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Equity - Resulting Trusts

. MacIntyre v. Winter

In MacIntyre v. Winter (Ont CA, 2021) the Court of Appeal cited an authority on 'gifting' in a family law context:
[17] The leading decision on the subject of gifting is Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. In that decision, Rothstein J. confirmed that two presumptions, that is, the presumption of a resulting trust and the presumption of advancement, continue to have a role to play in disputes over gratuitous transfers. He said that the presumptions “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor's intent in making the transfer is unavailable or unpersuasive”: at para. 23.

....

[24] Accepting that is the case, one must examine the balance of the evidence to determine what the intention was with respect to the monies that Alex contributed to the purchase of the two homes. In considering that issue, the trial judge failed to address the central point that arises from the presumption, that is, the intention of the transferor, namely, Alex. Contrary to the respondent’s submission, it is not the intention of both parties that is relevant. This central point was made clear in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, where Cromwell J. said, at para. 18:
The Court's most recent decision in relation to resulting trusts is consistent with the view that, in these gratuitous transfer situations, the actual intention of the grantor is the governing consideration: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 43-44. As Rothstein J. noted at para. 44 of Pecore, where a gratuitous transfer is being challenged, "[t]he 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". [Emphasis in original.]
[25] On this point, the nature of the onus or burden that rests on Ron, in terms of rebutting the presumption, is the civil standard of a balance of probabilities. In other words, Ron must establish, on a balance of probabilities, that it was Alex’s intention to gift these monies: Pecore, at para. 43. The standard of proof on a balance of probabilities requires “clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 46.

....

[33] The trial judge erred in extrapolating from the fact of joint tenancy, entered into with the intention of Ron taking a right of survivorship in the homes, to a finding of an intention to gift Ron the funds contributed by Alex for the acquisition of the homes. The point that a right of survivorship alone is not sufficient to rebut the presumption of a resulting trust that operates during the parties’ joint lives is clearly made in Mark Gillen, Lionel Smith & Donovan W.M. Waters, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada, 2012), at § 10.II.B.2 (WL):
If A supplies the purchase money and conveyance is taken in the joint names of A and B, B during the joint lives will hold his interest for A; B will also hold his right of survivorship—again by way of a resulting trust—for A's estate, because that right is merely one aspect of B's interest. In other words, the starting point is that B holds all of his interest on resulting trust for A, or A's estate. However, evidence may show that, while A intended B to hold his interest for A during the joint lives, it was also A's intention that, should he (A) predecease, B should take the benefit of the property. The presumption of resulting trust would then be partially rebutted, in relation to the situation that has arisen, so that B would not hold his interest (now a sole interest and not a joint tenancy) on resulting trust. He would hold it for his own benefit. [Footnote omitted.] [Emphasis added.]
. Perrier v. Cvetkovic

In Perrier v. Cvetkovic (Div Ct, 2020) the Divisional Court spelt out the basics of resulting trusts:
[29] In Pecore v. Pecore, 2007 SCC 17, at para. 20, the Supreme Court stated that 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 the property to the original owner". The Court went on to state that, in the case of a gratuitous transfer, there is a rebuttable presumption of a resulting trust:
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.
. Kent v. Kent

In Kent v. Kent (Ont CA, 2020) the Court of Appeal considered the status of a trustee of a resulting trust, and whether that constituted a legal interest for purposes of establishing a matrimonial home under the Family Law Act:
[1] Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, provided welcome guidance on how to approach a gratuitous transfer of property from a parent into joint names with a capacitated adult child. It held that, in such circumstances, a rebuttable presumption arises that the child holds the property on resulting trust for the parent (para. 36). However, when the transfer is of real property and, following the transfer, the child and her husband occupy the property for a lengthy period, family law considerations enter the equation. How are the two sets of legal considerations to be reconciled? This appeal depends on the answer to that question.

