Jackson v. Rosenberg, 2023 ONSC 4403

COBOURG COURT FILE NOS.: CV-22-13 and CV-22-124

DATE: 20230728

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-22-13

BETWEEN:

Nigel Jackson

Applicant

– and –

Lori Rosenberg

Respondent

M. Gosia Bawolska, for the Applicant

Mobina Basiri, for the Respondent

COURT FILE NO.: CV-22-124

AND BETWEEN:

Lori Rosenberg

Applicant

– and –

Nigel Jackson and Nigel Jackson, Estate Trustee of the Estate of Bernard Taube

Respondents

Mobina Basiri, for the Applicant

M. Gosia Bawolska, for the Respondents

HEARD: June 16, 2023

REASONS FOR DECISION

CHARNEY J.:

Introduction

1This case involves two related applications. It is a cautionary tale for persons who might be tempted to use joint tenancy as an estate planning mechanism to avoid the payment of probate fees.

2The first application was commenced on January 27, 2022. In it, the Applicant, Nigel Jackson, seeks a declaration that the Respondent, Lori Rosenberg, holds title to Mr. Jackson’s home in Port Hope (the Port Hope property) in resulting trust for Mr. Jackson, and that Mr. Jackson has a 100% beneficial interest in the Port Hope property.

3The second application was commenced on August 24, 2022. In the second application Lori Rosenberg is the Applicant, and she seeks a declaration that she is a beneficial owner of the Port Hope property, and various ancillary relief.

4Both applications deal with the same question: Did Mr. Jackson’s transfer of the title of his home from himself as sole owner to himself and Ms. Rosenberg as joint tenants, for no consideration, create a resulting trust in Mr. Jackson’s favour, or was this transfer intended as a gift to Ms. Rosenberg?

5The facts in both applications are identical. They are two sides of the same coin. Accordingly, I will deal with the two applications as a single application.

Facts

6Mr. Jackson and Bernie Taube were long time (since approximately 1963) romantic partners. Mr. Taube, who passed away on July 16, 2010, was Ms. Rosenberg’s great uncle.

7Mr. Taube and Mr. Jackson frequently attended family dinners at Ms. Rosenberg’s mother’s home.

8In addition to being romantic partners, Mr. Jackson and Mr. Taube ran an antique business in which they were equal shareholders. The business was operated in leased premises.

9Mr. Jackson claims that the business was never profitable, and that Mr. Jackson, who worked full-time outside the store until 2001, often financially assisted Mr. Taube.

10Ms. Rosenberg claims that it was Mr. Taube who financially supported Mr. Jackson.

11Ms. Rosenberg had no first-hand knowledge of Mr. Jackson’s and Mr. Taube’s financial affairs. Indeed, her affidavit states that Mr. Taube owned the Yorkville condominium, which was actually owned by both Mr. Taube and Mr. Jackson, and that Mr. Taube owned a commercial property on Cumberland Street in Toronto, which was actually leased by Mr. Taube and Mr. Jackson.

12In any event, whether Mr. Jackson supported Mr. Taube, or whether Mr. Taube supported Mr. Jackson, is not relevant to the legal issues to be determined in this Application. If this factual dispute were relevant, I would prefer the evidence of Mr. Jackson over the speculative and incorrect allegations of Ms. Rosenberg.

13On November 5, 2005, Mr. Jackson and Mr. Taube each executed a mirror Will which named the other as the sole beneficiary of their respective estates and named Ms. Rosenberg as the alternate beneficiary.

14When Mr. Taube died in 2010, the Will was not probated because all of his assets were jointly owned by Mr. Jackson. Mr. Jackson alleges that Mr. Taube had $60,000 in credit card debt when he died, and the assets were sold to pay off those debts.

15In addition, Mr. Jackson and Mr. Taube owned a condominium in the Yorkville neighbourhood in Toronto, which they purchased in 1999 as joint tenants. Upon Mr. Taube’s death, the Yorkville condominium went to Mr. Jackson as the sole owner through the right of survivorship of a joint tenancy, and not by virtue of Mr. Taube’s Will. The Yorkville condominium was never part of Mr. Taube’s Estate.

16On May 16, 2011, Mr. Jackson sold the Yorkville condominium. On May 17, 2011, he purchased the Port Hope property with the proceeds from the sale of the Yorkville condominium. Mr. Jackson was the sole registered owner of the Port Hope property.

17There is no dispute that Mr. Jackson paid for the Port Hope property and its upkeep with his own funds, and that Ms. Rosenberg has made no financial contribution to the property. Nor is there any dispute that the Port Hope property is Mr. Jackson’s home, and that Ms. Rosenberg has never lived there.

18On February 29, 2012, Mr. Jackson transferred the property from himself as sole owner to himself and Ms. Rosenberg as joint tenants with right of survivorship.

19The Port Hope property was held by Mr. Jackson and Ms. Rosenberg as joint tenants until September 9, 2020, when Mr. Jackson instructed his lawyer to sever the joint tenancy.

Nigel Jackson’s Position

20Mr. Jackson has no family of his own. In his affidavit, he stated that “I thought that once I pass away, I would like to leave whatever value was left in my home to Bernie’s (Mr. Taube) adult niece Lori Rosenberg.” Accordingly, in 2012, Mr. Jackson asked Mr. Taube’s lawyer, Jack Reingold, to register Ms. Rosenberg on title with him as a joint tenant. He explained that he “understood this to mean that when I pass away the title to my home would pass to Lori.” Mr. Jackson’s affidavit states:

It was never my intention that Lori would live with me, nor did I ever intend to give my house or any portion of my house to Lori. It was not my intention that Lori would have any rights to my home, at least not until I passed away.

