Flesjer v Butterfield 2019 BCSC 2332 held that the transfer of a mother’s interest in all her real property and all her financial investments to one for four children when she was elderly and terminally ill, was a resulting trust, and not a gift to the recipient child.
The defendant did not provide any consideration for the assets he received and consequently the transfers of property and financial assets give rise to a rebuttable presumption of resulting trust in favour of the estate.
From 2013 onwards three of the four children lived with their mother in the matrimonial home.
In 2013 the mother executed a power of attorney in favour of one child and signed a transfer to have that child added as a joint tenant to her property.
In June 2013 the mother and said son signed a contract of purchase and sale for another property owned by a company owned are associated to that sons wife’s family. The mother and son became the registered owners in joint tenancy of that property and at the same time, a $500,000 mortgage was registered against the property and the former matrimonial home property. The mother deposited the only funds towards the second properties purchase.
The court referred to Harshenin v Khadikin 2015 BCSC 1213 in restating the somewhat trite law that in a case involving an alleged resulting trust, the determining factor is the intention of the party who made the transfer ie gift or if not, a trust.
The court must weigh all of the relevant evidence, both direct and circumstantial, in an attempt to ascertain on a balance of probabilities, the transferor’s actual intention. The assessment may include any reasonable inferences that are sought to be drawn from the evidence, including the inherent probability or in probability of competing explanations as to the transferor’s intent. Fuller v Harper 2010 BCCA 421 at para.49.
In other words, the court may consider if the transferor had any rational purpose for the transfer, other than as a gift.
The presumption of resulting trust provides a guide for the courts in resolving disputes over transfers were evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive. This may be especially true when the transferor’s deceased, and thus is unable to tell the court his or her intention in affecting the transfer.
As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with this applicable a presumption and will weigh all of the evidence an attempt to ascertain, on the balance of probabilities, the transfers actual intention. The presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.
Bergen v Bergen 2013 BCCA 492 at paragraph 42 states that when a property is purchased by one party, but held in joint tenancy, there is a presumption that the transferor intended to retain the entire beneficial interest, including the right of survivorship, unless there is evidence to the contrary.
Either joint tenant in land is at liberty to sever the joint tenancy at any time, thus undermining the notion that as a matter of law, a joint tenant receives of full and perfect inter vivos gift of the survivorship.
Severance, which occurs automatically upon the destruction of the four unities, results that each owner becomes entitled to a distinct share in the land, rather than an undivided interest in the whole.
For example, a joint tenant may sever the joint tenancy, and thus the survivorship, by transferring the property to himself or herself and need not even notify the co-owner.
In Simcoff v Simcoff 2009 MBCA 80 , a case involving land, stated the fact that a complete a gift included a writer survivorship does not, prima facie prevent a donor from dealing with the retained interest, while alive. The right of survivorship is only to “what is left”. In the case of real property, nothing remains of the right of survivorship.
Bergen went on to state that it remains true that once a gift has been made of an interest in real property or any other type of property, the gift cannot be revoked whether the transfer retakes is a joint tenant or a tenant in common.
As stated in Fuller v . Fuller 2010 BCCA 421 the gift of a joint interest in real property is in inter vivos rather than a testamentary gift and cannot be retracted by the donor is a “complete and perfect” inter vivos gift. (Paragraph 53)
At the same time, in cases where the property was provided by the transferor, the transferee must still prove that a gift was intended i.e. he or she must rebut the presumption of resulting trust.
At paragraph 53 of the leading case on resulting trust Pecorev Pecore 2007 SCC 17 , the court stated, of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transfer or intended to gift the right of survivorship to what it ever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will.
Mehmal v Mehmal 2018 BCSC 2057 discussed an alleged family agreement that certain siblings held property in trust for other siblings, but because the legal and beneficial title was never divided and no property was ever transferred, the court held that without a transfer of title no trust can result and the presumption ( of resulting trust) is not engaged.
The court held that at some point title has to pass from one party to another and relied upon Fuller v Harper 2010 BCCA 421 in which the BC Court of Appeal referred to Pecore v Pecore (2007) 1 SCR 795 said the presumption arises when entitled the 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 over.
