Newhouse v. Garland, 2022 BCCA 276

Two people can hold title to real estate in one of two ways. The first is as tenants in common. Where two people hold real estate as tenants in common, when one dies, their share is distributed as per their will or, if they don’t have a will, in accordance with intestacy laws. The second is as joint tenants. Where two people hold real estate as joint tenants, when one dies, their share goes to the surviving owner. This is called the right of survivorship and is one of the hallmarks of joint tenancy. However, just because two people hold property as joint tenants, the right of survivorship will not always apply. The case of Newhouse v. Garland, 2022 BCCA 276 is an example of that.

In Newhouse, two friends, Bob and Barry, contemplated buying a rental property together. Barry, however, was always out of work and in debt, and didn’t have the money for his share of the down-payment. Barry’s spouse, Patricia, was in a much better financial position. While she did not have a problem partnering with Bob, she was concerned about what would happen if he were do die. Specifically, she expressed reluctance with having to deal with Bob’s children who she thought were dysfunctional.

To assuage her concerns, Patricia said Bob agreed that, if he were to die, his share would go to her so that she would not have to deal with his children if he died before her.

In keeping with what Patricia said Bob agreed to, the pair bought a rental property together as joint tenants.

Years later, Bob died and his children began the process of administering his Estate. Based on what Bob had told them, they were under the impression that Bob’s share of the property would go to them. However, when they contacted Barry, who they thought owned the property with Bob, they were told that Patricia was actually the other owner and that Bob’s share would go to her by virtue of the joint tenancy.

In response, Bob’s son and executor sued Patricia to get Bob’s share the property back and a summary trial (where witnesses give their evidence by written affidavits as opposed to in-person) proceeded in BC Supreme Court.

The trial judge noted that, where two business partners, own legal title to a property as joint tenants, there is a presumption that, on the death of one, the survivor holds the deceased’s interest in trust for their Estate. That presumption can be rebutted by the survivor by evidence that the partners intended the survivor to receive the entire property on the death of one of them.

In this case, the trial judge found that Patricia had not rebutted this presumption. The judge did not believe her story that Bob would agree that his share would go to her instead of his children. She also did not find the documentary evidence that Patricia pointed to in support of her argument to be persuasive.

Patricia appealed the trial judge’s decision to the BC Court of Appeal. As previously discussed, the Court of Appeal sits as a panel consisting of 3 to 5 judges. While sometimes the court is unanimous, sometimes the judges disagree. This was one such instance of a split-decision.

Before getting into the reasons for the split-decision, the decision helpfully describes the rebuttable presumption at play in this case:

[1]            There is a legal presumption that partners hold partnership property as tenants in common and accordingly there is no right of survivorship as between partners. Partners, however, can agree otherwise: Bathurst v. Scarborow, [2004], EWCA Civ. 411 [Bathurst]; Partnership Act, R.S.B.C. 1996 c. 348 s. 21. If the evidence, on a balance of probabilities, leads to a finding that the parties intended to hold the property as joint tenants with a right of survivorship, the presumption will be rebutted.

[54]         A rebuttable presumption of law is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption. The presumption shifts the burden of persuasion to the opposing party who must rebut the presumption. The presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities: Pecore v. Pecore, 2007 SCC 17 at paras. 22, 44 [Pecore].

[55]         A presumption is not a legal standard. A presumption is not strong or weak. It is a guide post that designates the legal burden. In this case the presumption placed the burden of proof on Ms. Newhouse to prove on a balance of probabilities the Rental Property and the BMO account passed to her by right of survivorship.

Two judges found that the trial judge made no reviewable errors, relying to a considerable degree on the applicable standard of review, which essentially means the degree to which a lower court must have gotten things wrong for an appellate court to intervene.

The dissenting judge thought otherwise and his reasons make up the bulk of the decision. In particular, the dissenting judge found that the trial judge had erred by:

  • imposing a higher standard of proof on Patricia than was appropriate;
  • not finding evidence as to Bob and Patricia’s intentions when they agreed to buy the property; and
  • proceeding by way of summary trial when credibility was at issue.

In the end, while the dissenting judge would have ordered a full trial, the majority of the court dismissed the appeal.

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