Appeals From Master’s Orders

Appeals From Master's Orders

In Abermin Corp. v. Granges Exploration Ltd. (1990), 45 B.C.L.R. (2d) 188, 42 C.P.C. (2d) 25 (S.C.), Mr. Justice MacDonald succinctly set out the scope of review on an appeal from a Master’s order.

He said at p. 31 [C.P.C.]:

An appeal from a Master’s order in a purely interlocutory matter should not be entertained unless the order was clearly wrong. However, where the ruling of the Master raises questions which are vital to the final issue in the case, or results in one of those final orders which a Master is permitted to make, a rehearing is the appropriate form of appeal. Unless an order for the production of fresh evidence is made, that rehearing will proceed on the basis of the material which was before the Master. In those latter situations, even where the exercise of discretion is involved, the Judge appealed to may quite properly substitute his own view for that of the Master.

16      The order under appeal is, in my view, final in nature, and accordingly the appeal should be considered a rehearing of the matter.

 

Breach of Trust: “Knowingly Participating”

Breach of Trust: "Knowingly Participating"

In Scoretz v Kensam Enterprises Ltd 2017 BCSC 1356 a director of a corporate bare trust was found liable for damages for “knowingly participating” in the breach of trust by failing to deliver shares held in trust .

The court found that it is clear that Mr. Sai knowingly assisted in the breach of trust. Mr. Sai had actual knowledge of the existence of the trust and that the refusal of Kensam to deliver up the shares was a breach of trust. He failed to take the necessary steps to have the release of the LIM Shares and the Napier Shares to Mr. Scoretz and, at the same time, he received a benefit as a result of the breach of trust as LIM Shares were made available to him through his control of Kensam.

He was in a position to sell his LIM Shares in the market without competition from the shares that should have been available for Mr. Scoretz. Mr. Sai knowingly assisted in the breach of trust by failing to cause Kensam to deliver the LIM Shares as was required. Whether by intention, recklessness, or wilful blindness, Mr. Sai participated in the breach of trust which benefited himself. In those circumstances, Mr. Sai is personally liable for the breach of trust of Kensam.

THE  LAW

The leading case on the personal liability of strangers to a trust is Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787. There, a travel agency was obliged to hold in trust the proceeds from its sale of Air Canada tickets, breached the trust, and did not provide Air Canada with approximately $25,000 that was owed. The issue was exactly the same as the issue here: whether or not the director and shareholder of the travel agency could be held personally liable for the loss.