Without a transfer of title no trust can result in the presumption is not engaged. This point was expressly made by the BC Court of Appeal in Elsen v Elsen 2011 BCCA 313
Elsen stated at paragraph 19:
“first, and most obviously, the principal as stated by Waters regarding the “transfer”of a legal or equitable interest is literally inapplicable because there was no transfer owned in equity. The properties were received by her as trustee for the beneficiaries-she never owned the beneficial interests and never transfer them.
The court noted that one of the key features of a resulting trust is that the claimant must have provided the property or equitable interest vested in the person bound by the trust ie the beneficiaries. Waters cited Baird v Columbia Trust Company (1915) 22 DLR 150 BCSC.
The court found that on the facts that a none of the siblings behaved as if they had any obligations to the trust. No one returned to the ranch or participated in any way and activities of the ranch once they left home. There were no papers drawn to reflect trust. The court found that it made sense for the siblings would all remove the way to begin on their own, to give up their interests in order to ensure that their mother continued to have a place to live along with the two siblings who remained on the ranch. It was a small sacrifice for them, and ensured that the ranch did not need to be broken up and sold to pay their inheritance. For some of the siblings it was no sacrifice at all.
Gully v Gully 2018 BCSC 1590 involved in a case where a mother transferred a one half interest in her home in 2015 to her son as joint tenant on title, on the basis of estate planning advice that she received. Her intention was to avoid the payment of inheritance tax on her death, but she did not advise her son that he had been added as a joint tenant to the property.
The son subsequently became indebted in the amount of $800,000 and a judgment was filed against his interest in the said property.
The mother subsequently commenced a court action alleging that the son held his joint tenant interest in the property as a resulting trust for the mother, and alleged that she did not intend to gift the property to her son and that her son maintained no beneficial interest in the property. She argued that accordingly the judgment debtor could not register its judgment against the property.
The judgment creditor challenged the presumption of resulting trust and the court found that the mother did in fact intend to gift the property to her son, particularly by reason that at the same time that she executed the transfer, she signed a declaration stating “ I declare that I contemplate naming my son and others as joint owners of some of my assets, or designated beneficiary of my RRSP, insurance and other investments, it being my intention that upon my death, such to belong to the named beneficiary, at law and in equity, and that such are not to be shared or allocated to other persons”
The mother executed a new will one month after the judgment was registered against the property, stating that she wished to disinherit her son because he had many personal debts.
The court referred to Fuller v Harper 2010 BCCA 421 that discussed how evidence of a transferor’s intention should be considered, and followed other decisions that held that evidence by a party to litigation may be admissible against that party for a limited purpose if it is found to be relevant to the issue of the transferor’s intention at the time of the transfer.
The court followed a more liberal stance on the admissibility of post-transfer conduct and cautioned that 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 the change in intention. The assessment of the reliability of post-transfer conduct admitted into evidence will include an assessment of the reasonableness of any inferences that are sought to be drawn from that conduct, including the inherent probability or in probability of competing explanations as to the transferor’s intent. In short the court must consider if the transferor had any rational purpose for the transfer other than a gift.
The court referred to sections 23 and 29 of the Land Title act to establish the proposition that an unrelated third party is not affected by unregistered changes, and is entitled to rely on the certificate of indefeasible title.
Section 23(2) of the Land Title Act states:
An indefeasible title, as long as it remains in force and on counsel, 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 indefeasible he entitled to an estate in fee simple to the land described in the indefeasible title, subject to the following—
Section 29(2) of the Land Title act states:
2) except in the case of fraud in which he or she has participated, a person contracting are dealing with are taking are proposing to take from a registered owner
a) a transfer of land, or
b) a charge on the land, or transfer assignment or sub charge of the charge, is not, despite the rule of law or equity to the contrary, affected by a notice, express and implied or constructive trust, of an unregistered interest affecting the lander charge other than—
The court conclusively found that the mother did in fact intend to gift the property to her son, and even if the court accepted that she did not intend to gift the property to her son at the time she registered her son’s interests, the argument may have some bearing on a dispute between the family members, but by virtue of the Land Title act and has no bearing on the interests of third parties such as the judgment creditor.
Rebutting the presumption of a resulting trust for the gratuitous transfer of property was discussed in Wong v Huang 2012 BCSC 975 and Frischnecht v Nowak 2018 BCSC 1430. In both cases the court reviewed the relevant authorities and found that the transfers of property in both cases had rebutted the presumption of a resulting trust.
