Another Case on Joint Accounts
1. Sawdon Estate, 2012 ONSC 4042 (CanLII) 
In this case, the conclusions of the Court were as follows:
- The beneficial interest in the joint bank accounts was transferred to all of the deceased's children with no intention to reserve any beneficial interest himself;
- There was a valid inter vivos gift despite the fact that the joint bank accounts were only in the names of the deceased's children, Wayne Sawdon and Stephen Sawdon;
- The gift of the joint interest and the joint bank accounts is not a testamentary disposition as the gift was intended to and was effective immediately upon opening of the joint bank accounts; and
- The joint bank accounts are not part of the estate of the deceased. There is no resulting trust in favour of the estate with respect to the joint bank account monies.
Trial of an issue:
This matter proceeded as a trial of a discreet issue in the passing of accounts by the trustee of the estate of Arthur Sawdon, deceased. The only issue to be determined in the trial was whether monies in certain joint bank accounts, with a right of survivorship, held by the deceased with one or more of his children at the date of his death, formed part of his estate.
There were several bank accounts held jointly with a right of survivorship by the deceased and his two sons prior to death and which still existed on the date of death. The value of the joint bank accounts was over $1million.
The judgment of Ricchetti J., states that there is no dispute that the joint bank accounts were held jointly with a right of survivorship. It is admitted Wayne Sawdon was a joint account holder in all of the joint bank accounts. It is also admitted that Stephen Sawdon was a third joint holder on at least five of the joint bank accounts. The only dispute is whether Stephen Sawdon was also a joint account holder on all seven of the joint bank accounts. Ricchetti J., was satisfied that both Wayne and Stephen Sawdon were joint bank account holders along with the deceased on all of the joint bank accounts.
Ricchetti J., makes the following legal analysis:
 The legal concepts relating to joint bank accounts was succinctly set out in Water's Law of Trusts in Canada (3ed) at pages 401 and 404:
A bank account gives rise to a chose in action against the bank. The banker is a debtor of the account holder, and the limit of the banker's obligation is the balance standing to the credit of the account at the time of the account holder's demand for payment. A joint account comes into being when an account at a bank is opened in the names of two or more persons. When the account is in joint names, both account holders are entitled to demand payment from the bank, and the agreement signed by both of them when the account is opened enables the bank to discharge its obligation by paying either account holder. The rights of the account holders against the bank stem from their joint legal title to the chose in action, and the demand upon the banker which it permits.(page 401)
The legal effect of this action, as commonly understood, is that, while the bank and the account holders stand respectively in the position of debtor and creditor, each of the account holders has a legal title to the moneys in the account. (page 401)
The opening of a joint account gives each account holder a legal interest in the moneys credited to the account at any one time, and the right of survivorship arises by operation of law as part of the legal concept of joint tenancy. But whether the survivor may take the balance depends upon whether the deceased intended to make such a gift of his share. (page 404).
 The most recent pronouncement on a survivors entitlement to the monies in joint bank accounts is the Supreme Court's decision in Pecore v. Pecore, 2007 SCC 17 (CanLII). The court stated:
2. Depending on the terms of the agreement between the bank and the two joint account holders, each may have the legal right to withdraw any or all funds from the accounts at any time and each may have a right of survivorship. If only one of the joint account holders is paying into the account and he or she dies first, it raises questions about whether he or she intended to have the funds in the joint account go to the other joint account holder alone or to have those funds distributed according to his or her will. How to answer this question is the subject of this appeal.
3. In the present case, an ageing father gratuitously placed his mutual funds, bank account and income trusts in joint accounts with his daughter, who was one of his adult children. The father alone deposited funds into the accounts. Upon his death, a balance remained in the accounts.
4. It is not disputed that the daughter took legal ownership of the balance in the accounts through the right of survivorship. Equity, however, recognizes a distinction between legal and beneficial ownership. The beneficial owner of property has been described as "the real owner of property even though it is in someone else's name": Csak v. Aumon, reflex, (1990), 69 D.L.R. (4th) 567 (Ont. H.C.J.), at p. 570. The question is whether the father intended to make a gift of the beneficial interest in the accounts upon his death to his daughter alone or whether he intended that his daughter hold the assets in the accounts in trust for the benefit of his estate to be distributed according to his will.
