Bare Trusts

The Liability and Duties of a Trustee of Bare Trust

Scoretz v Kensam Enterprises Inc 2017 BCSC 1356 was an action for breach of trust brought by the beneficiary of a bare trust  and discusses the liability and duties of a trustee of a bare trust.

The Court found that the trustee was liable in damages for failing to hand over the  shares when directed to do by the beneficiary who suffered damages as a result.

40      In Waters Law of Trust in Canada, 3rd ed. (Toronto: Thomson Carswell), 2005, the learned author makes this statement regarding the nature of a bare trust and the duties of a bare trustee:

The usually accepted meaning of the term “bare,” “naked” or “simple” trust is a trust where the trustee or trustees hold property without any duty to perform except to convey it to the beneficiary or beneficiaries upon demand. It is true, of course, that so long as a trustee holds property on trust he had the duty to account for the property, keeping it secure and unharmed. The trustee cannot divest himself of this duty, and, if that is his sole duty, he must transfer that property to the beneficiary on demand. . . .

(at pp. 33 and 34)

41      In Bronson v. Hewitt, 2010 BCSC 169, Goepel J. (as he then was), made this statement regarding the nature of a bare trust:

In Trident Holdings Ltd. v. Danand Investments Ltd. (1988), 64 O.R. (2d) 65 at 75, the Ontario Court of Appeal described a bare trust and the role of its trustee as follows, quoting from Maurice C. Cullity, “Liability of Beneficiaries-A Rejoinder” (1985-86), 7 E. & T.Q. 35 at 36.:

The distinguishing characteristic of the bare trust is that the trustee has no independent powers, discretions or responsibilities. His only responsibility is to carry out the instructions of his principals  the beneficiaries. If he does not have to accept instructions, if he has any significant independent powers or responsibilities, he is not a bare trustee.

(at para. 636)

42      In Bronson, supra, Goepel J. held that a trustee breached the terms of the trust which had required the trustee to return the trust property on demand when the trustee required the beneficiaries to sign a release and indemnification before releasing proceeds of a share transaction. I find that what was prohibited in Bronson, supra, is prohibited here.

43      As a bare trustee, Kensam was obligated to deliver the trust property upon demand and, as the principal of Kensam, Mr. Sai was required to take whatever steps that were required so that Kensam would make such a delivery to Mr. Scoretz. The failure to deliver the LIM Shares to Mr. Scoretz when they were demanded constitutes a breach of trust. The failure to deliver the Napier Shares to Mr. Scoretz when they were demanded also constitutes a breach of trust.

44      I am also satisfied that Kensam and Mr. Sai have acted other than in accordance with the obligation to act in the interests of Mr. Scoretz to the exclusion of the separate interests of Kensam and Mr. Sai.

45      One of the fundamental duties owed by a bare trustee to a beneficiary was set out by Gow, J. in MacDonald v. Thompson (1988), 26 C.C.E.L. 269 (B.C.S.C.) in the following statement:

A trustee in his dealings with one who has an interest in the fund which the trustee administers is under a duty to that someone of exceptional honesty. The standard is known “fiduciary” and was recently described by our Court of Appeal in Litwin Construction (1973) Ltd. v. Peter Pan et al., [1988] B.C.J. No. 1145 (No. CA006245/6/7 June 28, 1988) at p. 23 as follows:

It arises where the obligation that is undertaken or imposed is the obligation of loyalty or selflessness arising from the fiduciary having entered a relationship where the other party is entitled to expect that the fiduciary will act in the other party’s interests, or in the interests of both parties (where those interests coincide), to the exclusion of the fiduciary’s own separate interests (where those interests are opposed), and where the fiduciary has the power to affect the other party’s interests in a legal or practical sense, giving rise to a position of vulnerability in the other party.

In order to perform properly that fiduciary duty a trustee when considering and dealing with the interest of that someone must rid himself of bias (prejudice) and be scrupulous to act with fairness and impartiality c.f. Boe v. Alexander, (supra), at pp. 113-114

(at paras. 73 and 74)

46      The standard of care and diligence required of a trustee was also set out in Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302 where Dickson J., on behalf of Court stated:

Traditionally, the standard of care and diligence required of a trustee in administering a trust is that of a man of ordinary prudence in managing his own affairs (Learoyd v. Whitely, at p. 733; Underhill’s Law of Trusts and Trustees, 12th ed., art. 49: Restatement of the Law on Trusts, 2nd ed., para. 174) and traditionally the standard has applied equally to professional and non-professional trustees. The standard has been of general application objective though, at times, rigorous.

