Consider a situation where an elderly father owns two houses. He gifts one to his daughter and advises his son that he intends to give him the other. In furtherance of this latter objective, the father transfers the second house into joint tenancy with his son. Sounds like a gift, right?

Well, not quite. While estate litigators are accustomed to viewing transfers into joint tenancy through the lens of estate planning, it is important to remember that these transfers are not irrevocable. For sure, the circumstances of this fact scenario show an intention to ultimately benefit the son and therefore rebut the presumption of resulting trust on death which would otherwise apply to a gratuitous transfer from an elderly parent to an adult child.

But during his lifetime, the father always has an entitlement to sever the joint tenancy. And in this case he did, transferring the house to himself, thereby severing the joint tenancy and creating a tenancy-in-common. The father then transferred his half to his daughter.

The foregoing was the fact situation in Kavanagh v. Lajoie, 2014 ONCA 187 (CanLII).

At trial, the son submitted that his father gifted the house to him and the gift was not defeated by severing the joint tenancy.  The trial judge disagreed and concluded that the father’s promise to the son and the creation of the joint tenancy did not, in law, create an inter vivos gift.

On appeal to the Ontario Court of Appeal, the decision was upheld:

“For a gift to be valid and enforceable it must be perfected. In other words, the donor must have done everything necessary and in his power to effect the transfer of the property.  An incomplete gift is nothing more than an intention to gift. The donor is free to change his mind.  See Bergen v. Bergen [2013] B.C.J. No. 2552.

The appellant pointed to no legal authority in support of his proposition that creation of the joint tenancy completed Mr. Lajoie’s promise of Oakdale to the appellant.  In fact, by putting title of Oakdale into joint tenancy – with the attendant right to deprive the appellant of half of the property through severance – Mr. Lajoie defeated any finding that an irrevocable inter vivos gift was created.”

Thanks for reading

David Morgan Smith