Certainty of Subject Matter In Trusts

One of the three requirements of a valid trust is the “certainty of the subject matter”,

There are two elements to certainty of subject matter:

  • First, the property which is subject to the trust must be clear.
  • Second, the nature of the interest due to each beneficiary must be clear.

To satisfy the first of the two elements, the subject matter must be described with “sufficient exactness to permit that such matter be ascertained at the time the trust was created”: Re Beardmore Trusts, [1952] 1 D.L.R. 41 at 46 (Ont. H.C.) [Beardmore].

Clearly, the subject matter must also be certain on future dates when the trustees are required to deal with the trust property. However, the trust property need not be fixed in quantity or nature; property can be added later, and the nature of existing property may be changed by the trustees exercising their power of investment. If the initial trust property is certain, and the property which may be added is certain, then the subject matter is certain because at any point the current trust property can be determined by tracing the original property to its current form: Waters at 155 -156.

The second element of certainty of subject matter requires that it be clear what beneficial share each beneficiary will receive in the trust property: Boyce v. Boyce (1949), 60 E.R. 959 (C.A.).

Trustees Must Not Co-Mingle or Misuse Estate Funds For Their Own Purpose

trustess not co mingleTrustees must not co mingle or misuse estate funds or assets  for their own purposes.

It is trite law that trustees are fiduciaries and must not personally use, profit from, or co-mingle estate funds with their own.

If a trustee has mixed his/her own funds with the funds being held
for another, all of the property must be taken to be the other’s property until the trustee is able to prove what part of it is his/her own: Widdifleld on Executors and Trustees, above, at p. 13-2; Norman, Re, [1951] O.R. 752, [19521 1 D.L.R. 174 (Ont. C.A.) at p. 5; Cook v. Addison (1869), L.R. 7 Eq. 466 (Eng. Ch. Div

It is an “inflexible rule of the Court of Equity” that a fiduciary must not make a profit or to
put himself/herself in a position where his/her interests and his/her duty conflict unless the trust
instrument expressly so provides: Simone v. Cheifetz, [1998] O.J. No. 3267, 74 O.T.C. 18 (Ont.
Gen. Div.) at para. 47, citing Bray v. Ford (1895), [1896] A.C. 44 (U.K. H.L.); Bikur Cholim

Jewish Volunteer Services v. Langston, [2007] O.J. No. 3667,160 A.C.W.S. (3d) 921 (Ont. S.C.J.), at paras. 30 and 31. As a fiduciary, an attorney for property is not entitled to exercise that power for his or her own benefit unless expressly authorized to do so: Howlader v. Alamgir, [2006] O.J. No. 2575,149 A.C.W.S. (3d) 275 (Ont. S.C.J.)

The trustee, not the beneficiaries, bears the onus of establishing that the management and disbursement of funds is consistent with the terms of the trust: Maintemp Heating & Air Conditioning Inc. v. Momat Developments Inc. (2002), 59 O.R. (3d) 270, [2002] O.J. No. 2722 (Ont. S.C.J.).

A trustee who improperly enjoys the benefit of trust assets without authority and allows non-beneficiaries (e.g. the trustee’s family) to also benefit is liable to the trust for the amounts or the value of the benefits received: Waters’ Law of Trusts in Canada, above, at p. 877; Bikur Cholim Jewish Volunteer Services v. Langston, above, at paras. 13 to 16 and 38, affd (2008), 90 O.R 3d) 673, [2008] O.J. No. 1582 (Ont.

Trust For Care of Deceased’s Cats Held Valid

Deceased’s Cats

In Zinn v Bergen 2012 SKQB 214, the deceased left a five page typewritten will dated July 7, 2003 wherein he made several specific bequests, and asked to convert the rest and residue of the estate into cash for the purpose of initially maintaining feeding and caring for his pet animals (but not their offspring), until their death, which presently consisted of four cats. Upon the death of the cats than the residue was to be distributed to two charities.

