



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



McKendry v. McKendry,









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)






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).




Counsel for the Appellant:



K.E. Ducey





Counsel for the Respondents:



R.D. Lee





Place and Date of Hearing:



Vancouver, British
  Columbia

November 4, 2016





Place and Date of Judgment:



Vancouver, British
  Columbia

January 30, 2017









Written Reasons by:





The Honourable Madam Justice Dickson





Concurred in by:





The Honourable Mr. Justice Groberman

The Honourable Madam Justice Garson








Summary:

The appellant challenges the
judges finding that he holds beneficial title to property on a resulting trust
for his late mothers 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:

Introduction

[1]

This is an appeal from a trial judgment declaring that the appellant,
John McKendry, holds real property in trust for his late mothers estate.  The respondents,
Margaret Collin, Jean McKendry and Alexis Kent, are three of the appellants 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 Marys 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.

Background

[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 Marys 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 Johns 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 Marys
intentions.  The trust declaration provided that John hold the property in
trust and divide the beneficial interest upon Marys 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
Marys 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. Richters
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
Marys 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 sons 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
Marys estate.  In March 2014, they commenced the second action, seeking variation
of Marys will.

The Trial Judgment

[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 Marys intention when she transferred title in January 2008 was
to make an immediate gift of the joint tenancy interest.

[18]

The trial judge rejected Johns 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 Johns 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 Marys intention in January 2008
when she transferred the property into joint tenancy.  At best, she held, they
reflected a change in Marys 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 Johns
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 Marys 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 Marys estate.

Positions of the Parties

[22]

The contentious aspect of the judgment is the judges 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 Marys 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 judges 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 judges conclusions are fully
justified in law and on the evidence.  In their submission, Marys 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 Marys 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 Marys estate.

Discussion

[26]

The legal principles that apply are straightforward.  A brief summary of
those principles and their application on this appeal follows below.

Joint Tenancy and the Right of Survivorship

[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 elses 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 transferees
survivorship interest in the account balance - whatever it may be - at the time
of the transferors death, not to any particular amount.

[Emphasis
in original.]

Gifts and Resulting Trusts

[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 courts 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 transferors 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 As estate
, because that right is merely one aspect of
Bs interest. In other words,
the starting point is that B holds all of his
interest on resulting trust for A, or As estate.
However, evidence may
show that, while A intended B to hold his interest for A during the joint
lives, it was also As 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.]

Transfers of Land

[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 Marys 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 partys agent, both an indication that it
has been made and a reasonable indication of the subject matter,



Application of Governing Principles

[39]

The parties agree, as I do, that Marys 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 Marys 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, Marys 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 Marys 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 Johns 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
, Marys 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, Marys
intention should prevail.

Conclusion

[44]

It follows that I conclude the judge erred in declaring John holds the
property in trust for Marys estate.  That being so, it was unnecessary to vary
Marys 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