20 A resulting trust arises when title to property is in one party's name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: see D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters' Law of Trusts in Canada (3rd ed. 2005), at p. 362. While the trustee almost always has the legal title, in exceptional circumstances it is also possible that the trustee has equitable title: see Waters'Law of Trusts, at p. 365, noting the case of Carter v. Carter reflex,reflex, (1969), 70 W.W.R. 237 (B.C.S.C.).
24. The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters' Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
25. The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of a resulting trust.
40. As compelling as some cases might be, I am reluctant to apply the presumption of advancement to gratuitous transfers to "dependent" adult children because it would be impossible to list the wide variety of the circumstances that make someone "dependent" for the purpose of applying the presumption. Courts would have to determine on a case-by-case basis whether or not a particular individual is "dependent", creating uncertainty and unpredictability in almost every instance. I am therefore of the opinion that the rebuttable presumption of advancement with regard to gratuitous transfers from parent to child should be preserved but be limited in application to transfers by mothers and fathers to minor children.
41. There will of course be situations where a transfer between a parent and an adult child was intended to be a gift. It is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In addition, while dependency will not be a basis on which to apply the presumption of advancement, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust.
43 The weight of recent authority, however, suggests that the civil standard, the balance of probabilities, is applicable to rebut the presumptions: Burns Estate v. Mellon 2000 CanLII 5739 (ON CA), 2000 CanLII 5739 (ON CA), (2000), 48 O.R. (3d) 641 (C.A.), at paras. 5-21; Lohia v. Lohia,  EWCA Civ 1691 (BAILII), at paras. 19-21; Dagle, at p. 210; Re Wilson, at para. 52. See also Sopinka et al., at p. 116. This is also my view. I see no reason to depart from the normal civil standard of proof. The evidence required to rebut both presumptions, therefore, is evidence of the transferor's contrary intention on the balance of probabilities.
44 As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor's actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.
45 In cases where the transferor's proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor's death.
46. In certain cases, however, courts have found that the transferor gratuitously placed his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death, at which time the transferee alone would take the balance through survivorship: see e.g. Standing v. Bowring (1885), 31 Ch. D. 282, at p. 287; Edwards v. Bradley,  O.R. 225 (C.A.), at p. 234; Yau Estate, at para. 25.
47. There may be a number of reasons why an individual would gratuitously transfer assets into a joint account having this intention. A typical reason is that the transferor wishes to have the assistance of the transferee with the management of his or her financial affairs, often because the transferor is ageing or disabled. At the same time, the transferor may wish to avoid probate fees and/or make after-death disposition to the transferee less cumbersome and time consuming.
48. Courts have understandably struggled with whether they are permitted to give effect to the transferor's intention in this situation. One of the difficulties in these circumstances is that the beneficial interest of the transferee appears to arise only on the death of the transferor. This has led some judges to conclude that the gift of survivorship is testamentary in nature and must fail as a result of not being in proper testamentary form: see e.g. Hill v. Hill (1904), 8 O.L.R. 710 (H.C.), at p. 711; Larondeau v. Laurendeau,  O.W.N. 722 (H.C.); Hodgins J.A.'s dissent in Re Reid (1921), 64 D.L.R. 598 (Ont. S.C., App. Div.). For the reasons that follow, however, I am of the view that the rights of survivorship, both legal and equitable, vest when the joint account is opened and the gift of those rights is therefore inter vivos in nature. This has also been the conclusion of the weight of judicial opinion in recent times: see e.g. Mordo v. Nitting, 2006 BCSC 1761 (CanLII), 2006 BCSC 1761 (CanLII),  B.C.J. No. 3081 (QL), 2006 BCSC 1761, at paras. 233-38; Shaw v. MacKenzie Estate (1994), 4 E.T.R. (2d) 306 (N.S.S.C.), at para. 49; and Reber v. Reber 1988 CanLII 3357 (BC SC), 1988 CanLII 3357 (BC SC), (1988), 48 D.L.R. (4th) 376 (B.C.S.C.); see also Waters'Law of Trusts, at p. 406.
