PCORI to my clients, and as plain English as I possibly can, I say, look, it's the I really mean it case and the intention of the individual as to where that joint account is to flow. And remember, PCORI was a joint account case. It wasn't a joint real real property case, which we're going to hear from Brian shortly about but PCORI was a situation where the father places the majority of his assets into a. Joint accounts with one of his daughters and who was financially insecure, and during the lifetime of the individual, the father was the sole contributor to the to the accounts, used and controlled the funds and paid all the taxes on the income and made made from the assets. So the Father's Will doesn't mention the account at all, but it provides for an equal split of the assets on death. So the debate began, and that is, who is the resulting recipient of that joint account, and that's where we come into the ability of the court to look at the circumstances and address what we what what was really meant. And so PCORI gives us our starting point, but it brings us back to as a solicitors, we have an opportunity to document these intentions, whether it is to pass into the estate on death, or it is to pass to the joint account holder. And as Cody said in the chow Choi case, the banking records aren't enough. You can't rely on that in and of itself. So we, we what, what, certainly, our firm has developed, and many solicitors have developed, is an opportunity to create a declaration of intention, to create a resulting trust, or a declaration of intention to create a right of survivorship. And the other interesting tools that are out there, just quickly before we let come Brian, come on, is the idea of what the World Bank of Canada not to flog them, but they've got an actual document now that they're using, which is a joint Right of Survivorship document that they're asking their clients to sign. It is truly the I really mean it document. And the Simard case is another example. The BC Superior Court dealt with it where they looked at assets to determine who got what. And in this case, of course, they determined the rift to be determined were gifts, but the bank accounts were not. And again, the court looked to the things that I've just described. What would that came out of PCORI, looking at the use of the document, who's contributing, who's filing the taxes, and so on. So those are the sorts of opportunities that we have to consider how a, what a joint Right of Survivorship count means, and b how we can deal with it, on ownership, on death, but of course, give me lots of room for abuse. The gift of right of survivorship also gets established and affirmed in Corey and in PCORI where, where the joint tenancy is gratuitously placed on title with no beneficial interest. But again, that's a joint account case, and we're going to hear more about what happens when we get into situations of real estate, but we're looking at the opportunity to, obviously sever the joint tenancy while you're alive. Is an approach to to separate the account ownership. And of course, we see in a litigated standpoint, the circumstances where these accounts are approached on a undue influence challenge, where it's alleged that the individual joint account holder has been unduly influenced to do one way or another. So what I'll do at that point is just finish off, just talking quickly about the Hansen and Hanson decision, which is an important court of appeal decision, because, again, it gives us the benchmarks to look to when joint tenancy gets converted into tenancy in common, and it requires clear, unequivocal action. And it can go so far as where the courts have looked at literally the exchange of letters between the parties to have been sufficient to sever the joint tenancy. And there's a great article in the states and trust reports if you want to get deep into this analysis, by Jordy eight and on that, on the on the kinds of things you look to where the joint tenancy is severed as a consequence of conduct. But the Hansen decision is really the leading piece on that one. So Brian over to you to talk about the next section, and I'll watch the questions and see if we can dovetail some of them in great