The deceased subsequently signed a handwritten codicil, which was mostly almost illegible, but dated June April 19, 2011. The first two sentences of the codicil were significant in that they stated :

“This is a supplement to my will that made on July 7, 2003. The main part of the 2003 seventh of July remained the same.

My cats come first– after my expenses are paid been plenty of money for the cats”

The codicil did not purport to revoke any portion of the will, and accordingly the court admitted both documents into probate. Following the decision of Oh v Robinson 2011 SKQB 374,which held “the fact that some of the portions of the will may be in illegible or incomprehensible does not disqualify or prohibit the remaining portions of the will from satisfying the legal requirements for probate.”


The Law


The Court found that the testator gives clear expression of an intention to provide for his four cats following his death. He did so by purportedly creating a trust from the
residue “for the purpose of maintaining, feeding and caring for my pet animals,
(but not any off-spring thereof) until their death”, to “find a good home” forthem, and to “pay whatever reasonable amounts may be necessary and advisable from time to time to provide for the maintenance and care of my pets.”

The Codicil reinforces this predominant motivation with the statement “my cats come first”. He goes on “After my expenses are paid then plenty of money for the cats, including medical service and if deemed necessary declawing expenses.”… “The house will likely be used to pay for the cats home and the expenses. … The (house) must not be sold until after the cats are comfortable.”
This purported trust raises obvious questions about its validity (A. J.
Oakley, Parker and Mellows: The Modern Law of Trusts, 9th ed., (London: Sweet & Maxwell, 2008) at pps. 82 and 83 offer these insights:

3-102 Gifts for the maintenance of animals in general are charitable. However, gifts for the maintenance of one or more particular animals are not; … Re Dean is an explicit authority — not all the early cases in this area of the law are particularly explicit — that a non-charitable purpose trust for the upkeep of a given animal may be valid notwithstanding the fact that by its nature it is not enforceable by the beneficiary.

Relying upon these authorities, I find the trust valid. The executors are directed to retain the sum of $10,000.00 dedicated to the exclusive purpose of care, maintenance and health needs of the testator’s cats. Upon the death of the last of the four cats, the balance of this fund shall be disbursed as residue.

The Requirements of a Valid Inter Vivos Transfer to a Trust

The Requirements of a Valid Inter Vivos Transfer to a Trust


The decision Mordo v Nitting 2006 BCSC 1761 is a primary source on many aspects relating to trusts. Morodo was suing to set aside an alter ego trust settled by his mother in favour of his sister, and utilized just about every legal argument on the subject that could have been made, including this one.


[263] To form a valid inter vivos trust, there must be a valid act of transfer to a clearly identified trustee.

[264] It is clear from the Trust Indenture that Mr. Wilson was to be the original Trustee. Further, a Form A transferring the Warehouse to Mr. Wilson “as Trustee” was executed by Eida on September 5, 2000. Accordingly, in this case, the identity of the Trustee was clear.

[265] However, the creation of a valid inter vivos trust requires a valid act of transfer to that clearly

identified trustee. In this case, was it enough for Eida to complete the Form A and hand it to Mr. Wilson, or was it also necessary to register the Form A before the Trust came into existence? As noted, Mr. Wilson did not register the Form A until after Eida’s death for property tax reasons.

Legal authorities concerning the requirements for a valid transfer

[266] The rule as to the formation of a valid trust was stated in Milroy v. Lord (1862), 45 E.R. 1184 (C.A.) [Milroy]:

[l]n order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him (Milroy at 1189).

[267] In Milroy, the trustee was given share certificates and a power of attorney under which he

could transfer the shares into his name. The shares were such that legal title did not pass until the new owner’s name was entered in the share register; that was not done until after the settlor’s death. The court concluded it was not sufficient that the trustee was capable of transferring the shares. The transaction was incomplete without the actual transfer having occurred. The court would not compel the agent of the settlor to complete the transfer because it could not compel the settlor to complete the transfer:

Equity could not, I think, decree the agent of the settlor to make the transfer, unless it could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor (Milroy at 1190).

