COURT OF APPEAL FOR BRITISH COLUMBIA
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Citation: |
McKendry v. McKendry, |
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2017 BCCA 48 |
Date: 20170130
Docket: CA43408
Between:
Jean Marie
McKendry, Alexis Elaine Kent
and Margaret Anne Collin
Respondents
(Plaintiffs)
And
John Alexander McKendry
Appellant
(Defendant)
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Before: |
The Honourable Mr. Justice Groberman The Honourable Madam Justice Garson The Honourable Madam Justice Dickson |
On appeal from: An order of the Supreme Court of British Columbia, dated December 23, 2015 (McKendry v. McKendry, 2015 BCSC 2433, Vancouver Docket No. S123298).
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Counsel for the Appellant: |
K.E. Ducey |
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Counsel for the Respondents: |
R.D. Lee |
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Place and Date of Hearing: |
Vancouver, British Columbia November 4, 2016 |
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Place and Date of Judgment: |
Vancouver, British Columbia January 30, 2017 |
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Written Reasons by: |
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The Honourable Madam Justice Dickson |
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Concurred in by: |
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The Honourable Mr. Justice Groberman The Honourable Madam Justice Garson |
Summary:
The appellant challenges the judge’s finding that he holds beneficial title to property on a resulting trust for his late mother’s estate. He argues the judge erred in finding that his mother had not taken the steps necessary to perfect the inter vivos gift of the right of survivorship. Held: appeal allowed. The deceased was not required to take further steps to perfect the gift. Legal title was transferred into joint tenancy years earlier, and there was clear evidence of her intention to make the gift of the right of survivorship to the beneficial interest. The gift of the beneficial interest was not a “disposition” required to be evidenced in writing and, in any event, there was a signed written document.
Reasons for Judgment of the Honourable Madam Justice Dickson:
[1] This is an appeal from a trial judgment declaring that the appellant, John McKendry, holds real property in trust for his late mother’s estate. The respondents, Margaret Collin, Jean McKendry and Alexis Kent, are three of the appellant’s four sisters, all of whom are entitled to a share of the estate. For clarity, I will refer to the parties and their late mother, Mary McKendry, by first name.
[2] The real property in question is Mary’s home in Vancouver. In 2008, she transferred legal title to the property into joint tenancy with John, although it is clear that he was to hold the property in trust. In 2010, Mary 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 is whether the trial judge erred in finding that Mary was required to execute a written deed of gift under seal for John to take beneficial ownership when she died.
[3] For the reasons that follow, I would allow the appeal and dismiss both of the Respondents’ actions in the court below.
[4] Mary and her husband Gordon had six children: Margaret, Jean and Alexis, a fourth daughter, Colleen, and two sons, James and John. James died in early childhood. The remaining five McKendry children survived both their parents.
[5] In 1963, Mary and Gordon purchased the property, which is located on West 48th Avenue in Vancouver. Although it was originally held in both names, in 2000 Gordon transferred the property into Mary’s name alone. A few years later, he died. By 2006, John had moved into the property, where he lived with Mary for the rest of her life.
[6] On January 28, 2008, Mary transferred legal title to the property into her name and John’s as joint tenants. To do so, she signed a Form A transfer which was registered at the Land Title Office the next day. At the time of the transfer, however, Mary did not intend to give the beneficial interest in the property to John, as a gift or otherwise. Rather, she intended to transfer legal title only, and for John to have some ability to access the equity for investment purposes. She also intended that John would hold the beneficial interest in trust and divide it into three equal shares when she died: one share to go to him, one share to Colleen, and one share to be divided equally among Margaret, Jean and Alexis.
[7] Later in 2008, a lawyer prepared a trust declaration reflecting Mary’s intentions. The trust declaration provided that John hold the property in trust and divide the beneficial interest upon Mary’s death in accordance with her instructions. John did not sign the trust declaration.
[8] In February 2010, Mary consulted a new lawyer, Ms. Richter. She asked Ms. Richter to dissolve the trust she thought was created when the property was transferred into joint tenancy in 2008. She also asked Ms. Richter to create a new trust, with John as trustee, providing that the beneficial interest in the property would be divided into equal shares for each of her five children upon her death.
[9] Ms. Richter prepared a new trust declaration in accordance with Mary’s instructions. Again, John did not sign.
[10] In April 2010 Mary contacted Ms. Richter and asked her to put the new trust declaration “on hold”.