Brian Gilmartin  00:14:10

Thanks Ian. so I'm just going to go back one second here, and just just to note that in Ontario, there is a notable divergence from other provinces in the treatment of some of the concepts that we're discussing today. And so as we'll see in Ontario, we've adopted a similar approach to that seen in the provinces like Manitoba and British Columbia, and compared to Saskatchewan and Alberta, Ontario has a legislative regime which allows for more flexibility where it concerns severing of a joint tenancy. And I'll get into that a bit more in a moment, and then pursuant to a recent case Jackson and Rosenberg, which I'll get into in depth here in a moment, Ontario's approach to the gift of the Right of Survivorship is also distinct from that scene in Saskatchewan and Alberta. And so for better or worse, Ontario also notably has a different approach to challenging a power of attorney. For undue influence, and we'll discuss that a bit more as we go on. So in Manitoba, in British Columbia, now here in Ontario, a transfer or can give an inter vivos gift in joint tenancy, and during the remainder of their lifetime, take actions to sever the joint tenancy and render the Right of Survivorship worthless. Now in Alberta and Saskatchewan, that's not the case, and so these decisions are heavily influenced by each of the provinces respective land titles legislation, section 65 of Alberta's land titles act, and section 156 of Saskatchewan land titles act restrict the severance of joint tenancies, but unlike Alberta or Saskatchewan here, Ontario's land titles Act has no equivalent provision, and as a result, lower courts have adopted the approach taken in Manitoba and British Columbia. Now if we look at a case Thorn Steenson estate in Olson, that is a Saskatchewan Court of Appeal case from 2016 the court held that having gifted a right of survivorship, the transfer cannot sever the joint tenancy. Now, the Saskatchewan Court of Appeals approach looked to that province's land titles Act, which provides that a joint tenancy regarding land can only be terminated in Saskatchewan by written agreement or the joint tenants. Oh, sorry, written agreement of the joint tenants or a court order. Now in 2017 Alberta, the decision of poll and Medal, the court not only followed Thorn Steenson, but also interpreted the core to hold that joint tenants can agree by contract that they will not sever a joint tenancy. And in that case, the court was really of the view that it is a logical implication that flows from the core the case itself, that an inter vivos gift of a joint interest in property might include the irrevocable right of survivorship, and so therefore one should be able to relinquish his or her right to sever a joint tenancy by irrevocably gifting the Right of Survivorship to another. Now, that case I mentioned a few moments ago, Jackson and Rosenberg, a fairly recent case here in Ontario, and that's really where the court, both at the Superior Court level and at the Court of Appeal really got into some of these concepts. So in Jackson, the Ontario Superior Court of Justice dealt with a transfer into joint tenancy and subsequent severance by the transfer or and in that regard, the court was asked if the original transfer into joint tenancy for no consideration, was it a gift, or if it created a resulting trust in the transfers favor. Now, the court was satisfied that the transfers intention, at first instance, was to gift the right of survivorship, meaning that the transferee would receive the property upon the transfers death. However, the court found that the transfer or did not intend to gift his property to the transferee during his lifetime, and that he intended, fully intended, to retain control of the property while alive, and specifically the transfers, evidence was that the transfer was done for the purpose of avoiding those pesky probate fees, and that he never wanted the transferee to have any rights to the property during his lifetime. Now on that basis, the Court held that the presumption of resulting trust was partially rebutted. The Court recognized that the transfer gifted the right of survivorship, which he could not revoke, but that the severance was valid. And as such, the transfer retained all rights and interests in the property during his lifetime. The right of survivorship. And this is where it gets a bit interesting. The right of survivorship still applied to the transferees, 50% share of the property, which was held on resulting trust for the benefit of the transfer or during his lifetime and so on death, the court's rationale was that the 50% would pass to the transferee by right of survivorship, and the transfers remaining 50% would form part of his estate. So in support of finding, you know how they got to the decision in Jackson and Rosenberg, the decision really referenced British Columbia's approach in McKendree and McKendree, and that is a 2017, British Columbia Court of Appeal case. And here, the court in Jackson looked to McKendree, which held that an inter vivos transfer of the Right of Survivorship is properly characterized as a gift, even though there is the possibility that the severance of the joint tenancy could rob the gift of any value. And so jurisprudence from British Columbia demonstrates that where it concerns the gift of the Right of Survivorship. The gift is an immediate inter vivos gift in which the transfer can nullify through subsequent inter vivos transfers. And the leading authorities of Sim cough and sim cough, that's a 2009 Manitoba Court of Appeal case in Bergen and. Bergen, which is a 2013 British Columbia Court of Appeal case, and of course, McKendree, McKendree, which I just referenced, have all held that a gift from a parent to an adult child of joint interest in property does not necessarily mean the parent has given up the right to sever. Rather, these decisions hold that the Right of Survivorship is the result of joint tenancy and only takes effect if the joint tenancy continues to exist on the death of one tenant. So while the gift of half the property cannot be rescinded, the joint tenancy can be converted into a tenancy in common which does not carry the Right of Survivorship. Now, prior to the decision in Jackson, the Ontario Court of Appeal had yet to weigh in on the survivorship in the face of severance post bacore and so on appeal, the transferee in Jackson argued that once gifted, the right of survivorship cannot be taken away from her, even in part. And the transfer conversely argued that the application judge aired in concluding that the Right of Survivorship could continue in effect as to 50% interest in the property if a joint tenancy ceased to exist. Now, the Court of Appeal ultimately upheld the lower court decision and asked the parties to provide further submissions on the right of survivorship. And so just in January of this year, the Court of Appeal provided supplementary reasons and accepted the transfers request to implement an order vesting 100% of the beneficial interest in the property to him. So a bit of a confusing journey, I must admit, in Jackson and Rosenberg, but some clarity as to how the courts can potentially approach these types of issues. And so with that, I'll turn it over to Kim to carry on.

