What Evidence Courts Examine to Determine Gift or Not

What Evidence Courts Examine to Determine Gift or Not

Schouten Estate v Swagerman-Schouten 2014 BCSC 2320 examines the range of evidence and its significance when attempting to determine the intention of the donor when he transferred title to his farm to himself and one of his 6 children as joint tenants in 1995.

In the will of the deceased 14 years later, he showed an intention to gift the same property to the same child.

The Court reviewed the type of evidence it will consider when determining whether the defendant has rebutted the presumption that he held the property as a resulting trustee for the estate:

5. “What type of evidence may be considered to determine the transferor’s intention? Once the court has determined the proper presumption to apply, all of the relevant evidence should be weighed, depending on the facts of the case (Pecore at para. 55). The type of evidence that may be considered was discussed in Pecore at paras. 56-70. The Supreme Court of Canada at para. 59 expanded the traditional rule that evidence of intention ought to be contemporaneous with the transaction and said that evidence of intention subsequent to a transfer that is relevant to intention at the time of transfer should be assessed for reliability and weighed. Generally, the types of evidence germane to ascertaining intention include declarations and conduct contemporaneous with the transfer, evidence subsequent to the transfer, the documentary record as it relates to the asset, subsequent control and use of the property, other legal instruments, and tax treatment (Pecore at paras. 56-70; Doucette v. Doucette Estate, 2009 BCCA 393 (B.C. C.A.) at paras. 56-64; Fuller at paras. 48-50, 66-67; Chung at para. 49; Anderson v. Anderson, 2010 BCSC 911 (B.C. S.C.) at para. 161 [Anderson]). The grant of a power of attorney at the same time as a grant of joint ownership may indicate that the transferor intended to give more than management control of property (Pecore at para. 67). A Property Transfer Tax Return filed in relation to a transfer is a factor to consider in relation to intention and may suggest the intention of gift if the presumption of advancement was the applicable presumption at the time of transfer (Chung at paras. 52-54). Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of transfer (Pecore at para. 59; Turner v. Turner, 2010 BCSC 49 (B.C. S.C.) at para. 57). Continuing control and use of property after the transfer by the transferor may not be conclusive because it may not be inconsistent with a gift (Pecore at paras. 62-66; Fuller at paras. 66-67; Zukanovic v. Malkoc Estate, 2011 BCSC 625 (B.C. S.C.) at paras. 134-135).

6      Care must be taken to guard against after the fact evidence that may be self-serving (Pecore at para. 59; Fuller at para. 49; Chung at para. 51; Anderson at para. 164). The credibility of a witness should be gauged by its harmony with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions (Faryna v. Chorny (1951), [1952] 2 D.L.R. 354 (B.C. C.A.), at 357, Aujla at para. 36). Care must also be taken not to treat any single type of evidence as determinative but to weigh all of the evidence (Pecore at paras. 55, 68-69). D. Smith J.A. for the court in Fuller at para. 49 put it in a nutshell: “In short, the court must consider if the transferor had any rational purpose for the transfer other than a gift”.

Credibility in Gift vs Resulting Trust Actions

credibility

Credibility in Gift vs Resulting Trust Actions

One of the most common types of estate litigation is the conflicting stories of one party testifying that the asset was gifted to him or her, while others in the family argue resulting trust, and the Judge must decide who to believe.

Examples of such findings and determination of the case are found in the following examples:

It is clear that many cases where a transferee seeks to persuade a court that a gratuitous transfer was intended to be a gift turn on questions of credibility;

. Madsen Estate v. Saylor, 2007 SCC 18at para. 18,

Aujla v. Kaila, 2010 BCSC 1739at paras. 42, 62, 104, aff’d 2013 BCCA 158;

Modonese v. Delac Estate, 2011 BCSC 82at para. 69, aff’d 2011 BCCA 501;

Bakken Estate v. Bakken, 2014 BCSC 1540at paras. 33-35.

