Skip to content

Resulting Trusts: Parents Successfully Sue Daughter

Resulting Trusts: Parents Successfully Sue Daughter

TLG v KMG 2019 BCSC 1236 involves a dispute between parents and their daughter with respect to the parents advancing $110,000 to assist the daughter in purchasing a home for her use. The parents won the case due to the law of resulting trusts.

The parents advanced $110,000 to their daughter in 2011 to buy a home. The parents stated that it was an investment for their retirement while their daughter said it was a gift. Neither of the party sought legal advice or documented the arrangement.

The property was registered as to an undivided 99/100 interest in the name of the daughter and an undivided 1/100 interest in the names of the parents.

The parents stated that they trusted their daughter, but in hindsight their evidence at trial was that was a mistake.

The parents paid a contractor to renovate the basement suite and paid for the appliances. They used funds from their RRSPs to do so, and thus incurred tax consequences for withdrawing the funds.

The matter came to a head after five years when the parents informed the daughter that they wished to sell the property as they had a large tax bill to pay because of the RRSP withdrawals.

In response, the daughter told her parents ” no, it was her house”.

The court determined that the credibility of the parties was a significant factor in determining the matters in issue.

Credibility

The court recited Demir v Peyman 2009 BCSC 445 which quoted the Court of Appeal decision Paryna v Chorny (1952 ) 2 DLR 354:

“ The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanor of the particular witness carry conviction of the truth. The test must reasonably subject his story to an examination of his consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth story of a witness in such a case must be in harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.”

The court found that the daughter displayed a sense of entitlement and found her to be less credible than her parents.

Resulting Trusts

The parents claim was founded on the doctrine of resulting trust, described by the BC Court of Appeal in MacKinnon v Donauer 2017 BCCA 437 at para. 2 as “ the rule that a presumptive trust arises in favor of the transfer or when property is transferred gratuitously to another”. If the presumption of resulting trust is rebutted, the plaintiffs advance a claim an unjust enrichment arising from their financial contribution to the purchase of the property.

Section 23(2) of the Land Title act gives rise to a statutory presumption that the daughter is the owner of the property because she is the registered owner.

However, as noted in the Demir decision at paragraph 9 “ that statutory presumption is subject to equitable principles, one of which is the enforcement of an agreement between the parties in order to prevent unjust enrichment in the face of the title is upheld “.

Therefore the daughter had to prove on a balance of probabilities that the funds received from her parents were a gift, and were intended as such by them at the time the funds were advanced.

The court must start with the presumption of resulting trust and then weigh the evidence to determine, on the balance of probabilities what the plaintiff’s actual intentions were Pecore v Pecore 2007 SCC 17 at para. 44.

The court found that the parents had been financially supportive of both their children, and in particular the daughter, given her lengthy education and her need for financial support. That history of support, and its nature, weighed against the daughter’s assumption that the funds the plaintiffs advanced for the purchase of the property was a gift.

Accordingly, the court found that the daughter had failed to rebut the presumption of resulting trust, and the court ordered that the property be sold and that the defendant holds her interest in the property as trustee for the plaintiffs.

Categories

Related Posts