68  The starting point for liability for “knowing assistance” is the decision of the Court of Appeal in Chancery in Barnes v. Addy (1874), L.R. 9 Ch. App. 244where Lord Selborne L.C. stated at p. 252 that a stranger to a trust can be liable if they “assist with knowledge in a dishonest and fraudulent design on the part of the trustees”.
69  In Air Canada, supra, the Court noted that actual knowledge is required but that reckless or wilful blindness will also suffice. The Court also noted that, if a stranger receives a benefit as a result of the breach, it may be grounds to infer that the stranger had knowledge of the breach of trust.
70 Given that Kensam is a closely held company and Mr. Sai was the directing mind, this requirement of knowledge is easily satisfied. I have no hesitation in concluding that Mr. Sai had actual knowledge of the refusal of Kensam to deliver up the LIM Shares and the Napier Shares.
71  Concerning the nature of the breach of trust, the Court in Air Canada noted that there had developed two lines of authority: most English authorities required participation by the stranger in a dishonest and fraudulent design as set out originally in the Barnes decision whereas a line of Canadian authorities has developed holding that a person who is the controlling or directing mind of a corporate trustee can be liable for an innocent or negligent breach of trust if the person knowingly assisted in the breach of trust and that, in those circumstances, proof of fraud and dishonesty by the controlling mind of the corporate trustee is not a requirement if a finding can be made that the breach of trust amounts to fraud and dishonesty. In this regard, it is necessary to show that there is proof of fraud and dishonesty by the trustee and not by the controlling and directing mind of the trustee.
72  In Air Canada, supra, Iacobucci J. stated that the divergence in the case law was a result of the application of the traditional rule in the context where the corporate trustee is actually controlled by the stranger to the trust:
Where the trustee is a corporation, rather than an individual, the inquiry as to whether the breach of trust was dishonest and fraudulent may be more difficult to conceptualize, because the corporation can only act through human agents who are often the strangers to the trust whose liability is in issue. Regardless of the type of trustee, in my view, the standard adopted by Peter Gibson J. in the Baden case, following the decision of the English Court of Appeal in Belmont Finance, supra, [Belmont FinanceCorp. v. Williams Furniture Ltd. (No. 1), [1979] 1 All E.R. 118], is a helpful one. I would therefore “take as a relevant description of fraud ‘the taking of a risk to the prejudice of another’s rights, which risk is known to be one which there is no right to take’.” In my opinion, this standard best accords with the basic rationale for the imposition of personal liability on a stranger to a trust which was enunciated in Re Montagu’s Settlement Trusts, supra, [Re Montagu’s Settlement Trusts, [1987] Ch. 264] namely, whether the stranger’s conscience is sufficiently affected to justify the imposition of personal liability. In that respect, the taking of a knowingly wrongful risk resulting in prejudice to the beneficiary is sufficient to ground personal liability. This approach is consistent with both lines of authority previously discussed.
(at para. 60)
73  In British Columbia, there is a line of authority which is binding on me which provides that a person who is a controlling or directing mind of a corporate trustee can be liable for an innocent or negligent breach of trust if the person knowingly assisted in the breach of trust: Horsman Bros. Holdings Ltd. v. Panton, [1976] 3 W.W.R. 745 (B.C.S.C.); Trilec Installations Ltd. v. Bastion Construction Ltd. (1982), 135 D.L.R. (3d) 766 (B.C.C.A.); Henry Electric Ltd. v. Farwell (1986), 5 B.C.L.R. (2d) 273 (C.A.). In Scott v. Riehl (1958), 15 D.L.R. (2d) 67 (B.C.S.C.), Craig J. stated regarding an “innocent” breach of trust:
If a person deals with the funds, which are within the meaning of s. 3 [what was then the Mechanics’ Lien Act, 1956, S.B.C. 1956, c. 27] in a manner inconsistent with the trust, he breaches the trust, even though he may do so “innocently”.
74  Similarly, the courts in other jurisdictions have concluded that proof of fault and dishonesty is not required: Andrea Schmidt Construction Ltd. v. Glatt (1979), 25 O.R. (2d) 567. (C.A.); Austin v. Habitat Development Ltd. (1992), 94 D.L.R. (4th) 359 (N.S.C.A.).
 

The Test for an Injunction

The Test For An Injunction
Grieg v Kritikopoulou 2017 ONSC 4594 sets out the Supreme Court of Canada test for the granting of an interlocutory  injunction to restrain certain activity
11 The moving party must meet the following three-part test to success on a motion seeking an interlocutory injunction:

a) Is there a serious question to be tried?;
b) If the injunction is not granted will the moving party suffer irreparable harm which cannot be adequately compensated by damages?; and
c) Which party will suffer the greater harm if the injunction is granted or refused pending a decision on the merits?
12  The three-pronged test for granting an injunction was affirmed by the Supreme Court of Canada in RJR-MacDonald v. Canada (Attorney General)  ( 1995) 3 SCR 199 as follows:
a. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried.
b. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused.
c. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.
13  The final analysis, however, must be driven by what is just and equitable in all the circumstances of the case.
14  The defence agrees that the first step has been met by the plaintiffs.
15  With respect to the second step the court is normally justified in granting an injunction where the plaintiffs are likely to suffer irreparable harm in the absence of injunctive relief. In order to qualify as “irreparable”, the nature of the harm must be such that damages will not suffice.