Resulting Trust Presumption Applies to Real Property

Presumtion and ignoranceResulting Trust Presumption

 

The decision Schouten Estate v Swagerman- Schouten  2014 BCSC 2320 confirmed the case law that the law relating to resulting trust presumption law also apply to real property (land).

 

There had been some issue in law at one time due to the provisions of the Land Title Act.

 

3) in gratuitous transfer situations, the actual intention of the transferor is the governing consideration (Pecore at paras. 43-44; Kerr v. Baranow, 2011 SCC 10 at para. 18; Bergen at para. 38). In the case of an interest in land as joint tenants, it does not follow as a matter of law that an immediate irrevocable gift was given: the transferee must still rebut the presumption of resulting trust by bringing evidence of intention (Bergen at para. 22).

[4]             It appears settled now in British Columbia that the equitable presumptions established in Pecore apply to real property transfers (Fuller at paras. 41-45; Chung v. La, 2011 BCSC 1547, at paras. 45-46, 55 [Chung]; Aujla v. Kaila, 2010 BCSC 1739 at paras. 31-37 [Aujla]; Modonese v. Delac Estate, 2011 BCSC 82 at paras. 141-142; Suen v. Suen, 2013 BCCA 313 at paras. 35-38). Thus, the presumption of title in s. 23(2) of the Land Title Act, R.S.B.C. 1996, c. 250 as conclusive proof of title may be displaced by equitable presumptions that take into account the equitable interests between the parties in certain circumstances (Chung at para. 47; Aujla at para. 32). This is so even though title to the property in question may have been settled before 2007 when Pecore was decided (Kuo v. Kuo, 2014 BCSC 519 at paras. 225-227).

The 3 Types of Gifts in Wills

The 3 Types of Gifts in Wills - Disinherited

Will makers rarely appreciate that there are 3 types of legacies (Gifts In Wills) that can be left in a will:  general, demonstrative and specific.

The decision of Celantano Estate v Ross 2014 BCSC 27 discusses the three types of legacies in some detail

Types of Legacies (Gifts In Wills)

[16]         There are three types of legacies – general, demonstrative and specific.

General

[17]         A general legacy is a gift of something which, if the testator leaves sufficient assets, must be raised by her executor out of her general personal estate. It is a legacy not of any particular thing, but of something which is to be provided out of the testator’s general estate. An example of a general legacy is “I give [pounds] 100 to X”: Wood Estate v. Arlotti-Wood, 2004 BCCA 556 at para. 11.

Specific

[18]         A specific legacy is a gift of some particular thing or of some interest, legal or equitable, forming part of the testator’s estate. It must be identified by a sufficient description and separated in favour of the particular legatee from the general mass of the testator’s personal estate. In other words, a specific legacy is a gift of a severed or distinguished part of the testator’s property, thus showing an intention that the property shall pass to the legatee in specie. An example of a specific legacy is “I give my dwelling house, Blackacre, to X” or “I give my silver teaspoons to X”: Wood Estate at para. 11.

[19]         The courts lean heavily against identifying a bequest as specific, unless the testator clearly expresses such an intention: Smith Estate (Re), 2003 SKQB 361.

[20]         In Wood Estate, the will directed the trustee of the estate:

TO PAY any cash or TRANSFER any stocks and bonds held in account no. 861-16199-1-0 located at RBC Dominion Securities, Vancouver, B.C. into ten (10) equal parts …

[21]         Difficulty arose because shortly after the will was executed, the testator transferred his investments from RBC Dominion Securities to a different broker.

[22]         The Court of Appeal found this gift to be a specific legacy. They found it to be a gift in specie of the actual contents of the account, identifiable not by sum or number of shares, but only by the broker’s name (RBC Dominion Securities) and account number. The court held that it was not a demonstrative legacy because it was not possible to say that the gift “was to be paid ‘primarily but not solely’ out of the account “: para. 13.

