Jansen v. Niels Estate

Jansen v. Niels Estate Collection Decisions of the Court of Appeal Date 2017-04-18 Neutral citation 2017 ONCA 312 Docket numbers C61687 Judges Simmons, Janet M.; Pepall, Sarah E.; Huscroft, Grant Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Jansen v. Niels Estate, 2017 ONCA 312 DATE: 20170418 DOCKET: C61687 Simmons, Pepall and Huscroft JJ.A. BETWEEN Marjolein Jansen Applicant (Appellant) and The Estate of Theadora Anna Robertina Niels by her Estate Trustee, Richard Eugene Jan Niels, Richard Eugene Jan Niels personally, Ingrid Niels, Arend Karel Frans Shoemaker, Jessica Shoemaker, Albert Jan Shoemaker and Alan Melville John Stephens Respondents (Respondent) Colin A. Brown, for the appellant Judith L. Turner for the respondent, Ingrid Niels Heard: November 14, 2016 On appeal from the judgment of Justice Hugh K. O’Connell of the Superior Court of Justice, dated January 12, 2016, and from the cost order dated November 1, 2016. By the Court [1] This appeal concerns the estate of Theadora Niels, who died in November 2010. The principal issue is whether her interest in her house passed by right of survivorship to her daughter-in-law, Ingrid Niels, pursuant to a joint tenancy established by gift, or became part of her estate that is to be shared among her children. [2] Theadora’s daughter, Marjolein Jansen, brought an application seeking a declaration that the house is part of the estate and should be distributed under a will and codicil made in 2004. Her application was dismissed by the application judge. She appeals from that decision and seeks leave to appeal the application judge’s costs award. [3] The appeal is dismissed for the reasons that follow. Leave to appeal the costs award is granted but the appeal is dismissed. A. Background [4] Theadora Niels made two wills prior to the 2004 will and codicil, one in 1998 and one in 1999. These wills divided her estate into three shares, one for her son Richard, one for Marjolein, and one to be divided between her son Arend (Frank) and his children. [5] Marjolein’s relationship with Richard was not good. She and her mother were once close, but this changed when her mother began a relationship with a live-in companion in 1998. [6] Things came to a head in 2004, when Marjolein noticed a “for sale” sign on Theadora’s property. On November 29, 2004, Marjolein wrote a provocative letter to her mother asserting that the sale of the property was her business; that Theadora had always said that the house belonged to her and her brothers Richard and Frank; and that it was wrong for Theadora to sell the house. [7] Marjolein also criticized Ingrid, who was married to Richard at the time, and her motives, stating that Ingrid and Richard had succeeded in getting rid of her and Frank. Marjolein said that Ingrid was interested only in her inheritance and would not care for Theadora, but, instead, would put her into a nursing home before she knew it. The letter concluded: “You better tell me to my face that you have disinherited me.” [8] Marjolein received no response to her letter. She and her mother never spoke again. [9] On December 1, 2004 – two days following Marjolein’s letter – Theadora made a new will. She removed Marjolein as an executor but continued to leave her a one-third share of her estate. Richard remained executor and Carol Harding, the assistant to Theadora’s lawyer, was added as an alternate executor. [10] Theadora had purchased the property that is the subject of this appeal – 2425 Flos Road 10 East, Elmvale Ontario (“Flos Road property”) – but the sale had not yet closed when she made her new will. A codicil dated December 1, 2004 was executed providing that if Theadora died before title was taken to this property, title would be taken by Richard and the purchase would be funded by Theadora’s estate. [11] Theadora took title to the Flos Road property on April 29, 2005. However, title was converted to a joint tenancy in two subsequent transactions. On July 18, 2005, Theadora transferred title to herself and Richard as joint tenants. On March 5, 2007, Theadora and Richard transferred title to Theadora, Richard, and Ingrid as joint tenants. [12] Following the purchase of the Flos Road property, an addition of approximately 2800 square feet was built, which Richard and Ingrid occupied. [13] On February 28, 2009, Richard and Ingrid signed a separation agreement that Richard prepared from a form he obtained on the Internet (“2009 separation agreement”). The agreement, which was made without legal advice, provided that Richard would transfer his interest in the Flos Road property to Ingrid following the death of Theadora and, among other things, stated that the Flos Road property was to be the inheritance