Litigation Guardian: Lawyers Can Assess Mental Capacity

Litigation Guardian: Lawyers Can Assess Mental Capacity

In Gengenbacher v. Smith, 2016 BCSC 1164, the court examined what is the test that a solicitor must satisfy to determine if the solicitor can represent an individual seeking to be a litigation guardian of an adult under a legal disability and determined that the court will leave the determination of mental capacity to the lawyer and the court will not enquire into the degree of the incapacity.

The Court Stated:

[11]        I will deal first with the application to substitute a litigation guardian, a Mr. Evens, on behalf of Mr. Gengenbacher. Mr. Evens has signed a consent stating that he is Mr. Gengenbachers brother, undertakes to be responsible for the costs of the proceeding, and has no interest in the proceeding adverse to that of Mr. Gengenbacher.

[12]        Counsel for Mr. Gengenbacher has prepared a certificate of fitness, in the terms required by Rule 20-2(8), certifying that Mr. Gengenbacher is a mentally incompetent person, and setting out the bases of that belief. Those bases include meetings and telephone conversations with Mr. Gengenbacher since 2014, and review of medical reports from a psychiatrist, a neurologist and Alberta government employees, all from between 2008 and 2010.

[13]        Counsel for the lawyer points to the age of the medical information on which the certificate is partly based, and is concerned that any order made with respect to appointing a litigation guardian not become either res judicata in any later proceedings between Mr. Gengenbacher and his former lawyer, or influence any findings of fact in any later proceedings. The concern is that the order might be taken as a finding of Mr. Gengenbacher’s capacity that might somehow be applied retrospectively.

[14]        In my view, the Rules with respect to conducting litigation through a litigation guardian clearly leave any assessment of capacity to counsel: the court does not inquire into capacity, nor does the court rule on capacity. It is enough that a lawyer, as an officer of the court, certify that a person is a mentally incompetent person, in the words of Rule 20-2(8).

[15]        If this were a fresh action, no order would be required. Sub-rule (2) provides that no action may be by or against a person under legal disability except by his or her litigation guardian. Person under legal disability is a necessarily broader term than mentally incompetent persona so as to permit infants to engage in litigation while minors. In E.M.E. v. D.A.W., 2003 BCSC 1878 (CanLII), the court held at para. 16 that persons under legal disability for the purposes of Rule 20-2 were infants or mentally incompetent persons, based on a reading of the Rule as a whole. I note that sub-rule (12) contemplates a litigant who attains majority during the litigation, and who is “then under no legal disability of assuming conduct of their litigation on filing an affidavit.

[16]        Sub-rule (10) contemplates court involvement in this question only if a litigant becomes a mentally incompetent person while a party to a proceeding, in which case the court must appoint a litigation guardian if no committee has been appointed or the litigant has not nominated a representative under the Representation Agreement Act, R.S.B.C. 1996, c. 405. E.M.E. v. D.A.W., does not require an inquiry into mental capacity in every case, as in there it was an opposing party seeking appointment of a litigation guardian for a self-represented litigant, with neither a lawyers certificate nor consent of a proposed litigation guardian

Offers to Settle and Double Costs

Offers to Settle and Double Cost Awards

Connor Estate 2017 BCSC 1341 dealt with the issue of whether the plaintiff should be  awarded double costs after the filing of an offer to settle that the plaintiff beat at the trial.

The issue was whether the plaintiff Chambers was a spouse of the deceased even though they never lived together and that he should inherit her entire estate as a spouse on an intestacy.

He had offered her 5 step siblings the sum of $10,000 each plus each party bear their own costs.

At trial he was declared her spouse and was entitled to her entire estate of $2 million. His offer to settle represented %2 of the entire estate.

6      The offer contained the language mandated by subrule 9-1(1)(c)(iii), i.e., that Mr. Chambers was “reserv[ing] the right to bring this offer to the attention of the court for consideration in relation to costs after the court has pronounced judgment on all other issues in this proceeding”.

The Court declined to award double costs and instead awarded costs on scale B.