21Of course, Mr. Jackson could have accomplished this same objective simply by naming Ms. Rosenberg as the sole beneficiary of his Will, as he had already done in 2005. Mr Jackson filed a supplementary affidavit explaining why he added Ms. Rosenberg as joint tenant:

It was never my intention to gift a portion of my Port Hope home to Lori. As I had no close family at that time, my intention was to have the property, with whatever equity was left in it, pass to Lori, my beloved partner’s grand niece, without her having to pay the probate fees. This is why I added her on title, and for no other reason.

22Placing property in a joint tenancy is commonly done as an estate planning mechanism. Property that is jointly owned passes automatically to the surviving member if the other owner dies: Hansen Estate v. Hansen, 2012 ONCA 112, at paras. 30 - 31. This avoids the inclusion of the property value in the calculation of the Estate Administration Tax (probate fees) when probating the estate. Mr. Jackson knew this – that is how he became the sole owner of the Yorkville condominium after Mr. Taube’s death.

23As Mr. Jackson has now discovered, joint tenancy is a risky way to minimize probate fees. The legal fees that both parties will have to pay to resolve this dispute will far exceed any probate fees that Ms. Rosenberg would have had to pay.

24Mr. Jackson’s affidavit states that Mr. Reingold did not discuss with him “any implications of adding Lori on the title of my home as a joint tenant”.

25As part of the transfer, Mr. Jackson signed an Acknowledgment and Direction to allow Mr. Reingold to transfer the property. This document included a Land Transfer Tax Statement, which indicates that the transfer was made for nominal consideration ($2.00). The “explanation for nominal consideration” given is “gift”. The direction to Mr. Reingold, which was signed by both Mr. Jackson and Ms. Rosenberg, states:

We further instruct you to effect such Transfer as a GIFT on the basis that no consideration is passing between the parties in any manner whatsoever.

26Mr. Jackson’s affidavit states that these documents were not explained to him.

27On or about August 2020, Ms. Rosenberg and her husband, Mr. Lopez, came to visit Mr. Jackson. Mr. Lopez informed Mr. Jackson that he and Ms. Rosenberg planned to upgrade Mr. Jackson’s home so that they could sell it. Once sold, they would use the proceeds to purchase a two-storey property on a golf course, and Mr. Jackson could live with them. Ms. Rosenberg was not a party to this conversation.

28Mr. Jackson was shocked and frightened by this conversation with Mr. Lopez, and became worried that Ms. Rosenberg and her husband would take steps to force him out of his home.

29Mr. Lopez filed an affidavit in this Application. His affidavit does not refute – or even mention – Mr. Jackson’s version of these events. Accordingly, Mr. Jackson’s evidence on this matter is the only evidence before the court, and I accept it as true. That said, it is entirely irrelevant to the legal analysis to be undertaken. The court is not being asked to decide whether Mr. Jackson was justified in severing the joint tenancy and converting it to a tenancy in common, his reasons are irrelevant. The questions are whether he had the legal right to sever the joint tenancy, and whether he has the legal right to the remedies sought.

30On September 22, 2020, Mr. Jackson asked a real estate lawyer to sever the joint tenancy and convert it to a tenancy in common, so that if he died before he regained ownership of his home, Ms. Rosenberg would not get the entire home.

Lori Rosenberg’s Position

31Ms. Rosenberg takes the position that any interest in the Port Hope property transferred to her by Mr. Jackson was done pursuant to a gift. Her affidavit states that she understood the transfer:

[T]o be an unconditional gift by Nigel during his life, making me a beneficiary and title owner of the property. There were never any conditions placed on the transfer, nor was I, at any point, holding the interest in trust for Nigel.

32Ms. Rosenberg also states that given that she was already the named beneficiary in Mr. Jackson’s Will, “the inter vivos gift and joint tenancy allowed for the transfer of any interest without probate fees.”

33Ms. Rosenberg’s affidavit states that prior to Mr. Taube’s passing, he assured her that he would divide his Estate on a 50/50 basis between Mr. Jackson and Ms. Rosenberg.

34Instead, the three of them (Rosenberg, Jackson and Taube) “came to an understanding that Bernard and Nigel would name each other as the Beneficiaries of their Estates and name me as the alternative beneficiary to both estates.” This understanding was executed by the signing of mutual Wills on November 2, 2005.

35Ms. Rosenberg states that the tripartite agreement was “an exchange”:

[B]y not being entitled to 50% of Bernard’s estate on Bernard’s passing but being entitled to 100% of Nigel’s estate upon Nigel’s passing, since all if not most of Nigel’s estate consisted of assets that flowed to him from Bernard’s estate.

36Ms. Rosenberg argues that the severance of the joint tenancy was a breach of Mr. Jackson’s fiduciary duty as trustee of the property and a breach of contract as between Mr. Taube and Mr. Jackson.

Analysis

37Mr. Jackson takes the position that the February 29, 2012 transfer was not a gift, but was a resulting trust, with the beneficial ownership being retained by Mr. Jackson.

38The law relating to the presumption of resulting trust was set out by the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17.

39The recent decision of Sanfilippo J. in Bradshaw v. Hougassian, 2023 ONSC 3266, at paras. 38 - 39, provides a useful summary of the law of resulting trust, which I adopt for the purposes of this analysis:

As the Supreme Court has explained, “the underlying notion of the resulting trust is that it is imposed ‘to return property to the person who gave it and is entitled to it beneficially, from someone else who has title to it. Thus, the beneficial interest ‘results’ (jumps back) to the true owner’”

A resulting trust arises where the property is in one party’s name, but impressed with an obligation to return the property either because the holder is a fiduciary or because the transferee gave no value for the property. To determine whether the transfer of property was made for no value, the actual intention of the transferor at the time of the transfer is the governing consideration. Where a gratuitous transfer is made, there is a rebuttable presumption that the transferor intended to create a trust rather than to make a gift, on the principle that “equity presumes bargains and not gifts”. The onus is on the person receiving the transfer to demonstrate that a gift was intended, failing which the transferee holds the property in trust for the transferor. [Footnotes omitted.]