The presumption of a resulting trust is rebuttable by proof on a balance of probabilities, given that were a transfer of property has been made for no payment, the onus is on the transferee to prove that a gift was intended.
Wong v Huang cited the leading case of Pecore v Pecore 2007 SCC 17 at para. 24. – Only the intention of the transferor is relevant, and intention is determined at the time of the transfer.
Pecore is the leading case on the presumption of resulting trust with respect to gratuitous transfers of property from one individual to another, and the legal decision as to whether the property should be treated as a gift or whether the property is subject to return or repayment as it is held in trust.
Pecore discussed two presumptions namely the presumption of a resulting trust and the presumption of advancement. The court described the nature of these competing presumptions at paragraph 24, and 27 – 28 respectively:
24. The presumption of resulting trust as a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged the presumption allocates the legal burden of proof. Thus where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended- this is so because equity presumes bargains, not gifts.
27. The presumption of resulting trust is the general rule for gratuitous transfers. However, depending on the nature of the relationship between the transferor of the transferee, the presumption of resulting trust will not arise and there will be a presumption of advancement instead. If the presumption of advancement applies, it will fall on the party challenging the transfer to rebut the presumption of a gift.
28. Historically, the presumption of advancement has been applied in two situations. The first is where at the transfer is a husband and the transfer is his wife ( Hyman v Hyman (1934) 4 DLR 532 (SCC) at para. 538. The second is where the transfer is a father in the transferee as his child, which is at issue in this appeal.
Regardless of which presumption applies, either presumption may be rebutted by evidence on the ordinary civil standard of a balance of probabilities.
Pecore limited the rebuttable presumption of advancement with regard to gratuitous transfers from parent to child and be limited in application to transfers by mothers and fathers to minor children.
In the Wong decision, the transfer was made to the defendant minor child, but the plaintiff was not his mother or father. Thus the presumption of advancement did not apply.
Since the transfer was made without consideration, the presumption of resulting trust applied unless that presumption is rebutted on the balance of probabilities. Therefore the onus of proof was on the minor defendant to prove on a balance of probabilities that the plaintiff’s intention in making the transfer was to complete a gift of a one half interest in the property to the defendant.
It is only the intention of the plaintiff transferor that governs, not the intention or understanding of the transferee or anyone else- Rascal Trucking : Kerr v Baranow 2011 SCC 10.
It is only the transferor’s intention at the time of the transfer that matters. Thus if a transfer later regrets the transfer or changed his mind about his intentions, that does not change the nature of the transaction.
In the Wong decision the plaintiff was an 86-year-old man who transferred a one half interest in his property to his six-year-old great-nephew. At the time of trial the nephew was 12 years old.
The plaintiff and the infant defendant had a close relationship at the time of the transfer of the property, and the plaintiff was estranged from his own children.
The court concluded in Wong that on the balance of probabilities the plaintiff’s intention when he made the transfer six years before the trial date, was to make an unconditional gift to the defendant of the one half interest in the plaintiff’s home.
The court viewed several aspects to the circumstances relating to the transfer, and found that it was not an isolated event, but instead must be viewed in the context of the plaintiffs expressed intentions going back to 2000 when the defendant was born. At that time the plaintiff wrote letters that he signed to transfer to change the ownership of the home to himself of the defendant as co-owners, indicating he would be leaving the remainder of his estate to the defendant as well.
The plaintiff wrote letters indicating that the transfer had been completed, and that the ownership certificate indicated that he and the defendant were co-owners. The plaintiff’s lawyer created a joint tenancy, and not a tenancy in common, with the effect that so long as the joint tenancy was not severed, the entire legal interest in the property would best of the defendant, outside of his will, upon the plaintiff’s death.
In the Frischknecht decision the plaintiff and the defendant were unrelated but had a relationship akin to that of mother and son. The plaintiff signed over her share of the property to the defendant at a time when she was suffering from diminishing mental capacity.
Her biological children who lived in Europe challenged the transfer.
In May 2001, the plaintiff and the defendant executed a co- ownership agreement, which when read by the court, was evidence of an intention by the plaintiff to transfer the property as a gratuitous gift to the defendant.
Despite the plaintiffs diminishing mental capacity, the lawyer who handled the transfer testified that the plaintiff clearly understood what she was doing and wanted to gift her half of the property to the defendant.
