The recent decision of Gully v. Gully, 2018 BCSC 1590 serves as a powerful cautionary tale for those who have or are planning to register their children on the title to their home as part of their estate planning. In this case, the plaintiff, Ms. Gully, acted on estate planning advice she received and registered her son as a joint tenant on the title to her home. The idea behind this was to avoid any probate fees or inheritance tax that her beneficiaries might have to pay on her death.
Ms. Gully did not tell her son she had registered him on the title as a joint owner of her home. This turned out to be a bad decision because two years after being registered on title as a joint owner, her son consented to a judgment in favour of Ledcor in the amount of $800,000.00. Ledcor then registered that judgment against the son’s half interest in his mother’s home.
After learning about the judgment Ms. Gully brought an action against her son claiming that when she registered him on the title she did not intend to gift the property to him and, as such, he held his half interest in the property in trust for her. She essentially was arguing she remained the absolute owner of the property and Ledcor could not claim repayment of the debt from her. The court, however, rejected this argument concluding that at the time of the transfer and based on the wording of her Will and the concurrent registration of her son as a joint owner, Ms. Gully had demonstrated a clear intention to gift an interest in the property to her son.
While one could argue about the judge’s conclusion concerning Ms. Gully’s intentions at the time of the transfer, the judge went on to consider the effect of the Land Title Act. Specifically, the judge noted section 23(2) of the Land Title Act stipulates that the registered title to land is “… conclusive evidence at law and in equity… that the person named in the title as registered owner…” is/are the true owners of the property. Section 29(2) of the Act says that except in the case of fraud a person claiming to take an interest in land is not affected by an unregistered claim or interest in the land – even if the person has notice of that claim. Therefore, even if Ms. Gully had not intended to gift an interest in the property to her son, such that he held the land in trust for his mother, that the “in trust claim” was not registered on title and thus could not defeat Ledcor’s right to secure its judgment by registering it against title to the property.
The take away from this case is that if you are thinking about registering family on title make sure you understand and consider the possible consequences to both you and your family.
Bart R. Findlay of Findlay Gunnell Sandor
Laurence W. Anderson of Vernon & Thompson Law Group