40The February 29, 2012 transfer to Ms. Rosenberg as joint tenant was a gratuitous transfer. Thus, the presumption of resulting trust applies, and the onus is on Ms. Rosenberg to demonstrate that the February 29, 2012 transfer was intended as a gift.

41In Pecore the Court noted, at para. 56, that the most important evidence of intention will generally be evidence that is contemporaneous to the transfer:

[E]vidence adduced to show the intention of the transferor at the time of the transfer “ought to be contemporaneous, or nearly so”, to the transaction…The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts.

42That said, the Court concluded, at para. 59, that evidence of intention that arises subsequent to a transfer should not automatically be excluded; “the trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention”.

43In Andrade v. Andrade, 2016 ONCA 368, the Ontario Court of Appeal held, at para. 63, that the question for the court to determine is the intention of the grantor or contributor, and not the “common intention” of the parties:

The trial judge referred on multiple occasions to “the parties’ intentions”, stating that he could find “no real evidence of a commonly shared intention to purchase and hold the [house] in trust for Luisa.” Common intention, however, is not the issue. The intention of the grantor or contributor alone counts, as the point of the resulting trust is that the claimant is asking for his or her own property back. [Emphasis added.]

See also: MacIntyre v. Winter, 2021 ONCA 516, at para. 24.

44The object of this inquiry is to “weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention”: Pecore at para. 44.

45In order to establish a gift, Ms. Rosenberg must satisfy three conditions: there must be (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration; (2) an acceptance of the gift by the donee; and (3) a sufficient act of delivery or transfer of the property to complete the transaction: McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24; MacIntyre at para. 40; Falsetto v. Falsetto, 2023 ONCA 469, at para. 27.

46The issue of resulting trust commonly arises where a parent transfers a property to an adult child to enable the adult child to assist with the management of the parent’s financial affairs: Pecore, at para. 36. That is clearly not the case here; there is no suggestion that Mr. Jackson transferred the property to Ms. Rosenberg to enable her to assist with the management of the property. Indeed, Mr. Jackson is clear that his purpose in transferring the property to Ms. Rosenberg was to give her whatever equity was left in the home after he died. Mr. Jackson understood that the transfer to Ms. Rosenberg as a joint tenant with a right of survivorship meant “that when I pass away the title to my home would pass to Lori.”

47As indicated, the transfer was also intended to avoid the payment of estate administrative taxes when the property was transferred to Ms. Rosenberg after Mr. Jackson’s death. This was entirely consistent with Mr. Jackson’s 2005 Will, which bequeathed his Estate to Ms. Rosenberg as the sole beneficiary.

48The Acknowledgment and Direction signed by Mr. Jackson when the transfer was made is also important evidence of his intention at the time of the transfer. These documents expressly state that his intention was to make the transfer as a gift to Ms. Rosenberg.

49Finally, it is also relevant that the Port Hope property was Mr. Jackson’s home, and that Ms. Rosenberg never lived there, nor was there any intention that she would ever live at that property during Mr. Jackson’s lifetime.

50In considering the evidence of Mr. Jackson’s intention at the time of the transfer, we must consider not only whether a gift was intended, but the nature of the gift.

51Considering the evidence as a whole, I am satisfied that Mr. Jackson’s intention at the time of the transfer was to gift the right of survivorship in the Port Hope property to Ms. Rosenberg. His intent was that the whatever equity remained in the property upon his death should pass to Ms. Rosenberg, and not to his Estate. The right of survivorship included whatever equity was left in the property after he died.

52Mr. Jackson did not intend to gift the property to Ms. Rosenberg during his lifetime. Mr. Jackson wanted and intended to retain control of the Port Hope property throughout his life. There was no intention to give Ms. Rosenberg any control over the property before Mr. Jackson’s death. It was Mr. Jackson’s intention that Ms. Rosenberg’s beneficial interest in the property would arise only after Mr. Jackson’s death.

53The fact that Mr. Jackson did not intend to give the Port Hope property to Ms. Rosenberg during his lifetime does not preclude the conclusion that he intended to gift the right of survivorship to Ms. Rosenberg. This was made clear by the Supreme Court of Canada in Pecore, at paras. 63 and 66:

[T]the transferor’s retention of his or her exclusive beneficial interest in the account in his or her lifetime may support the finding of a resulting trust, unless other evidence proves that he or she intended to gift the right of survivorship to the transferee…

[T]he fact that a transferor controlled and used the funds during his or her life is not necessarily inconsistent with an intention at the time of the transfer that the transferee would acquire the balance of the account on the transferor’s death through the gift of the right of survivorship.

54The fact that Mr. Jackson did not intend his gift to take effect until he died does not change the fact that the gift of the right of survivorship is an inter vivos and immediate gift, as will be discussed below.

55The fact that Mr. Jackson later regretted gifting the right of survivorship to Ms. Rosenberg does not alter his intention at the time of the transfer. The fact that Mr. Jackson may not have understood that transferring the property to Ms. Rosenberg as a joint tenant might complicate his ability to sell or otherwise encumber the property in the future (a prospective purchaser or mortgagee would require Ms. Rosenberg’s consent) does not alter his intention to gift the remaining equity in the Port Hope property to Ms. Rosenberg after his death.

56The circumstances in this case are identical to those contemplated in Mark Gillen, Lionel Smith & Donovan W.M. Waters, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada, 2012), at § 10.II.B.2, quoted with approval by the Court of Appeal in MacIntyre, at para. 33:

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 a 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. [Footnote omitted.] [Emphasis added.]¹

57In my view, the underlined portion quoted above reflects the evidence in this case. The evidence shows that while Mr. Jackson intended Ms. Rosenberg to hold her interest in the Port Hope property in trust for Mr. Jackson during their joint lives, it was also Mr. Jackson’s intention that, should he predecease Ms. Rosenberg, Ms. Rosenberg should take the benefit of the property. The presumption of resulting trust has, therefore, been partially rebutted. At the time of the gratuitous transfer, Mr. Jackson’s intent was that, upon his death, Ms. Rosenberg would hold whatever equity remained in the Port Hope property for her own benefit, and not as a trustee of Mr. Jackson’s Estate.