The court was impressed with the evidence of the experienced, careful and diligent solicitor, who testified that there were no issues relating to undue influence or mental competency.
The court concluded that the gift was unconditional and that the plaintiff intended to gift her interest in the property without any conditions attached, and specifically without any conditions relating to the repayment of mortgage funds. The plaintiff intended that the property be transferred to the defendant without consideration.
In both cases the court found evidence sufficient to rebut the presumption of resulting trust.
Burkett v Burkett Estate 2018 BCSC 320 held that the presumption of undue influence in gifts arises in circumstances where the relationship between the parties gives rise to the potential domination of one party by another, and once established that the potential for undue influence exists, the onus then shifts to the defendant to rebutt and show that the plaintiff entered into a transaction favoring the dominating party as a result of his own “free, full and informed thought.”
The Burkett decision set aside a transfer of land on the basis of resulting trust and undue influence.
Undue influence is generally not found by the courts unless the transferor had diminished mental capacity, but this is not always required as in the situation of a cult for example, where one person is in a position to dominate others who are not mentally incompetent.
In this decision the elderly mother of three sons in 2010 executed a transfer of her property to son A, and made a codicil to her will removing son C as co-executor.
The mother suffered from dementia in 2010, a condition which she attempted to mask.
The son did not register the transfer until 2013 when the mothers dementia had become apparent and significantly worse.
The court found that the mother lacked capacity to affect changes in her estate, and declared that son a held the property in trust for the mothers estate and removed him as executor.
The mothers previous 1997 will left all of her property to her three sons equally, and the plaintiffs were the children of one son who had predeceased his mother and who were entitled to their late father’s share.
The court found that by the fall of 2011 the deceased was in precipitous and noticeable mental decline and had become paranoid and obsessive. When she was interviewed by a medical doctor in 2012, she did not know that she had executed a transfer of the property the previous year.
The court found that in all likelihood the deceased signed the transfer of land to avoid the payment of probate fees, which under the law of resulting trust would find that her intention was not to gift the property, but alternatively that it was to be held in trust.
The Law of Presumption of Undue Influence
In Loriintt v. Boda 20114 BCCA 354, the BC Court of Appeal explained the presumption of undue influence at paragraph 75 and 76:
75. The presumption of undue influence arises in circumstances where the relationship between the parties gives rise to the potential domination of one party by another. Once a dominant relationship has been established, such that potential for influence exists, the onus moves to the defendant to rebutt and show that the plaintiff entered into the transaction as a result of his own ” free, full and informed thought”.
This law was first pronounced by the Supreme Court of Canada in the decision Geffen v. Goodman (1991) 2 SCR 353 at paragraphs 42 – 45 .
76. As another civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. 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 the balance of probabilities, the transferor’s actual intention. As discussed by Sopinka in the Law of Evidence in Canada, at page 116, the presumption will only determine the result where there is insufficient evidence to rebut on the balance of probabilities.
Some case law has identified relationships between an old and sick parent and a child to be one of dominance and dependency: Petrowski v . Petrowski 2009 A.B.QB 196 at paragraph 382.
After examining the relationship between the transferor and the transferee, the court then examined the transaction in question. The presumption of undue influence can be rebutted by evidence of independent legal advice
In Mondonese v Delac estate 2011 BCSC 82, affirmed at 2011 BCCA 501,at parapgraph 122, the court stated: the function of independent legal advice is to remove the taint that, if not removed, might invalidate a transaction. The nature and circumstances will dictate what constitutes adequate independent legal advice for the purposes of a given situation. Cope v Hill 2—5 ABQB 625 at para. 209.
The remedy for an unrebutted finding of undue influence is described in Geffen, at paragraph 23:
“the equitable doctrine of undue influence was developed as was pointed out by the House of Lords in Allcard v. Skinner (1887) , 36Ch. D. 145, not to save people from the consequences of their own folly, but to save them from being victimized by other people. In the context of gifts and other transactions, equity will intervene and set aside such arrangements. If procured by undue influence.”
The BC Appeal Court in Winstanley v Winstanley 2017 BCCA 265 ordered a new trial on the basis that the trial Judge erred in his determination as to whether the evidence at trial had rebutted the presumption of a resulting trust that arises when a parent transfers an asset for little or no consideration to an adult child. The Court stated very clearly that there is no longer any presumption of advancement from a parent to an adult child as per the decision of Pecore v Pecore 2007 SCC 17.