of their children. The separation agreement also provided (presumably in error) that “until transfer … Party 1 [Richard]” would have “the right to exclusive occupation and possession of the matrimonial home”. [14] Theadora was diagnosed with cancer in 2010 and given 6-12 months to live. She asked Ingrid to take care of her and Ingrid did so. Shortly before her death on November 22, 2010, Theadora made a phone call to her alternate executor, Carol Harding (dialing the number with Ingrid’s assistance), seeking assurance that the Flos Road property would go to Richard and Ingrid when she died. Ms. Harding assured her of this. [15] On October 31, 2011, Richard and Ingrid signed an Amending Agreement to their 2009 separation agreement. The Amending Agreement, prepared by a lawyer, stated that they jointly owned the Flos Road property and that Richard was transferring his right, title and interest to Ingrid. On December 12, 2011, a transfer was registered, transferring title from Richard and Ingrid to Ingrid alone. [16] On February 17, 2012, Marjolein brought her application seeking a declaration that the Flos Road property is part of Theadora’s estate. B. The application judge’s decision [17] The application judge flatly rejected Marjolein’s allegation that Ingrid had, in essence, taken advantage of Theadora and thereby deprived Marjolein of her share of the Flos Road property as an inheritance. [18] The application judge found that Ingrid was a caring and loving daughter-in-law and accepted her evidence completely. He found that Ingrid cared for Theadora, in contrast to what he described as the callousness shown to Theadora by Marjolein and her husband. Where the evidence conflicted, the application judge accepted the evidence of Ingrid over that of Marjolein and her husband. [19] The application judge found that although she did not say specifically that she was gifting the Flos Road property, Theadora clearly intended to do so and completed her gift in accordance with the requirements set out by this court in McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401 and Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721. The gift was fully and freely informed and the presumption of undue influence was rebutted. The application judge found, at para. 187, that “to the end, Mrs. Niels was cognitively engaged, unfettered by persuasion and did what she wanted. The evidence is clear on this point. There is simply no evidence to suggest otherwise.” Consequently, the resulting trust presumption was rebutted. [20] The application judge found that Theadora acted with legal advice in creating the joint tenancy, first with Richard and then with Richard and Ingrid, and that Theadora understood the difference between joint tenancy and tenancy in common. The application judge stated, at para. 180: “There is not one scintilla of evidence to suggest that the parties intended to mutually treat the tenancy as constituting a tenancy in common.” He stated, further, that the 2009 separation agreement between Ingrid and Richard did “not evidence a course of conduct to sever the bona fide joint tenancy”. The application judge did not address the concept of severance in detail. Instead, he adopted the submissions of counsel for Ingrid that the joint tenancy had not been severed, submissions that were based on this court’s decision in Hansen Estate v. Hansen, 2012 ONCA 112, 109 O.R. (3d) 241. [21] The application judge found that no “shenanigans, or manoeuvres of title” were used to deprive the estate of an asset. He found no unjust enrichment and no constructive trust. The application judge summarized his decision as follows, at para. 191: [T]his case [concerns] an inter vivos gift meant to be accomplished outside of the estate stream, and I am completely satisfied that the gifting and the intent of the testatrix make for bona fide ownership of the property in the hands of Ingrid Niels. C. Issues on appeal [22] Marjolein submits that the application judge made several errors in his judgment and costs award. The issues may be summarized and addressed as follows: 1. Did the application judge err in concluding that the joint tenancy had not been severed? 2. Did the application judge err in concluding that Theadora gifted the property to Richard and Ingrid? 3. Did the application judge err in concluding that Theadora was not subject to undue influence? 