49. An early case that addressed the issue of the nature of survivorship is Re Reid in which Ferguson J.A. of the Ontario Court of Appeal found that the gift of a joint interest was a "complete and perfect gift inter vivos" (p. 608) from the moment that the joint account was opened even though the transferor in that case retained exclusive control over the account during his lifetime. I agree with this interpretation. I also find MacKay J.A.'s reasons in Edwards v. Bradley (C.A.), at p. 234, to be persuasive: The legal right to take the balance in the account if A predeceases him being vested in B on the opening of the account, it cannot be the subject of a testamentary disposition. If A's intention was that B should also have the beneficial interest, B already has the legal title and there is nothing further to be done to complete the gift of the beneficial interest. If A's intention was that B should not take the beneficial interest, it belongs to A or his estate and he is not attempting to dispose of it by means of the joint account. In either event B has the legal title and the only question that can arise on A's death is whether B is entitled to keep any money that may be in the account on A's death or whether he holds it as a trustee under a resulting trust for A's estate. [Emphasis added.] Edwards v. Bradley was appealed to the Supreme Court of Canada but the issue of survivorship was not addressed.
51. Treating survivorship in these circumstances as an inter vivos gift of a joint interest has found favour in other jurisdictions, including Australia and the United Kingdom: see Russell v. Scott (1936), 55 C.L.R. 440, at p. 455; Young v. Sealey,  1 All E.R. 92 (Ch. Div.), at pp. 107-8; (in obiter) Aroso v. Coutts,  1 All E.R. (Comm) 241,  EWHC Ch 443, at paras. 29 and 36.
53. Of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor's estate to be distributed according to the transferor's will.
 The Supreme Court in Pecore reviewed several of the relevant factors which might assist a court in determining the intention of the deceased at the time of the transfer of the joint interest in the bank accounts:
(a) Evidence of the deceased's intention, including, where admissible, evidence subsequent to the transfer;
(b) Bank documents - the clearer the wording in the bank documents as to the deceased's intention, the more weight that evidence might attract;
(c) Control and use of the funds in the account -the circumstances must be carefully reviewed and considered to determine the weight to be given to this factor. However, the Supreme Court in Pecore recognized that a transferor may wish to avoid probate fees and/or make after death disposition less cumbersome and time consuming. See Pecore para. 47;
(d) Granting a Power of Attorney - the court should consider whether a granted power of attorney is some evidence, one way or another, of the deceased's intention; and
(e) Tax Treatment of Joint Accounts - this is another circumstance which might shed light on the deceased's intention.
- The issues to be decided were whether the applicants have rebutted the presumption of a resulting trust with respect to the Joint Bank Accounts; and
- Whether there was a valid inter vivos gift of the joint interest in the Joint Bank Accounts.
Based on the legal analysis applied as set out above, the court in considering the evidence found that the deceased intended to make an immediate transfer of his beneficial interest in the joint bank accounts at the time the accounts were established; and, moreover, that there was direct evidence of intent that the deceased clearly intended to make an inter vivos gift of the interest in the joint bank accounts as at the date the joint accounts were opened.
Ricchetti J., found the bank documents to be clear on their face. His Honour found that the deceased's sons had control and use of the funds if they wanted, and that there was no evidence that the deceased intended to hold an interest in trust for himself while he was alive.
Though it is a question of intention in every case to be gathered on the facts and circumstances, in this case, Ricchetti J., found that all evidence supported the conclusion that all five children were intended to and had an equal beneficial interest in the joint bank accounts of the deceased, despite the fact that only Wayne and Stephen's names were on the joint bank accounts. Despite the position taken by the Watch Tower, being that the gift of the right of survivorship can only be to the joint account holders, and as such, the gift fails.
Ricchetti J., also opined that another way to approach the deceased's actions was that he made a gift of the legal and beneficial interest in the joint bank accounts to Wayne and Stephen subject to Wayne and Stephen holding those monies upon receipt in trust for the siblings. In other words, that Wayne and Stephen were bare trustees for their siblings, when and if they received any monies from the joint bank accounts.
2. Re Estate of Ruth Smith; Smith v. Rotstein, 2 
You will recall that we have written pervious blogs and newsletters on certain issues arising in the case of Smith Estate v Rotstein. Justice Brown initially granted partial summary judgment in this matter, dismissing the Amended Notice of Objection. The matter was appealed to the Court of Appeal and the Court of Appeal dismissed the appeal from the granting of the partial summary judgment, but directed the award of costs be set aside and the quantum of fees claimed to be reassessed by Justice D. Brown, the Motions Judge.