[2] The family law provisions engaged on this appeal are ss. 18(1) and 26(1) of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”). For ease of reference, I set them out now.
Matrimonial Home

18 (1) Every property in which a person has an interest and that is … ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.

....

Joint tenancy in matrimonial home

26 (1) If a spouse dies owning an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy shall be deemed to have been severed immediately before the time of death.
....

[43] Determining whether the Property was Janice and Gordon’s matrimonial home begins with a consideration of s. 18 (1) of the FLA. It will be recalled that s. 18(1) provides that:
Every property in which a person has an interest and that is … ordinarily occupied by the person and his or her spouse as their family residence is their matrimonial home.
[44] Although the application judge made no express finding on the matter, it appears beyond dispute that Janice and Gordon occupied the Property as their family residence, beginning in 2008 when they, together with their children, moved onto the Property and began living there with Marian. Thus, in determining whether the Property was Janice and Gordon’s matrimonial home, we must decide whether either Janice or Gordon had “an interest” in the Property within the meaning of s. 18(1).

[45] Did Janice have an interest in the Property within the meaning of s. 18(1) of the FLA? In my view, she did not.

[46] Janice became a joint tenant of the Property with Marian as a result of the 1996 Transfer. As I have explained, the 1996 Transfer raised the presumption of resulting trust and, on the findings of the application judge, the presumption was not rebutted. Thus, the 1996 Transfer had the effect of placing Janice on title to the Property in the capacity of a trustee. As this court stated at para. 45 of Spencer v. Riesberry, 2012 ONCA 418, it is self-evident that the duties and powers of a trustee are not an interest in the property within the meaning of s. 18(1) of the FLA because those powers and duties are held not in a personal capacity but in the fiduciary role of a trustee. Consequently, the 1996 Transfer did not give Janice an interest in the Property within the meaning of s. 18(1).
. Korman v. Korman

In Korman v. Korman (Ont CA, 2020) the Court of Appeal considered the status of the matrimonial home under the doctrine of resulting trusts:
[26] Section 14 of the Act [Family Law Act] affirms the presumption of a resulting trust in determining questions of ownership between spouses in the context of gratuitous property transfers. Where the presumption is invoked, the party resisting the imposition of a resulting trust is required to disprove the presumption that his or her spouse is the beneficial owner of an interest in the disputed property.

[27] In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 16-19, the Supreme Court confirmed that a traditional resulting trust may arise in the domestic context where, as here, there has been financial contribution to the initial acquisition of a property and a subsequent gratuitous transfer of title to the property. In these circumstances, the actual intention of the transferor is the governing consideration. See also Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 43-44; Schwartz v. Schwartz, 2012 ONCA 239, 290 O.A.C. 30, at paras. 41-42. Further, the intention of the transferor to make a voluntary and gratuitous transfer is an essential ingredient of a legally valid gift: see McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401, at para. 24.
. Holtby v. Draper

In Holtby v. Draper (Ont CA, 2017) the Court of Appeal states the principles to be applied to making a finding of resulting trust after a gifting of property is made (here the gifting was made through a corporation and the court discusses the specific impact of that at paras 38-44):
[32] In Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at para. 44, Rothstein J. explained that the trial judge must commence his or her inquiry with the applicable presumption and weigh all the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. When a gratuitous transfer is made, the transferee has the onus to demonstrate a gift was intended, to rebut the presumption of resulting trust: Pecore, at para. 24. The presumption of resulting trust applies to married spouses, except that where property is held in joint ownership, the presumption is that they intended to each own one half, in the absence of evidence to the contrary: Family Law Act, s. 14. The transferor’s intention at the time of the transfer is the critical consideration: Nishi v. Rascal Trucking Ltd., 2013 SCC 33 (CanLII), [2013] 2 S.C.R. 438, at paras. 2, 30 and 41. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. Its reliability must be assessed to determine weight, guarding against evidence that is self-serving or reflects a change in intention: Pecore, at para. 59; Andrade v. Andrade, 2016 ONCA 368 (CanLII), 131 O.R. (3d) 532, at para. 63.
. Andrade v Andrade

In Andrade v Andrade (Ont CA, 2016) the Court of Appeal commented as follows on purchase money resulting trusts:
[57] “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”: Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at para. 20.