(at p. 315)

47      A beneficiary is entitled to expect that a trustee will act in his or her best interests to the exclusion of the interests of a trustee: Litwin Construction, supra at p. 95.

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.

Mental Suffering

Claiming Damages for Mental Suffering

Even in estate disputes client’s often wish to claim damages for mental suffering caused by other parties. The law relating to such was discussed in the Ontario case of Guschewski v Gushewski 2017 ONSC 4553

In Prinzo v. Baycrest Centre for Geriatric Care, (2002), 60 OR 474 Weiler J.A. stated:

A review of the case-law and the commentator confirms the existence of the tort of the intentional infliction of mental suffering, the elements of which may be summarized as:

(1) flagrant or outrageous conduct;

(2) calculated to produce harm; and

(3) resulting in a visible and provable illness.

51      There is no allegation from Ms. Guschewski that she is suffering from a “visible and provable illness”. The case is similar, in this respect, to B.L. v. Furman, (2011), in which summary judgment was granted dismissing a claim for damages for intentional infliction of mental suffering based on the absence of a pleading of visible and provable illness.

52      The Supreme Court of Canada established the test for claims for damages for mental suffering in Mustapha v. Culligan of Canada Ltd., (2008) 2 SCR 114. McLachlin C.J., speaking for the Court, stated:

[8] Generally, a plaintiff who suffers personal injury will be found to have suffered damage. Damage for purposes of this inquiry includes psychological injury. The distinction between physical and mental injury is elusive and arguably artificial in the context of tort. As Lord Lloyd said in Page v. Smith, [1996] 1 A.C. 155 (H.L.), at p. 188:

In an age when medical knowledge is expanding fast, and psychiatric knowledge with it, it would not be sensible to commit the law to a distinction between physical and psychiatric injury, which may already seem somewhat artificial, and may soon be altogether outmoded. Nothing will be gained by treating them as different “kinds” of personal injury, so as to require the application of different tests in law. [Emphasis added.]

[9] This said, psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Personal injury at law connotes serious trauma or illness: see Hinz v. Berry, [1970] 2 Q.B. 40 (C.A.), at p. 42; Page v. Smith, at p. 189; Linden and Feldthusen, at pp. 425-27. The law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury. I would not purport to define compensable injury exhaustively, except to say that it must be serious and prolonged and rise above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept. The need to accept such upsets rather than seek redress in tort is what I take the Court of Appeal to be expressing in its quote from Vanek v. Great Atlantic & Pacific Co. of Canada (1999), 1999 CanLII 2863 (ON CA), 48 O.R. (3d) 228 (C.A.): “Life goes on” (para. 60). Quite simply, minor and transient upsets do not constitute personal injury, and hence do not amount to damage. [Emphasis added]

53      The Supreme Court recently revisited the test for mental distress claims in Saadati v. Moorhead, (2017) SCC 28, in which the court resisted an effort to extend the reach of Mustapha v. Culligan by requiring evidence of a recognizable mental illness. Brown J. stated:

This Court has, however, never required claimants to show a recognizable psychiatric illness as a precondition to recovery for mental injury. Nor, in my view, would it be desirable for it to do so now. Just as recovery for physical injury is not, as a matter of law, conditioned upon a claimant adducing expert diagnostic evidence in support, recovery for mental injury does not require proof of a recognizable psychiatric illness. This and other mechanisms by which some courts have historically sought to control recovery for mental injury are, in my respectful view, premised upon dubious perceptions of psychiatry and of mental illness in general, which Canadian tort law should repudiate. Further, the elements of the cause of action of negligence, together with the threshold stated by this Court in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27 (CanLII), [2008] 2 S.C.R. 114, at para. 9, for proving mental injury, furnish a sufficiently robust array of protections against unworthy claims. I therefore conclude that a finding of legally compensable mental injury need not rest, in whole or in part, on the claimant proving a recognized psychiatric illness. It follows that I would allow the appeal and restore the trial judge’s award.

Trustee Removal

9 Legal Principles of Trustee Removal

Two Ontario cases summarize the law relating to the removal of a trustee appointed by a will and would likely be followed as the law in British Columbia.

In Chambers Estate v. Chambers 2013 ONCA 511, the court found that a testator’s wishes as to who should act as trustee should only be interfered with in rare circumstances.

In Radford v. Wilkins, 2008 CanLii 45548 (ONSC), Quinn J. set out the legal principles that apply in an application to remove an estate trustee.

