Court Finds Gift Over Resulting Trust

Court Finds Gift Over Resulting Trust | Disinherited Vancouver

Gully v Gully 2018 BCSC 1590 involved in a case where a mother transferred a one half interest in her home in 2015 to her son as joint tenant on title, on the basis of estate planning advice that she received. Her intention was to avoid the payment of inheritance tax on her death, but she did not advise her son that he had been added as a joint tenant to the property.

The son subsequently became indebted in the amount of $800,000 and a judgment was filed against his interest in the said property.

The mother subsequently commenced a court action alleging that the son held his joint tenant interest in the property as a resulting trust for the mother, and alleged that she did not intend to gift the property to her son and that her son maintained no beneficial interest in the property. She argued that accordingly the judgment debtor could not register its judgment against the property.

The judgment creditor challenged the presumption of resulting trust and the court found that the mother did in fact intend to gift the property to her son, particularly by reason that at the same time that she executed the transfer, she signed a declaration stating “ I declare that I contemplate naming my son and others as joint owners of some of my assets, or designated beneficiary of my RRSP, insurance and other investments, it being my intention that upon my death, such to belong to the named beneficiary, at law and in equity, and that such are not to be shared or allocated to other persons”

The mother executed a new will one month after the judgment was registered against the property, stating that she wished to disinherit her son because he had many personal debts.

The court referred to Fuller v Harper 2010 BCCA 421 that discussed how evidence of a transferor’s intention should be considered, and followed other decisions that held that evidence by a party to litigation may be admissible against that party for a limited purpose if it is found to be relevant to the issue of the transferor’s intention at the time of the transfer.

The court followed a more liberal stance on the admissibility of post-transfer conduct and cautioned that the trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect the change in intention. The assessment of the reliability of post-transfer conduct admitted into evidence will include an assessment of the reasonableness of any inferences that are sought to be drawn from that conduct, including the inherent probability or in probability of competing explanations as to the transferor’s intent. In short the court must consider if the transferor had any rational purpose for the transfer other than a gift.

The court referred to sections 23 and 29 of the Land Title act to establish the proposition that an unrelated third party is not affected by unregistered changes, and is entitled to rely on the certificate of indefeasible title.

Section 23(2) of the Land Title Act states:

An indefeasible title, as long as it remains in force and on counsel, 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 indefeasible he entitled to an estate in fee simple to the land described in the indefeasible title, subject to the following—

Section 29(2) of the Land Title act states:

2) except in the case of fraud in which he or she has participated, a person contracting are dealing with are taking are proposing to take from a registered owner

a) a transfer of land, or

b) a charge on the land, or transfer assignment or sub charge of the charge, is not, despite the rule of law or equity to the contrary, affected by a notice, express and implied or constructive trust, of an unregistered interest affecting the lander charge other than—

The court conclusively found that the mother did in fact intend to gift the property to her son, and even if the court accepted that she did not intend to gift the property to her son at the time she registered her son’s interests, the argument may have some bearing on a dispute between the family members, but by virtue of the Land Title act and has no bearing on the interests of third parties such as the judgment creditor.

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