[58] A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of property without taking legal title”: Nishi v. Rascal Trucking Ltd., 2013 SCC 33 (CanLII), [2013] 2 S.C.R. 438, at para. 21. It is one of the “classic resulting trust situations” and can arise when a party contributes directly to the purchase price or the mortgage: Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 S.C.R. 269, at para. 12, Cromwell J. noted that it has been “settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”.

[59] Except where title is taken in the name of a minor child, where property is acquired with one person’s money and title is put in the name of another, there is a presumption of resulting trust. While some authorities refer to a presumption of resulting trust arising when a gratuitous transfer is made between unrelated persons, the presumption of advancement between spouses was abolished by statute in Ontario (see Family Law Act, R.S.O. 1990, c. F.3, s. 14) and between parents and adult children by the Supreme Court in Pecore: see para. 36.

[60] In this case the respondent argued both at trial and on appeal that the appellant had not overcome the presumption that the legal title holders owned the house. Given the evidence of Luisa’s contributions to the purchase price and mortgages, however, the presumption here was one of resulting trust.

[61] The decision in this case however does not turn on the application of a presumption. A presumption is of greatest value in cases where evidence concerning the transferor’s intention may be lacking (for example where the transferor is deceased). “[T]he focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer … “[T]he presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities”: Pecore, at paras. 5 and 44.

[62] The trial judge referred on multiple occasions to “the parties’ intentions”, stating that he could find “no real evidence of a commonly shared intention to purchase and hold the [house] in trust for Luisa.” Common intention, however, is not the issue. The intention of the grantor or contributor alone counts, as the point of the resulting trust is that the claimant is asking for his or her own property back: Kerr v. Baranow, at para. 25.

[63] The relevant time for ascertaining intention is the time of the acquisition of the property, when the funds were advanced: Nishi v. Rascal Trucking Ltd., at paras. 30 and 41; Pecore, at para. 59. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. The court must assess the reliability of such evidence and determine what weight it should be given, guarding against evidence that is self-serving or tends to reflect a change in intention: Pecore, at para. 59.

.....

[93] In Schwartz v. Schwartz, 2012 ONCA 239 (CanLII), title to a matrimonial home was transferred from the wife to the husband. There were competing claims to the house by the wife and the husband’s judgment creditor. The central issue was whether the wife had conveyed her entire interest in the matrimonial home to her husband. Simmons J.A. held that the fact that the transfer may have been for the purpose of insulating the wife from claims by her own potential creditors did not in itself rebut the statutory presumption of resulting trust between spouses. She stated, at paras. 42-43:
In Kerr, the Supreme Court of Canada also confirmed the view expressed in Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at paras. 43-44, that where there is a gratuitous transfer, the actual intention of the transferor is the governing consideration. At para. 44 of Pecore, Rothstein J. noted that where a gratuitous transfer is being challenged, “[t]he 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.”

Further, as Karakatsanis J. observed in Nussbaum v. Nussbaum (2004), 2004 CanLII 23086 (ON SC), 9 R.F.L. (6th) 455 (Ont. S.C.), at paras. 20 and 32, while the “intention to gift property trumps the presumption of resulting trust”, a party's intention at the time of a conveyance is a question of fact. Further, as she stated, at para. 32, “[w]hile evidence that someone intended to fully evade creditors can be evidence that they intended to gift their entire interest in the property”, a party's actual intention remains a question of fact to be determined based on the whole of the evidence.
[94] See also Korman v. Korman, 2015 ONCA 578 (CanLII), at para. 38, where, citing the same passage from Nussbaum, and the Schwartz decision, this court confirmed that the motivation to shield property from a transferring spouse’s potential creditors does not in itself rebut the presumption of a resulting trust in a gratuitous transfer of property between spouses.
. Farkas v. Bedic

In Farkas v. Bedic (Ont CA, 2016) the court makes some succinct comments on the constituent elements of resulting trusts:
[18] ..... A resulting trust is an arrangement where one person holds property for the benefit of another and typically is created or implied when title to the property is transferred to a party who did not provide any value for it. Unless the transfer is held to be a gift, the party is required to return the property to the true owner. Legally, the beneficial interest in the property “results” to the person who transferred legal title: see Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at para. 24.