Law re: Costs

10      Rule 14-1 addresses costs. Subrule 14-1(1)(9) provides that, generally speaking, “costs of a proceeding must be awarded to the successful party unless the court otherwise orders”.

11      Success has been equated to “substantial success”. In Fotheringham v. Fotheringham, 2001 BCSC 1321, the court held that, as a rule of thumb, substantial success occurs when the prevailing party succeeds on 75% of the matters in dispute, considered globally.

12      Offers to settle are not considered in determining substantial success. That is because substantial success is determined by comparing the positions taken by the parties at the trial or the hearing against the end result. The position taken by a party at this later date may be substantially different than that set out in any earlier offer to settle.

13      Another reason why the court initially considers costs without reference to an offer to settle is that implementation of the costs options found in the offer to settle rules depend upon the initial cost order. Rule 9-1 governs offers to settle. Subrules 9-1(5) and (6) provide:

Cost Options

(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;

(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant’s costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.

Considerations of Court

(6) In making an order under sub-rule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or served or on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(c) the relative financial circumstances of the parties;

(d) any other factor the court considers appropriate.

14      In the often cited case of Hartshorne v. Hartshorne, 2011 BCCA 29, the Court of Appeal provided some guidance concerning the cost consequences of offers to settle. At para. 25 the court stated:

An award of double costs is a punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place “to encourage the early settlement of disputes by rewarding the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer” (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice Frankel’s comments in Giles are apposite:

[74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

“[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;

 “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);

“[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;

“[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navega Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

15      The first factor to be considered respecting any double costs application is whether the offer to settle ought reasonably to have been accepted. Here, two philosophically divergent views emerge. One school of thought is that a party should not be penalized for declining an offer that did not provide a genuine incentive to settle. The other is that an offering party should not be required to compromise beyond its own objective assessment of the case in order to obtain the benefit of an offer to settle.

16      From an objective perspective both viewpoints have much to recommend. Why should a party be penalized for not accepting an offer which does not provide an incentive to settle? On the other hand, why should a party be forced to pay more or accept less than a claim is actually worth? How this conflict plays out can sometimes depend on the nature of the claims and dispute.

Analysis and Application

20      There is, however, more to be said in favour of refusing double costs.

21      First one must bear in mind that the reasonableness of any acceptance or rejection of a settlement offer is not to be assessed in light of the actual outcome. Rather, it is to be assessed in light of the circumstances existing between the date of the offer and the ultimate trial or hearing. As stated by the Court of Appeal in Meghji v. British Columbia (Ministry of Transportation and Highways), 2014 BCCA 105at para. 112:

The reasonableness of the offer must be assessed at the time the offer was made and thereafter. The court should look at the circumstances as they stood at the time the offer was made, and since, and should bear in mind information in the hands of the parties at the relevant times. The reasonableness of the acceptance or rejection of the settlement offer is not to be judged in retrospect, in light of the judgment at trial.

22      Second, while consideration of the final outcome is not permitted, the nature of the dispute is nonetheless a factor in assessing the reasonableness of any offer to settle and response to same. Here, the amount of money at stake is a valid consideration; the estate is worth in excess of $2 million and the offer of settlement represented a little more than 2% of that value.

Same Sex Partnership

Same Sex Partnership: The Civil Marriage Act

Hinks v Gallardo 20114 ONCA 494 held that a British same sex partnership was a valid spousal marriage in Ontario and presumably also in British Columbia.

A Canadian and a British citizen entered into a civil partnership under the Civil Partnership Act (UK) which created a parallel regime to marriage that provided same sex couples with the same legal financial and practical benefits and burdens as married spouses in England.

When the parties moved back to Ontario and sought a divorce the court was asked to determine if the civil partnership created spouses as defined by the Divorce act of Canada and both the trial and appeal court held that it did.

The court held that the terms spouses and marriage was consistent with modern approach to statutory interpretation  and that one of the fundamental purposes of the Divorce act was to provide parties with equitable and certain process for resolving economic issues arising our of breakdown of the relationship.