The Right of Survivorship

58The gift of a right of survivorship by way of a joint interest in a bank account or in real property is an inter vivos rather than a testamentary gift: Pecore at paras. 48 and 49.

59While the gift is immediate, it is a gift of whatever remains at the death of the transferor, not what existed at the date of the transfer. This is most readily understood in the context of a joint account, where the transferor retains the right to drain a joint account to a zero balance prior to his death. As the Supreme Court explained in Pecore, at para. 50:

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.

60The same principle applies to real property. This principle has been addressed by the Manitoba Court of Appeal in the case of Simcoff v. Simcoff, 2009 MBCA 80 and in several British Columbia Court of Appeal decisions.

61In Simcoff, the Manitoba Court of Appeal held, at para. 61:

As a matter of fact, at common law, it is the prima facie right of a joint tenant while alive to take action to effect a severance of a joint tenancy into a tenancy in common. In his oft-cited article, Professor A. J. McClean, “Severance of Joint Tenancies” (1979) 57 Can. Bar Rev. 1, comments on the fundamental right to deal with joint property (at p. 2):

… [A] joint tenant, without the consent of or even notice to the other joint tenants, is as free to deal with his interest as any other owner, and may deal with it in such a way as to destroy one of the unities. If that happens it follows that the joint tenancy is severed.

62Simcoff decided that the right to sever a joint tenancy exists even though the joint tenancy includes a right of survivorship. The Court stated, at para. 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.

63Simcoff has been followed by the British Columbia Court of Appeal. In Bergen v. Bergen, 2013 BCCA 492, the Court explained, at paras. 40 and 41:

Where a joint tenancy in land is concerned, on the other hand, either of the joint tenants is at liberty to sever the joint tenancy at any time − a fact that clearly undermines the notion that as a matter of law, a joint tenant receives a “full and perfect” inter vivos gift of the “survivorship” (and counsel for Robert contends, of the property itself). Severance, which occurs automatically upon the destruction of the four unities, ends the jus accrescendi, with the result that each co-owner becomes entitled to a distinct share in the land rather than an undivided interest in the whole. (Under s. 18(3) of the Property Law Act, R.S.B.C. 1996, c. 377, a joint tenant may sever the joint tenancy—and thus the “survivorship” – by transferring the property to himself and need not even notify the co-owner). … As observed by Steel J.A. in Simcoff v. Simcoff, 2009 MBCA 80, a case involving land, “the fact that a ‘complete gift’ … included a right of survivorship does not, prima facie, prevent a donor from dealing with the retained interest while alive. The right of survivorship is only to what is left.” In the case of real property (and personal property, for that matter) nothing remains of the right of survivorship.

Of course it remains true that once a gift has been made of an interest in real property or any other type of property, the gift cannot be revoked − whether the transferee takes as a joint tenant or tenant in common. As stated by D. Smith J.A. in Fuller v. Harper, “The gift of a joint interest in real property is an inter vivos rather than a testamentary gift and cannot be retracted by the donor. It is a ‘complete and perfect inter vivos gift’ …”. (At para. 53.)

64In Zeligs v. Janes, 2016 BCCA 280, the Court stated, at para. 41:

The principal and distinguishing characteristic of joint tenancy is the right of survivorship, the jus accrescendi. When one joint tenant dies, his or her interest in the property is extinguished and passes to the surviving joint tenant(s). 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: Estate of Propst, 788 P.2d 628 at 631 (Cal. Sup. Ct. 1990). When given inter vivos, a gift of survivorship rights is to what is left, if anything, when the gamble is won: Simcoff v. Simcoff, 2009 MBCA 80 at para. 64.

65The Court further explained, at para. 45:

Like any owner, a joint tenant is entitled to deal freely with his or her interest in property. Accordingly, a joint tenant may sever a joint tenancy, with or without the consent or knowledge of the other joint tenant(s) and subject to contrary statutory provision. After a joint tenant dies, however, severance is no longer possible because death extinguishes the joint interest. For this reason, a testamentary disposition cannot sever a joint tenancy: Bergen v. Bergen, 2013 BCCA 492 at para. 40; Hansen Estate at para. 63; A.J. McClean, “Severance of Joint Tenancies” (1979) 57 Can. Bar Rev 1 at 2, 38-41.

66In McKendry v. McKendry, 2017 BCCA 48, the Court accepted that an inter vivos transfer of the right of survivorship was properly characterized as a gift, even though there was a possibility that severance of the joint tenancy could rob the gift of any value, at paras. 28 - 30:

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.

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.

A donor may gift the right of survivorship, but continue to deal freely with property throughout his or her lifetime...

67See also Herbach v. Herbach Estate, 2019 BCCA 370, at paras. 31, 32 and 37.

68A situation similar to the case at hand was considered by the British Columbia Supreme Court in Kennedy v. Smith, 2022 BCSC 1622. Francis J. reviewed the three legal scenarios that may arise when a gratuitous transfer of property into joint tenancy is made, at para. 80:

Pursuant to the Supreme Court of Canada’s decision in Pecore v. Pecore, 2007 SCC 17 [Pecore], property that is held in joint tenancy can give rise to three potential scenarios in terms of the beneficial interests of the title holders:

a) A true joint tenancy, in which the joint tenants are each owner of the whole. Each enjoys the full benefit of property ownership and the ultimate survivor will enjoy the whole title for him or herself.

b) A resulting trust, wherein only one joint tenant has any beneficial interest in the property and the other joint tenant, usually a gratuitous transferee, holds title in trust for the other and has no beneficial interest in the property.

c) A scenario which is sometimes referred to as a “gift of the right of survivorship,” wherein a joint tenant is gratuitously placed on title and has no beneficial entitlement to the property during the lifetime of the donor, but if the donee survives the donor, the donee will receive the entire property by right of survivorship. In Bergen v. Bergen, 2013 BCCA 492 at para. 37 [Bergen], Newbury J.A. described a gift of the right of survivorship in a joint account as “an immediate gift of a joint interest consisting of whatever balance exists in the account on the transferor’s death, assuming he or she dies first.”

