Can one owner of a joint bank account withdraw all of the funds
for their own purposes? Does the other joint accountholder have any
right to claim against the withdrawn funds? The British Columbia
Court of Appeal tackled such questions, as well as many others, in
the recent decision of Zeligs Estate v. Janes, released on
29 June 2016.
This case involved a house on the University of British Columbia
Endowment Lands owned by Mrs. Burnett and her daughter Diana as
joint tenants. In 2010, when Mrs. Burnett was 102 years old and
living in a care facility, Diana used her authority as co-owner and
as Mrs. Burnett's attorney (pursuant to an enduring power of
attorney) to sell the UBC house for $2.7 million. Mrs. Burnett was
mentally incapable at the time. Diana deposited the net sale
proceeds into a bank account at CIBC, held in the joint names of
herself and Mrs. Burnett. Within a few weeks, Diana withdrew the
entire sum for her own purposes.
Mrs. Burnett died later that year, leaving a will that divided
her estate equally between her daughters Diana and Barbara. Diana,
as executor, took the position that the sale proceeds from the UBC
house belonged to her by right of survivorship, and did not form
part of the estate. According to Diana, all that remained in the
estate was a balance of $126,000. She sent Barbara a cheque for
Barbara died a year later, but her husband continued this claim
on her behalf. At trial, the BC Supreme Court held that Diana severed any
joint tenancy by selling the UBC house and taking possession of the
entirety of the sale proceeds. Mrs. Burnett's estate was
therefore entitled to 50% of the net sale proceeds ($1,300,000),
and Barbara would be entitled to half of that. Diana was also required to discharge the mortgages taken
out on the property.
The B.C. Court of Appeal dismissed Diana's appeal of these
findings. In a significant judgment, the Court clarified the basic
principles surrounding joint tenancies and the right of
survivorship, and specifically considered the complexities of a
joint bank account. The Court noted that equitable or beneficial
ownership of a joint bank account may be different than legal
ownership. Although it is difficult to apply the rules about joint
tenancy to bank accounts (such as the requirement of the "four
unities" of title, interest, time and possession), modern
banking forms typically use the language of joint tenancy, and
joint accounts include a right of survivorship. The equitable or
beneficial share of each accountholder depends upon their
intentions and, in some circumstances, one joint owner may have a
claim in equity to withdrawn funds or any property purchased with
the funds. Quoting the 1978 Supreme Court of Canada decision in Rathwell v. Rathwell, Madam Justice
Dickson noted that ownership of the funds does not come down to
which accountholder "reaches the bank first".
The Court of Appeal rejected Diana's arguments that she was
entitled to withdraw all of the UBC sale proceeds from the joint
account, and that any withdrawn funds became her exclusive
property. When Diana transferred the sale proceeds to herself and
her husband Jerry, she destroyed one of the "four
unities" required for a joint tenancy – the unity of
title. Diana's unilateral actions effected a severance of the
joint tenancy, so that 50% of the sale proceeds became Mrs.
Burnett's exclusive property and, shortly thereafter, part of
Mrs. Burnett's estate.
The Zeligs decision provides a careful summary of many
vexing questions arising from the law of joint tenancy and the
right of survivorship, and provides considerable guidance on how
these questions may be determined. It is a reminder that joint bank
accountholders may have the legal right to withdraw funds, but may
not be the beneficial owners of the funds in the account.
Scott Kerwin, a partner in BLG's Estates and Trust
Litigation Group in Vancouver, acted for Mr. Zeligs in this
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.
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.
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