9 Principles of Trustee Removal

  1. The Superior Court of Justice has inherent jurisdiction to remove trustees
  2. An application to remove an executor may be made by any person interested in the estate of the deceased
  3. The choice of estate trustee is not to be lightly interfered with
  4. There must be a clear necessity warranting the removal
  5. The removal of an estate trustee should only occur on the clearest of evidence and there is no other course to follow
  6. In deciding whether or not to remove an estate trustee, the court’s main guide should be the welfare of the beneficiaries
  7. The applicant must show that the non-removal of the trustee will likely prevent the trust from being property executed
  8. Removal is not intended to punish past misconduct
  9. Friction alone is not a reason for removal

The Presumption of Advancement In BC May Be Dead

The Presumption of Advancement In BC May Be Dead

HCF v DTF 2017 BCSC 1226, a divorce case, traces the historical roots of the presumption of advancement and finds that it is an outmoded and “dead” legal principle in today’s BC society. 

Times have changed because women are no longer economically vulnerable and same sex marriages mean that no one would ever really know who would get the benefit of the presumption.  This is because the presumption applied for transfers from husbands to wives but not from wives to husbands (in which case it was held by the husband  on resulting trust).

The decision would apply to estate cases as well as matrimonial cases.

The Court Stated: What is the Legal Nature of the Presumption of Advancement?

[109]     The presumption of advancement is simply a rebuttable common law evidentiary presumption; see Pecore v. Pecore, 2007 SCC 17 at paras. 24-25 and 27; D. Waters, M. Gill & L. Smith, Waters Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012) at 421, [Waters]. The presumption of advancement is neither, for example, a cause of action nor a remedy.

The Ambit of the Presumption of Advancement

[110]     It is necessary at the outset to understand that the presumption of advancement only pertains to gifts made by a husband to a wife and not to gratuitous transfers made by a wife to a husband. The authors of Waters at 413 explain that the origins of the presumption between husband and wife is to be found in the eighteenth century, and, prior to World War l in particular, it reflected very much the course of affairs in the average middle-class or aristocratic family. Waters further observes that the transfer of property from a husband to a wife is regarded as an advance of what might be expected on the transferor husbands death; see Waters at 412.

[111]     Gifts made from a wife to a husband, however, are governed by the presumption of resulting trust and the onus would lie on a husband to establish that a gratuitous transfer made to him was intended as a gift. In this case these competing presumptions have direct relevance. It is to be remembered that when the parties bought the Connaught Property Mr. F. and Mrs. F. contributed $50,000 and $45,000 respectively to that purchase. In the absence of evidence to the contrary Mr. F. contribution is presumed to have been gifted to Mrs. F. while Mrs. F.s contribution is presumed to remain her money.

The Basis for the Presumption

[112]     The historical and jurisprudential underpinnings of the presumption are not entirely clear. Nevertheless it appears that the presumption, as between husband and wife, does not operate, as one might expect, based on an assumption of love or respect as between spouses or on the view that what is given by one spouse to another ought presumptively to be viewed as a gift. Instead, it arises out of a now anachronistic view of the economic competency of women. Thus, nearly fifty years ago, in Pettitt v. Pettitt, [1969] 2 All ER 385, Lord Reid, at 388-389 said:

I do not know how this presumption first arose, but it would seem that the judges who first gave effect to it must have thought either that husbands so commonly intended to make gifts in the circumstances in which the presumption arises that it was proper to assume this when there was no evidence, or that wives economic dependence on their husbands made it necessary as a matter of public policy to give them this advantage. I can see no other reasonable basis for the presumption.

[113]     In Pecore, Rothstein J., at para. 21, observes that advancement is a gift during the transferors lifetime to a transferee who is financially dependent on the transferor  In dealing with the application of the presumption as between parents and their adult children, Rothstein J. said:

37        Some commentators and courts have argued that while an adult, independent child is no longer financially dependent, the presumption of advancement should apply on the basis of parental affection for their children: see e.g. Madsen Estate, at para. 21; Dagle; Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47 (Ont. Ct. (Gen. Div.)); and Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204 (Ont. S.C.J.). I do not agree that affection is a basis upon which to apply the presumption of advancement to the transfer. Indeed, the factor of affection applies in other relationships as well, such as between siblings, yet the presumption of advancement would not apply in those circumstances. However, I see no reason why courts cannot consider evidence relating to the quality of the relationship between the transferor and transferee in order to determine whether the presumption of a resulting trust has been rebutted.

[114]     Thus, it is a theory or premise of gendered economic dependence that underlies the evidential rule.