[11] In November 2010 John dropped off a handwritten note from Mary at Ms. Richter’s office. In the note, Mary stated that she did not want a trust agreement with respect to the property. Instead, she wrote:
… My son, John, is to have sole possession of this house and contents. Margaret, Jean, Alexis and Colleen will receive their portions of my Estate (in my Last Will and Testament). I trust my son, John, to take care of my family if necessary.
[12] A few days later, Mary spoke with Ms. Richter on the telephone. She told Ms. Richter that, after much consideration, she had decided it was simpler for her to leave the property in joint tenancy. She also said that she understood the property would go to John absolutely on her death and he did not need to share it with his siblings.
[13] On December 16, 2010, Mary met with Ms. Richter in person. At the meeting, she signed a will and a two-page document that Ms. Richter had prepared. The will appointed John and Colleen as executors and trustees of Mary’s estate and divided the residue equally among Margaret, Jean, Alexis and Colleen. It also included a paragraph stating that the property was registered in joint tenancy with John and he would receive it subject to the registered mortgages.
[14] Mary signed the two-page document on both of its pages. The document provided:
I, Mary Alice McKendry, confirm that I wish to cancel any trust agreements or other documents imposing an obligation on my son to share the property I own at [W. 48th] with my other children. I want my home to be my son’s property on my death absolutely - no strings attached. I have made this decision after much consideration and I fully understand that this gives my son the majority of my assets. My house constitutes the majority of my assets.
[15] Mary died on February 23, 2012.
[16] In May 2012, Margaret, Jean and Alexis commenced the first of two actions against John, seeking a declaration that he holds the property in trust for Mary’s estate. In March 2014, they commenced the second action, seeking variation of Mary’s will.
[17] At trial, Margaret, Jean and Alexis contended that the January 2008 transfer of title was gratuitous and that John held his interest in the property in trust for Mary during her lifetime, and thereafter for her estate. John responded that Mary’s intention when she transferred title in January 2008 was to make an immediate gift of the joint tenancy interest.
[18] The trial judge rejected John’s submission and found the evidence demonstrated that Mary did not intend to transfer a beneficial interest in the land to John when she transferred legal title to him. Rather, she intended to make him a legal owner of the property and to allow him to use the equity for purposes of investment, subject to her control. Mary considered that a transfer of a legal interest to John would facilitate such an arrangement.
[19] The judge went on to address John’s further submission regarding the events of December 2010 and their legal implications. In summary, according to John, by December 2010 Mary clearly intended to give him a beneficial interest in the property, including an unfettered right of survivorship upon her death. As the property was already held in joint tenancy and he already had the legal right of survivorship, he submitted that no further steps were required to perfect the inter vivos gift.
[20] The judge also rejected this submission. She found that the events of December 2010 were not reliable evidence of Mary’s intention in January 2008 when she transferred the property into joint tenancy. At best, she held, they reflected a change in Mary’s intention. For purposes of analysis she went on to assume that, as of December 2010, Mary intended to make a gift to John of a right of survivorship in the property. However, she did not accept John’s submission that nothing further was required to perfect the intended gift.
[21] The judge noted that, pursuant to s. 59(3) of the Law and Equity Act, R.S.B.C. 1996, c. 253, contracts respecting land must be in writing to be enforceable. Citing Kooner v. Kooner (1979), 100 D.L.R. (3d) 76 (B.C.S.C.), she also noted that, to make a valid gift, a donor must have done everything that, according to the nature of the property, was necessary to be done to transfer the property and make the transfer binding on the donor. She went on to find that Mary’s statements in the December 2010 will and two-page document were insufficient to create any legal obligation with respect to the right of survivorship in the property. Rather, in her view they were mere promises:
[140] In my opinion, the Form A transfer, signed by Mary on January 28, 2008, is not sufficient to perfect a gift of the survivorship interest in W. 48th to John, because (as I have found) Mary did not intend at that time to make such a gift to John. Assuming that, as of December 2010, Mary did intend to make such a gift to John, she did not take the necessary steps to perfect the gift. The statements in the December 2010 Will and the December 16 Letter are insufficient to create any legal obligation; they are (at best) mere promises to make a gift to John. I agree with Mr. Lee that, in order for Mary to make a valid gift to John of the survivorship interest in W. 48th, Mary would have been required to execute a written deed of gift under seal (obviating the need for consideration), confirming an immediate gift of the survivorship interest in W. 48th. Short of this, there was no legally binding gift, and I so find.
