By: Arlene Blake
PDF Version: Avoiding Probate Does Not Eliminate Problems
Case Commented On: Dobransky v. Roteliuk, 2018 ABQB 660
Putting property in joint names is an oft used method of estate planning to avoid probate. While it is unclear if Dobranksy is such a case, it can serve as a cautionary tale for those contemplating using joint tenancy as a method of avoiding probate.
Mr. Dobransky transferred a parcel of land to his daughter, Ms. Roteliuk, in 1984 (at para 2). He did so naming himself and his daughter as joint tenants. Over twenty years later, Mr. Dobransky wanted to sever the joint tenancy and declared that the property held under the joint tenancy by Ms. Roteliuk was done so in trust for himself (at para 3). He pursued his position by making a claim by way of Originating Notice against Ms. Roteliuk in 2007 (at para 3).
On March 13, 2008 Wilkins J ordered Mr. Dobransky to file a statement of claim within 30 days, that didn’t happen, but later in 2009 Mr. Dobransky served a Notice of Intention of sever the joint tenancy under section 65 of the Land Titles Act (at paras 3 and 4). On March 22, 2010 Ms. Roteliuk filed her own Originating Notice, seeking a declaration that the transfer had been an inter vivos gift, including an irrevocable right of survivorship (at para 5).
The matter was heard and on May 27, 2010 – Justice Brown ordered (at para 6):
- It is hereby declared that the joint tenancy of William Dobransky and Marjorie Roteliuk with respect to the property described below is severed effective immediately.
- The Registrar of the North Alberta Land Registration District be and hereby is directed to register the property in the name of William Dobransky … and Marjorie Roteliuk … as Tenants in Common.
- In the event that the Respondent Marjorie Roteliuk wishes to file a Caveat claiming an interest in the one-half share of the above property held by William Dobransky, she may provide a form of Caveat to counsel for the applicant, William Dobransky to be registered with the Registrar of the North Alberta Land Registration District with the registration of the within Order.
- There shall be a trial of the issues with respect to this property, which shall be set out in a Statement of Claim and Statement of Defence to be filed and served with respect to this application.
- The trial shall also address issues with respect to the ownership of any machinery equipment or vehicles previously delivered to Roteliuk from Dobransky and now in the possession and control of Roteliuk.
- William Dobransky shall file a Statement of Claim or statement setting out his claim in the within action within 45 days of the date of this Order.
- Marjorie Roteliuk shall file and serve a Statement of Defence within 15 days of being served with the Statement of Claim filed herein by William Dobransky.
- Examinations for Discovery shall be scheduled to be completed within four (4) months of the filing of the Statement of Claim.
- Costs of this application shall be in the cause.
There were attempts to carry out Justice Brown’s order: there was a Statement of claim filed, there was a Statement of defendant’s claim filed, there was an examination of Ms. Roteliuk on October 27, 2011, but little beyond those events (at para 7). The Land titles office rejected the request to register the order as further forms were required, and although counsel made efforts to register as late as July 2014, the order was never filed (at para 8).
Mr. Dobransky died on August 7, 2014 (at para 10). On September 15, 2014, Ms. Cameron – personal representative of the estate filed a caveat on title (at para 11). She subsequently applied for probate on April 23, 2015 and was appointed by the court on June 18, 2015 (at para 11).
Ms. Roteluik filed an affidavit of surviving tenant on the property on May 12, 2015 and requested the Land Title office issue a new certificate in Ms. Roteluik’s name alone (at para 12). On August 30, 2017 she brought an application for long delay to dismiss Ms. Cameron’s caveat (at para 13).
On January 30, 2018 Ms. Cameron brought an application to enforce Justice Brown’s earlier order and to have title rectified (at para 14).
The matter was heard by Justice Bokenfohr on May 24, 2018 with additional written submissions provided by the parties on June 28, 2018 (at para 15).
In her analysis, Justice Bokenfohr clarifies that while the Land Titles Office did not register the property pursuant to the order of Justice Brown, the order of the court must be obeyed (at para 25). There was no appeal of the decision. Further, while the register is the foundation of the system that protects innocent purchasers, in this case both relevant parties were aware of the Justice’s order and its implications – it cannot be said that the non-registration negates the validity of the order (at paras 23 and 25). Also, the reasons for the registrar’s rejection were not related to the issue of the severing of the title (at para 25).