This interpretation was consistent with the values set out in the Canadian Charter of Rights and Freedoms.

The motion judge first considered the very different constitutional and legislative frameworks in Canada and the U.K. regarding marriage. She stated, at paras. 27-30 and 36:

The issue of whether the former common law definition of marriage as “the voluntary union for life of one man and one woman, to the exclusion of all others” was discriminatory against same-sex couples came before the Ontario Court of Appeal in Halpern v. Canada (Attorney General) (2003), 65 O.R. (3d) 161. There, the court expressly held that “separate but equal” partnership legislation that fell short of marriage was contrary to Canada’s public policy, was discriminatory and violated the equality guarantees of our Charter.

The court in Halpern specifically found that same-sex couples were excluded from the fundamental societal institution called marriage, saying:

Based on the foregoing analysis, it is our view that the dignity of persons, in same-sex relationships is violated by the exclusion of same-sex couples from the institution of marriage. Accordingly, we conclude that the common-law definition of marriage as “the voluntary union for life of one man and one woman to the exclusion of all others” violates s. 15(1) of the Charter.

As a result, the court struck down the former definition of marriage and reformulated it as “the voluntary union for life of two persons to the exclusion of all others”. This new definition of marriage has effectively been codified in the Civil Marriage Act, which also codifies in the Preamble the policy statements the courts have enunciated in Halpern and elsewhere.

To the contrary, the United Kingdom has followed a different policy path. There, a civil partnership is the only method by which gay people can change their legal status from single to something different. They are not permitted to marry; instead, the U.K. has developed a parallel but equal system exclusively for the gay community. In the U.K., a civil partnership and a marriage are legally equal. They are considered substantively equal. This was confirmed by the High Court of Justice, Family Division in the U.K. in Wilkinson v. Kitzinger

Re-Opening a Trial: New Evidence

Re-Opening a Trial: New Evidence

Lambert v Peachman 2017 ONSC 4270 outlined the law relating to what is necessary in the form of new evidence to re-open a trial.

Analysis

26      The principles and authority to re-open evidence of a trial are well established and noted by the Supreme Court of Canada in Sagaz Industries Canada Inc., Sagaz Industries Inc. and Joseph Kavana v. 671122 Ont Limited, formerly Design Dynamics Limited [2001] 2 R.C.S. to fall within the trial judge’s discretion but to be used “sparingly and with the greatest care”.

27      The Court is concerned with never ending litigation. The competing tensions are between finality to the hearing process and the need to prevent unduly protracted legal proceedings against the need to ensure that important and relevant evidence is not ignored, since doing so might lead to a substantial injustice (See Justice P. Lauwers at par. 16 in Jackson v. Corp. of the City of Vaughan, 2009 CanLII 717 (ONSC).

Test to Admit New Evidence

28      The test to re-open evidence of a trial to admit new evidence, is a two-prong test, both parts of which must be satisfied by the moving party:

  1. First, could the evidence have been obtained before trial by the exercise of reasonable diligence?
  2. Second, would the evidence, if presented at trial, probably have changed the result?

Availability of Evidence at Trial and Reasonable Diligence

29      The reasonable diligence requirement may be “relaxed in exceptional circumstances where necessary to avoid a miscarriage of justice” (See Degroote v. Canadian Imperial Bank of Commerce, [1999] O.J. No. 2313 (C.A.) at p. 2.). To avoid a miscarriage of justice a “trial judge has the discretion to permit a matter to be reopened and new evidence to be admitted even if the evidence could have been placed before the Court in the first instance” (See 130734 Ontario Inc. v. 1243058 Ontario Inc., [2001] O.J. No. 257).

30      Nordheimer J. noted at p. 3 – 4 in 1307347 Ontario Inc.:

It is also my view that a miscarriage of justice involves more than just a finding that a different result might have occurred. It involves a finding that, absent the reopening of the matter and the reversal of the original determination, a fraud would be perpetrated or the giving of perjured evidence or the deliberate misleading of the court would be countenanced.

