In a recent decision, the Ontario Superior Court of Justice
ruled on whether a non-contributing joint bank account holder owed
a fiduciary duty to the contributing joint bank account holder, and
whether she was in breach of that duty by paying herself
compensation out of the joint bank account.
The facts in Estate of Annie MacKay v. Dawn MacKay
(Evans), 2015 ONSC 7429 reflect the common family scenario in
which an elderly parent transfers a bank account into joint names
with a child. This is often done for convenience or for
probate planning purposes rather than as a gift of an undivided
one-half interest in the account. The funds are therefore
presumed to be held on resulting trust for the parent's
In this case, the elderly Annie MacKay moved in with her son,
Tom, and her daughter-in-law, Dawn. Annie subsequently named
Tom as her attorney for property and added Dawn as a joint account
holder to her bank account. At trial, Dawn asserted that
Annie had asked Dawn to provide her with companionship and assist
her with her banking and personal care in exchange for
In late 1999, Annie relocated to a retirement residence close to
Dawn and Tom's house. The Court accepted that Dawn
visited Annie at the retirement residence five days per week, on
average, and took Annie on frequent outings.
In early 2003, Dawn transferred $1,000 out of the joint
account. Her stated reason for this transfer was that it was
in respect of weekly compensation of $250 for her banking
assistance and companionship. From early 2003 to mid-2008,
Dawn periodically transferred additional funds out of the joint
account for her own benefit, again purportedly as compensation for
her banking assistance and companionship.
Dawn and Tom separated in 2008, at which point Tom commenced an
action on Annie's behalf seeking an accounting with respect to
all transactions on the account.
The first issue raised in this case was whether Dawn owed a
fiduciary duty to Annie in the management and operation of the
joint bank account. The Court cited the following indicia set
out in the decision of the Supreme Court of Canada in Frame v.
Smith,  2 S.C.R. 99 to assist with the determination of
whether a fiduciary relationship exists:
The fiduciary has scope for the exercise of some discretion or
the fiduciary can unilaterally exercise that power or
discretion so as to affect the beneficiary's legal or practical
the beneficiary is vulnerable to or at the mercy of the
fiduciary holding the discretion or power.
The Court found that Annie relied upon Dawn to exercise her
discretion, performing duties generally recognized as being
fiduciary in nature. The Court also found that the evidence
established vulnerability on Annie's part and a recognition of
that vulnerability by Dawn. As a result, the Court concluded
that Dawn acted as a trustee de son tort and owed a
fiduciary duty to Annie in relation to the operation of the joint
The Court then considered whether Dawn breached her fiduciary
duty by making payments to herself from the joint account.
Justice Woodley acknowledged that, at common law and in equity, the
general rule is that fiduciaries are not entitled to benefit from
their appointment. However, the rule of equity states that
once the court has established a conflict between personal interest
and duty the question then becomes whether there was consent to the
activity. In this case, the question was whether Annie or her
attorney consented to Dawn's compensation for personal
services. The Court examined the evidence and concluded that
Annie had consented to the arrangement verbally and that this
agreement was a "family agreement" for personal
service. The Court also found that Tom's actions inferred
his consent to the family agreement.
Finally, the Court considered whether Dawn was liable to repay
any or all of the withdrawn funds. Based on her journal
records, Dawn provided detailed evidence relating to the personal
services she provided to Annie. Dawn stated that she and
Annie had agreed to weekly compensation of $250. However, the
total amount withdrawn by Dawn from the joint account for the
weeks' service Dawn provided was less than half that
amount. The Court also accepted that the sporadic nature of
the payments reflected Dawn's concern that Annie be cared for
and her expenses met before Dawn compensated herself.
This case confirms that joint accounts held on resulting trust
may give rise to a fiduciary relationship between account holders
where the contributing account holder is incapable. The
question still remains as to whether a non-contributing account
holder owes a fiduciary duty to a capable contributing account
holder. Accordingly, non-contributing account holders would
be well advised to handle account assets with care.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
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