Presumption of Resulting Trust Applies to Transfer of Land

Until recently there had been some questions in BC estate litigation as to whether or not the presumption of resulting trust applies to gratuitous transfers of real

property, in light of the provisions of the Land Title Act, section 31 that provides that under the torrens system, the indefeasible title is conclusive evidence in law

and in equity, that the person named in the title is entitled to an estate in fee simple in the land.

 

The court in Aujula v Kaila 2010 BCSC 1739, held that the conclusive evidence of title found under the Land Title act can be rebutted in some circumstances

as such  the operation of the presumption of resulting trust where there is an agreement between the parties that is contrary to the registered title, or to take into

account the underlying equitable interests between the parties.

 

In Fuller v. Harper, 2010 BCCA 421 at para. 43, (sub nom Fuller v. Fuller Estate)[2010] B.C.J. No. 1901 [Fuller], the Court of Appeal noted the existence of

appellant authority that appears to support the view that a presumption of resulting trust could be applied to a gratuitous transfer of real property.  Smith D. J.A.

, relying on Pecore, described how the burden of proof is affected by the presumption of resulting trust by placing the onus on the transferee to lead evidence of

the transferor’s contrary intention in order to rebut the presumption on a balance of probabilities: Fuller at paras. 44-47.

 

The relationship between the statutory presumption found in the Land Title Act and the presumption of resulting trust was addressed in Aujla.  Under the

statutory presumption, the party challenging the state of title has the onus of displacing the presumption that title, as currently registered, is conclusive of legal

and beneficial ownership.  However, at para. 37, Harris J. found that this burden could be discharged through the operation of the presumption of resulting trust

if the transfer was gratuitous. If no consideration was exchanged, the onus shifts to the transferee to prove on a balance of probabilities that the transfer was

intended as a gift.

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