31      In Qit Fer et Titane Inc. v. Upper Lakes Shipping Ltd. (1991), 3 O.R. (3D) 165, at p. 168, Gravely J. suggested that fraud was the usual requirement, but it may not be the only basis to find a miscarriage of justice:

Where justice demands it and particularly where fraud is involved or the court may have been deliberately misled, a judge is justified in departing from the diligence requirement in order to prevent a miscarriage of justice.

Sworn Financial Disclosure

Sworn Financial Disclosure

Shinder v Shinder 2017 ONSC 4177  sets out the importance of how sworn financial disclosure in family (and estate) court actions must be honest and complete as it is a “bedrock principle” that the parties are entitled to rely upon.

The Supreme Court of Canada has confirmed that honest, complete financial disclosure is a bedrock principle in family law disputes. In Rick v. Brandsema, 2009 SCC 10, 303 D.L.R. (4th) 193, Abella J. states, at para. 47:
a duty to make full and honest disclosure of all relevant financial information is required to protect the integrity of the result of negotiations undertaken in these uniquely vulnerable circumstances.
The deliberate failure to make such disclosure may render the agreement vulnerable to judicial intervention where the result is a negotiated settlement that is substantially at variance from the objectives of the governing legislation.
30  I adopt the comments of Aitken J. in Buttrum v. Buttrum (2001), 15 R.F.L. (5th) 250, at para. 68 (Ont. S.C.) that the obligation to disclose requires completeness, clarity, and simplicity in disclosure made in sworn Financial Statements:
Complete, honest and on-going financial disclosure is required during the course of a family law case. That is the very purpose of r. 13. [ . . . ] The purpose of financial statements is to ensure disclosure is made quickly and repeatedly as circumstances change, and in a manner that is consistent and easy to follow. [Emphasis added.]
31 Disclosure cannot be selective or misleading. Understanding the assets and debts at marriage and separation is not meant to be a costly game, requiring parties to read the fine print seeking clarification and ferreting out information.
32 Parties are entitled to, and do rely on sworn Financial Statements to accurately set out the assets and interests and values the property of a party as a basis for settling their cases. Accurate and complete Financial Statements are crucially important

The Presumption of Resulting Trust

Rebutting the Presumption of Resulting Trust

The BC Appeal Court in Winstanley v Winstanley 2017 BCCA 265 ordered a new trial on the basis that the trial Judge erred in his determination as to whether the evidence at trial had rebutted the presumption of a resulting trust that arises when a parent transfers an asset for little or no consideration to an adult child. The Court stated very clearly that there is no longer any presumption of advancement from a parent to an adult child as per the decision of Pecore v Pecore 2007 SCC 17.

Analysis

29      I begin my analysis by reviewing Pecore v. Pecore 2007 SCC 17, which is authority for the proposition that there is no longer a presumption of advancement between parents and their adult children. The Court decided that in modern social conditions the reverse is true: there is a presumption of a resulting trust where a parent makes a gratuitous transfer to an adult child, such as placing funds in a jointly-held bank account.

30      The facts in Pecore involved joint accounts held by a father and his adult daughter. The father transferred the majority of his assets to these joint accounts before he died. The terms of the accounts included a right of survivorship upon his death. At trial, the judge held that the presumption of advancement applied and the daughter was entitled to the legal and beneficial ownership of the assets. The question on appeal was whether the presumption of advancement as between a parent and child had continuing relevance under present social conditions. Rothstein J. for the majority held at paras. 4, 5 and 6:

[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 “[t]he real owner of property even though it is in someone else’s name”: Csak v. Aumon (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.

[5] While the focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer, intention is often difficult to ascertain, especially where the transferor is deceased. Common law rules have developed to guide a court’s inquiry. This appeal raises the following issues:

  1. Do the presumptions of resulting trust and advancement continue to apply in modern times?
  2. If so, on what standard will the presumptions be rebutted?
  3. How should courts treat survivorship in the context of a joint account?
  4. What evidence may courts consider in determining the intent of a transferor?