 

Kimberly Whaley  00:21:44

Right. So stepping in for Susanna, we thought it would be important too, when we're talking about gifts and also contemplating, perhaps the use of powers of attorney. Some recent develops, development, sorry, with respect to the correct approach. So when you're thinking of attacking a power of attorney for undue influence, the question is whether the approach taken is that of attacking a gift or challenging a will. So so you have to have that in mind when you're looking at these cases. And there have been two appellate decisions on this issue, one Vanier and Vanier, and the second, a more recent case coming out of the Manitoba court of approval appeal, that of drew neck and Smith. So in Vanier, the Court of Appeal had to weigh in on the decision regarding the determination of the validity of the continuing power of attorney for property, where the lower court held that the approach applied in circumstances where undue influence was at play is is at is, is, is compared to the wills doctrine of testamentary undue influence. And in fact, the approach really was in survivals undue influence, not testamentary undue influence, but But nevertheless, in June it the Manitoba Court of Appeal took the opposite approach and held that the test to be applied is the equitable approach to undue influence. So in that case, a donor suffering from cognitive impairment granted similar to Ontario, where we have the continuing power of attorney and enduring power of attorney to a daughter, only to later appoint a new attorney under an enduring power of attorney to the other daughter. And that was the basis for the challenge that ensued. At first glance, the application judge held that the equitable evidentiary presumption of undue influence cannot arise in the in the case of a power of attorney, and applied the wills doctrine of undue influence. But on appeal, the court looked at the history and jurisdiction of probate courts and noted that the powers of attorney were not part of that history. So I'd encourage you to look at this decision. It's very well reasoned and very well thought out, and it goes through a full history of the development. Jennifer Whitner, who is the judge on this vendor, held that powers of attorney developed in the law of agency and contract where equity does indeed have jurisdiction. And as a result, the Manitoba Court of Appeals held that for the presumption of undue influence to arise when a donor grants a power of attorney, there must be a relationship with the potential for domination. And so. So you have two decisions. I leave it to you to look at both. I think the approach in journey in Smith is the correct approach and and hopefully we'll see some traction on that in Ontario decisions in the future. So in looking at these sorts of matters where there is a vulnerable person at play, as Ian spoke to it's important to be aware of other tools available to assist clients in vulnerable circumstances. So an often seen tool is the use of declaratory relief, also restitution, the doctrines of equity that can be relied upon for various remedies depending on the circumstances, and we'll go through a few of them, so restitution can be particularly helpful where assets for recovery may no longer exist, where older and vulnerable adults, perhaps may require time sensitive advice and immediate action, and it may be impossible to describe the terms of the transfer with enough certainty that would resemble an enforceable condition or contract or quasi contract, so a court can make declarations, for example, that although the abuser may indeed have received legal title to the property, the beneficial title, however, still belongs to the older adult and and this is a tool that we see increasingly used by our courts in Ontario, where this occurs, it can be said that an abuser has been unjustly enriched, and it occurs where a benefit has been given to a party to the detriment of the other party, and there's no lawful reason for it, and if a court does find that abuser has been unjustly enriched, the court can order that the money be paid back, or order that the property the abuser holds is in trust for the older adult. And on this I'm going to note the recent New Brunswick case. Actually, it's not New Brunswick. It was a British Columbia case in 2025 and it was pelica and Pele che Okay, so now, what are some other equitable doctrines that we see? We've talked about declaratory orders. There are also injunctions, specific performance, restitution, damages and equity precision accounting remedies. And we see indeed, a lot of accounting remedies employed, especially in passing a fiduciary accounts, rectification financial compensation orders for breach of confidence and just it's important when looking at equitable claims to determine whether or not the party seeking equitable relief has the facts to establish that the law of equity