4. Did the application judge err in awarding costs against her and not the estate, or, in the alternative, err in the amount that he awarded? D. Analysis Was the Joint Tenancy Severed? [23] It is well established that severance of a joint tenancy may be achieved in one of three ways – described as the “three rules” in Hansen, at para 34, and summarized as follows: Rule 1: unilaterally acting on one’s own share, such as selling or encumbering it; Rule 2: a mutual agreement between the co-owners to sever the joint tenancy; and Rule 3: any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. [24] Marjolein’s primary submission is that that the joint tenancy was severed by the 2009 separation agreement, pursuant to which Richard agreed to transfer his interest in the property to Ingrid on the death of Theadora and, which, in any event, included a grant of exclusive possession of Richard and Ingrid’s matrimonial home. This, it is said, means that Theadora’s interest is no longer identical in nature, extent, and duration to Richard’s or Ingrid’s, and that both Richard and Ingrid hold their interests as tenants in common. Marjolein’s submission relies on Rules 1 and 3. [25] This submission must be rejected. [26] First, as to Rule 1, assuming that the 2009 separation agreement between Richard and Ingrid was valid and enforceable – a matter not addressed by the application judge – it did no more than express an intention to convey Richard’s interest in the Flos Road property in the future. It is not clear that an expression of intention is sufficient to achieve severance: see Kevin Gray and Susan Francis Gray, Elements of Land Law, 5th ed. (Oxford: Oxford University Press, 2009), at p. 950. [27] The agreement is ambiguous, as might be expected given the parties’ lack of legal advice. But the submission that conveyance of Richard’s interest, and the grant of exclusive possession, severed the joint tenancy fails in any event, for a more fundamental reason. Where, as here, there are three joint tenants, the conveyance of one joint tenant’s interest to another, or the grant of exclusive possession by one joint tenant to another, severs only the interest of the joint tenant making the conveyance or granting exclusive possession. It does not sever the whole of the joint tenancy. As Latham C.J. explains in Wright v. Gibbons, [1949] 78 C.L.R. 313 (H.C.A), at p. 324-325: If there are three joint tenants, A, B and C, and one joint tenant A transfers his interest to another joint tenant B, the result is that A then has no interest in the land, B becomes a tenant in common as to one-third interest in the land, and remains a joint tenant with C as to a two-thirds interest. See also: Megarry & Wade: The Law of Real Property, 8th ed. (London: Sweet & Maxwell, 2012), at p. 513; Gray, at pp. 947-948, Bruce Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014), at pp. 344-345; and Anger & Honsberger, loose-leaf, 3rd ed. (Toronto: Thomson Reuters, 2016), at para. 14.20.120. [28] Thus, the 2009 separation agreement could sever no more than Richard’s one-third interest in the joint tenancy. The joint tenancy held by Theadora and Ingrid over their two-thirds interest of the Flos Road property would subsist, with Richard holding a one-third interest as a tenant in common. When Theadora died, the two-thirds interest she held jointly with Ingrid passed to Ingrid by survivorship, leaving no portion of the property to pass to her estate. [29] If, on the other hand, the separation agreement did not have the effect of severing Richard’s interest in the joint tenancy, then the joint tenancy continued. On Theadora’s death, her one-third interest would have passed to Richard and Ingrid by right of survivorship, leaving no portion of the property to pass to her estate. Richard and Ingrid would have become joint tenants of the whole of the Flos Road property. [30] Thus, in either case, no part of the Flos Road property would become part of the estate. [31] Marjolein’s submission that the joint tenancy was severed by the provision in the 2009 separation agreement that Richard and Ingrid’s children would inherit the property must also be rejected. In general, a joint tenancy is unaffected by a will, because property is conveyed pursuant to the joint tenancy outside the terms of the will: see Ziff, at pp. 345-346. However, even assuming that the simultaneous execution of mutual wills could have the effect of severing a joint tenancy, no finding was made that mutual wills were executed in this case. [32] Marjolein’s submission that the parties made a mutual decision to sever the joint tenancy must also be rejected. [33] As the court explained in Hansen, at para. 7: A proper application of the course of dealing test for severing a joint tenancy requires the court to discern whether the parties intended to mutually treat their interests in the property as constituting a tenancy in common. It is not essential that the party requesting a severance establish that the co-owners’ conduct falls into a formulation found to have had the effect of severing a joint