[268] The court in Milroy refused to hold that the settlor held the legal title on trust for the trustee:

[T]here does not appear to me to be any sufficient ground to warrant us in holding that the settlor himself became a trustee of these bank shares for the purposes of this settlement (Milroy at 1190).

[269] In the case of Re Rose, [1952] Ch. 499, [1952] 1 All E.R. 1217 (C.A.) [Re Rose] the English

Court of Appeal distinguished Milroy and found a valid trust. In Re Rose, the registration of the shares could not be completed until the board of directors approved the transfer. The court concluded that the settlor had done all that he could by completing the documentation and forwarding it to the board for approval, and accordingly held that legal title passed before registration, when the settlor gave up possession of the documents.

[270] In Fenton v. Whittier (1977), 26 N.S.R. (2d) 662 at paras. 86 to 96; 40 A.P.R. 662 (S.C.)

[Fenton], the Nova Scotia Supreme Court, considering Re Rose, concluded there was no inter vivos gift of shares. Although the donor had completed the share transfer forms, she kept them in a safety deposit box until her death because she wanted the benefit of the dividends during her lifetime. The court concluded that the donor intended the gift to take effect only upon her death.

[271] In Pennington v. Waine, [2002] 1 W.L.R. 2075, [2002] EWCA Civ 1587 an aunt intended to

make a gift of shares to her nephew. However, the share register was not updated with the name of the new owner and the donor kept the completed share transfer forms rather than handing them to her nephew. On a strict application of the principle in Re Rose, there was no valid inter vivos gift. However, the English Court of Appeal held that it would have been unconscionable for the executors of the giftor to refuse to hand over the share certificates, and found that the gift was valid. In so concluding, the court relaxed the rule in Milroy and imposed a trust on the settlor such that she held the legal title to the shares in trust for the trustee until the transfer of ownership was completed.

[272] In Bank Leu AG v. Gaming Lottery Corp. (2003), 231 D.L.R. (4th) 251 at para. 56 (Ont.

C.A.) Weiler J.A. (for the court), referring to Pennington, affirmed the principle in Re Rose that a transfer may be valid notwithstanding that the transferee must perform further acts to complete the transfer.

[273] The foregoing cases deal with the transfer of shares. As noted in Milroy, what constitutes “everything necessary” to achieve an effective transfer depends on the nature of the property being settled. In the case of real property, what is “everything necessary” to effect a transfer?

[274] In Mascall v. Mascall (1989), 50 P. & C.R. 119 (C.A.) the plaintiff father applied for a

declaration that a transfer of real property to his son, the defendant, was invalid. The plaintiff had completed the land transfer forms and handed them to the defendant, anticipating that any further steps concerning the forms would be taken by the defendant. At the time of the plaintiffs death, the defendant had not yet registered the forms. The English Court of Appeal, applying Re Rose, found that the plaintiff had done all that he could to complete the transfer and therefore the transfer was complete. In the result, the son was the holder of legal title despite registration having not yet taken place.

[275] The acts necessary to affect a valid transfer of land is more a question of the legislation governing land transfers than a matter of trust law: The Australian Law Journal, [1968] A.L.J. Vol. 42 at 227. Section 20 of the Land Title Act, R.S.B.C. 1996, c. 250 [Land Title Acf\ deals with the transfer of land in British Columbia:

20. Except as against the person making it, an instrument purporting to transfer, charge, deal with or affect land or an estate or interest in land does not operate to pass an estate or interest, either at law or in equity, in the land unless the instrument is registered in compliance with this Act.

[Emphasis added]

[276] In Davidson v. Davidson, [1946] 2 D.L.R. 289 (S.C.C), affg [1945] 2 W.W.R. 576 (B.C.C.A),

the Supreme Court of Canada, considering language of the Land Title Act almost identical to that now contained in s. 20, held that an unregistered transfer of land took effect on the day the transfer was executed and not on the day it was registered. More recently, in Chung Estate v. Chan (1995), 4 B.C.LR. (3d) 370 (S.C.) [Chung], affd (1995), 13 B.C.LR. (3d) 157 (C.A.) the court held that if the transferor has properly completed a freehold transfer form, the opening words of s. 20 – “except as against the person making it” – apply such that the form may be registered after the transferor’s death to effect a transfer of the property.