applies at first instance. So walking through a few other equitable remedies, undue influence is one that we see often. It's a doctrine used to set aside certain inter Bibles, gifts, wealth transfers, transactions or planning testamentary documents where they have been procured through exertion of influence on the mind of the donor or the grant or the person who's made the gift. It's engaged when the influence overbears or overcomes the independence of that grantor, and the decision is said to be no not wholly independent, also where we see unconscionability, and more and more, I see the doctrine of unconscionability use, not just in Ontario, but across Canada, as a doctrine used to set aside a contract that offends the conscience of the court. It arises when a stronger party exercises an unconscious use of power to gain advantage over the weaker party. We see this a lot in gifting and in joint accounts and joint transfers. A successful claim requires proof of inequality or distress of the weaker party, plus proof of substantial unfairness in the bargain. And we know that the Supreme Court of Canada has opined on this in the Uber Technologies and Heller case, where a two part test was set out in deciding when a contract should be set aside for unconscionable reasons. So that would be one. Inequality of bargaining power, and secondly, proof of an improvident bargain. So another often seen component is the lack of legal advice ILA is usually provided by an independent lawyer unrelated to the parties matter. So, for example, that in a joint transfer, the same lawyer is not being used to advise both parties and the lawyer has no conflicting interests. It can be used to assist as a defense where there are allegations of undue influence in intervibos transfers gifts and testamentary gifts and non aspectum. It's a special category of law relating to the law of mistake. It's a very narrow remedy in scope, but it is a defense available where someone has been misled into executing a document or a deed that is fundamentally different than they thought it was or what it was intended to do. So an easy example was the case of Cervelo. And Cervelo, that's a 2015, Ontario Court of Appeal case. It involved a son who tricked his mother into transferring title of her home into joint tenancy with him. She had a very limited understanding of English. She she thought she was signing something that would give her son the authority to look after her and make property decisions for her, and the court noted particularly that independent legal advice was not received or provided to the mother, and the set aside the transfer and restore title to her. So in a lot of these cases, I we can't underscore enough the importance of independent legal advice. Practitioners really need to possess a clear understanding, not only of the importance that ILA provides but but also in determining uncertainty at the end of the day. And also there's professional responsibility issues that come into play, including, for example, when you are operating under a joint retainer. So a great example of this was seen in the BC case of Sandy and Sandy. In that case, a son took his illiterate Punjabi speaking parents to a lawyer to execute a transfer of title again, to their their home or property to him as the sole title holder. The transfer was executed, the son was involved in the entirety of the process, and a receipt of ILA was signed by the parents, despite them not having ever received any advice from an independent lawyer. So it was one lawyer used throughout the whole transaction. And then another case is the 1997 Supreme Court of Canada case in gold and Rosenberg. And in that case, it was held that whether someone has received ILA is dependent on two concerns, whether they understand what was proposed to them, and whether they were free to decide according to their own will. And then I know Cooper Smith is, is another one. This was a court of appeal decision that looked at the sufficiency of the ILA that was provided, and it identified considerations relevant to the assessment of the legal advice they the the factors are referred to as the question factors, and include whether the party benefiting from the transaction was also present when the advice was given or the documents were executed, and also whether the lawyer acting for the grantor was also engaged by or to constructions from the influencer. So the other cases, the inch naraya and shake Ali Bin Omar case, and in that decision, it was a privy council decision from long, long ago. The court said a lawyer must not only explain the nature and effect of a guarantee or other contract to the client, but also have a broader understanding of the client's assets, the risk to the client of the transaction, considering all of their assets, the risks of the transaction itself, and any alternatives for accomplishing the transaction without that risk. Is