Zeligs Estate v. Burnett Estate, 2016 BCCA 280

• Judge: Newbury, Groberman and Dickson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 08, 2016
• Jurisdiction: British Columbia
• Citations: 2016 BCCA 280;(2016), 390 B.C.A.C. 173 (CA)

Zeligs Estate v. Burnett Estate (2016), 390 B.C.A.C. 173 (CA);

    673 W.A.C. 173

MLB headnote and full text

Temp. Cite: [2016] B.C.A.C. TBEd. JL.003

Joseph Zeligs, Personal Representative of the Estate of Barbara Joan Zeligs, Deceased (appellant/respondent on cross-appeal/plaintiff) v. Diana June Janes, in her personal capacity and as Executor of the Will and Trustee of the Estate of Dorothy Burnett, Deceased, and Jerry Carter Janes (respondents/appellants on cross-appeal/defendants)

(CA42542; 2016 BCCA 280)

Indexed As: Zeligs Estate v. Burnett Estate

British Columbia Court of Appeal

Newbury, Groberman and Dickson, JJ.A.

June 29, 2016.

Summary:

An elderly woman gratuitously transferred real property (i.e., the Knox Road property) in joint tenancy, to one of her adult daughters, Janes. Janes was also a joint-holder of her mother's chequing account and donee of an enduring power of attorney. Shortly after the transfer, Janes granted mortgages on the Knox Road property and used the mortgage funds for her own benefit and that of her husband. While her mother was still alive, but mentally incapable and in a long-term care facility, Janes sold the property for 2.7 million. She executed the sale as a joint tenant and in her capacity as her mother's attorney. As part of the conveyance, Janes directed payouts of the mortgages. She deposited the remaining sale proceeds in the joint account, but within weeks withdrew them and used them to purchase real property and investments for herself and her husband (Mr. Janes). Janes' mother died a few months later. As executor of her will, Janes divided funds unrelated to the Knox Road sale on deposit in the joint account into specific bequests and equal shares of the residue, and distributed them. She and her sister, Zeligs, were the residual beneficiaries. Zeligs died the year after her mother. The representative of Zeligs' Estate commenced an action against the Janes, claiming Janes had unduly influenced her mother in the Knox Road transfer and held her interest in the property in a resulting trust. The Estate also claimed the joint tenancy had been severed when the property was sold and that Janes breached her fiduciary duty as her mother's attorney when she paid the mortgage debts from the sale proceeds.

The British Columbia Supreme Court, in a decision reported [2015] B.C.T.C. Uned. 7, held the presumptions of undue influence and resulting trust arose, but both were rebutted. The court also held the joint tenancy had not been severed by the sale, but was severed when Janes transferred the sale proceeds to her own exclusive use and benefit. In consequence, the joint tenancy became a tenancy in common, the right of survivorship was extinguished and the estate was entitled to 50 per cent of the sale proceeds. The judge went on to find that Janes had breached her fiduciary duty as her mother's attorney when she directed the mortgage payouts and held the amounts of the mortgages were subject to a constructive trust. In the alternative, the court held the Janes responsible to exonerate the mother's estate as surety for the same amounts. Zeligs Estate filed a notice of appeal, but it was later abandoned. The Janes cross-appealed. Only the cross-appeal proceeded. At issue was whether: "a) Given their trial theory and admissions, can the Janes argue on appeal that Ms. Janes was entitled to withdraw the sale proceeds and use them for her own exclusive benefit because they were held on deposit in a joint account? b) Did the judge err in finding that Ms. Janes severed the joint tenancy when she withdrew the sale proceeds from the joint account, thus extinguishing the right of survivorship? c) Did the judge make any palpable and overriding factual errors? d) Did the judge err in his application of fiduciary principles and the doctrine of equitable exoneration to the mortgage discharges?"

The British Columbia Court of Appeal dismissed the cross-appeal. The court reviewed the first principles of joint tenancy and severance in relation to real and personal property. The court granted leave to Janes to advance all arguments raised on appeal. The trial judge made no error in finding that Janes severed the joint tenancy when she withdrew the sale proceeds from the joint account. The judge made no palpable and overriding factual errors. Nor did the trial judge err in his application of fiduciary principles and the doctrine of equitable exoneration to the mortgage discharges.

Agency - Topic 1078

Authority of agent - Express authority - Power of attorney - Fiduciary duty - See paragraphs 86 to 88.

Banks and Banking - Topic 2721

Bank accounts - Joint accounts - General - See paragraphs 60 to 62.

Banks and Banking - Topic 2729

Bank accounts - Joint accounts - Severance of joint tenancy - By withdrawing funds from account - See paragraphs 69 to 79.

Equity - Topic 3010

Equitable rules affecting property - General - Doctrine of equitable exoneration - See paragraphs 89 to 93.

Gifts - Topic 724

Gifts inter vivos - Transfers in joint tenancy - Transfers to joint bank accounts - See paragraphs 60 to 62.

Gifts - Topic 730

Gifts inter vivos - Transfers in joint tenancy - Survivorship - See paragraphs 38 to 44.

Personal Property - Topic 1626

Ownership - Joint tenancy - Severance of - See paragraphs 45 to 59.

Personal Property - Topic 1644

Ownership - Tenancy in common - Circumstances creating - See paragraphs 45 to 62.

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues or points not previously raised - See paragraphs 63 to 68.

Real Property - Topic 3881

Joint estates - Severance of joint tenancies - General - See paragraphs 45 to 59.

Real Property - Topic 3890

Joint estates - Severance of joint tenancies - Unilateral acts which result in severance - See paragraphs 56 to 59.

Counsel:

M.S. Kerwin, for the respondent on cross-appeal;

R.A. Kasting, for the appellants on cross-appeal.

This appeal was heard in Vancouver, B.C., on January 8, 2016, before Newbury, Groberman and Dickson, JJ.A., of the British Columbia Court of Appeal. The following decision was delivered for the court by Dickson, J.A., on June 29, 2016.