To be clear, the Court of Appeal did not alter the award of costs for disbursements plus taxes, nor did the Court of Appeal interfere with the conclusion that costs should be awarded on a full indemnity basis. The Court of Appeal remitted for Justice Brown's consideration the issue of the quantum of the fees claimed, fixed on a full indemnity scale.
In setting aside the award of costs for fees, fixed on a full indemnity basis, the Court of Appeal provided guiding principles that Brown J., considered and applied as follows:
(i) There is no requirement for a losing party on a motion who is not seeking costs to file a bill of costs, although it is preferable that a party do so;
(ii) If a losing party does not file a bill of costs, the motions judge may take that into account as a factor when considering the reasonable expectations of the losing party;
(iii) However, a bill of costs for a significant amount, such as one in excess of $700,000.00, "must be able to stand on its own without reference to a bill of costs from the [losing party];"
(iv) It was open to me, as a motion judge, to draw the permissible inference from the failure of Ms. Rotstein to file a bill of costs that "the fees incurred by Ms. Rotstein on a full indemnity basis approximated those incurred and submitted by Mr. Smith;"
(v) Notwithstanding such a finding, a motion judge must proceed to consider whether the amount of costs claimed is fair and reasonable and to address any significant concerns about the bill of costs raised by the losing party;
(vi) A bill of costs for an amount such as that sought by Mr. Smith "invites careful analysis", and while a motion judge "is not required to do a line by line analysis, he or she must be satisfied that the bill is fair and reasonable standing on its own;"
(vii) If Ms. Rotstein's "analysis is accepted in a reassessment, it could lead to a significantly different result;"
(viii) The Court of Appeal did not propose to carry out the reassessment: "The motion judge is best suited to do it and it is for him to come to his own conclusion. What is important is that the analysis be fully considered as part of the assessment:" and,
(ix) While Ms. Rotstein "may well have paid fees equivalent to or in excess of those claimed by the respondent, she is still entitled to challenge the respondent's bill as unreasonable. If there is a critique of the respondent's bill of costs, it is worthy of consideration..." 
In the end, and through significant analysis as set out in the 19 page judgment, Brown J., concluded that the full indemnity costs originally awarded, plus applicable tax for fees incurred, are fair and reasonable and no deduction should be made to them; which is the same result reached in the initial costs reasons.
As to the costs of the reassessment, Brown J., ordered that a fair and reasonable award of partial indemnity costs to Mr. Smith for the reassessment be made in the amount of $8,500.00 including disbursements and taxes, ordered payable by Ms. Rotstein within 120 days.
What is most instructive are Brown J's., observations on costs and the principle of objective reasonableness. For these reasons, I reproduce here paragraphs 57-64 representing Justice Brown's observations on the costs analysis which are instructive to counsel and clients:
Cost Analysis of Brown J.,
 In my Summary Judgment Reasons I encouraged the parties to settle the costs of the motion, failing which I set a timetable for the filing of written cost submissions and bills of costs by both parties.  The Court of Appeal held that "there is no requirement for the losing party, who is not seeking costs, to file a bill of costs although it is preferable that he or she does so." 
 I explained in my Initial Cost Reasons why I thought that information about the amount expended on costs by the losing party could act as an indicia of the "objective reasonableness" of the costs incurred: if both parties spent the same amount on the same legal steps, then, arguably, that provides a measure of "objective reasonableness", as well as benchmarking the reasonableness of expectations about a possible cost award if one loses. Absent a bill of costs from an unsuccessful party, complaints about over-reach and excessive costs are difficult to bench-mark or, as Winkler J., as he then was, observed in Risorto v. State Farm Mutual Automobile Insurance Co., an attack on the quantum of costs where the court did not have before it the bill of costs of the unsuccessful party "is no more than an attack in the air". 