Analysis
29 I begin my analysis by reviewing Pecore v. Pecore 2007 SCC 17, which is authority for the proposition that there is no longer a presumption of advancement between parents and their adult children. The Court decided that in modern social conditions the reverse is true: there is a presumption of a resulting trust where a parent makes a gratuitous transfer to an adult child, such as placing funds in a jointly-held bank account.
30 The facts in Pecore involved joint accounts held by a father and his adult daughter. The father transferred the majority of his assets to these joint accounts before he died. The terms of the accounts included a right of survivorship upon his death. At trial, the judge held that the presumption of advancement applied and the daughter was entitled to the legal and beneficial ownership of the assets. The question on appeal was whether the presumption of advancement as between a parent and child had continuing relevance under present social conditions. Rothstein J. for the majority held at paras. 4, 5 and 6:
[4] It is not disputed that the daughter took legal ownership of the balance in the accounts through the right of survivorship. Equity, however, recognizes a distinction between legal and beneficial ownership. The beneficial owner of property has been described as “[t]he real owner of property even though it is in someone else’s name”: Csak v. Aumon (1990), 69 D.L.R. (4th) 567 (Ont. H.C.J.), at p. 570. The question is whether the father intended to make a gift of the beneficial interest in the accounts upon his death to his daughter alone or whether he intended that his daughter hold the assets in the accounts in trust for the benefit of his estate to be distributed according to his will.
[5] While the focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer, intention is often difficult to ascertain, especially where the transferor is deceased. Common law rules have developed to guide a court’s inquiry. This appeal raises the following issues:
Do the presumptions of resulting trust and advancement continue to apply in modern times?
If so, on what standard will the presumptions be rebutted?
How should courts treat survivorship in the context of a joint account?
What evidence may courts consider in determining the intent of a transferor?
[6] In this case, the trial judge found that the father actually intended a gift and held that his daughter may retain the assets in the accounts. The Court of Appeal dismissed the appeal of the daughter’s ex-husband.
31 Rothstein J. noted that the rebuttable presumption of law “is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption” (at para. 22). The presumptions of advancement and resulting trust apply to gratuitous transfers “where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive” (at para. 23).
32 The effect of the majority’s decision in Pecore is that an adult child whether independent or dependent who receives a gratuitous transfer from a parent is now presumed to hold the transferred property on resulting trust for the parent, whereas formerly the parent was presumed to have advanced the property to the child as a gift.
33 Rothstein J. noted that the presumption of resulting trust may be rebutted with sufficient evidence:
[41] There will of course be situations where a transfer between a parent and an adult child was intended to be a gift. It is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In addition, while dependency will not be a basis on which to apply the presumption of advancement, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust.
[Emphasis added.]
34 Rothstein J. also considered the interaction between the right of survivorship in a joint account and the presumption of resulting trust at law. He concluded at para. 48:
[48] Courts have understandably struggled with whether they are permitted to give effect to the transferor’s intention in this situation. One of the difficulties in these circumstances is that the beneficial interest of the transferee appears to arise only on the death of the transferor. This has led some judges to conclude that the gift of survivorship is testamentary in nature and must fail as a result of not being in proper testamentary form: see e.g. Hill v. Hill (1904), 8 O.L.R. 710 (H.C.), at p. 711; Larondeau v. Laurendeau [1954] O.W.N. 722 (H.C.); Hodgins J.A.’s dissent in Re Reid (1921), 64 D.L.R. 598 (Ont. S.C., App. Div.). For the reasons that follow, however, I am of the view that the rights of survivorship, both legal and equitable, vest when the joint account is opened and the gift of those rights is therefore inter vivos in nature. This has also been the conclusion of the weight of judicial opinion in recent times: see e.g. Mordo v. Nitting, [2006] B.C.J. No. 3081 (QL), 2006 BCSC 1761, at paras. 233-38; Shaw v. MacKenzie Estate (1994), 4 E.T.R. (2d) 306 (N.S.S.C.), at para. 49; and Reber v. Reber (1988), 48 D.L.R. (4th) 376 (B.C.S.C.); see also Waters’ Law of Trusts, at p. 406.
. . .
[53] Of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will.