[277] Chung was distinguished in the case of Kovacs v. Tuteckyj (2000), 147 Man. R. (2d) 161,

2000 MBQB 104 [Kovacs]. In Kovacs, the transferor had executed the transfer form and given it to another, but instructed that it not be registered until after he had consulted with his solicitor. The court held that the intention of the transferor at the time he handed over the transfer form was relevant. The court drew the inference from the circumstances that the transferor had not done everything necessary to complete the transfer and, as such, the transfer was not complete.

[278] As the foregoing case law indicates, the intention of the transferor is crucial. If the transferor intends to transfer the property, the transfer will be complete when the transferor has relinquished control of the property and put the transferee in a position to complete the transfer. The importance of control was discussed in Re Evans, Royal Trust Co. v. Lloyd’s Bank Ltd. (1956), 7 D.L.R. (2d) 445 (B.C.S.C.) [Re Evans]. The Court, citing Austin W. Scott, The Law of Trusts, 1st ed. (Boston: Little, Brown and Company, 1939) at 225 [Scott] said the following:

A conveyance, whether absolute or in trust, is ineffective if the transferor does not

surrender control of the property…. A conveyance in trust is incomplete unless the settlor has passed the title to the property to the trustee by delivery of the subject matter of the trust or of an instrument of transfer. On the other hand, if the conveyance in trust is completed by such delivery, the trust is not incomplete merely because the settlor reserves power to revoke or to alter the trust. There is a sufficient surrender of control over the property if the settlor transfers the title to it to the trustee, even though he reserves power to undo what he had done. The surrender of control is sufficient even though the settlor reserves power to reassume the control (Re Evans at 451 – 452).

[279] Alex argued that Eida did not effectively transfer the property, or relinquish control of it,

because Mr. Wilson did not register the transfer form. As such, said Alex, Eida had the unrestricted right to deal with the property. In particular, Alex relied on the following words from Re Pfrimmer Estate [1936], 2 D.L.R. 460 at para. 10 (Man C.A.) [Re Pfrimmer Estate] citing Malim v. Keighley (1794), 30 E.R.659at660:

I will lay down the rule as broad as this; wherever any person gives property, and points out the object, the property, and the way in which it shall go, that does create a trust, unless he shews clearly, that his desire expressed is to be controlled by the party; and that he shall have an option to defeat it.

– See more at: http://www.disinherited.com/blog/requirements-valid-inter-vivos-transfer-trust#sthash.5VPAlcyW.dpuf

Claim To Set Aside Alter Ego Trust Dismissed

Alter Ego Trustsalter ego

Usher v Larabee 2010 BCSC 1608 discusses the general principles of inter vivos gifts and an alter ego trust set up by a mother, that was attacked by two sons in litigation.


The mother’s assets consisted of property in the stock portfolio with a total value of $650,000.


Her three children were placed in care of the provincial government when she had a nervous breakdown in 1963.


In 2000, the mother decided that she would not include one son as a beneficiary in her will as result of his criminal activity, his failure to repay loans, and his constant lying about her.


That son as well as another stated to her that they would contest her will and threaten to put a lien against her home.


In 2003, the mother established an alter ego trust, with the trust and will making provisions for her daughter during her life, and upon her death, to her daughter’s children.


The sons brought action for a declaration that the mother held the estate in trust for them, that the mother transfer of the portion of the estate to them, or alternatively damages for breach of contract that the trust be set aside.


The action was dismissed.


The court found that the evidence of the mother was straightforward, and she claimed that she did not estate to her son’s that they would have an interest in her property, and that there was no agreement to pay the money through her estate or in any other manner.


The court found that the alleged promises made by the mother to the sons had no context and were bald assertions, and the sons accordingly failed to meet the onus of proof on them to prove the verbal agreement with their mother.