[141] In summary, I find that John has failed to discharge the burden on him to show that, on January 28, 2008, Mary intended to make an immediate gift to him of the survivorship interest in W. 48th. If, on December 16, 2010, Mary intended to make such a gift, she failed to take the steps necessary to make a valid, legally binding gift.
[142] The result is the plaintiffs are, accordingly, entitled to a declaration that John holds W. 48th in trust for Mary’s estate.
[22] The contentious aspect of the judgment is the judge’s finding that an executed deed of gift under seal was required to perfect a gift to John of the right of survivorship in the property.
[23] On appeal, John contends that Mary’s actual intention is the governing consideration. In his submission, that intention was clear: to give him survivorship rights when she transferred the property into joint tenancy in January 2008. By late 2010, he submits, Mary also intended that his survivorship rights would be unfettered by any trust obligation and he would receive the entire beneficial interest in the property upon her death. However, contrary to the judge’s finding, John says nothing further was required to perfect the gift because he already held legal title.
[24] Margaret, Jean and Alexis respond that the judge’s conclusions are fully justified in law and on the evidence. In their submission, Mary’s intention in January 2008 when she transferred the property into joint tenancy governs the outcome of the case. At the time of the transfer, she clearly did not intend to gift to John a beneficial right of survivorship in the property. Rather, she intended to retain the beneficial interest in the property for herself and continue to deal with it as she saw fit.
[25] According to Margaret, Jean and Alexis, if Mary’s intention changed in 2010, she failed to make a legally binding gift to John. This is so, they say, because she did not deliver the gift to him, immediately and irrevocably, by binding means such as a deed under seal. In consequence, in their submission, although Mary may have wished to do so, she did not perfect the gift to John before she died. In consequence, he continues to hold the beneficial interest in the property in trust for Mary’s estate.
[26] The legal principles that apply are straightforward. A brief summary of those principles and their application on this appeal follows below.
[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 280 at 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 17 at 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 80 at para. 64; Bergen v. Bergen, 2013 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.
[Emphasis in original.]
[31] A gift is a gratuitous transfer made without consideration. Two requirements must be met for an inter vivos gift to be legally binding: the donor must have intended to make a gift and must have delivered the subject matter to the donee. The intention of the donor at the time of the transfer is the governing consideration. In addition, the donor must have done everything necessary, according to the nature of the property, to transfer it to the donee and render the settlement legally binding on him or her: Kooner at 79-80; Pecore at para. 5.
[32] A gift may be delivered in various manners. For example, a donor may choose to transfer property directly to a donee or a trustee, or may retain possession and make a declaration of trust. Once a gift is given, the donor cannot retract it. If it is incomplete, however, the court will not perfect a gift. Accordingly, where the gift rests merely in a promise or unfulfilled intention, the court will not compel an intending donor to follow through with making the gift: Kooner at 79-80; Pecore at para. 56.
[33] The standard for proving a gift is the usual civil standard of a balance of probabilities: Singh Estate v. Shandil, 2007 BCCA 303 at paras. 24-27.
[34] The intention of a person who transfers property gratuitously to another is sometimes difficult to determine. This is particularly true where the transferor is deceased. For this reason, common law rules have developed to guide the court’s inquiry. In Pecore, the Supreme Court of Canada explained those rules and how they apply to property held in joint tenancy.
[35] In summary, a resulting trust arises when title to property is held in the name of a party who gave no value for it. In such circumstances, that party is obliged to return the property to the original title owner unless he or she can establish it was given as a gift. In the case of a gratuitous transfer, a rebuttable presumption of resulting trust applies when the transfer is challenged. The judge commences the inquiry with the presumption, weighs all of the evidence, and attempts to ascertain the actual intention of the transferor. The governing consideration is the transferor’s actual intention. The presumption of resulting trust determines the result only where there is insufficient evidence to rebut the presumption on a balance of probabilities: Pecore at paras. 20, 22-25, 44; Kerr v. Baranow, 2011 SCC 10 at para. 18.