[Emphasis added.]
35 Despite finding that the trial judge had erred by applying the presumption of advancement, the majority in Pecore affirmed the judge’s disposition because there was strong evidence showing the father intended to gift the daughter the right of survivorship to the joint accounts, thus rebutting the presumption of resulting trust.
36 I now turn to the application of the principles emerging from Pecore to the facts of this case.
37 The correct legal analysis in the present case required the judge to first instruct himself that there is no presumption of advancement as between a parent and an adult child and to apply a presumption of resulting trust in regard to any gratuitous transfers of Jessie’s property to Carl. The burden of proof would then rest on Carl to rebut the presumption with respect to each transfer.
Dheenshaw v Gill 2017 BCSC 319 deals with an increasingly commonly litigation problem- the advancement of large sums of parents money to their children and the subsequent determination whether the monies were a gift or a loan when matters go ” sideways”.
The court will look start at attempting to determine the intention of the parties when making the advancement of the monies which are usually made gratuitously.
There is usually a presumption that the advancement of funds was not a gift and that the onus of proving a gift is on the recipient children, who must rebut the presumption that they hold the funds as a resulting trustees. The court will examine a number of criteria in analysing such a scenario.
THE LAW
In Beaverstock v. Beaverstock, 2011 BCCA 413, the Court addressed the correct approach to the resolution of a dispute about whether a gratuitous advance from a parent to an adult child is a loan or a gift. As the Court held at para. 9:
The correct approach to the resolution of this dispute is not in dispute. It is set out in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. Whether the transfer was a loan or a gift depends on the actual intention of the appellant when she made the advance, which is a question of fact. As the advance was gratuitous, the onus was on the respondent to demonstrate that the appellant intended a gift, since equity presumes bargains, not gifts (para. 24). This equitable principle gives rise to a presumption the son received the money on a resulting trust, which is a rebuttable presumption of law. The trial judge was therefore required to presume the advance was not a gift and to determine whether the respondent had satisfied the burden of rebutting the presumption of resulting trust on a balance of probabilities (para. 44).
73 In Byrne v. Byrne, 2015 BCSC 318, the issue was whether bi-weekly payments of $1,000 made by the claimant’s father to a joint account held by the claimant and the respondent and used to pay for household expenses constituted a gift or loan. Mr. Justice Armstrong began his analysis at paras. 41 and 42:
[41] Payments from a parent to an adult child are generally not presumed to be gifts; they are presumed to form a resulting trust in which the parent keeps an interest in the property. However it is open to a party claiming the transfer is a gift to rebut the presumption of a resulting trust by providing evidence to that effect: Pecore v. Pecore . . .
[42] In Pecore, the Supreme Court of Canada addressed how the presumptions operate in the context of transfers from a parent to an adult child:
(a) the focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer . . .
(b) When the transferor’s intent is unavailable or unpersuasive, the presumptions of advancement (a gift) and resulting trust are useful guides and will apply . . .
(c) gifts from parents to independent adult children are not presumed to be gifts; rather the presumption of a resulting trust applies . . .
(d) there may be circumstances where a transfer between a parent and an adult child was intended to be a gift and it is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support that claim . . .
(e) the burden on the party claiming a gift was made is proof on a balance of probabilities . . .
74 At para. 43, the court noted that in Kuo v. Chu, 2009 BCCA 405at para. 9, the Court of Appeal adopted the following factors from Locke v. Locke, 2000 BCSC 1300, as applicable to the question of whether a loan or a gift was intended:
(a) Whether there were any contemporaneous documents evidencing a loan;
(b) Whether the manner for repayment is specified;
(c) Whether there is security held for the loan;
(d) Whether there are advances to one child and not others, or advances of unequal amounts to various children;
(e) Whether there has been any demand for payment before the separation of the parties;
(f) Whether there has been any partial repayment; and,
(g) Whether there was any expectation, or likelihood, of repayment.
75 The Locke factors are items of circumstantial evidence relevant to the transferor’s actual intention. They are not exhaustive and are to be weighed by the trial judge, along with all of the other evidence, in order to determine the transferor’s actual intention as a matter of fact: Beaverstock at para. 11.
76 Whether the opposing spouse was aware of the transaction is not determinative of the question of whether a loan was made: Byrne at para. 47.