The evidence given by the sons was vague and contradictory.


Certain verbal agreements could be enforced and result in express trust, however the evidence in this case did not establish such an agreement. The evidence in fact lacked specificity, time and place and some was simply unbelievable.


Since there was neither evidence of agreement, nor consideration for such agreement, the mother was free to set up the trust to benefit her daughter and defeat any future claims by her sons.


It is not disputed that alter ego trusts are standard estate planning tools used to achieve estate planning objectives: Mordo v. Nitting, 2006 BCSC 1761(B.C. S.C.).


42 A person is entitled to arrange their affairs as they choose, including dealing with potential claims of adult children such as the Wills Variation Act, R.S.B.C. 1996, c. 490: Hossay v. Newman, [1998] B.C.J. No. 3289(B.C. S.C. [In Chambers]).


43 In Antrobus v Antrobus, May 9, 2007, Vancouver Registry S066312, Mr. Justice Powers rejected the existence of the parents’ promises, who, in their 40s at the time, agreeing that the plaintiff would be the sole beneficiary of the estate was not sufficient to support an express trust. He concluded that the real nature of the plaintiff’s claim may be that of a constructive trust. However, in Antrobus, Mr. Justice Powers concluded that before proceeding with the summary trial pursuant to Rule 18A there ought to be examinations for discovery.


44 In order for the Court to make an order for constructive trust of an asset, or for that matter an order of compensation, there must be: an enrichment by one party, in this case Mrs. Larabee; there must be a corresponding deprivation by the other parties, Michael and Patrick who have not been compensated, and there must be an absence of any juristic reason for the enrichment.


45 An oral agreement is capable of enforcement: Hall v. McLaughlin Estate(2006), 25 E.T.R. (3d) 198(Ont. S.C.J.).


46 In order to have an enforceable secret trust, three certainties in an express trust must exist. These three certainties of an express trust are:


1) the intention to the primary donee of an obligation to a secondary donee;


2) the communication is made to the primary donee; and


3) the acceptance of that obligation has been made to the primary donee.


Chinn v. Hanrieder, 2009 BCSC 635(B.C. S.C.).

Secret Trusts

secret trustsSecret trusts likely exist much more than the public believes, as after all, they are secret.


 In Champoise v. Champoise-Prost Estate, 2000 BCCA 426(B.C. C.A.) at paras. 15-16, the Court of Appeal summarized the fundamental principles which inform the analysis:


[15] It is useful to review the basic principles of secret trusts.

A secret trust arises where a person gives property to another, communicating to that person an intention that the property be dealt with in a specific way upon the happening of an event, and the donee accepts the obligation. The essential elements are the intention of the donor, a communication of the intention to the donee and acceptance of the obligation by the donee… [Citation omitted.]


[16] In addition to these requirements for an enforceable secret trust, the three certainties necessary for any express trust must be exhibited; the words making the trust must be imperative, the subject of the trust must be certain, and the object or person intended to take the benefit of the trust must be certain. Further, those certainties must be exhibited at the time the trust is created: Re Beardmore Trusts, [1951] 1 D.L.R. 41; D.W.M. Waters, Law of Trusts in Canada, supra at 107.


In Anderson v Anderson 2010 BCSC 911, a claim for a secret trust was dismissed.

The deceased prior to his death transferred his interest in a cottage to his second wife for one dollar and other good and valuable consideration.

The plaintiffs were the deceased’s children from his first marriage. For several years following the deceased’s death, the plaintiffs and their families continue to enjoy access to the recreational property.

The defendants second wife however plan to sell the cottage, and the plaintiffs commenced court action for a declaration that the defendant held the property in trust for the plaintiffs, including a secret trust

The action was dismissed as the court found that the deceased intended to make a gift of the cottage to his spouse, and that she did not hold the property on any conditions of trust.


166 ” This type of trust, although an express trust, is secret because the donee’s obligations are not referenced on the face of the document under which the property is given to the donee.