taking the risk component out of it. And so this is important too, when we look at whether or not the proposed transaction involves a transfer of all of or a substantially, a great proportion of a person's assets, and whether the lawyer was aware of this, and discuss all of the financial implications with the person looking to do the transfer, and the lawyer should really inquire whether or not the donor discussed the proposed transactions with other family members to determine what their thoughts were, and really that everybody was on board with this, and especially those who might have otherwise benefited if the transaction had not taken place, the lawyer should also discuss other options available to the donor, and that's in the same narrative as the inshinaraya case, with The goal being to reduce risk. The discussion about Cervelo earlier and the importance of independent legal advice really is important when you think about an older adult who is being influenced potentially by a child. And so again, another remedy that we see all the time, and we don't even maybe think of it, is it as equitable, but our declaratory judgments, and judges do have the discretion to grant declaratory judgments the Supreme Court of Canada, and you were in Canada defined a declaratory judgment as a determination of rights without consequential relief and a remedy that is available without a cause of action and whether or not any consequential relief is available. So that decision, it in depth, set out the requirements and provided that the court has discretion to hear the issue and the dispute is real and not theoretical, and that the party raising the issue has a genuine interest in its resolution, and the Responding party has an interest in opposing the declaration being sought, and then a fifth requirement is sometimes added. And we can see that from the related case law, a declaration will only be granted if it will have a practical utility, ie, it will settle a live controversy between the parties. So generally speaking, two factors govern when a court should exercise discretion to decree to use a declaratory remedy, and that is the reality of the dispute and whether the declaration is capable of having any practical effect in its resolution. So now we've given you a lot of components and remedies and things to think about concerning joint ownership, whether that be a joint account or asset or a joint property. Now we're going to turn to some of the cases to demonstrate some of the concepts we've been discussing. So I'm going to first get us started with hugginson and hugginson, and the reason I chose this decision is it literally just came out. Um, it dealt with determining whether an alleged $400,000 into Bibles. Gift was valid. In this case, a stepdaughter and beneficiary of the deceased sought a declaration that the transfer made by her sister, the estate trustee from the estate to herself, was invalid, and the deceased had, in fact, once contemplated gifting the funds to this stepdaughter. He had gone so far as to meet with a financial advisor and with a lawyer, but in the end, never provided any specific instructions, nor was an exact amount for the gift ever discussed. And in fact, no transfer ever took place. So after death, the state trustee transferred the money into her personal investment account. When the court said no, that this was not a valid gift, that there was a failure to prove intention on, on on the one hand, but also there was a failure to demonstrate that the delivery of the gift actually was never completed, and in arriving at its decision, the court looked at the McNamee and McNamee decision, and that was a 2011 court of appeal decision, and most of us are. Familiar with it, because it set out the elements that must be satisfied for a valid gift, being intention to make the gift, delivery of the gift and acceptance, in this case, the risk this respondent argued creatively. I will say that if the deceased gift was imperfect. It was subsequently perfected when she became the estate trustee, and she relied on a case from a long time ago, in 1874 called strong and bird that held a testator having manifested an intention in his lifetime to forgive a debt which continued to be unchanged to the date of his death, and having appointed an executor, that debt could be extinguished and equity would regard the gift as complete. And the other decision relied upon in that vein was the Renick and Rennick decision, that was a Saskatchewan decision, also from long ago, but not 1874 was 1962 but the court said no way both these decisions could be distinguished, since each concerned a debt, and that was not a gift of money, and so it was not The actual circumstances and and therefore there was no success. And now we're going to return to Ian, and he's going to tell us about the balkinson and Sandy decision, which is also very released, recently released.

