A good deal of estate litigation revolves around the issue of whether a transfer of real or personal property from one party to another was a gift or if the property is held on a presumed resulting trust.
The BC Court of Appeal case of McKendry v. McKendry 2017 BCCA 48 provides a useful summary as to the law of gifts at paragraphs 31 – 35 of the judgment.
31. A gift is a gratuitous transfer made without consideration. Two requirements must be met for an inter vivos gift to be legally binding:
a) the donor must of intended to make a gift;
b) the gift must of been delivered
The intention of the donor at the time of the transfer is the governing consideration. In addition, the donor must have done everything necessary according to the nature of the property, to transfer it to the donee and render the settlement legally binding on him or her- Pecore v. Pecore 2007 SCC 17.
32. A gift may be delivered in various manners: for example, a donor may choose to transfer property directly to a donee or a trustee, or may retain possession and make a declaration of trust. Once a gift is given, the donor cannot retract it. If it is incomplete however, the court will not perfect a gift. Accordingly, where the gift rests merely in a promise or unfulfilled intention, the court will not compel an intending donor to follow through with making the gift –Pecore at para 56
33. The standard for proving the gift is the usual civil standard of a balance of probabilities Singh Estate v Shandil 2007 BCCA 303 at paras. 224-27
35. The judge commences the inquiry with the presumption of a resulting trust, weighs all of the evidence, and attempts to ascertain the actual intention of the transferor. The governing consideration is the transferor’s actual intention. The presumption of resulting trust determines the result only where there is insufficient evidence to rebut the presumption on the balance of probabilities –Pecore at paras 20, 222-225.
Court cases involving gifts versus resulting trusts are inherently risky cases where the evidence can often be interpreted either way, leading to unpredictable results.
The fact that the governing presumption at law is the presumption of resulting trust, and not the presumption of a gift however, has direct implications as to how and whether the case can be settled given the litigation risk of taking these actions to trial..
