Supreme Court of Canada Grants Leave to Appeal to Joint Accounts Cases
Last week, we commented on our Blog about the whole question of joint accounts. At the end of the week, Eugene Meehan's email newsletter announced that 2 important decisions from the Ontario Court of Appeal had been granted leave.
In Pecore v. Pecore, the deceased transferred assets held in his name jointly with his daughter. The jointly-held assets amounted to approximately 80% of the value of the Estate. The deceased was concerned that the transfer of the assets to his daughter's name could trigger a deemed disposition and result in tax consequences. As a result, he wrote the financial institutions and told them not to adjust the cost bases for the investments, as he retained 100% ownership and that the transfer to joint names was for probate purposes only. For the trial decision, click here.
Subsequent to the transfer of the investment accounts, the deceased also amended his Will to name his daughter and his daughter's husband as residual beneficiaries. The daughter was married to a man who was a quadriplegic as a result of a motor vehicle accident, and the daughter was her husband's primary caregiver.
Approximately two years after the deceased's death, the daughter and her husband's marriage ended and the daughter's husband, in the course of the divorce proceedings, learned that she had received a substantial inheritance by way of a joint ownership account following her father's death. The husband brought a claim against the daughter claiming an interest in the jointly-held assets and claiming that he was entitled to 50% of those assets.
Of interest, in this case the transfer of the joint account was not challenged by the siblings of the transferee, it was challenged by the deceased's son-in-law. At trial, the Judge reviewed the evidence and concluded that the deceased intended the gift of the assets held on joint account with the daughter. The Court again, as is customary in these matters, reviewed the specific factual circumstances relating to this matter.
At trial, the deceased's intention was supported by the other daughter of the deceased. A review of the documents signed by the deceased was also undertaken and the Court was satisfied that all the documents signed by the deceased with the various financial institutions clearly indicated that the daughter was to have a right of survivorship. The timing of the gifting was also considered and was further supported by the deceased's Will, an RRSP and an insurance policy designation.
At the Court of Appeal, in dismissing the son-in-law's appeal, Lang, J.A. considered and reviewed the presumptions of resulting trust and advancement. Her Honour, of course, acknowledged that if the presumption of resulting trust applied, the burden was on the daughter to establish the gift and, conversely, if the presumption of advancement applied, the burden would lie on the son-in-law to establish that the deceased did not intend his daughter to receive both the legal and beneficial ownership of the investments.
Lang, J.A. stated that:
"Since both presumptions can be rebutted by evidence of actual intention, in my view, the presumptions become relevant only if, after considering all the evidence and the circumstances surrounding the transfer, a court is unable to draw a conclusion about the transferor's actual intention. Only in such a case, would a court resort to the presumptions to determine the issue. In a case such as this, which involves joint ownership of assets, resorting to the presumptions will rarely, if ever, be necessary."
The Court of Appeal went on to conclude that, in this case, there was ample evidence of actual intent and it was unnecessary for the trial judge to resort to the presumptions. On Thursday, May 25th, 2006, the Supreme Court of Canada held that the application for leave to appeal was granted, with costs to the Applicant in any event of the cause: Tomorrow we will talk about the other joint account decision that was also granted leave to appeal.
All the best, Suzana and Ian.
