In the recent decision of Justice Baker in Gully v. Gully, 2018 BCSC 1590, the BC Supreme Court considered the legal effect of a registered joint tenancy where a third party creditor sought to secure an interest in real property that had been subject to a transfer of ownership from parent as sole owner to parent and child as joint owners, as part of the parent’s estate planning.
In 2015, Ms. Gully added her son, Steven, as a joint owner on title to her principal residence (the “Residence”). Steven had made no contribution to the acquisition or maintenance of the Residence and was not aware that his mother had executed the transfer of ownership. The Court accepted that Ms. Gully had made this transfer as part of her estate plan, which also included a will executed in 2015 (the “2015 Will”).
The 2015 Will included the following declaration:
“I declare that I contemplate naming my son and others as joint owners of some of my assets, or designated beneficiary of my RRSP, insurance and other investments, it being my intention that upon my death, such to belong to the named beneficiary, at law and in equity, and that such are not to be shared or allocated to other persons”.
In 2017, Steven and his company consented to judgment in favour of a third party creditor (“Ledcor”). The Court accepted that at this time, Steven remained unaware that he was on title to the Residence.
Ledcor subsequently registered its judgment against Steven’s half interest in the Residence. Shortly thereafter, Ms. Gully executed a new will (the “2017 Will”) severing the joint tenancy and leaving nothing to Steven. Ms. Gully then applied to the Court for, among other things, a declaration that Steven held his half interest in the Residence on resulting trust in her favour. Ms. Gully argued that the 2015 transfer had been made to facilitate the transfer of the Residence to her grandchildren on her death and that the beneficial interest remained solely with her by way of resulting trust.
The Court rejected Ms. Gully’s argument and dismissed the application. Costs were awarded to Ledcor.
The Court held that Ms. Gully’s 2017 Will was executed as a direct response to Ledcor’s registration of its judgment and rejected Ms. Gully’s argument of resulting trust. In reliance on the actual transfer made in 2015 and the intention recorded in the 2015 Will, the Court concluded that, at the time of the transfer, Ms. Gully had intended to give Steven half of the Residence and that such gift occurred at the date of the transfer from sole ownership into joint ownership.
Further, the Court held that even if the 2015 transfer had created a resulting trust, it would not have affected Ledcor’s claim to the property because the presumption of resulting trust that may arise through the gratuitous transfer of an interest in land from a parent to a child has no application in the case of a third party creditor claiming against a registered interest in land.
The fact that Steven had not agreed to the transfer of the Residence and, in fact, did not have knowledge of the transfer, did not invalidate the registered joint tenancy interest.
The court held that Ms. Gully had taken a risk in registering the joint tenancy, and consequently exposed half of her property to Steven’s creditors.
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