tenancy in other cases. The court’s inquiry cannot be limited to matching fact patterns to those in prior cases. Rather, the court must look to the co-owners’ entire course of conduct – in other words the totality of the evidence – in order to determine if they intended that their interests were mutually treated as constituting a tenancy in common. This evidence may manifest itself in different ways. [34] In short, Hansen requires a court to determine, having regard to all of the evidence, whether the parties intended to treat their interests as constituting a tenancy in common. This is a fact-specific inquiry that is subject to deference on appeal. [35] As noted above, the application judge found “not one scintilla of evidence” that the parties intended to mutually treat the tenancy as a tenancy in common. He found, further, that Richard and Ingrid’s 2009 separation agreement did “not evidence a course of conduct to sever the bona fide joint tenancy”. This was so in spite of any divided living or exclusive possession arrangements related to the occupation of the property. [36] These findings were open to the application judge on the record before him and they are fatal to this submission. Was the Property Gifted? [37] Marjolein submits that the application judge erred in several respects in concluding that Theodora gifted the Flos Road property to Richard and Ingrid. For example, Marjolein notes that Richard claimed to have purchased the property; that Ingrid did not claim that a gift had been made to her until the hearing; that neither Theadora’s lawyer nor her alternate executor, Carol Harding, testified that a gift had been intended; that there was no explanation for the exclusion of Frank from the will; and that the will, at the time of the transfers, had divided both real and personal property into thirds for the three children. [38] Marjolein adds that the application judge erred in assuming that Theadora’s action in placing her property into joint names was evidence that a gift was being made. Finally, Marjolein argues that the application judge wrongly relied on notes documenting a visit and phone call Theadora made to her lawyer’s office in determining her intention concerning the gift. [39] These submissions must be rejected. [40] The application judge applied the proper test for a gift, as set out in McNamee and summarized in Foley at para. 25: “To establish a gift, one must show intention to donate, sufficient delivery of the gift, and acceptance of the gift”. [41] As the application judge noted, it was not necessary for Theadora to state that she was gifting the property. Her intention to gift the property was evident from her instructions to her solicitor and his assistant and the executed documents, all of which supported this finding. This included: · her advice to her solicitor that she would take title alone and add Richard to the deed later; · the codicil to her will, making it clear that the home would not form part of her estate; · her request that the joint tenancy between herself and Richard be created on his return to Canada; · the absence of any request to revert the title to tenancy in common; and · her call to Carol Harding seeking assurance that her home would pass to Richard and Ingrid on her death. [42] Furthermore, the application judge found that Theadora received legal advice from a lawyer who knew her well; that she understood the consequences of joint tenancy as opposed to tenancy in common; and that she was mentally engaged and cognitive until her death. [43] The application judge did not wrongly rely on evidence of notes documenting Theadora’s visit to her lawyer’s office in September 2004 and a phone call made to the office in November, 2004, in determining her intention concerning the gift. The application judge’s reasons, and in particular para. 148, do not reflect acceptance of the notes on Theadora’s visit as evidence of intention. Rather, the notes were part of the narrative explaining the steps that led to title being in the names of Theadora and Richard and the contents of the codicil. This would also help explain why the appellant took no objection at trial to the admission of the notes. [44] As for the note documenting the November, 2004 call, although it was not admissible for the truth of its contents, its use was limited and served to provide a chronology of a visit that Marjolein’s husband admitted he made to Theadora. Theadora’s upset could reasonably be inferred from: the evidence proffered by the appellant including her incendiary letter sent to her mother dated November 29, 2004; the will and codicil made two days later; the appellant's testimony that her mother would not talk to her; and the fact that November 29, 