 

Kimberly Whaley  00:41:45

Ian, you're on mute.

 

Ian Hull  00:41:51

Thanks. So Kim, we'll work through this last bit of this to try to get to our questions, which a lot of this case law brings out and demonstrates a high degree of what are the practical implications of this, these efforts to manage joint accounts, manage gifting and and so I'll come to those questions shortly. So don't be shy about putting some questions down. We've got a bunch, but we'll just speak briefly. Then on these last ones, the balkinson decision. In that case, the mother funded a purchase of a property of Brampton, property registered in the name of her older son and one of the one of the respondents and the mother claimed that the property was held in trust for her. However, the respondent argued it was a gift to the son and the sister as an early inheritance. The court held that the respondents successfully rebutted the resumption of resulting trust and established that the property was, in fact, a gift like the hugginson case. The Court looked at all the elements to establish the gift and the principles set out of PCORI, and that's where we can really look to some guidance. The court determined the intention in valkinson hinged really on the view that the evidence of the parties had a very different version of the events in question, such that the order that the court ordered Viva Bucha cross examinations on affidavits of the parties. So the court was ready to roll their sleeves up and really draw drill down on the core elements of what they felt were were important, looking at contemporaneous text messages, looking at the kind of evidence that gets typically established when you're doing these kinds of familial exchanges. And the court found the respondents were credible and consistent in their evidence, and found that the mother and her supporting witnesses were evasive and consistent in the circumstances. So you can see that decision really allows us to look at the methodology that the court will go through to establish the ultimate ownership. So over to you. Brian.

Brian Gilmartin  00:44:02

Thanks, Ian. So the next case is Doherty. And Doherty, and this is a decision that deals with misappropriation at the hands of an attorney for property. And so in this decision, 2023 Ontario Court of Appeal, over $700,000 was missing from an older adults joint account with her son. Now the son admitted that while acting his mom's attorney for property, he withdrew over $370,000 from a joint account that he held with his mom and transferred the funds into a joint account held with his wife and son. Now he claimed these funds were inter vivos gifts, and the son and his wife used the mother's funds to repair her residence. And in 2018 acting as attorney for property, the son listed and sold the home for 30% below market value. And later that year, the mother moved into a long term care facility. Now in 2022 mom's daughter, the sister. Contacted police to report that her brother had stolen money from their mother, and the court in this case concluded that the transferred amount was not a gift, and held the son and his wife jointly and severally liable for damages arising from the wrongful removal of the funds. And in this case, it was interesting a capacity assessor's evidence was persuasive in rebutting the intention to gift. Now, the assessor described conversations with the mom about the events leading up to her admission into long term care, and according to mom, she signed papers believing that it would allow her son to fix the house. She told the assessor that she didn't realize it would mean that he would have access to all of her money, and that it was like a slap in the face when he took her money. And so this decision really underscores the importance of considering capacity from all angles, even the scenario where a good and honest helper becomes the target of a delusional donor. In these cases, the importance of corroborating evidence and documenting all steps taken as an attorney for property are really crucial. And then this the next decision rehart And estate here, an attorney for property exercised undue influence to have new Power of Attorney documents signed and was ordered to repay funds to the estate. And so this is another case where funds and gifts were transferred from a vulnerable parent to an adult child, except here, there was also a presumption of undue influence, and so in this case, one of the daughters of the deceased objected to her sister's accounting as the attorney for property and the estate trustee and the deceased had provided her condominium and cash transfers to the respondent. Now the court heard that the deceased was a highly vulnerable person, and there was a significant power imbalance between her and her daughter, whom she was dependent upon. Now, due the deceased declining health and cognition in 2012 her lawyer refused to prepare new Power of Attorney documents which sought to appoint the respondent, and the respondent proceeded to print off a power of attorney document she downloaded off of the internet and had the deceased sign it without the benefit of independent legal advice. Now she once she had that signed document, she immediately began acting on the on the document, closed the deceased accounts maintained by her sister under a prior power of attorney, and then she redirected her mail and deposited the deceased funds into a new joint account in her name as well. Now in conclusion, the respondent was unable to demonstrate that the deceased had intended to gift her the right of survivorship to the assets left in the joint account at the time of her death. She wasn't able to induce any corroborating evidence to support a finding of such an intention. And so the court allowed the objections to the accounting and ultimately ordered her to repay to the estate the amount of $127,000 and I think that's it for the cases. So I'll turn it back to Kim.