[6] In this case, the trial judge found that the father actually intended a gift and held that his daughter may retain the assets in the accounts. The Court of Appeal dismissed the appeal of the daughter’s ex-husband.

31      Rothstein J. noted that the rebuttable presumption of law “is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption” (at para. 22). The presumptions of advancement and resulting trust apply to gratuitous transfers “where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive” (at para. 23).

32      The effect of the majority’s decision in Pecore is that an adult child  whether independent or dependent  who receives a gratuitous transfer from a parent is now presumed to hold the transferred property on resulting trust for the parent, whereas formerly the parent was presumed to have advanced the property to the child as a gift.

33      Rothstein J. noted that the presumption of resulting trust may be rebutted with sufficient evidence:

[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.

[Emphasis added.]

34      Rothstein J. also considered the interaction between the right of survivorship in a joint account and the presumption of resulting trust at law. He concluded at para. 48:

[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 [1954] 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] 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), 48 D.L.R. (4th) 376 (B.C.S.C.); see also Waters’ Law of Trusts, at p. 406.

. . .

[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.

[Emphasis added.]

35      Despite finding that the trial judge had erred by applying the presumption of advancement, the majority in Pecore affirmed the judge’s disposition because there was strong evidence showing the father intended to gift the daughter the right of survivorship to the joint accounts, thus rebutting the presumption of resulting trust.

36      I now turn to the application of the principles emerging from Pecore to the facts of this case.

37      The correct legal analysis in the present case required the judge to first instruct himself that there is no presumption of advancement as between a parent and an adult child and to apply a presumption of resulting trust in regard to any gratuitous transfers of Jessie’s property to Carl. The burden of proof would then rest on Carl to rebut the presumption with respect to each transfer.

B.C. Case Transferred to Alberta

B.C. Court Case Transferred to Alberta

In subsequent reasons for judgement Cresswell v Cresswell 2017 BCSC 1183 a BC Court ordered a court action transferred to Alberta after finding that the plaintiff did not have standing to bring the action in BC as she was ordinarily resident in Alberta, did not have real or substantial connections to BC and that Alberta was the more appropriate forum for the court action..

The Court:

In reasons for judgment indexed at 2017 BCSC 178, I found that, at the time of her death, Barbara Edith Cresswell was ordinarily resident in Alberta and did not have any real and substantial connections to British Columbia, and that Alberta is the more appropriate forum in which to hear these proceedings. Pursuant to that decision, I received further submissions from the parties about transferring this proceeding to Alberta. These are my reasons concerning that transfer.

The plaintiff says that this Court can impose conditions on a transfer, even when this Court lacks territorial jurisdiction, as a result of ss. 14(2) and 15 of the Court Jurisdiction And Proceedings Transfer Act, S.B.C. 2003, c. 28 [CJPTA]. Those sections state:

14(2) The Supreme Court by order may request a court outside British Columbia to accept a transfer of a proceeding, in which the Supreme Court lacks territorial or subject matter competence if the Supreme Court is satisfied that the receiving court has both territorial and subject matter competence in the proceeding.

. . .

15 (1) In an order requesting a court outside British Columbia to accept a transfer of a proceeding, the Supreme Court must state the reasons for the request.

(2) The order may

(a) be made on application of a party to the proceeding,

(b) impose conditions precedent to the transfer,

(c) contain terms concerning the further conduct of the proceeding, and

(d) provide for the return of the proceeding to the Supreme Court on the occurrence of specified events.

. . .

5      In my view, these sections empower this Court to impose conditions on the parties, not the receiving court. In addition, I am of the view that it would be rather presumptuous and inappropriate of this Court to attempt to impose conditions on the Alberta court’s conduct of this proceeding, particularly when it is that court, not this one, which has jurisdiction over this proceeding.

8      I therefore order that the file be transferred for all further purposes to Alberta and request that the Alberta court accept the transfer. Otherwise, counsel can make further submissions.