77 In Beaverstock, the Court held that the trial judge had erred in law by failing to begin his analysis with the presumption of resulting trust and in failing to make a finding concerning the appellant’s actual intention when she advanced the funds to her son.
78 In Savost’Yanova v. Chui, 2015 BCSC 516, where the husband’s father had advanced $60,000 to assist with the purchase of the matrimonial home, Mr. Justice Weatherill held that in determining the intent of the person of who advances money in a family context, the court must weigh all of the evidence to determine whether the presumption of resulting trust has been rebutted: Chui at para. 77.
79 At para. 75, the court adopted the following summary of the applicable legal principles:
[75] The law regarding whether a transfer made by a parent to an adult child is a loan or a gift was summed up by Madam Justice Brown in Hawley v. Paradis, 2008 BCSC 1255at para. 30, after a review of the applicable authorities:
[30] Based on the case law presented to me, I conclude:
1. that the presumption of advancement no longer applies between adult children and their parents;
2. that as between adult children and their parents, the presumption is a resulting trust when the parents make gratuitous transfers to children;
3. that the court must consider all of the evidence in determining whether the parent intended the transfer as a gift or a loan;
4. that the factors considered in Wiens and Locke will assist the court in determining whether the advance was a loan or a gift.
80 Here, I must determine whether the actual intention of the claimant’s mother was to make a gift or a loan. Because the advance was gratuitous, the claimant bears the onus of demonstrating that her mother intended a gift, “since equity presumes bargains, not gifts”. In determining the transferor’s intention, the court must take into account the Locke factors, along with all of the other evidence.
Warde v Slater 2017 BCSC 274 contains a discussion about the various types of trusts in deciding who owned the beneficial interest in the shares of a family business.
The decision quotes extensively from Waters on Trusts In Canada.
It is helpful to refer to the definition of a trust adopted as “one of the best” in Waters, Gillen and Smith: Waters’ Law of Trusts in Canada, 4th ed. 2012 (“Waters“) at p 3:
“A trust is the relationship which arises whenever a person (called the trustee) is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons (of whom he may be one, and who are termed beneficiaries) or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustees, but to the beneficiaries or other objects of the trust.”
The following passage from Waters at pp 394-395 is a useful comparison of the different kinds of trusts alleged.
The courts and the various legislatures of the common law world have sometimes used interchangeably the terms “implied trust”, “resulting trust” and “constructive trust”, and the terminology is therefore somewhat confusing
But essentially, while express trusts are those which come into existence because settlors have expressed their intention to that effect, constructive trusts arise not because of anyone’s expression of trust intent but because B ought to surrender property to A and this is the machinery the court employs in order to get B to do that. In between the express trust, a product of the settlor’s intention, and the constructive trust, a machinery imposed by law, are the implied trust and the resulting trust.
The term “implied trust” is commonly used for two situations. The first occurs where the intention to create a trust is not clearly expressed, but has to be discovered from indirect and ambiguous language. This is all that distinguishes such an implied trust from the express trust. A second common use is where one person has gratuitously transferred his property to another, or paid for property and had the property put into another’s name. The intention of the transferor or purchaser is implied to be that the transferee is to hold the property on trust for the transferor or purchaser. The implication arises out of the fact that Equity assumes bargains, not gifts, and requires the donee to prove that a gift was intended.
The term “resulting trust”, on the other hand, does not allude in any way to intention; it describes what happens to the property in question. It results or goes back to the person who, for reasons we shall examine, is entitled to call for the property. For example, because Equity does not assume gifts, the transferee holds title for the transferor or the one who provided the purchase money. In other words, in this “implied trust” situation the beneficial interest results, or goes back, to the transferor or purchaser. . . .
Distinguishing the resulting trust from the constructive trust is also not easy because the lines have been blurred. Sometimes the same facts allow both a constructive trust theory and a resulting trust theory to be deployed. . . .
There is even more overlap between resulting trusts and those constructive trusts which arise to reverse unjust enrichment. The reason is that both kinds of trusts typically perform the same function: they return property to the person from whom it came.
In Fulton v. Gunn [2008 BCSC 1159] for example, an interest in land was acquired by a son using purchase money that came from his mother. It was held that this created a resulting trust for the benefit of the mother; and it was also held in the alternative that the son had been unjustly enriched at the expense of the mother, and so held the property on constructive trust for her. To the extent that resulting trusts are seen as arising by operation of law, they are really just a sub- species of constructive trust. The distinction between resulting and constructive trusts is perhaps best put in this way – while constructive trusts have nothing to do with intention, express or implied, resulting trusts can be explained either on the basis of intention or imposition of law. . . .
