Trevor Todd and Jackson Todd have over 65 years of combined experience in handling estate litigation issues such as resulting trusts, undue influence and gifts.
Peterson v Emery 2026 BCSC 1467 contains a succinct summary of the law relating to resulting trusts, undue influence and gratuitous transfers of property.
In Sandu v. Sandu, 2023 BCSC 323 [Sandhu], Justice Kent provided a helpful overview of the legal principles applicable to the gratuitous transfer of property, the presumption of resulting trust and undue influence.
The Court in that case said:
[47] It is well settled that equity presumes bargains over gifts: Nishi v. Rascal Trucking Ltd., 2013 SCC 33 at para. 29. Accordingly, where property is transferred from one party to another without consideration, a legal presumption of resulting trust applies: Nishi at para. 29.
[48] The presumption of advancement rebuts the presumption of resulting trust, but the case law is clear that the presumption of advancement does not apply when a parent transfers property to an adult, independent child: Campbell Estate (Re), 2022 BCSC 2184 at para. 169; Pecore v. Pecore, 2007 SCC 17 [Pecor] at paras. 36–37.
[49] If the presumption of advancement does not apply, the onus is on the transferee to rebut the presumption of resulting trust by demonstrating that a gift was intended: Pecore at para. 24.
[50] The doctrine of resulting trust somewhat conflicts with s. 23(2) of the Land Title Act, R.S.B.C. 1996, c. 250, which provides that
[a]n indefeasible title, as long as it remains in force and uncancelled, is conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title. . .
[51] Nevertheless, our Court of Appeal has accepted that the statutory presumption of indefeasibility can be rebutted in several ways, including by the operation of a resulting trust: Suen v. Suen, 2013 BCCA 313 at para. 34.
[52] The presumption of indefeasibility is also capable of being rebutted if the registered owner took their interest by the exercise of undue influence: Hamilton Estate v. Jacinto, 2011 BCSC 52 at para. 57; Kane v. Hanslo, 2017 BCSC 2393 at para. 42.
[53] In any event, the presence of actual or presumed undue influence qualifies the assessment of whether the transferor had donative intent for the purposes of determining whether a resulting trust is rebutted: Pinsonneault at para. 178. There can be no gift where the transfer was made under undue influence: Bostrom v. Bigford, 2019 BCSC 79 at para. 99.
[54] The doctrine of undue influence was developed to prevent victimization: Allcard v. Skinner (1887), 36 Ch. D. 145, cited with approval in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 at 368, 81 D.L.R. (4th) 211. Equity renders a transaction facilitated through undue influence voidable: Geffen at 368; John E.S. Poyser, Capacity and Undue Influence (Toronto: Thomson Reuters, 2014) at 471.
[55] There are two branches of inter vivos undue influence:
- intentional or actual undue influence; and
- unintentional or presumed undue influence.
See Allcard at 181; Ann Soden, Advising the Older Client (LexisNexisCanada: 2005) at 335; Poyser at 485–86.
[56] The first branch, or actual undue influence, is characterized by the influencer’s conduct, which might include:
- “overt and violent threats (give me the house or I’ll beat you…)”: Soden at 336;
- “subtle forms of persuasion (give me the house or I don’t know if I’ll be able to look after you anymore…)”: Soden at 336;
- persistent requests for the property ultimately disposed of: Sandberg v. Sandberg Estate, [1986] W.D.F.L. 1935, 1986 CarswellSask 383 at para. 17 (Q.B.), aff’d 10 A.C.W.S. (3d) 182, 1988 CarswellSask 49 (C.A.); or
- exploitation of the donor’s desire to keep the family peace: Stel-Van Homes Ltd. v. Fortini, 16 B.L.R. (3d) 103, 2001 CanLII 28376 at paras. 145–46, 160 (Ont. S.C.).
[57] It is unnecessary for undue influence to be malicious: Halliday v. Tesdale, 2019 BCSC 554 at para. 215. The second branch of inter vivos undue influence recognizes unintentional undue influence, which is to be presumed if:
- there is a “potential for domination” given the nature of the relationship between the parties (this includes solicitor/client, parent/child, and guardian/ward relationships): Geffenat 378; and
- the defendant unduly benefited or the plaintiff was unduly disadvantaged, but only if the transaction is commercial: Geffen at 378.
[58] In gift-giving cases, therefore, a relationship with potential for domination is sufficient to trigger the presumption of undue influence: Geffen at 378.