167 The crux of this case turns on the Deceased’s intention relative to the disposition of the Property when he transferred it to the defendant on September 7, 1999.


168 The defendant and the Deceased were married for over 16 years and there is no evidence to suggest that their relationship was anything other than loving and supportive. At the time the Deceased transferred the Property to the defendant it was their only home. They had invested some the proceeds from the sale of their home in Duncan, which they owned jointly, in renovating the Property. The defendant also had purchased some materials from her former employer for those renovations and contributed her own labour to them.


169 As of the date of the transfer, the Deceased was 65 years old and he held assets of relatively modest value. The defendant was 57 years old. She was the designated beneficiary on the Deceased’s RRSP which was valued at approximately $100,000. She was the joint account holder on his bank account which had funds of $4,000 to $5,000. Upon his death, she became entitled to his survivor pension payments of $1,900 per month. She also received any vehicles he owned. She was also entitled to repayment of the loan of $35,000 that she and the defendant had made to Ms. Potts and her husband in 1995.


170 It is apparent from the manner in which the Deceased arranged his affairs that he clearly intended to benefit his spouse on his death. She had been the sole beneficiary under his will since December 1990. It is a reasonable inference that he believed that his primary obligation was to his younger spouse whom he expected would outlive him by many years.


171 Ruth Anderson and Walter Levick were the only disinterested witnesses in this proceeding. Their evidence supports a finding that the Deceased intended to gift the Property to his wife on September 7, 1999. I have accorded their evidence considerable weight.


172 It is entirely consistent with the probabilities of the situation that on September 7, 1999 the Deceased intended to give the whole of the legal and beneficial interest in the Property to the defendant. This course was also in keeping with his testamentary intentions expressed in his Will. If the presumption of advancement does apply, I find that, on a balance of probabilities, the plaintiffs have failed to adduce sufficient evidence to rebut it.


173 In the event the presumption of advancement is not applicable and the converse presumption of resulting trust governs, the result is no different. In weighing all of the evidence, I am satisfied on a balance of probabilities that on September 7, 1999 the Deceased intended to gift the beneficial ownership of the Property to the defendant absolutely.


174 In their final submissions, the plaintiffs did not argue that the Deceased intended that the Property would form part of his estate. For completeness, however I briefly address the claim for resulting trust as it is included in the amended statement of claim.


175 The evidence does not support a finding that when the Deceased transferred the Property to his wife in September 1999, he intended to retain the beneficial interest. Although Jeffrey in his testimony made some vague references to “tax planning”, there was no cogent explanation for the Deceased retaining the beneficial interest in the Property when he knew he was terminally ill.


176 In any case, such an assertion contradicts the plaintiffs’ primary submission that their father transferred the Property to the defendant on certain express trust terms: in essence, that the defendant could have the “unfettered use” of the Property for her lifetime, but when she “was done with it” she would transfer the Property to the three Anderson children.


177 I have considered all of the cases submitted by both parties on the secret trust claim. While I found the authorities instructive, I do not propose to review them as each case turns on its own unique facts.


178 I have, however, considered all of the evidence in light of the test enunciated in Champoise. For the reasons set out below, the evidence does not support a finding that the defendant holds the Property in trust for the Anderson children.


179 There was no direct evidence adduced at trial to support the allegation that when the Deceased transferred the Property to the defendant, he communicated to her his intention that she could have the use of the Property for her lifetime or as long as she wished, but thereafter the Property was to devolve to his three children. There was no evidence that she accepted such an obligation. Nor can this Court, upon careful consideration, reasonably infer that these essential requirements for an enforceable secret trust have been established on the evidence.


180 Moreover, the plaintiffs have not satisfied the Court of the existence of the three certainties required to prove any express trust. The subject of the trust was clearly the Property. However, insofar as the certainty of intention, as discussed above, the evidence does not establish that the Deceased intended to impose any trust condition on the defendant when he transferred the Property to her. This is fatal to the plaintiffs’ trust claim.


