BC joint tenancy family property lawyers warning. Are you:
- going through a marriage breakdown;
- or are you or do you have an elderly parent who has placed property in joint tenancy with a spouse or child for creditor protection or estate planning purposes and;
- are you or a spouse or sibling concerned as to what will happen if one joint tenant dies or a spouse who is separated but not divorced dies before they settle their family case?
We have written recent articles on the SCC case of Pecore and how a resulting trust works but recent case law also reviews how a joint tenancy can be severed by the actions of parties near the end an unhealthy relationship. The consequences can be huge to your rights and claims in both family separation and estate cases.
At MacLean Family Law Group, we can answer any questions regarding how to deal with jointly owned property and beneficiary designations if you are going through a marriage breakdown or after you are divorced as common mistakes are made if you do not consult a lawyer or if you have a sick spouse or parent. It is crucial that you get the right legal advice to protect your assets and provide for your family. We have four offices across the province to service you located in downtown Vancouver, Surrey, Kelowna, and Fort St. John.
A recent Ontario case shows there can be huge implications for owners of property in joint tenancy with unintended results.
This month the Ontario Court of Appeal, in Hansen Estate v. Hansen (2010 ONCA 112), reconfirmed the approach in deciding what constitutes a “course of dealing” sufficient to establish that a joint tenancy in property should be declared severed. The Court followed and reconfirmed the 1977 decision of the Ontario High Court of Justice in Re Walters, and the 1969 decision of the British Columbia Supreme Court in Ginn v. Armstrong. This is significant because the British Columbia Court of Appeal, in Tompkins Estate v. Tompkins (1993 BCCA 1119), found that Ginn “can no longer be considered good law in this province”
Winkler C.J.O., speaking for the court, “generally disagreed with Southin J.A.’s view in Tompkins,” on several points including that the course of dealing test is a form of estoppel requiring evidence of detrimental reliance.
In contrast, in 1992 the British Columbia Court of Appeal, in Tompkins Estate v. Tompkins, expressed the view that the third rule of severance (see above) was “postulating a species of estoppel”. The court stated that for severance to be established through a “course of dealing” there must be evidence of detrimental reliance such as would ordinarily be required to invoke the doctrine of estoppel. An estoppel may be established through evidence that one party made a representation, whether communicated expressly or through conduct, to another and that the other party relied on that representation to his or her detriment. This decision has not been followed in any other jurisdiction in Canada.
The Ontario Court of Appeal underwent a lengthy analysis on why the Court believes Tompkins Estate is incorrect. As a result of the decision, it is possible that British Columbia courts may revisit the decision in Tompkins Estate. However, the current law in British Columbia is that for a joint tenancy to be severed under the third rule; there must be a representation by a party, reliance by the other party, and that reliance must be detrimental to the representee.
A joint tenancy and a tenancy in common are the main forms through which two or more persons may collectively hold interests in property. In a joint tenancy, the co-owners hold the property as a unified whole such that each hold an equal interest in the property. In contrast, in a tenancy in common, one co-owner may be entitled to a greater proportionate interest in the property than the other(s).
There are very few other practical differences between the two forms of land holding. Ultimately, the critical distinction between the two is the right of survivorship. Through the right of survivorship, the interest of a co-owner in a joint tenancy will pass equally to all of the other co-owners upon his or her death. In contrast, upon the death of a co-owner in a tenancy in common, the deceased’s interest in the property passes to his/her estate.
There are three ways to sever a joint tenancy and create a tenancy in common: (i) by a person acting on his/her own share; (ii) by mutual agreement; or (iii) by “any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.” Hansen Estate deals with the third category and what is sufficient for “course of dealings.”
The time-honoured test is whether there was a course of dealing sufficient to intimate that the interests of the parties were mutually treated as constituting a tenancy in common.
In Hansen Estate, a married couple title to their matrimonial home as joint tenants. They were in the process of separating and dividing their matrimonial assets when the husband died. After the husband died, the wife claimed exclusive ownership of the home through the right of survivorship, which is the defining feature of a joint tenancy.
The husband’s daughters from a prior marriage held the position that the joint tenancy was severed before their father died. As a result, Mr. Hansen held the home with his wife as tenants in common; therefore, the daughters claimed that on their father’s death, his one-half interest in the matrimonial home went to his estate. In his will, Mr. Hansen left his entire estate to his daughters.
The Court stated that the rationale for severing a joint tenancy in (iii) above “is that it is a means of ensuring that a right of survivorship does not operate unfairly in favour of one owner where the co-owners have shown, through their conduct, a common intention to no longer treat their respective shares in the property as a indivisible, unified whole.” The court went on to state that in the context of spouses in the midst of a separation “even failed or uncompleted negotiations can lead to a severance because the negotiation of shares and separate interests represents an attitude that shows that the notional unity of ownership under a joint tenancy has been abandoned.” This means that joint owners do not need an explicit agreement to treat their interest in a property as tenants in common; it is their conduct that will decide the issue.
The Court found the evidence of the “course of dealing” between the spouses when considered as a whole was “sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.” From the time the spouses separated until Mr. Hansen’s death, the spouses took a number of steps which reveal that they were each treating their interests in the property as distinct. In other words, their conduct demonstrated they were mutually treating their co-ownership as a tenancy in common and not as a joint tenancy.
In the months immediately prior to Mr. Hansen’s death, he and the respondent engaged in a course of conduct that involved separating their lives and dividing their assets. Mrs. Hansen moved out of the matrimonial home and leased her own apartment, while Mr. Hansen remained in the home and took responsibility for it, including by having the utility bills put in his name. Also, the husband and wife each retained their own lawyers and agreed to prepare and exchange financial statements. They closed their joint bank accounts and transferred the money into separate accounts.
As a result, the court found that the joint tenancy had been severed and the half share in the matrimonial house went to the estate and not to Mrs. Hansen.
If you have any questions regarding marriage breakdown and division of family property and assets or estate litigation , please call MacLean Family group toll free at 1 877 602 9900 to book an appointment. At Maclean family Law Group, we can answer any questions regarding Wills Variation Orders. It is crucial that you get the right legal advice to protect your assets and provide for your family. We have four offices across the province to service you located in downtown Vancouver, Surrey, Kelowna, and Fort St. John.