[59] If the plaintiff establishes circumstances that trigger the presumption of undue influence, the defendant has the onus of rebutting it: Geffen at 379. To rebut the presumption, the defendant must show that the plaintiff entered into the transaction with “full, free and informed thought”: Geffen at 379, citing Zamet v. Hyman, [1961] 3 All E.R. 933 at 938.
[60] The following factors—cited from Cowper-Smith v. Morgan, 2016 BCCA 200 at para. 50, rev’d 2017 SCC 61 on other grounds—are often considered to determine whether the plaintiff acted of their own “full, free and informed thought”:
- the lack of actual influence or opportunity to influence the donor;
- the receipt of or opportunity to obtain independent legal advice;
iii. the donor’s ability to resist any such influence; and
- the donor’s knowledge and appreciation about what she was doing.
[61] The receipt of independent legal advice may be a critical factor. Where the donor is dependent upon the trustworthy guidance and advice of another person who stands to benefit as a result of the gift, it will generally be necessary that they receive independent and informed advice before making the gift: Woods v. Woods, 2022 BCSC 2269 at para. 66.
[62] Undue influence is a particular concern in the context of intergenerational relationships involving care. Courts have “reluctantly” set aside transfers of property as a result of presumed undue influence where a lawyer has failed to adequately explain the transaction to the donor, or no independent legal advice was sought, even when the donee has spent “considerable time and energy” caring for the aging donor: see Gammon v. Steeves, 83 N.B.R. (2d) 397, [1987] N.B.J. No. 1046 (C.A.); Ogilvie.
[63] The mere presence of independent legal advice is insufficient to rebut the presumption of undue influence: Inche Noriah v. Shaik‐Allie Bin Omar, [1928] All E.R.189 (P.C.), cited in Deidre J. Herbert, “Undue Influence — ‘Please’, ‘Unless’ or Something Else?” (Paper 8.1 delivered at the Canadian Elder Law Conference, November 2019).
[64] The practitioner will generally need to give “‘informed advice’ on the merits of the transaction”: Cowper-Smith at para. 53. The adequacy of the advice is measured against two branches, which are, as described in Cowper-Smith at para. 52:
(i) advice as to understanding and voluntariness (attendance on execution); and (ii) advice as to the merits of a transaction (the wisdom of entering into the transaction). The first branch of the test requires that the independent advisor is satisfied the donor understands the transaction and enters into it freely and voluntarily. The second branch of the test requires something more than the independent advisor being satisfied that the donor understands the effect of the transaction and wishes to make the gift; it also requires that the independent advisor is satisfied that “the gift is one that is right and proper in all the circumstances of the case, and if he cannot so satisfy himself he should advise his client not to proceed.”
[Citations omitted; emphasis added.]
[65] The following factors— adopted in Coish v. Walsh, 2001 NFCA 41 at para. 23, cited in Cowper-Smith at para. 51—are relevant to determining the character of the legal advice given to the donor:
- Whether the party benefiting from the transaction is also present at the time the advice is given and/or at the time the documents are executed;
- Whether, though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;
- In a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact and discussed the financial implications with the grantor;
- Whether the lawyer enquired as to whether the donor discussed the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place; and
- Whether the solicitor discussed other options whereby the objective might be achieved with less risk to the donor.
[66] Although the case law provides some guidance on how lawyers should deal with clients in a relationship of potential domination, various legal publications also contain advice and/or checklists on providing adequate independent legal advice in such circumstances: see e.g. Ted Tjaden, The Law of Independent Legal Advice, 3rd ed. (Toronto: Thomson Reuters, 2021) at 751.
[67] The British Columbia Law Institute published a comprehensive guide on detecting the presence of undue influence before proceeding with the creation of a will: Recommended Practices for Wills Practitioners Relating to Potential Undue Influence: A Guide (Vancouver: BCLI, 2011) [the Guide]. The Guide also applies to inter vivos transfers that could be tainted by undue influence: Stanley Rule, “Screening for Capacity and Undue Influence” (Paper 4.1 delivered at the Canadian Elder Law Conference, November 2017) at 4.1.6.
[68] The Guide warns practitioners to be on the lookout for undue influence. It advises, at 13, that victims of undue influence are often elderly:
because factors that are associated with aging such as cognitive decline, physical illness, disabilities such as impaired vision and hearing, financial security, and major changes in life circumstances may make the victim more susceptible to being influenced.