69The factual findings in Kennedy are virtually identical to those in this case. Francis J. summarized those findings at para. 81:

Mr. Smith gave clear, credible and uncontroverted evidence as to his intentions when he registered the property in joint tenancy with Ms. Kennedy. He did not wish for Ms. Kennedy to have any ownership interest in the Home during his lifetime, but he wished for Ms. Kennedy to inherit the Home on his death. Mr. Smith’s wish to retain beneficial interest in the Home during his lifetime is consistent with the actions of the parties.

70Francis J. held, at para. 83, that this arrangement was the third scenario described in Pecore: “Mr. Smith intended to retain all beneficial interest in the Home during his lifetime, but wished the Home to pass by right of survivorship to Ms. Kennedy on his death.”

71Francis J. also noted, at para. 82, that the circumstances described by the authors of Waters’ Law of Trusts in Canada (quoted above at para. 56) “are an apt description of the legal relationship that arose between Mr. Smith and Ms. Kennedy with respect to the Home, in which Mr. Smith is Party A and Ms. Kennedy is Party B”.

72Like Francis J. in Kennedy, I conclude that the arrangement in the case at hand was the third scenario described in Pecore: Mr. Jackson intended to retain all beneficial interest in the Port Hope property during his lifetime, but wished the Port Hope property to pass by right of survivorship to Ms. Rosenberg on his death.

73As such, I adopt the conclusion of Francis J. in Kennedy, at para. 86:

[O]ne consequence of a transfer of legal title into joint tenancy is that an immediate, inter vivos gift is made of the right of survivorship in property, with the donor of the gift retaining all remaining right and interest in the property during their lifetime: Herbach v. Herbach Estate, 2019 BCCA 370 at para. 39. These are the circumstances that have arisen in this case. Mr. Smith did not create a true joint tenancy when he gratuitously placed Ms. Kennedy on title as a joint tenant. He made an immediate inter vivos gift of the right of survivorship.

74As a result, the donee was only ever entitled to what was left of the donor’s interest in the property on the donor’s death. In the Kennedy case, nothing was left of the donor’s interest in the property because it had been sold pursuant to a court order: para. 88.

75Francis J. concluded as follows at paras. 90-91:

When the gift of the right of survivorship was made to Ms. Kennedy, she was given the right to receive whatever was left of Mr. Smith’s interest in the Home if Ms. Kennedy succeeded in the “ultimate gamble” and survived Mr. Smith. Nothing remains of that right at this point as the Home has been sold. Much as would be the case if Mr. Smith had given Ms. Kennedy the gift of the right of survivorship in a bank account, and then drained the funds during his lifetime, there is at this point nothing left to pass on to Ms. Kennedy. The gift of the right of survivorship in the Home has no value.

To be clear, this is not to say that Mr. Smith was entitled to revoke the gift of the right of survivorship in the Home. Like any perfected gift, the gift of a beneficial interest in the Home was not something Mr. Smith could take back. However, what was conveyed to Ms. Kennedy when she was placed on title, the gift of the right of survivorship, is a gift whose value is contingent on a specific series of events occurring. In the circumstances of the events that have occurred in this case, the gift does not have any value.

As such, I conclude that the entire proceeds of sale of the Home equitably belong to Mr. Smith. No amount is payable to Ms. Kennedy on account of her legal interest as a joint tenant on title to the Home.

76In my view, this is the correct legal conclusion to the case before me. Mr. Jackson gifted the right of survivorship to Ms. Rosenberg. He cannot revoke that gift, but, until he dies, Mr. Jackson retains all rights and interests in the Port Hope property during his lifetime, and is free to encumber or sell the property should he choose.

Severance of Joint Tenancy

77“Severance is the process of converting a joint tenancy into a tenancy in common… The main reason why joint tenants want to become tenants in common is to get rid of the right of survivorship”: Robert Chambers, The Law of Property, (Toronto: Irwin Law, 2021), at p. 91.

78Mr. Jackson was free to sever the joint tenancy as he has done. This is the conclusion reached by the Manitoba Court of Appeal in Simcoff and the British Columbia Court of Appeal in Bergen, McKendry and Herbach, reviewed above.

79The Saskatchewan Court of Appeal came to the opposite conclusion in Thorsteinson Estate v. Olson, 2016 SKCA 134, where it held that, having gifted a right of survivorship, the transferor cannot sever the joint tenancy. The same conclusion was followed by the Alberta Court of Appeal in Pohl v. Midtdal, 2018 ABCA 403.

80As far as I can determine, the Ontario Court of Appeal has yet to weigh in on this question post-Pecore.

81I prefer the conclusion of the Manitoba and British Columbia Courts of Appeal which, in my view, is consistent with Ontario law with respect to severing joint tenancies, as set out below.

82The Ontario law with respect to severing a joint tenancy was summarized by MacLeod-Beliveau J., in Thompson v. Elliott Estate, 2020 ONSC 1004, at paras. 48 - 50:

There is no issue that a person can unilaterally sever a joint tenancy upon the execution of a transfer in land. It has been held that it must however be done before the person dies and cannot be done in a will or testamentary disposition, as by then, it is too late. The right of survivorship in those circumstances has already vested the property in the surviving tenant (see Royal and SunAlliance Insurance Company v. Muir, [2011] O.J. No. 1688, 2011 ONSC 2273, at para. 25, Perell J.).