Kimberly Whaley  00:47:58

Yeah, I think you maybe we could address some of the questions. Now?

Ian Hull  00:48:07

Happy to do so. All right, let's start with one of the questions. One of the themes that's coming out of the questions is this idea of documenting for joint accounts, in particular, documenting them in a will or and how we deal with them in estate planning. And of course, this is something that needs to be considered province wide, province by province. Certainly in Ontario, we have the benefit of primary and secondary wills, and some of our planning now is to include joint accounts in the secondary will to avoid probate tax on the accounts themselves. But that doesn't always solve the problem of the intention, and so in some circumstances, people are putting the intention right in the Will my personal practices is to create a standalone document, and I'll circulate a draft of that materials that Kim's going to talk about in a minute. But that we're using, but, and not putting it in the will, but, but often we're using it for the from a planning standpoint. So So Kim, from your standpoint, or Brian on the documenting of the intention, what are some of your views for both from in the context of the PCORI expectations of making the intention clear one way or another.

Kimberly Whaley  00:49:28

Right? So I'm not going to go over all of the factors that pecore and Sailor Madsen said they're there for you to see, but the confusion always is in if there is this presumption of resulting trust, how do we how do we overcome it? And so intention is not just something that people intuitively know. It has to be documented so there has to be. Some paper trail of what was actually intended by the deceased. And we know that it's not as simple as going to the bank and checking off in the box, that it's a joint account, and that everybody thinks it's going to pass by rights of survivorship, because those days are gone. That's not enough. And so I think that documentation is key. Why would you leave it up to the circumstances of having to then say, well, you know, who is it that use the account? What was the source of the funds? Who paid taxes on the interest earned on the account? Documented, if that's your intention. Then, then, then there should be no, no problem in in documenting that intention.

Brian Gilmartin  00:50:50

It's important to consider that at the estate planning stage, even though you know, we all know that these, these types of accounts, these joint accounts in the register survivorship, they serve a purpose. They pass outside of the estate in these you know, if you are the solicitor, meeting with the client, having a complete understanding of the totality of the assets is crucial, and probing and verifying the client's rationale for what they want to do with those assets, whether they flow through the will or they don't, can really go a long way to, you know, providing something towards that intention and documented, you know, you know, explanation of what that intention really is.

Ian Hull  00:51:32

And so from that, the documenting piece of it, do you approach this in any different way when you're dealing with real estate from that standpoint. Kim?

 

Kimberly Whaley  00:51:46

No, not at all. In fact. Well, we, we know that it crossed provincially. There are requirements under land titles and registrations that are applicable teach jurisdiction, but it should be. It should always be documented. I mean, it saves headache of the person who survives, who's trying to rebut the presumption it, it. It saves on the litigation by the disgruntled siblings or other potential beneficiaries. It's really important that there is, I'm going to say, a paper trail of intention, and that really, I think it plays into what Brian was saying, and that is, if you're the lawyer involved in the planning, make sure you know what all of the property is of the person and how it's held and what the intention is. Because often a property transfer is not done with the planning lawyer. It's done with a real estate lawyer. So left hand doesn't know what the right hand is doing gets lost in translation. Translation, it causes confusion, and then an unintended consequence, perhaps, is the result.

 

Ian Hull  00:53:12

So talking about who's where and what on a joint account, does it matter who the joint account holder is with the parent, ie, does it matter if it's an adult child? Does it matter if it's an adult grandchild? Does it matter if it's a minor child?