181 The preponderance of the probabilities that emerge from the totality of the evidence does not support a finding that prior to the Deceased’s death, the plaintiffs understood that the Property would eventually devolve to the three Anderson children. The plaintiffs’ own evidence is somewhat conflicting as to whether the intended ultimate beneficiary of the alleged trust was Darin alone or the three children. I find the plaintiffs have failed to demonstrate certainty of the objects of the trust at the time the trust was allegedly created.


182 I am satisfied that the plaintiffs in September 1999 were fully aware that their father had gifted the Property to the defendant and that is why it was not a source of dispute at the time of the Deceased’s death. Rather what lies at the heart of their case is their profound disappointment in the defendant’s decision in 2006 to dispose of the Property.

Presumption of Resulting Trust Rebutted By Evidence of Love and Affection

IN the Spirit of ThingsThere is a presumption of resulting trust over a gift when a substantial asset is transferred for little or no consideration,-here the presumption was overcome by evidence of love and affection.

Oord v Oord 2012 BCSC 1857 is the classic scenario where a well-intentioned family ended up in litigation concerning the ownership to the home which the plaintiff and her deceased husband purchased with their son and his wife and two children. The purchase price for the home came entirely from the parents but title was registered in the names of both parents and both the son and daughter-in-law as joint tenants. After the death of the husband, his interest was transferred to the remaining three joint tenants in equal shares. The son and the daughter-in-law subsequently separated.

The mother plaintiff brought this action for a declaration that the son and daughter in law held part of their interest in the property in trust for the mother, for an order for partition and sale of the property, and for division of the proceeds in accordance with the beneficial interest. The court dismissed the action and found that as the monies used to purchase the property came entirely from the parents, the registration of title to the property and all four names amounted to a gratuitous transfer in favor of the son and daughter-in-law.

The presumption of advancement could not apply, and the presumption of resulting trust applied, but was rebutted by the sun with regard to the initial payment to purchase the lot. The existence of love and affection and desire on the part of the parents to assist their children was relevant in the courts determination as to whether the presumption of resulting trust was rebutted. The court found that the living arrangement was intended to be a permanent situation, and that the parents intended to make a gift of one half of the purchase price of the property, because they knew it was the only way such an arrangement would be possible. The court ordered partition and sale of the property, finding that sale was the only method for division of the parties interests.

In the leading case, Pecore v. Pecore, [2007] 1 S.C.R. 795 [Pecore], Mr. Justice Rothstein, writing for the majority, discussed the principles to be applied by the court when dealing with gratuitous transfers and determining whether a resulting trust was created or whether the transfer was a gift. He began by defining the competing notions of resulting trust and advancement at paras. 20 – 21:

20 A resulting trust arises when title to 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 owner … .

21 Advancement is a gift during the transferor’s lifetime to a transferee who, by marriage or parent-child relationship, is financially dependent on the transferor.

[28] While it is the actual intention of the transferor at the time of the transfer that determines how a dispute concerning a gratuitous transfer should be determined, the law has developed certain rebuttable presumptions that will arise, depending on the circumstances. Rothstein J. referred to these presumptions at para. 22, as follows:

22 In certain circumstances which are discussed below, there will be a presumption of resulting trust or presumption of advancement. Each are rebuttable presumptions of law: see e.g. Re Mailman Estate, [1941] S.C.R. 368, at p. 374; Niles v. Lake, [1947] S.C.R. 291; Rathwell v. Rathwell, [1978] 2 S.C.R. 436, at p. 451; J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 115. A rebuttable presumption of law is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption. The presumption shifts the burden of persuasion to the opposing party who must rebut the presumption: see Sopinka et al., at pp. 105 – 6.

[29] With regard to gratuitous transfers, it is the presumption of a resulting trust that generally applies to gratuitous transfers as stated at para. 24 of Pecore:

24 The presumption of resulting trust is 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: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.

[30] The rebuttable presumption of advancement was restricted in Pecore to gratuitous transfers from a parent to a minor child (para. 40).

[31] As Rothstein J. remarked at para. 41:

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.