10 As Waters makes clear (see also pp. 19-21), the terms “express” and “implied” refer to the intention of the alleged settlor. Intention may also be relevant to a resulting trust, but is irrelevant to a constructive trust. A constructive trust is one constructed by the law to enforce an obligation. It arises out of unjust enrichment and “good conscience”: Waters at p 23; Petkus v Becker, [1980] 2 SCR 834.
Thus, there can be only two sources of a trust obligation: the intention of a property owner to create a trust; or the imposition by the law of a trust obligation upon persons: Waters at p 478.
11 In my view, a resulting trust can be quickly eliminated from contention in this case. An essential characteristic is that the claimant, the would-be beneficiary, must have provided the property or equitable interest vested in the person bound by the trust: Waters at p 399. Neither Elaine nor Brian provided the property here in issue, the shares of (or proprietary interest in) Slatter Holdings, to Fern. If Fern holds that property in trust for either or both of Elaine or Brian, it must be because of an express or implied trust (intention), or because in the absence of such a trust, unjust enrichment and good conscience require that the law constructs a trust in order to enforce an obligation.
12 To demonstrate the creation of an intentional trust, the evidence must establish three certainties: certainty of intention to create the trust, certainty of the subject of the trust, and certainty of the trust object: Waters at p 140 and following; Tozer v Bank of Nova Scotia, 2012 NBCA 57 at paras 10-12. It is not necessary that the trust be set out fully in a document. It may be construed from conduct, or from documents and conduct taken together. See, for instance, Elliott (Litigation Guardian of) v Elliott Estate, [2008] OJ No 4941 (SCJ):
[30] This Court must consider all of the circumstances, including the words and conduct of Robert Elliott and Jean Elliott [the alleged settlors] to determine if certainty of intention exists.
13 Technical words are not required. As Waters put it at p 141:
There is no need for any technical words or expressions for the creation of the trust. Equity is concerned with discovering the intention to create a trust; provided it can be established that the transferor had such an intention, a trust is set up.
14 This is so whether the intentional trust is created by the settlement of property upon a trustee, or by declaration by the owner of property of an intention to constitute himself or herself a trustee of that property. Again, it is not necessary that the donor use the words, “I declare myself a trustee”. Words of any kind and even conduct are sufficient provided it is satisfactorily shown that the donor did in fact intend to constitute himself or herself a trustee: Waters at p 204.
It occasionally occurs in estate litigation that a party has complaints about the misfeasance of public officials, (usually against the Public Guardian and Trustee), as a result of perceived deliberate unlawful actions on the part of the public official against the complainant
The tort of misfeasance is the legal remedy when appropriate to seek compensation for such unlawful conduct on the part of the public official.
In my experience, such actions rarely succeed except in the most egregious instances where it is proved that the official abused his or her powers to the detriment of the ordinary citizen.
The Supreme Court of Canada has set out the elements of the tort of misfeasance in public office in Odhavji Estate v. Woodhouse 2003 SCC 69, [2003] 3 S.C.R. 263 (S.C.C.), at para. 23, and in St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, 319 D.L.R. (4th) 74 (Ont. C.A.), at para. 20, as follows:
(a) that a public officer, acting in his or her capacity as a public officer, engages in deliberate and unlawful conduct;
(b) the public officer is aware both that the conduct is unlawful and that it is likely to harm the plaintiff;
(c) the public officer’s tortious conduct was the legal cause of the plaintiff’s injuries; and
(d) the injuries suffered are compensable in law.
104 In Freeman-Maloy v. York University (2006), 79 O.R. (3d) 401 (Ont. C.A.), (sub nom Freeman-Maloy v. Marsden) 2006 CanLII 9693, at para. 10, leave to appeal refused, [2006] S.C.C.A. No. 201 (S.C.C.), Sharpe J.A. writing for the Court stated that “[t]he tort of misfeasance in a public office is founded on the fundamental rule of law principle that those who hold public office and exercise public functions are subject to the law and must not abuse their powers to the detriment of the ordinary citizen.”
