Donative Intent and Gifts

Hsu v Hsu 2023 BCSC 683 discussed the law relating to donative intent in determining if a transfer of land for no consideration was a gift or a resulting trust.

The court found that it was an inter vivos gift.

In order for there to be an inter vivos gift, the donor must have intended to make a gift. The intention of the donor at the time of the transfer is the governing consideration: McKendry v. McKendry, 2017 BCCA 48 at para. 31. And see Bakken Estate v. Bakken, 2014 BCSC 1540 at paras. 74-75.

Where a transfer of land is gratuitous, the presumption of resulting trust may displace the presumption of indefeasible title, see Fuller v. Harper, 2010 BCCA 421 at para. 43. The operation of that doctrine is described by Justice Smith, for the Court:

[44] Pecore is the leading decision on the application of the presumption of resulting trust in circumstances of a gratuitous transfer. The presumption is “a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption” (Pecore at para. 22). It arises when “title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner: Waters’ Law of Trusts in Canada (3d ed. 2005), at p. 362” (Pecore at para. 20).

[45] Mr. Justice Rothstein, writing for the Court, explained how the burden of proof is affected by the presumption of resulting trust:

[24] [W]here a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E.E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.

Therefore, the onus is on the transferee to lead evidence of “the transferor’s contrary intention on the balance of probabilities” in order to rebut the presumption (Pecore at para. 43).

Rothstein J. also explained the methodology to be employed when the presumption of resulting trust is engaged:
… The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. …

[55] Where a gratuitous transfer is being challenged, the trial judge must begin his or her inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted….

[47] The effect of the presumption only becomes evident after all the evidence, both direct and circumstantial, on the surrounding circumstances in which the transfer was made, has been weighed. Only if the trial judge is unable to reach a conclusion about the transferor’s actual intention at the time of the transfer, will the presumption be applied to tip the scales in favour of the transferor or his estate: Sopinka, Lederman & Bryant, The Law of Evidence in Canada, 3d ed. (Markham, ON: LexisNexis Canada, 2009) at page 159, § 4.60.
In Pecore v. Pecore, 2007 SCC 17 at paras. 45-47, Justice Rothstein noted that the relevant time with respect to the question of the donor’s intent is at the time of the transfer. Evidence of subsequent conduct is admissible provided that it goes to the issue of the donative intent at the time of transfer.

Neither the registration nor the deed of gift is dispositive of the issue as discussed in Kalanj v. Kalanj Estate, 2022 BCSC 427:

[44] The defendants rely on s. 23(2) of the Land Title Act, R.S.B.C. 1996, c.250 [LTA] which provides that an uncancelled indefeasible title 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”, absent certain exceptions which have no application here.

[45] Justice Savage (then of this Court) in Fleming v. Kwakseestahla, 2010 BCSC 1006 at para. 22 [Fleming], considered whether s. 23(2) of the LTA negates the presumption of a resulting trust in BC when applied to land. Justice Savage determined that the operation of s. 23(2) of the LTA does not oust the operation of other principles of law and equity, outside circumstances involving the acquisition of title by a bona fide purchaser for value: Fleming at para. 24. Ultimately, Savage J. concluded that, despite the provisions of the LTA, where there is a transfer without consideration, there is a presumption of a resulting trust: Fleming at para. 26.

[46] Similarly, Groves J. noted in Modonese at para. 139, that Fuller (at para. 43) appears to support the view that the presumption of a resulting trust could be applied to a gratuitous transfer of real property. He found that, because the transfer of the deceased’s property into joint tenancy was gratuitous, the presumption of resulting trust discharged the statutory presumption: Modonese at para. 142. These authorities support the conclusion that the statutory presumption in the LTA does not displace the equitable presumption of a resulting trust, as does Suen v. Suen, 2013 BCCA 313 at para. 34.

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