Recent Decisions Add Pieces To The Puzzle Of Joint Ownership

The recent decision of the Ontario Court of Appeal in Mroz v. Mroz1 expands on the principles elucidated in Sawdon Estate,2 and adds to the body of jurisprudence dealing with evidence of a testator's intentions. Kay Mroz was a widow who had a daughter, Helen, two grandchildren (Adrianna and Martin) from a son who died several years earlier, and a nephew, Richard, who had a wife and three children and who was an integral part of Kay's family.

In 2004, Kay executed a Will. At the same time, she signed a Direction to transfer her home, her only significant asset, into joint ownership with Helen. Although that real estate would have passed to Helen upon Kay's death by the right of survivorship, Kay's Will nonetheless included the following provision:

"I bequeath my share of the property ... to my daughter, Helen Mroz, provided that she pay within one (1) year of the date of my death the following legacies:

(i) The sum of seventy thousand dollars ($70,000.00) to Adrianna Mroz ... ;

(ii) The sum of seventy thousand dollars ($70,000.00) to Martin Mroz ....

These legacies shall constitute a first charge on my property in favour of Adrianna Mroz and Martin Mroz, until the legacies are paid."

Kay's Will also provided for $10,000 legacies to be paid to each of the five members of Richard's family.

Kay died in 2005 leaving an Estate with a value (exclusive of the real property) of approximately $3,200. Upon Kay's death, Helen sold the property and realized approximately $476,000. Helen treated these funds as her own on the basis that the property passed to her by the right of survivorship. She did not pay any of the legacies referenced in the Will.

The trial judge found that Kay possessed the requisite capacity and was not misled or subject to undue influence at the relevant times. The evidence supported the view that Kay was a "strong, intelligent woman" who managed her own finances and was "financially astute".

In the trial decision, the judge referred to the seminal Supreme Court of Canada decision in Pecore3 and held that Helen had rebutted the presumption of a resulting trust. As such, on Kay's death, Helen became the sole owner of the house by right of survivorship. The house did not form part of the Estate. However, the trial judge also held that "[i]t is beyond dispute that Helen knew her mother wanted the legacies paid and knew the deadline for payment". The judge noted that Kay's Will provided for the two $70,000 legacies to form a first...