The Status of the Presumption

[115]     For nearly fifty years the presumption of advancement, as between husbands and wives, has been consistently questioned and steadily eroded.

[116]     In Pettitt, Lord Reid, at 389 observed that the social and economic conditions for women were changing, transforming a wifes traditional status as an economic dependent to an independent economic agent. To the extent that economic dependence made it necessary, as a matter of public policy, to give wives the advantage of the presumption of advancement, Lord Diplock wrote that the presumption belonged to a different social era; see 414.

[117]     Waters, at 414, notes that the presumption in Canada has largely disappeared and, at 413, observed that even the word advancemen is archaic.

[118]     In Rathwell v. Rathwell, [1978] 2 S.C.R. 436, Chief Justice Dickson, at para. 31 said: in present social conditions the old presumption of advancement has ceased to embody any credible inference of intention. Those comments, in this province, had been referred to, for example, in Hofmann v. Hofmann (1979), 12 B.C.L.R. 319 (C.A.) at para. 15. In Alexsich v. Konradson (1995), 5 B.C.L.R. (3d) 240 (C.A.), Prowse J.A., said, in obiter, at para. 24, that though the presumption of advancement still existed it no longer has the significance it once enjoyed.

[119]     Recently in Zhu v. Li, 2009 BCCA 128, Neilson J.A. said:

[51]      First, there is considerable support for the view that the presumption of advancement has lost its force in the contemporary matrimonial context.  The editors of Waters Law of Trusts describe its origins in the 18th century, rooted in the assumption that when a husband or father transfers an asset to his wife or child, his intention is to make a gift due to the donees financial dependence on him and the reasonable expectation that the donee would share in his estate.  They observe that this premise has lost its persuasiveness in contemporary society, to the point that the presumption of advancement has been eliminated by express legislation in the majority of Canadian provinces and territories.  While it has not been abolished in British Columbia, they say that legislation dealing with the division of matrimonial property has €œreduced the presumption to no significance: [citations omitted.]

Zhu was referred to at para. 36 of F. (V.J.).

[120]     In addition, as early as 1975, provincial legislators began to recognize the disconnect between the presumption of advancement and the reality of modern family dynamics. Currently, s. 36 of Albertas Matrimonial Property Act, R.S.A. 2000 c. M-8; s. 50 of Saskatchewans Family Property Act, S.S. 1997, c. F-6.3; and s. 14 of Ontarios Family Law Act, R.S.O. 1990, c. F.3, have eliminated or abolished the presumption of advancement within their respective property division regimes. That said, each statute provides that a property placed in the names of both spouses as joint owners is proof, in the absence of evidence to the contrary, that joint ownership is intended; see also F. (V.J.) at paras.12-14.

Further Difficulties with the Presumption of Advancement

[121]     The relevance and usefulness of the presumption has been further eroded by ongoing changes in the nature of the unions between individuals. I have said that the presumption only applies to gifts from husbands to wives and not from wives to husbands. In Kerr. v. Baranow, 2011 SCC 10, Cromwell J. said:

20        The presumption of resulting trust, however, is neither universal nor irrebuttable. So, for example, in the case of transfers between persons in certain relationships (such as from a parent to a minor child), a presumption of advancement — that is, a presumption that the grantor intended to make a gift — rather than a presumption of resulting trust applies: see Pecore, at paras. 27-41. The presumption of advancement traditionally applied to grants from husband to wife, but the presumption of resulting trust traditionally applied to grants from wife to husband. …

See also Waters at 413; Donnelly v. Weekley, 2017 BCSC 529 at para. 145.

[122]     Thus, the often expressed view that the presumption of advancement operates as between spouses or that it relates to  spousal gifts is both incorrect and misleading. So too is the use of the expression  donor spouse. Each of these expressions is incorrect because the only potential donor spouse is a husband and a spousal gift can only be made to a wife. These statements are misleading because discussions about fairness and consistency in relation to spousal gifts take on a different complexion when it is recognized that the presumption only operates in one direction.

[123]     In the present case how the presumption actually operates is important because any recognition of its limited scope is wholly absent from each of G. (P.), Remmem and Wells. These three cases, in turn, were the decisions that identified and addressed the conflict in the case law that was then brought to a head in F. (V.J.). In F. (V.J.) itself, however, the court was clearly aware that the presumption operated in this limited manner and it referred to this fact, albeit in passing; see paras. 50 and 77.