[23]         In Re Culbertson, the testator made 31 bequests in varying amounts totalling $24,750.00. The will then indicated:

I direct that each of the above legacies shall be paid out of the money realized from the sale of my farm lands, and if the amount recovered from the sale of my farm lands should not be sufficient to cover the full amount of the said legacies, then each person shall take a proportionate share in accordance with the amount he would have received if the full amount of the legacy had been realized.

[24]         The Saskatchewan Court of Appeal found these legacies to be specific. The court found that the language used by the testator, given its natural and ordinary meaning, limited the payment of the legacies to the fund to be realized from the sale of his farmlands. He gave direct instructions that the legacies would abate if the fund proved insufficient.

Demonstrative

[25]         A demonstrative legacy shares characteristics of both general and specific legacies. It is in the nature of a specific legacy in that it is a gift of a specified amount or quantity which is directed to be satisfied primarily out of a particular fund or asset. It is in the nature of a general legacy, in that it could be paid out of the general estate if the specified fund falls short. An example of a demonstrative legacy is: “I give [pounds] 100 to be raised out of the sale of my Surrey properties”; Wood Estate at para. 12.

[26]         The Saskatchewan Court of Appeal, in Re Culbertson, described a demonstrative legacy at paras. 8 and 10 as follows:

[8] The definition of a demonstrative legacy and its nature are clearly set out by the learned author of Williams on Executors& Administrators, 13th ed., vol. 2, pp. 610-11, as follows:

A legacy of quantity is ordinarily a general legacy; but there are legacies of quantity in the nature of specific legacies, as of so much money, with reference to a particular fund for payment. This kind of legacy is called a demonstrative legacy: the testator, after making a positive gift, points out the particular fund which he desires to have first applied, and which he supposes to be adequate for the purpose. If the fund indicated is not adequate, the gift is intended to take effect nevertheless out of some other property of the testator. Such a legacy is general in that if the fund is called in or fails the legatee will not be deprived of his legacy, but will be permitted to receive it out of the general assets; it is specific in that it will not be liable to abate with general legacies upon a deficiency of assets, provided the fund from which it is primarily to be taken is not exhausted.

…

[10]      I think it is clear that if a bequest, general in form, but, as stated by the learned author of Williams on Executors & Administrators, supra, in the nature of a specific legacy relating to a particular fund for payment, is to be declared a demonstrative legacy, the will must disclose:

(1)        that recourse for payment of the legacy is first to the fund, and,

(2)        there is no expressed intention of the testator precluding satisfaction of the legacy out of some other property of the testator, if the particular fund proves inadequate.

[27]         In Re Atkins, [1912] O.J. No. 363, the court found the following bequest to be a demonstrative legacy:

(3)        To my relatives in England I leave one thousand dollars in equal shares to the following persons, … these amounts to come from the Savings Bank account, together with any expenses in this connection with this division.

[28]         Some years following the execution of the will, the testator closed the Savings Bank account and deposited the money in a different bank. In finding this bequest to be a demonstrative legacy, the court described it as “a legacy of quantity in the nature of a specific legacy as of so much money, with reference to a particular fund for payment”, but which will not adeem if the particular fund no longer exists: para. 12.

[29]         In Warren (Re), 54 O.L.R. 433, the court held that a value of stock in a named company was a demonstrative legacy. The clause in the will at issue read as follows:

“(4) To make over and assign to our adopted son George Warren $10,000 worth of capital stock of the Thomas Warren Knitting Company Limited.”

[30]         The difficulty in interpretation of that clause was the meaning to be given to the word “worth”. At the time of the testator’s death, the stock was actually worth less than par. In concluding that it was not a specific legacy, the court observed that the testator nowhere used the word “my” or any other expression which indicated that he was referring to any specific stock, which he then possessed. In construing the legacy as demonstrative, the court took note that George Warren was, after the deceased’s widow, the main beneficiary.

 

Further reading on legacies left in wills

Children Born After Death of the Testator

What Makes It a Will?

Wills Drafting: The Myth of the “Simple Will”