[36] When legal title to property is transferred gratuitously and a resulting trust arises, the right of survivorship is held on trust by the transferee unless otherwise established. In Bergen, Newbury J.A. explained why:
[42] … Consistent with this, the authors of Waters [Donovan W.M. Waters, Mark R. Gillen, & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012)] in the most recent edition (post-Pecore) state:
If A supplies the purchase money and conveyance is taken in the joint names of A and B, B during the joint lives will hold his interest for A, B will also hold his right of survivorship − again by way of resulting trust for A’s estate, because that right is merely one aspect of B’s interest. In other words, the starting point is that B holds all of his interest on resulting trust for A, or A’s estate. However, evidence may show that, while A intended B to hold his interest for A during the joint lives, it was also A’s intention that, should he (A) predecease, B should take the benefit of the property. The presumption of resulting trust would then be partially rebutted, in relation to the situation that has arisen, so that B would not hold his interest (now a sole interest and not a joint tenancy) on resulting trust. He would hold it for his own benefit. [At 405; emphasis added.]
[37] Academics have sometimes questioned whether the presumption of resulting trust applies to gratuitous transfers of land, although there is authority from this Court to support the view that it does: Fuller v. Harper, 2010 BCCA 421 at para. 43. In this case, it is unnecessary to decide the issue because there is clear evidence of Mary’s intentions. Regardless, transfers of land are subject to statute. In particular, the Law and Equity Act and the Land Title Act, R.S.B.C. 1996, c. 250, Part 12 both apply to transfers of real property. Pursuant to the Law and Equity Act, contracts respecting land must be in writing to be enforceable. Pursuant to the Land Title Act, transfers of land must be in a prescribed or otherwise acceptable form and registered against title to land.
[38] The judge referred to s. 59(3) of the Law and Equity Act, but not s. 59(1), in reaching her conclusion. In my view, both ss. 59(1) and (3) of the Act are relevant. They provide, in part:
59 (1) In this section, “disposition” does not include
(a) the creation, assignment or renunciation of an interest under a trust, …
…
(3) A contract respecting land or a disposition of land is not enforceable unless
(a) there is, in a writing signed by the party to be charged or by that party’s agent, both an indication that it has been made and a reasonable indication of the subject matter,
…
[39] The parties agree, as I do, that Mary’s actual intention is the governing consideration. In the light of the evidence, the presumption of resulting trust is not required to determine the outcome of the case. This is so because Mary’s intentions in 2008 and 2010 are manifest and unambiguous. The only real question is their legal effect.
[40] In January 2008, when Mary gratuitously transferred legal title to the property to John in joint tenancy, she did so with the intent that he hold the property in trust. The judge found that she intended to retain the entire beneficial interest, including the right of survivorship, for herself and her estate: paras. 124-133. Although John did not sign the trust declaration prepared by counsel, Mary’s intentions were clear and unambiguous. In consequence, while John held legal title with Mary jointly from January 2008 onward, he held all of the beneficial interest, including survivorship rights, in trust.
[41] Unless something changed, upon Mary’s death John would have continued to hold legal title to the property only and to hold the beneficial interest in trust. However, in December 2010 something did change. As evidenced by the November note and the two-page document prepared by her lawyer, Mary unambiguously renounced her beneficial interest in the right of survivorship in John’s favour should he survive her. In doing so, she clearly intended to make an immediate inter vivos gift of that incident of the joint tenancy to John. As explained in Simcoff, the gift was to whatever remained when Mary died.
[42] Pursuant to s. 59(1) of the Law and Equity Act, Mary’s renunciation of her beneficial interest in the right to survivorship did not amount to a “disposition” of land. Accordingly, the requirements of s. 59(3) did not apply. In addition, and in any event, the two-page document in which Mary renounced her interest was a signed writing as contemplated by s. 59(3).
[43] Given that she had previously transferred legal title to the property to John in joint tenancy, Mary did everything necessary in December 2010 to give her beneficial interest to John, bearing in mind the nature of that interest. Her intention was made manifest in the signed two-page document her lawyer prepared and no further act of delivery was required because of the existing joint tenancy. In particular, nothing more would have been gained had Mary executed a deed of gift under seal, given her clear and formally expressed intention. The immediate inter vivos gift was complete and binding. In my view, Mary’s intention should prevail.
[44] It follows that I conclude the judge erred in declaring John holds the property in trust for Mary’s estate. That being so, it was unnecessary to vary Mary’s will. In consequence, I would allow the appeal and dismiss both actions.
“The Honourable Madam Justice Dickson”
I AGREE:
“The Honourable Mr. Justice Groberman”
I AGREE:
“The Honourable Madam Justice Garson”