The Ontario Court of Appeal has reviewed the common law in this area and has held in Hansen Estate v. Hansen (2012), 2012 ONCA 112,… at paras. 32, 34, that there are three ways for someone to sever a joint tenancy during their lifetime:

1. by an act of any one of the persons interested operating on his or her own share;

2. by mutual agreement; and

3. any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

… A joint tenancy can be severed by transferring an interest jointly held with another from oneself to oneself. The property is then considered to be held as tenants in common with the former co-tenant. The joint tenancy is considered effectively destroyed (see s. 42 of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34; Murdoch v. Barry (1976), 1975 CanLII 360 (ON SC), 10 O.R. (2d) 626, at paras. 19, 22, Goodman J. (H.C.J.).

83The right of a joint tenant to convert the joint tenancy into a tenancy in common was also recognized by Perell J. in Royal & SunAlliance Insurance Company v. Muir, 2011 ONSC 2273, at para. 25:

A joint tenancy can be converted into a tenancy in common. A joint tenant has the right to end the joint tenancy, which is known as a severance of the joint tenancy. Severance involves disrupting the continuance of the unities of title, interest, and possession. (The unity of time refers to the initial creation of the joint tenancy and cannot subsequently be affected.) If a joint tenant wishes to sever the joint tenancy, he or she must do so before he or she dies. In other words, it is too late to sever by testamentary disposition because with the death of the co-joint tenant, the right of survivorship would have already vested the property in the survivor.

84Thus, severance is not taking back a gift, but the exercise of an inherent power of all joint tenants to transform a joint tenancy into a tenancy in common: Verwoerd v. Verwoerd, 2017 ABQB 272, at para. 328.

85In this case, the severance was accomplished by Mr. Jackson transferring his share in the joint tenancy to himself. Section 41 of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34 expressly authorizes a person to convey property to themselves:

Conveyance of property to self

41 A person may convey property to or vest property in the person in like manner as the person could have conveyed the property to or vested the property in another person.

86I agree with the Manitoba and British Columbia Courts of Appeal that the law relating the severance of joint tenancies continues to apply after Pecore. The right of survivorship is the same whether the joint tenancy was the result of a bargain or a gift, and there is no reason why the former can be severed but not the latter.

87While joint tenants can agree by contract that they will not sever the joint tenancy, no such agreement exists in this case, and I am not prepared to infer (as was the trial judge in Pohl v. Midtdal, 2017 ABQB 711, at paras. 42 and 63) that such a restriction should be implied. There is nothing in Pecore that would compel such a result.

88Indeed, Pecore expressly finds – in the context of a joint bank account - that even though the gift of the right of survivorship is immediate and inter vivos, it does not stop the transferor from draining the account and leaving the transferee with nothing of value. It is a gift of whatever remains at the death of the transferor, not what existed at the date of the transfer. There is no principled reason why this analysis should not apply to joint tenancies as it does to joint accounts.

89Following the Alberta and Saskatchewan authorities would require the court to overrule the Ontario law with respect to severing a joint tenancy as set out in Hansen Estate, Thompson, and Royal & SunAlliance. There is no reason to doubt the correctness of any of those decisions.

90Moreover, the Alberta Court of Appeal decision in Pohl, at para. 11, and the Saskatchewan Court of Appeal decision in Thorsteinson, at para. 19, were heavily influenced by provisions in their respective Land Titles Acts that restrict the alienation of joint tenancies. These provisions have no equivalence in the Ontario legislation.

91Section 65 of the Alberta Land Titles Act, RSA 2000, c L-4, precludes registration of severance of a joint tenancy without consent or notice. Section 65 provides:

Registration of transfer affecting joint tenancy

65 The Registrar shall not register a transfer that has the effect of severing a joint tenancy unless

(a) the transfer is executed by all the joint tenants,

(b) all the joint tenants, other than those executing the transfer, give their written consent to the transfer, or

(c) the Registrar is provided with evidence satisfactory to the Registrar that all the joint tenants who have not executed the transfer or given their written consent to the transfer have by

(i) personal service, or

(ii) substitutional service pursuant to a court order, been given written notice of the intention to register the transfer.

92Similarly, s.156 of the Saskatchewan Land Titles Act, 2000, SS 2000, c L-5.1, provides:

Restriction on alienation of joint tenancy

156 No title or interest held in joint tenancy may be alienated by an instrument purporting to grant the title or interest unless the alienation is authorized:

(a) by all the joint tenants, in writing; or

(b) by court order, on the application of one of the joint tenants.

93No equivalent provisions exist in the Ontario Land Titles Act, R.S.O. 1990, c L-5.

94Accordingly, Mr. Jackson had the right to sever the joint tenancy, as he did on September 9, 2020.

95That severance made each a tenant in common with a 50% interest in the property. Severance ends the right of survivorship; upon the death of a co-owner in a tenancy in common, the deceased’s interest in the property passes to his/her estate: Hansen Estate at para. 31.

96While Ms. Rosenberg has a 50% interest in the property, the presumption of resulting trust also applies to the September 9, 2020 transfer, because it was a gratuitous transfer. It clearly was not Mr. Jackson’s intention to gift this 50% interest in the Port Hope property to Ms. Rosenberg. His intention in severing the joint tenancy was to reduce Ms. Rosenberg’s right of survivorship in the property. Accordingly, Ms. Rosenberg holds this 50% interest on a resulting trust for Mr. Jackson.

97While severance of the joint tenancy eliminates Ms. Rosenberg’s right of survivorship with respect to Mr. Jackson’s 50% share, Mr. Jackson cannot revoke the right of survivorship with respect to Ms. Rosenberg’s 50% share.