Kimberly Whaley  00:53:29

Well, we we know it. It does matter because of the core and Pecora distinguished or upheld the distinction that existed previously, and so a joint account with a minor child, there's a presumption of advancement that applies. So yes, it does matter.

Ian Hull  00:53:55

Absolutely All right, so what about situations where a joint account holder is a spouse, but they're separated for many years. Does that have any impact on on how things unfold with regard to on death or or during the lifetime? If there's some sort of severance allegations.

Kimberly Whaley  00:54:22

Sure and again, if there could be unintended consequences, or there could, you have to understand what the intention is, because even if they are separated or divorced, the intention may still be there. But does the presumption of advancement apply in the same way that otherwise would have. And there is where the confusion comes into play.

Ian Hull  00:54:50

So on the moment in time when the on death and a joint account is transferred. What if there's liabilities with. In that account, some ongoing liabilities. Where do they land? Either Brian or Kim on that one.

Kimberly Whaley  00:55:08

Well, that's a good question. What? But what exactly were you thinking? Are you are you thinking in terms of a division of net family property, or how are you you looking at it? Ian.

Ian Hull  00:55:21

Well, that's the great question, a good follow up. Because the point is, is that the question that we're being asked is that the liability transfer, does it go, does it carry on? If there's a liability, does it, does the joint account owner live with that liability? And you're absolutely right, in what circumstances, if it's if it's a family law situation, of course, the question of equalization may play a role if there's a debt attached to it, for example, a line of credit on a joint account that has to be resolved. Those are all liabilities to the recipient, obviously, of the of the of the joint account itself.

Kimberly Whaley  00:56:00

Yeah, yeah. I mean, it's important consideration, but lots of factors go into the the answer to that one.

Ian Hull  00:56:10

For sure. So that's, of course, across provincially, it has a role. So there's just some mention. And I did mention this RBC product only because it's a they call it a J, J, T, W, R, O, S account, and it provides joint account holders with both the legal and beneficial ownership as soon as the account is opened. So the assets are essentially gifted at the time of their creation, and upon the death of one of the account holders, the account will be handled in accordance with the account agreement in the name of the deceased will be removed from the account. So really, the only surviving account holders will be named on the account, allowing the joint account to pass, in certain circumstances, to by bypass probate and so on. So it's just a tool that it's out there, and I raise it only because I think the importance of these joint accounts is is so paramount in estate planning that even the banking community is starting to pick up on how they can differentiate their classic joint with right of survivorship accounts, which many of our clients think are going to fall into their hands on death with their for example, if they've got a joint account with their mother or something like that, right? Do you? Do you? Do you? What do you think about making reference to the joint accounts in a Will Kim? Do you have any preference either way?

Kimberly Whaley  00:57:39

Although I'm in favor of intention. I guess it would be dependent on what the intention was, because, because then you're going to have it captured by by probate that you might not otherwise have wanted to happen. So I mean, to your point, you can use it this, the primary and secondary will application to overcome that. Maybe that's a good idea.

Ian Hull  00:58:08

Yeah, it does depend, doesn't it, in those circumstances? Yeah, all right, we're just about through most of the core questions that we've been asked, and perhaps Kim, you can just tell us a little bit about the materials and how this is going to unfold now for the participants to get access to our our points.

Kimberly Whaley  00:58:31

Right? So obviously, we covered lots of ground. Our PowerPoints will be made available if you're interested in downloading the PowerPoint presentation, it will be posted to our respective blogs, at well partners and at Helen Hall, on their knowledge page. And we thank you today for joining us in what we hope, is, you know, an area where we can raise awareness so that we can avoid some of the increasing litigation in these matters and confusion after death. So thanks so much, and thanks for joining us.

Mallory Hendry  00:59:17

And I'll just jump in here to thank you guys, Kimberly, Ian and Brian, thanks for sharing your expertise with us today, and thank you to everyone in the audience for joining us for another great and insightful webinar. So keep an eye out for more that might be coming down the pipe later on, and please enjoy the rest of your day. Thank you.