Dhaliwal v Ollek 2012 BCCA 86 discusses rebutting of the presumption of a resulting trust, and upholds that the recipient done bears the onus of proof, on the balance of probabilities, to rebut the presumption of a trust and to attempt to prove a gift.
Madam Justice Fenlon’s decision in Demir v. Peyman, 2009 BCSC 445, 68 R.F.L. (6th) 319, sets out a useful statement of the legal principles governing the ownership of property. The case arose from the breakdown of the marriage between James Peyman and Seylan Demir. The mother of Mr. Peyman, Elizabeth Peyman, had contributed a large sum of money to Mr. Peyman and Ms. Demir for the purchase of a residential property. Ms. Demir viewed her mother-in-law’s contribution as a gift, but Mrs. Peyman and her son James testified that the mother’s money had been advanced to enable the young couple to purchase a home containing a guest suite to house Mrs. Peyman.
[6] If Mrs. Peyman’s contribution was not a gift, then she would own about 80% of the property and the married couple would own about 20% based on their respective contributions to the purchase price. In the course of her reasons, Fenlon J. said:
[9] I turn first to a preliminary matter, which is the burden of proof in these proceedings. James Peyman and Seylan Demir are registered as the owners of the property and, under the Land We Act, R.S.B.C. 1996, c. 250, s. 23(2), such title is conclusive at law and in equity 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 title. In short, the law begins with the presumption that if your name is on the title in the Land Title Office, you own that property. That statutory presumption is, however, subject to equitable principles, one of which is the enforcement of an agreement between the parties in order to prevent unjust enrichment if the face of the title is upheld.
[10] In a case such as this where property is purchased with funds provided by a third party without consideration the law presumes that the person receiving the funds holds the property in trust. This is known as a resulting trust. As stated by the Supreme Court of Canada in Pecore v. Pecore, [2007] 1 S.C.R. 795, the presumption of a resulting trust is rebuttable. The effect of the presumption, though, is to alter the general rule that in a civil case the person who wants to challenge the names on title in the Land Title Office bears the legal burden of proof.
[11] In the case at bar Ms. Peyman challenges the legal title to the property on the basis that she made a gratuitous transfer of funds to her son and daughter-in-law so that they could purchase the property. A resulting trust is presumed with respect to the portion of the property paid for with those funds. It follows that Ms. Demir bears the burden of rebutting that presumption, that is. she bears the burden of proving that the money was a gift.
[Emphasis added.]
In the case of Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, the Supreme Court of Canada established that, as a general rule, ownership will be determined having regard to the intentions of a party at the time the transfer of property occurs:
56 The traditional rule is that evidence adduced to show the intention of the
transferor at the time of the transfer “ought to be contemporaneous, or nearly so”, to the
transaction: see Clemens v. Clemens Estate, [1956] S.C.R. 286, at p. 294, citing Jeans
v. Cooke (1857), 24 Beav. 513, 53 E.R. 456. Whether evidence subsequent to a
transfer is admissible has often been a question of whether it complies with the Viscount
Simonds’ rule in Shephard v. Cartwright, [1955] A.C. 431 (H.L.), at p. 445, citing Snell’s
Principles of Equity (24th ed. 1954), at p. 153:
The acts and declarations of the parties before or at the time of the purchase, [or of the transfer] or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration ….But subsequent declarations are admissible as evidence only against the party who made them….
The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts. As noted by Huband J.A. in Dreger, at para. 33: “Self-serving statements after the event are too easily fabricated in order to bring about a desired result.”
57 Some courts, however, have departed from the restrictive — and somewhat
abstruse — rule in Shephard v. Cartwright. In Neazorv. Hoyle (1962), 32 D.L.R. (2d)
131 (Alta. S.C., App. Div.), for example, a brother transferred land to his sister eight
years before he died and the trial judge considered the conduct of the parties during the
years after the transfer to see whether they treated the land as belonging beneficially to
the brother or the sister.
59 Similarly, I am of the view that the evidence of intention that arises subsequent to a transfer should not automatically be excluded if it does not comply with the Shephard v. Cartright rule. Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer: Taylor v. Wallbridge (1879), 2 S.C.R. 616. 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 a change in intention.
[40] In the recent case of Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, Cromwell J. writing for the Court, noted that it is the intention of a transferor (or donor of funds) that is significant and that the concept of a joint intention trust is discredited.