98When Mr. Jackson dies, his 50% share of whatever equity remains in the Port Hope property will become part of his Estate and will be distributed according to the terms of his Will. When Mr. Jackson dies, Ms. Rosenberg’s 50% share of whatever equity remains in the property will pass to her in accordance with the intention of the original February 29, 2012 transfer.

Is Ms. Rosenberg entitled to the property by way of Mutual Wills?

99In the alternative, Ms. Rosenberg argues that there was an agreement between her, Mr. Jackson and Mr. Taube that Ms. Rosenberg would be the sole beneficiary of Mr. Jackson’s Estate when he died. She argues that Mr. Taube and Mr. Jackson agreed to execute “mutual wills”.

100She argues that Mr. Taube and Mr. Jackson executed reciprocal wills together on November 5, 2005 as part of this agreement. Both Wills listed each other as beneficiaries of their respective estates, and both named Ms. Rosenberg as the alternative beneficiary of both estates, thereby disposing of their estates in an identical manner.

101This agreement, she argues, precludes Mr. Jackson from changing or revoking the terms of the November 5, 2005 Will, or from denying her any share in the Port Hope property when he dies.

102The law relating to mutual wills was summarized by Reid J. in Rammage v. Estate of Roussel, 2016 ONSC 1857, at paras. 17 - 20:

Reciprocal wills contain terms that are mirror images of each other. By definition, they represent the wishes of the two testators at the date of signing... However, the simple fact that the wills were made in that form simultaneously is not enough, by itself, to establish that they are mutual wills.

Mutual wills are reciprocal wills that the makers have agreed cannot be changed, at least as to their effect, without the consent of the other. Once one of the testators has died, it is not possible for the surviving testator to receive such consent, and therefore the terms cannot be altered.

For wills to be mutual, their provisions must be identical in the sense that each party receives an identical interest from the other, or that the remainder or gift over is disposed of in an identical manner.

Where wills are not specifically identified as being mutual, there must be evidence of a binding legal contract and not “just some loose understanding or sense of moral obligation” if they are to be deemed mutual. Whether the extrinsic evidence supports the presence of a binding legal contract is the key issue to be determined in this case. [Footnotes omitted.]

103The fact that wills are identical does not, in itself, give rise to an inference that there is an agreement that the survivor will not be able to vary or revoke the will in the future: Gefen v. Gaertner, 2019 ONSC 6015, at para. 80, aff’d Gefen Estate v. Gefen, 2022 ONCA 174:

A mutual will agreement is more than a mirror will -- it is an agreement that the wills not be changed and is a constraint on testamentary freedom. The testamentary intentions of the will-makers expressed in their mirror wills is not enough to establish that they had agreed that the survivor would not be able to vary such dispositions in the future.

104In Edell v. Sitzer, 2001 CanLII 27989 (ON SC), (aff’d Edell v. Sitzer, 2004 CanLII 654 (ON CA)), Cullity J. stated, at para. 73:

As has often been pointed out, evidence that spouses or others intended property to devolve in accordance with their mutual wills does not even touch the question whether they had agreed that the survivor would not be able to vary such dispositions in the future. By definition, a will is a statement of an individual's testamentary intentions at the time it is executed. The fact that, of its nature, it is a revocable instrument reflects the fact that testamentary intentions, and the contents of a person’s will, may change. Evidence of statements of the testamentary intentions of spouses at a particular time does not, by itself, give rise to any inference with respect to an agreement that such intentions would not change in the future.

105The onus of proving the mutual will rests with the party that alleges the existence of a mutual will. While the onus is proof on a balance of probabilities, the quality of evidence must be clear and cogent. As explained by Kimmel J. in Gefen, at paras. 85 - 86 (aff’d 2022 ONCA 174, at paras. 37 - 39):

The onus on the party alleging the MWA [mutual will agreement] is “heavy” in that there must be clear evidence of a mutual will agreement:

In my view, there is a heavy onus on the Plaintiffs to establish the binding agreement, in the nature of a contract, which they assert, in clear and unequivocal terms. And there is ample authority for this proposition.

The requirement of proof of a MWA by “clear and cogent evidence” is a function of the importance of testamentary autonomy and the tension between that important value and an MWA which encroaches upon it. In the most recent reported MWA case in Canada that I was referred to (decided on December 14, 2018), Mayer v. Mayer Estate, Crossin J. of the B.C. Supreme Court described the rationale for the plaintiff’s burden as follows in his reasons dismissing an MWA claim:

A mutual will agreement imposes an onerous obligation on the surviving testator, who is left unable to deal freely with their property during the remainder of their lifetime and is compelled to dispose of it in a certain way at their death. For this reason, in order for the court to find the existence of an enforceable agreement, there must be clear and unequivocal evidence, including clarity of the terms.

[Footnote omitted.]

106In addition, s. 13 of the Evidence Act, R.S.O. 1990, c. E.23, provides that a verdict cannot be obtained on the evidence of a potential beneficiary of the verdict unless that evidence is corroborated by other material evidence. Section 13 provides:

13 In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

107The evidence of Ms. Rosenberg’s husband does not qualify as corroborating evidence because he is also an interested party.

108In my view, the evidence does not support Ms. Rosenberg’s position that Mr. Taube and Mr. Jackson agreed to sign mutual wills that could not be changed or revoked.

109There was no direct written or oral confirmation that the 2005 Wills were mutual.

110Mr. Jackson expressly denied that there was any such agreement.

111In addition to his denial, Mr. Jackson points to the fact that Mr. Taube signed a codicil to his Will on August 15, 2009, to remove Ms. Rosenberg as the executor and trustee of his Estate and replace her with Mr. Jackson. This is evidence that Mr. Taube did not believe that there was any agreement that the mirror wills could not be changed.

