Joint Tenancy and Dependant’s Relief Claims

In two previous posts, we looked at specific situations where parties have unsuccessfully argued for severance of joint tenancies; in the context of an estate in bankruptcy and in the context of separation of spouses prior to death.  Today, we look at a recent case where a claim of severance was made, again unsuccessfully, in the context of a dependant’s relief claim.

In Su v. Lam, the Ontario Superior Court of Justice found that Mr. Su, a common-law spouse of the deceased, was a dependant for the purposes of a dependant’s relief claim under the Succession Law Reform Act (the “Act”).  Mr. Su was not named as a beneficiary in the will of the deceased.  The man to whom the deceased was still legally married at the date of her death was named as estate trustee.  As of the date of death, the deceased and the estate trustee still owned two properties in joint tenancy.  Mr. Su made an application against the estate for dependant’s relief.  The case centred on the availability of these properties to satisfy Mr. Su’s claim.

Section 72 of the Act provides for a form of statutory severance of a joint tenancy for the narrow purpose of making assets available for dependant’s relief claims.  Specifically, the capital value of any disposition of property held by the deceased and another as joint tenants at the date of death shall be included as testamentary dispositions as of the date of death and shall be deemed to be part of the deceased’s net estate for purposes of ascertaining the value of his or her estate, and is available to be charged for payment in satisfaction of an order for dependant’s relief.  Therefore, for the purposes of a dependant’s relief claim only, the survivor of a joint tenancy may not have an absolute right to ownership of property.

Unfortunately for Mr. Su, the Court found that the provisions of s. 72 only apply if an application for dependant’s relief is made within six months of the issuance of a certificate of appointment of estate trustee, as required by s. 61(1) of the Act.  The Court held that, after the expiry of this limitation period, the ability under the Act to treat jointly held property as estate assets lapses.  Mr. Su did not make his application within the required six months. 

However this was not the end of the story.  If an application is made more than six months after the certificate is issued, s. 62(2) of the Act allows a court, “if it considers it proper”, to make an order for dependant’s relief “as to any portion of the estate remaining undistributed at the date of the application”.  However, the Court held that in such circumstances, the party seeking relief would have to show that there were undistributed assets as of the date of his or her application.  Therefore, Mr. Su would have to show that there was a severance of the jointly held property at common law while the testator was alive.  Otherwise, the property would devolve to the survivor upon death and would therefore not be property of the “estate remaining undistributed”.

As in Hewson, the Court noted that at common law, a joint tenancy could be severed in one of three ways.  Firstly, where a party unilaterally acts on one’s own share, such as by selling or encumbering her or his interest.  Secondly, where there is a mutual agreement between the co-owners to sever.  Thirdly, where there is any course of dealing sufficient to intimate that the interests of the co-owners were mutually treated as constituting a tenancy in common.  Finding that neither the first or second circumstances applied, this case turned on an application of this third “course of dealing” rule.

The Court found that Mr. Su had not met the onus on a party seeking severance of a joint tenancy.  The Court found that while the estate trustee and the testator were separated, mere separation is insufficient to establish severance.  The Court required more – some course of dealing showing that the parties intended to treat their interests as separate.  The Court was not able to find evidence of such dealings.  What it did find was that the deceased and the estate trustee appeared to have had little contact regarding the jointly held properties after separation.  The lack of dealing showed a lack of intention to deal with their interests separately.

Of course, the biggest issue here is the six-month limitation period.  For a party seeking dependant’s relief, it is crucial to meet this deadline.  If the application is made in accordance with the Act, a party benefits from the statutory inclusion in the estate, not only of jointly held property, but of certain gifts, money held in joint accounts, certain monies and property held in trust and life insurance proceeds.

DON’T DELAY.

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