Joint Tenants in Investment Properties – making sure intentions are clear!
NEWHOUSE v GARLAND: DOCUMENTATION AND ERRING ON THE SIDE OF CAUTION
The B.C Court of Appeal, in a 2-1 decision Newhouse v Garland 2022 BCCA 276, confirms the Chamber’s Judge Decision that the Appellant Ms. Patricia Newhouse failed to prove, on a balance of probabilities, that she and the deceased Bob Garland intended to hold an investment property as joint tenants with a right of survivorship. This case tells us that if parties were to intend a right of survivorship over a property when either of them passes away, it is highly encouraged to have written documents endorsed by both parties evidencing this intention.
There is a legal presumption that partners hold partnership property as tenants in common, and as such there is no right of survivorship. However, the Partnership Act, RSBC 1996, c 348 Section 21 allows partners to vary their mutual rights and duties by either the express or inferred consent. In this case, the appellant argued that she held the property with Bob as joint tenants with a right of survivorship instead of holding the partnership property as tenants in common as this would allow her to obtain the full value of the property which is approximately at one million dollars. On the other hand, if the property was seen to be held by the parties as tenants in common, Bob’s estate would still be entitled to his half of the value of the property.
The Chamber’s Judge concluded that Ms. Newhouse has failed to prove on a balance of probabilities that the parties had an agreement intending that the right of survivorship applied to their investment property. The Chamber’s Judge inferred that Ms. Newhouse only came to fully appreciate the significance of the joint tenancy and the right of survivorship upon researching after Bob’s death, that Ms. Newhouse’s affidavits were vague and lacking in particulars, and that Ms. Newhouse was not credible. On the other hand, the Chamber’s Judge viewed Bob’s instructions in a Wills Checklist reflecting Bob’s anticipation of the property being sold upon his death, which was consistent with the ordinary rules that govern partnership property on the dissolution of a partnership. The Chambers Judge subsequently held that the property was indeed held by the parties as tenants in common only.
Ms. Newhouse appealed the Chamber’s Judge Decision. In the Court of Appeal, one of the considerations that the sole dissenting Justice, Justice Goepel, looked at when arguing that the Chamber’s Judge decision be overturned was that the deed, the mortgage and the BMO application signified a contrary intention to the legal presumption that the partners hold the investment property as tenants in common, and that Patricia and Bob were to hold the property as joint tenants with a right of survivorship.
The majority Justices Justice Dickson and Justice DeWitt-Van Oosten did not agree – the deed, the mortgage and the BMO application was not enough. The majority was not satisfied that these documents sufficiently resolved the live issue of whether the parties also intended to give each other the right of survivorship. The majority agreed with the Chambers Judge’s decision that Ms. Newhouse failed to prove on a balance of probabilities that there was an agreement between her and Bob that the value of the property would go solely to the surviving partner in case that either partner passes away.
This decision cost Ms. Newhouse roughly half a million. It remains to be seen as to whether Ms. Newhouse would continue to appeal to a higher level of court, but this case tells us that in order to avoid making the same mistake as Ms. Newhouse, it is highly encouraged to prepare written documents evidencing the parties’ intent to give each other the right of survivorship.