[124]     It is also worth recalling that in Pecore, at para. 40, the court narrowed the doctrine, as it applied to the parent-child relationship, so that it now only applies to transfers from parents to minor children.

[125]     These are then only two circumstances where the common law in Canada, in some provinces, recognizes the ongoing existence of the doctrine. The legal parallels, in a contemporary society, between gifts made to wives and gifts made to minor children, are jarring and further highlight the outdated foundation of the presumption as it applies to a gift made by a husband to his wife.

[126]     The application of the presumption is further confounded by additional considerations. Though there is some inconsistency in the authorities, the better view appears to be that the presumption has no relevance to common law relationships. In Kerr, at para. 20, Cromwell J. said  whether the application of the presumption of advancement applies to unmarried couples may be more controversial.

[127]     In Fumich v. Babic, 2005 BCCA 552, citing McDonald v. Eckert et al, 2004 BCSC 323 at para. 33 the court said:

[27]       the presumption has not been broadly recognized where the relationship in question is a common law relationship and it has been held that it does not arise in respect of a relationship of that kind. [citations omitted.]

[128]     In Ng v. Ng, 2012 BCCA 195, a parent/child case, the court said:

[29]      The law is clear that the presumption can also be displaced by the operation of a presumption of advancement (which applies only between parents and children or married spouses) or where an agreement exists under which one party would be unjustly enriched if the titleholder were held to be the beneficial owner. [citations omitted.]

See also Remmem at para. 50 and F. (V.J.) at paras. 34 and 77.

[129]     If one considers both that the presumption operates only from a husband to his wife and that the presumption is grounded on the theory that a wife is economically dependent on her husband extending the presumption to common law relationships would make little sense. It would cause a dated and now largely inaccurate view of marital relationships to be superimposed on a contemporary form of marital union; see Waters at 414.

[130]     These same considerations extend to both same-sex marriages and same-sex common law relationships. Under the Definition of Spouse Amendment Act, S.B.C. 1999, c. 29 and the Definition of Spouse Amendment Act, 2000, the definition of spouse was expanded to include persons in a marriage-like relationship, including marriage-like relationships between persons of the same sex. In 2003 the British Columbia Court of Appeal in Barbeau v. British Columbia (Attorney General), 2003 BCCA 251, ruled that the common law bar to same-sex marriage contravenes s. 15 of the Charter. Two years later the federal government enacted the Civil Marriage Act, S.C. 2005, c. 33, which allowed same-sex partners to marry across the country.

[131]     The FLA was clearly intended to extend the division of property regime to same-sex relationships. During the debates concerning the FLA one speaker said, I think most Canadians, regardless of whether they want the benefit of marriage or a common law relationship or a gay or lesbian relationship or whatever kind of relationship they want, expect that at the end of the day, if that relationship fails, there will be some fundamental fairness; see B.C., Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 4th Sess., No. 2 (17 November 2011) at 1015.

[132]     The operation of the presumption poses pragmatic and conceptual difficulties in the same-sex context. As a practical matter, if the presumption only arises when property moves from husband to wife, when would it arise between spouses of the same sex? On a conceptual level, if the presumption was historically designed to ameliorate a wife’s legal and socially engineered economic dependence on her husband, does such a relationship exist between two men or two women?

[133]     If, as it appears, the presumption of advancement does not function between same-sex partners then, contrary to legislative intent, same-sex couples would be treated differently than traditional couples for the purposes of property division under the FLA.

[134]     These defining attributes of and limitations on the presumption of advancement have important consequences for whether the presumption has any ongoing existence under the FLA.

[135]     One final reality is relevant. Today many people enter two or more marriages throughout the course of their lives. The excluded property regime in the FLA assists parties to maintain some financial continuity as they move between marriages or common law relationships.

[136]     This effect is not incidental. During the second reading of Bill 16, one speaker observed: the old joke is that a second marriage is the triumph of hope over experience, but many seem to be prepared to do that. As you divide assets more and more, the complications that arise from that and who brought what and the age at which you enter into those relationships become incredibly complex; see B.C., Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 4th Sess., No. 2 (17 November 2011) at 1010. Read in the context of the debate as a whole, one of the intended effects of the excluded property regime was to bring some financial certainty to persons who enter multiple marriages over the course of their lifetime.

[137]     As Madam Justice Fenlon, as she then was, pointed out in G. (P.) the presumption of advancement creates uncertainty in the excluded property regime. This reality was acknowledged in F. (V.J.) at para. 33. This uncertainty disproportionately impacts people who enter multiple marriages throughout their lifetime, working against the legislative objective.