.....

[20] ..... Whether a resulting trust is created or implied depends on the intent of the transferor at the time of transfer. Although the transferor gives another person legal title to the property, the transferor does not intend the other person to have a beneficial interest in the property. Thus, the other person holds the beneficial interest in trust for the transferor: Pecore v. Pecore at para. 5.
. Foley (Re)

In this estate case, Foley (Re) (Ont CA, 2015), the Court of Appeal made the following salutory comments on the law of gifting and resulting trusts:
C. The Law Pertaining to Gifts

[25] A valid inter vivos gift is one that is intended to take effect during the lifetime of the donor. It consists of a voluntary transfer of property to another with the full intention that the property will not be returned. To establish a gift, one must show intention to donate, sufficient delivery of the gift, and acceptance of the gift: McNamee v. McNamee, 2011 ONCA 533 (CanLII), 106 O.R. (3d) 401, at para. 24.

(1) Presumption of Resulting Trust

[26] Equity presumes bargains, not gifts. Thus, when a parent gratuitously transfers property to an adult child, the law presumes that the child holds the property on a resulting trust for the parent: Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at para. 36. The onus shifts to the adult child to rebut the presumption by proving the contrary intent on a balance of probabilities: Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 (CanLII), 119 O.R. (3d) 81, at paras. 56-57; Mroz (Litigation Guardian of) v. Mroz, 2015 ONCA 171 (CanLII), at para. 72. The trial judge must begin her inquiry with the presumption and then weigh all the evidence in an attempt to determine the parent’s actual intent at the time of the transfer: Pecore, at para. 44; Sawdon, at para. 57; Mroz, at para. 72.

[27] The evidence necessary to rebut the presumption depends on the facts of the case: Pecore, at para. 55. Evidence of the parent’s post-transfer conduct is admissible, so long as it is relevant to the parent’s intention at the time of the transfer: Pecore, at para. 59.

....

(3) Corroborative Evidence

[29] The common law requires corroborating evidence to rebut the presumptions. The corroborating evidence can be direct or circumstantial, and it can consist of a single piece or evidence or several pieces considered cumulatively: Burns Estate v. Mellon (2000), 2000 CanLII 5739 (ON CA), 48 O.R. (3d) 641, at para. 29.

[30] In addition, where the donor is deceased, the Evidence Act, R.S.O. 1990, c. E.23 requires corroborative evidence. Section 13 provides:
In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
. Donaldson v. Braybrook

In Donaldson v. Braybrook (Ont CA, 2020) the Court of Appeal address resulting trusts between parent and child:
[26] As for the appellants’ reliance on the presumption of resulting trusts, the guiding authority is Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. In that case, the Supreme Court of Canada confirmed that, while the presumption of advancement normally applies to a transfer between parents and children, that presumption does not apply once the children are adults. As Rothstein J. said, at para. 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.
[27] However, the issue of the proper presumption has limited effect since the presumption only applies if the court is unable to determine the intent of the transferor. As this court said in its decision in Pecore v. Pecore (2005), 2005 CanLII 31576 (ON CA), 17 R.F.L. (6th) 261 (Ont. C.A.), at para. 9, per Lang J.A.:
Since both presumptions can be rebutted by evidence of actual intention, in my view, the presumptions become relevant only if, after considering all the evidence and the circumstances surrounding the transfer, a court is unable to draw a conclusion about the transferor's actual intention. Only in such a case, would a court resort to the presumptions to determine the issue.


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