2004 was the last time the appellant talked to her mother. We note also the application judge's finding of Theadora's independence and capacity; Theadora’s estrangement from the appellant; and the application judge’s credibility findings favouring Ingrid. In sum, the note of the telephone call had no material bearing on the outcome of the application. Was Theadora Subject to Undue Influence? [45] Marjolein submits that the application judge erred by, in effect, requiring her to establish undue influence rather than simply demonstrate that the relationship of the parties gave rise to a potential for undue influence. [46] There is no merit to this submission. [47] The application judge applied the law as set out in Foley, in which this court noted, at para. 28, that the presumption of undue influence applies “[w]here the potential for domination inheres in the relationship between the transferor and transferee”, citing Goodman Estate v. Geffen, [1991] 2 S.C.R. 353, at p. 378. Where the presumption applies, the transferee must establish that a gift was the result of the full, free, and informed thought of the transferor. Evidence that the transferor received qualified and independent advice can be used to rebut the presumption, although it is not required in every case. But corroborating evidence is required in order to rebut the presumption, whether direct or circumstantial in nature. [48] The application judge applied the presumption that undue influence was exerted, but based on his factual findings concluded, at para. 184, that “the potential for domination and therefore undue influence is completely rebutted.” The application judge emphasized the independence of Theadora. He found that her advanced age was not a trigger for domination. This was not a case in which a totally new estate plan had been entered by a person facing a terminal illness. Theadora was pursuing an intention to gift the property that she developed in 2004 and never wavered from. She was cognitively engaged and unfettered by persuasion. [49] Although the application judge said that Marjolein provided no evidence of undue influence, when his decision is read as a whole, it is clear that he did not reverse the burden of proof and require Marjolein to prove undue influence. On the contrary, the application judge acknowledged the operability of the presumption but found that it was rebutted. As the application judge put it, at para. 179: “Nothing in the evidence causes me any concern that the direction and eventual registration of the tri joint tenancy deed, was done with anything less than the full acquiescence, acceptance and complete concurrence of Mrs. Niels.” [50] This ground of appeal must be rejected. Costs Award [51] The application judge awarded the respondent costs of $55,951, inclusive of taxes and disbursements. [52] Marjolein submits that the application judge erred in awarding costs against her and not against the Estate. She says that the Estate was a party to the proceedings and the application judge erred in concluding otherwise. She submits, further, that Theadora was at fault for failing to spell out her intentions with regard to placing the property into joint names, and a hearing was required to determine the matter as a result. In these circumstances, public policy considerations require the Estate to pay costs. [53] We would reject this submission. [54] The Estate had minimal involvement in the proceedings and was not represented at the hearing. The litigation was brought by Marjolein in an attempt to undo arrangements Theadora had made in order to ensure that no part of the Flos Road property would pass to her. Marjolein’s submissions were rejected comprehensively by the application judge and her application was dismissed. We see no public policy considerations that warrant relieving her of the responsibility to pay costs normally borne by the losing party: see McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.). [55] As to the quantum, the application judge considered the fairness, reasonableness, and proportionality of the costs in all the circumstances. As the application judge noted, the parties’ cost outlines were within $1,000 of each other, with counsel for Marjolein seeking the slightly higher amount. In all of these circumstances, we would not interfere with the exercise of the application judge’s discretion. E. Disposition [56] The appeal is dismissed. [57] The respondent is entitled to her costs on the appeal, fixed in the amount of $9,000, inclusive of taxes and disbursements. [58] Leave to appeal the costs awarded on the application is granted, but the appeal is dismissed. Released: “SEP” “APR 18 2017” “Janet Simmons J.A.” “S.E. Pepall J.A.” “Grant Huscroft J.A.”