It was found that the original order of Justice Brown did have the effect of severing the joint tenancy on May 27, 2010 (at para 28). The transfer to Ms. Roteliuk as surviving joint tenant May 12, 2015 was seen by the court as a collateral attack on the order of Justice Brown (at para 34) and so title was rectified pursuant to section 190 of the Land Titles Act (at para 32), providing that the property in question be held as tenants in common as between Ms. Roteluik and Ms. Cameron – in her capacity as Personal Representative of the estate of Mr. Dobransky.
The court further allows the parties to make decisions as to their pursuit of the application for long delay or any cross application by the personal representative (at para 41).
As can be seen, this may not be the end of the matter. Over the span of some eleven years, these parties have been addressing the issue of the joint tenancy and arguing over the intention of Mr. Dobransky.
In a recent case from Saskatchewan, Stubbings v Stubbings, 2018 SKQB 8, the court also considered the use of joint tenancy between parent and child as a planning tool for estate purposes.
Mr. Stubbings Sr. had transferred his condominium into joint tenancy with his son in 2013 with the intent that his interest would vest with his son, Stubbings Jr., when he died, and in the event he did not require its sale prior to his death (Stubbings, at para 3). There was evidence that at the time of transfer, Stubbings Sr. did not seek payment in any form from Stubbings Jr. (Stubbings, at paras 4 and 6). Stubbings Sr., later sought to have Stubbings Jr., transfer the condominium back into his name alone or other appropriate order of the Court (Stubbings, at para 8). His rationale centred around money given to his son and his son having received an inheritance from another relative, both totalling $395,000, as well as a distancing between himself and his son in the ensuing years since the 2013 transfer (Stubbings, at paras 7 and 9). He also wished to sell the property realizing he would require assisted living accommodation.
The court considered the questions of the legal status of Stubbings Jr. as a gratuitous transferee, and whether Stubbings Sr. had the right to seek partition and sale of the condominium. The court also outlined the pitfalls of joint ownership:
[14] Other complications loom. In exchange for lessened probate fees – a modest 0.7 percent in Saskatchewan – creating joint title with a child may raise questions upon the death of the parent whether the surviving child holds the title in trust for the deceased parent’s estate or holds unfettered title as a sole survivor, an issue that led to the notorious case of Pecore v Pecore 2007 SCC 17, [2007] 1 SCR 795 [Pecore]. Transferring investment assets may trigger payment of capital gains; transferring a principal residence may interfere with capital gains exemption; transferring any property may make the property available to claims from a child’s creditors or spouse and hamstring a parent’s control if a child disagrees with a parent’s instruction or the child becomes incapacitated. No parent should transfer property into joint names with a child without understanding these potential pitfalls. The law does not recognize regret as a ground for undoing a formal legal act.
There is the question of resulting trust or gift – did Stubbings Sr. provide a gift to his son, or is the property jointly held, in part, in trust for the Stubbings Sr? Citing Jensen v Jensen 2009 ABCA 272, the Court found that “…gratuitously transferring land into joint names is generally presumed to create a resulting trust, but proof of the transferor’s intention to create a gift rebuts a resulting trust” (Stubbings, at para 22). The Court found that the relevant time to determine intention is at the time of the transfer itself (Stubbings, at para 22). To that end, Stubbings Sr. had intended a gift to Stubbings Jr. and the presumption of the resulting trust was sufficiently rebutted (Stubbings, at para 26).
The Court concluded that there should be an order for sale in lieu of partition, that upon payment into court of half of the value of the condominium, the property would be transferred solely into the name of Stubbings Sr., and at that time the Court should release the money to Stubbings Jr., and upon registration of the property into the name of Stubbings Sr., that Stubbing Jr’s interest would be terminated (Stubbings, at para 44).
Neither of these families could have foreseen the protracted litigation that would consume their time, money and family relationships resulting from the attempt to simplify the administration of their estates, and that is the value of a cautionary tale: providing reasoned guidance for those who believe that nothing can go wrong.
This post may be cited as: Arlene Blake, “Avoiding Probate Does Not Eliminate Problems” (October 4, 2018), online: ABlawg, http://ablawg.ca/wp-content/uploads/2018/10/Blog_AB_Avoiding_Probate_Doesn’t_Eliminate_Problems_Oct2018.pdf
To subscribe to ABlawg by email or RSS feed, please go to http://ablawg.ca
Follow us on Twitter @ABlawg
