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The classic statement setting out the three ways in which a joint tenancy may be severed was established in 1861 by Vice-Chancellor Wood in Williams v. Hensman.[1] Despite being nearly 160 years old, Canadian courts have long recognized, and continue to recognize, Vice-Chancellor Wood’s statement as the starting point for assessing severance of a joint tenancy.

The three rules as outlined by Vice-Chancellor Wood may be 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.

This article will provide a brief overview of all three rules pertaining to severing a joint tenancy with particular emphasis placed on any potential implications that these rules may have for situations involving matrimonial homes as well as testamentary dispositions.

Rule 1: Unilaterally Severing the Joint Tenancy

An individual who owns a property as a joint tenant with another individual may unilaterally sever the joint tenancy by transferring their share of the property to someone else or by transferring their share to themselves. In Ontario, this would be completed by registering an entirely new transfer on Teraview. The registration of a new transfer in this regard would automatically sever the joint tenancy wherein the property owners would then hold title as tenants in common instead of as joint tenants.

It is important to recognize that matrimonial homes are not exempt from this rule. In Horne v Horne Estate[2], the Ontario Court of Appeal held that a conveyance by one joint tenant to himself or herself for the purpose of severing the joint tenancy does not “dispose of” an “interest” in a matrimonial home within the meaning of section 21 of the Family Law Act (“FLA”). The court found that, although the right of survivorship is thereby eliminated, each spouse nonetheless continues to hold his or her proprietary right to an undivided one-half interest in the property. Thus spouses who wish to leave their share of a matrimonial home to someone other than their spouse (i.e. a child from a previous marriage), can do so by registering a transfer to themselves severing the joint tenancy. However, in a best case scenario, both spouses would agree and consent to the severance of the joint tenancy.

If, however, a spouse were to transfer their share of the matrimonial home to a third party without the other spouse’s consent, this would constitute a ‘disposition’ as per section 21(1) of the FLA. In this case, the other spouse can move to have the encumbrance set aside as per section 23 of the FLA.

Rule 2: Written Agreement

If the co-owners of a property reach a written agreement to sever the joint tenancy, then this will constitute sufficient grounds to prove severance. Whereas Rule 2 deals with an explicit written agreement, Rule 3, which will be detailed below, deals with cases in which there were no explicit agreements made between the property owners.

Rule 3: Course of Dealing

Rule 3 states that there may be a severance of joint tenancy by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.  Rule 3 operates so as to prevent a party from asserting a right of survivorship where doing so would not do justice between the parties. The leading case in Ontario pertaining to Rule 3 is the Ontario Court of Appeal case Hansen v Hansen Estate.[3]

The Hansen case involved a married couple — the respondent on appeal, Barbara Lorraine Hansen, and the deceased, Willy Hansen — who held title to their matrimonial home as joint tenants. They were in the process of separating and dividing their matrimonial assets when Mr. Hansen died. At the time of his death, legal title to the home remained as a joint tenancy. After Mr. Hansen died, the respondent claimed exclusive ownership of the home through the right of survivorship. However, two of the husband’s daughters from a prior marriage, who were the appellants in this appeal, were the trustees for Mr. Hansen’s estate. They were of the contrary view that the joint tenancy was severed before their father died and that he therefore held the home with his wife as tenants in common. Their position was that, upon their father’s death, his one-half interest in the matrimonial home devolved to his estate. Under the terms of his will, which Mr. Hansen had drawn shortly before his death, he left his entire estate to his four daughters.

The ONCA held that in the months immediately prior to Mr. Hansen’s death, he and the respondent engaged in a course of conduct that involved separating their lives and dividing their assets. Thus the wife’s assertion of a right of survivorship was entirely inconsistent with the couple’s mutual intention to divide the property interests and hold interests in common rather than jointly. Furthermore, in the context of negotiations between spouses who are in the midst of a marriage breakdown, the court found that even failed or uncompleted negotiations can lead to a severance because “the negotiation of shares and separate interests represents an attitude that shows that the notional unity of ownership under a joint tenancy has been abandoned”.

It is noteworthy that in the Hansen case, it was not enough for Mr. Hansen to pass on his share of the property to his daughters through his Will. Jurisprudence has established that, in Ontario, a joint tenancy cannot be severed by testamentary disposition alone, however, a provision in a Will has been found to be a pertinent piece of evidence that could be used to help discern whether there was common intention to treat joint tenancy as severed.[4] Thus in situations where one spouse might desire to leave their property to someone other than their spouse (i.e. a child from another marriage), it would be wise to consider utilizing Rule 1 or 2.

[1] (1861), 70 E.R. 862 (Eng. V.-C.).

[2] (1987), 60 O.R. (2d) 1 (Ont. C.A.).

[3] 2012 ONCA 112.

[4] See Marley v Salga, 2019 ONSC 3527.

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