 Allowable costs, awarded on whatever scale, are limited to those which have been reasonably incurred.  If reasonableness is an objective standard, in the absence of information about the amount of costs expended by the losing side, to what sources can a motion judge look for guidance in discerning the concrete tangibles of objectively reasonable costs? The Rules of Civil Procedure contain three general principles which provide some substance to the concept of "reasonably incurred" costs. First, Tariff A stipulates that fees claimed must be "for any step in a proceeding authorized by the Rules of Civil Procedure". In other words, fees incurred for work which did not relate to the litigation are not considered fees "reasonably incurred" for the purposes of assessing costs. Second, Rule 57.01(1) provides a list of qualitative factors which must inform the reasonableness of fees claimed. Third, Rule 1.04(1.1) sets out another qualitative factor by requiring that cost orders be "proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding". However, these are all qualitative factors. How does one transform, in an objective fashion, these qualitative factors into quantitative terms? Here the Rules provide much less guidance because they no longer contain a costs grid. In the absence of a costs grid - either statutory or one set by appellate authority - the general principles of the Rules, while helpful, provide no concrete, dollar and cents, guidance on how much time or money objectively should be spent on any particular step in a proceeding.
 So, where else can a motion judge turn for assistance in ascertaining the objectively reasonable level of costs applicable to a case? In some cases the court might be able to identify internal inconsistencies in a bill of costs- such as two counsel docketing different amounts of time for the same task -and treat those inconsistencies as evidence of the objective unreasonableness of the claimed costs. But most bills of costs contain no such inconsistencies. Or, should the process of assessing costs, even on a full indemnity basis, start from the premise that the successful party's bill of costs must always be cut to some extent because, well, that's just the way the litigation game is played? That does not strike me as a principled approach to fixing costs.
 The inability of a motion judge, as part of his or her inherent power, to order an unsuccessful party to file a bill of costs presents practical problems for fixing the costs of a motion. Once the costs claimed by a party rise above a level of $75,000.00 or so, it becomes increasingly difficult for a motion judge to ascertain "the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed": Rule 57.01(1)(0.b). The disclosure of the amount and allocation of costs expended by an unsuccessful party on the step in the proceeding, through the provision of a bill of costs, is a useful tool in assisting a motion judge in ascertaining the reasonable expectations of an unsuccessful party.
 The Rules of Civil Procedure presently provide that absent agreement by the parties on costs, "every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length": Rule 57.01(6). In some regions both parties on a motion routinely bring their costs outline to the motion hearing. As a result, the motion judge possesses information about the costs sought by both parties - since every party to a motion thinks it will succeed and will be entitled to costs - and the costs outline provides a useful tool in the ultimate fixing of costs. Indeed, in Andersen v. St. Jude Medical Inc. the Divisional Court stated that "the introduction of the Costs Outline in Rule 57.01(6) will provide some measure of what the unsuccessful party expected..."  Unfortunately the practice of requiring counsel on all motions to bring to court costs outlines has not caught on in the Toronto Region, in part through the failure of Toronto Region judges (myself included) to insist that parties comply rigorously with Rule 57.01(6).
 So, part of the solution might be for the Toronto Region judiciary to enforce Rule 57.01(6) more vigorously, although it is not clear to me what sanctions a court reasonably could impose if, at the start of a hearing, the motion judge discovers that one or both parties have not come armed with their costs outline. Perhaps where a motion judge reserves on a complex matter the judge could direct the parties to file costs outlines before the judge releases his or her reserved reasons for judgment - i.e. at a time when there is not yet an unsuccessful party. Such an approach would appear to be consistent with the obligations imposed on parties by Rule 57.01(6).
 But often a judge will reserve on a complex motion and then set out a timetable for the filing of written submissions upon the release of his or her reasons. For such cases it might well be appropriate for the Civil Rules Committee to consider an amendment to Rule 57.01 which will authorize a judge to order an unsuccessful party on a motion or at a trial to file a bill of costs, or costs outline, as part of its responding cost submissions."
Always prepare and bring to your hearing, a Bill of Costs or Costs Outline.
 Sawdon Estate, 2012 ONSC 4042 (CanLII)
 Re Estate of Ruth Smith; Smith v. Rotstein, 2012 ONSC 4200 (CanLII)
 2011 ONCA 491 (CanLii), paras. 51 to 56.
 2003 CanLII 43566 (ON SC), (2003), 64 O.R. (3d) 135 (S.C.J.), para. 10, quoted with approval by the Divisional Court in United States of America v. Yemec,  O.J. No. 2066 (Div. Ct.), para. 54.
 MacKinnon v. Ontario Municipal Employees Retirement Board 2007 ONCA 874 (CanLII), (2007), 88 O.R. (3d) 269 (C.A.), at para. 92.
  O.J. No. 508 (Div. Ct.), para. 19.