[69] Tjaden, at 765, similarly advises practitioners to inquire about and to consider the following to ensure there is no undue influence or duress:
the client’s age and level of sophistication and experience, the nature of the transaction, the motivations of the client and others involved in the transaction, and the relative bargaining strength of all parties.
[70] The Guide goes on to list potential “red flags” that practitioners might look out for, including when the donee is a caregiver, or a member of the donor’s family (other than a spouse) who benefits disproportionately: at 23.
[71] It suggests a protocol for screening and preventing undue influence:
- The donor must be interviewed alone, unless someone else is necessary, like an interpreter: at 29.
- If red flags are present, the practitioner should ask open-ended questions to determine why the donor wants to proceed with certain actions: at 31.
- If the answers to these questions continue to raise concerns, the practitioner should explore whether the donor is in a special relationship or one marked by domination or dependency: at 32–33.
- If necessary and other warnings signs are present, the practitioner should explore whether the donor is a victim of abuse: at 36.
- And, if possible, the practitioner should obtain relevant information from third parties with the donor’s consent. These parties should neither be related to the donor nor beneficiaries and may include physicians, accountants, etc.: at 39.
[72] Throughout the process, the practitioner is advised to make and retain appropriate records whenever red flags are present: the Guide at 42.
[73] The practitioner must decline to draft the will or transactional paperwork if their index of suspicion remains high after reasonable investigation: the Guide at 43.
[74] In my opinion, these are all common sense suggestions that properly inform the determination of the adequacy of any independent legal consultation or advice in cases such as the present one.
[39] This is a comprehensive and useful summary of the principles applicable in this case.
[40] In addition, the Court notes the pertinent principles set out in Doucette v. McInnes, 2009 BCCA 393:
[53] In Pecore and its companion case, Madsen Estate v. Saylor, 2007 SCC 18, [2007] 1 S.C.R. 838, the Supreme Court of Canada made significant changes in the law with respect to gratuitous transfers from parent to adult child. Until Pecore, where a parent transferred money into a joint account or investment with an adult child, the presumption of advancement applied on the death of the parent. After Pecore the presumption of advancement remains in the case of minor children but with respect to adult children the rule is now that a presumption of a resulting trust in favour of the parent must apply unless it can be overcome on a balance of probabilities by evidence that the parent intended the transfer as a gift to the adult child.
[54] The rationale for the change in the law was explained by Rothstein J. writing for the Court:
[36] … First, given that a principal justification for the presumption of advancement is parental obligation to support their independent children, it seems to me that the presumption should not apply in respect of independent adult children. As Heeney J. noted in McLear, at para. 36, parental support obligations under provincial and federal statutes normally end when the child is no longer considered by law to be a minor: see e.g. Family Law Act, s. 31. Indeed, not only do child support obligations end when a child is no longer dependent, but often the reverse is true: an obligation may be imposed on independent adult children to support their parents in accordance with need and ability to pay: see e.g. Family Law Act, s. 32. Second, I agree with Heeney J. that it is common nowadays for ageing parents to transfer their assets into joint accounts with their adult children in order to have that child assist them in managing their financial affairs. There should therefore be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs. [Emphasis added.]
[55] Rothstein J. went on in his reasons to discuss the case of a transferor who gratuitously places his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death at which time the transferee alone will take the balance through survivorship. Rothstein J. rejected the conclusion of some courts that such a gift is testamentary in nature, preferring the view that the gift of survivorship is a complete and perfect gift inter vivos from the moment the joint account is opened even though the transferor retains exclusive control over the account during his or her lifetime.
[41] Given the jurisprudence in Pecore v. Pecore, 2007 SCC 17, as set out above, the rule with respect to adult children and gratuitous gifts from a parent is that a presumption of a resulting trust in favour of the parent must apply unless it can be overcome on a balance of probabilities by evidence that the parent intended the transfer as a gift to the adult child.
[42] Whether a transfer is gratuitous is a question of fact to be determined in the circumstances of a given case: Fleming v. Kwakseestahla, 2010 BCSC 1006 at para. 19; Bajwa v. Pannu, 2007 BCSC 260. It is not enough for a transferee to show that the gift was complete and perfected in the sense that the transferee is fully vested with title. She must show the gift was intended. A transfer stated to be made for $1 and natural love and affection will not alone be determinative: Mong Alter Ego Trust No. 1 v. Yip, 2022 BCSC 1327 at para. 79; Pavlovich v. Danilovic, 2019 BCSC 153 at para. 42, aff’d 2020 BCCA 239.