112Moreover, Mr. Jackson’s evidence was that there was nothing in Mr. Taube’s Estate for him to inherit. Mr. Taube’s Will was not probated because they jointly owned all property. The only significant property owned by Mr. Jackson and Mr. Taube was the Yorkville condominium, and it passed automatically to Mr. Jackson as joint tenant, and was never part of Mr. Taube’s Estate.

113I do not believe Ms. Rosenberg’s affidavit evidence (or that of her husband, Mr. Lopez) that Mr. Taube “always assured me that he would leave 50% of his estate to me, and 50% of his estate to [Mr. Jackson]”. This was not, in fact, what Mr. Taube did, and was belied by the fact that the only property of value - the Yorkville condominium – was never going to be part of Mr. Taube’s Estate. A joint interest cannot be given away by will because it ceases to exist at the moment of death.

114Even if Mr. Taube gave such assurance to Ms. Rosenberg at some point, testamentary intentions may change, and it is evident that Mr. Taube changed his mind, as reflected in his November 5, 2005 Will.

115Further, Ms. Rosenberg testified that “all if not most of Nigel’s estate consisted of assets that flowed to him from Bernard’s estate”. This statement is the cornerstone of her mutual will argument, but it is not correct. As indicated, Mr. Taube’s Will was never probated and the assets – primarily the Yorkville condominium - flowed to Mr. Jackson automatically as joint owner, and not from Mr. Taube’s Estate.

116Nor is Ms. Rosenberg’s statement that “Bernard, Nigel and I came to an understanding that Bernard and Nigel would name each other as the Beneficiaries of their Estates and name me as the alternative beneficiary to both estates”, sufficient to meet the test for a mutual will agreement.

117As indicated, a mutual will agreement requires more than just a decision to sign reciprocal or mirror wills, it requires an express agreement by the makers of the wills that the wills cannot be changed. Ms. Rosenberg does not suggest that there ever was such an express agreement between Mr. Taube and Mr. Jackson.

118Even putting aside s. 13 of the Evidence Act, I am not satisfied that Ms. Rosenberg’s affidavit evidence constitutes clear and cogent evidence of an agreement between Mr. Taube and Mr. Jackson to never change or revoke their 2005 Wills.

119Accordingly, this aspect of Ms. Rosenberg’s claim is dismissed.

Summary of Findings

120Mr. Jackson’s intention at the time of the transfer was to gift the right of survivorship in the Port Hope property to Ms. Rosenberg. His intent was that the whatever equity remained in the property upon his death should pass to Ms. Rosenberg, and not to his Estate. The right of survivorship included whatever equity was left in the property after Mr. Jackson died.

121Mr. Jackson did not intend to gift the property to Ms. Rosenberg during his lifetime. Mr. Jackson wanted and intended to retain control of the Port Hope property throughout his life. There was no intention to give Ms. Rosenberg any control over the property before Mr. Jackson’s death. It was Mr. Jackson’s intention that Ms. Rosenberg’s beneficial interest in the property would arise only after Mr. Jackson’s death.

122Mr. Jackson intended Ms. Rosenberg to hold her interest in the Port Hope property in trust for Mr. Jackson during their joint lives, it was also Mr. Jackson’s intention that, should he predecease Ms. Rosenberg, Ms. Rosenberg should take the benefit of the property. The presumption of resulting trust has, therefore, been partially rebutted. At the time of the gratuitous transfer, Mr. Jackson’s intent was that, upon his death, Ms. Rosenberg would hold the Port Hope property for her own benefit, and not as a trustee of Mr. Jackson’s Estate.

123Mr. Jackson gifted the right of survivorship to Ms. Rosenberg. He cannot revoke that gift, but, until he dies, Mr. Jackson retains all remaining rights and interests in the Port Hope property during his lifetime, and is free to encumber or sell the property.

124Mr. Jackson had the right to sever the joint tenancy as he did on September 9, 2020. That severance made each a tenant in common with a 50% interest in the property.

125While Ms. Rosenberg has a 50% interest in the property, Ms. Rosenberg holds this 50% interest on a resulting trust for Mr. Jackson during his life.

126Severance of the joint tenancy eliminates Ms. Rosenberg’s right of survivorship with respect to Mr. Jackson’s 50% share, but Mr. Jackson cannot revoke the right of survivorship with respect to Ms. Rosenberg’s 50% share. When Mr. Jackson dies, his 50% share of whatever equity remains in the Port Hope property will become part of his Estate and will be distributed according to the terms of his Will. When Mr. Jackson dies, Ms. Rosenberg’s 50% share of whatever equity remains in the property will pass to her in accordance with the intention of the original February 29, 2012 transfer.

127There was no mutual will agreement between Mr. Taube and Mr. Jackson.

Conclusion

128Based on these findings, I make the following orders:

129Mr. Jackson’s severance of the joint tenancy of the property municipally known as 15 Potts Lane, Port Hope, Ontario, on September 9, 2020 is valid.

130Ms. Rosenberg holds her 50% share of the property as a tenant in common on a resulting trust in favour of Mr. Jackson during his lifetime.

131Mr. Jackson retains all rights and interests in the Port Hope property during his lifetime, and is free to encumber or sell the property.

132When Mr. Jackson dies, his 50% share of whatever equity remains in the Port Hope property will become part of his Estate.

133When Mr. Jackson dies, Ms. Rosenberg’s 50% share of whatever equity remains in the Port Hope property will pass to her through the right of survivorship.

134The issue of costs is reserved. If the parties are not able to agree on costs, Mr. Jackson may file costs submissions of no more than 3 pages, plus costs outline and any offer to settle, within 20 days of the release of this decision, and Ms. Rosenberg may file responding costs submissions on the same terms, within a further 15 days.

Footnotes

1. 1The language in the most recent version of Waters’ Law of Trusts in Canada, 5th ed. (Toronto: Thompson Reuters Canada, 2021), remains virtually unchanged. See Kennedy v. Smith, 2022 BCSC 1622, at para. 82, citing the 2021 edition for the same proposition.