[32] If the particular circumstances give rise to the presumption of a resulting trust, the burden of proof falls upon the party challenging the formation of a resulting trust to establish that the transfer was a gift. The standard of proof that is applicable to rebut the presumption is the balance of probabilities (Pecore at para. 43). The approach to be taken by the trial judge in examining this rebuttal is set out at para. 44 of Pecore:

44 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 the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.

[33] The evidence that a court may consider in determining the intent of the transferor includes evidence that arises subsequent to a transfer provided that the evidence is relevant to the intention of the transferor at the time of the transfer (Pecore at para. 59).

Court Finds Transfer of House from Mother to Son a Valid Gift, Subject to a Life Interest of Financial Support For Mother

Transfer of House

Ruff v Ruff 2013 BCSC 169 is a very interesting and creative judgment relating to the thorny question of how do the courts treat a gift of real property from a parent to an adult child, when the parent subsequently changes his or her mind and demands the return of title to the property.

In this particular case the court found that the adult did intend to get the house to the son, and thus allowed the sun to keep the home, but found that the adult also expected that she would remain in the house, and thus a trust was created such that the sale proceeds from the home would be held in trust for the adults lifetime, and the income would be available for the adults reasonable maintenance and support.

The plaintiff adult, transferred title to her house to her son, the defendant in 2005.

The adult remained in the house alone until 2008 when the son and his wife moved in with her, when she was then 88 years of age.

After approximately 2 years friction had developed between the parties to the extent that litigation was commenced by the mother, who sought a declaration claiming that the title to her house was held in trust for her by her son. The litigation was commenced after the defendant had taken steps to sell the property.

The court allowed the property to be sold, but found that the proceeds should be held in trust for the plaintiffs lifetime, and the income used for her support.


Transfer of House

The following quotes of law are taken from the decision:

 63]         I repeat that the relevant time to determine the intent of Freida Ruff was the time of the transfer: see Farrell Estate v. Turner Estate, 2002 BCSC 165 at para. 26, and Hamilton Estate, supra, at para. 74.

[64]         It is Freida Ruff’s intent, and hers alone, that is relevant: see Kerr v. Baranow, 2011 SCC 10 at para. 25.

[65]         Evidence tendered to show Freida Ruff’s intent at the time of the transfer should be contemporaneous to the time of transfer: Pecore at para. 56. Evidence of intention that arises after the transfer may be admitted if it can be shown to be relevant to the intention of the transferor at the time of the transfer: Pecore at para. 59. Evidence arising after a transfer may be unreliable for a variety of reasons, not the least of which can be remorse on the part of the transferor, or self-interested justification on the part of the transferee, and its relevance to actual intent at the time of transfer is questionable: see Fuller at para. 65.

[66]         Freida Ruff’s intention at the time of the transfer is not the same as her reasons for the transfer, although her motives shed some light on her intention. Thus, her desire to minimize the opportunities for her sons to quarrel over the portion of her estate represented by the property is relevant to the determination of her intention, but not determinative

Freida Ruff would not fare any better on the basis of unjust enrichment. The requirements are:

1.       An enrichment of the defendant;

2.       A corresponding deprivation of the plaintiff; and

3        An absence of juristic reason for the enrichment: Garland v. Consumer’s Gas Co., 2004 SCC 25 at para. 30.

Mrs. Ruff has established that she conferred a benefit on Robert through the transfer of title, with the corresponding detriment to her of giving up title. She would not succeed in a claim based in unjust enrichment because her intent to gift the land to Robert would constitute a juristic reason for the benefit/detriment result.

[80]         Had Freida Ruff succeeded in having the property restored to her, Robert and Denise Ruff would have had a valid claim in unjust enrichment. In that case, the money and labour they put into improvements to 140 South Petersen Road would have benefited Freida Ruff, to their corresponding detriment, and there would be no juristic reason to support that benefit/detriment result. As to remedy, however, they have not gone much further than a rough estimate of the money they have spent on improving the property, and have not attempted to quantify the amount or value of their labour.

Resulting Trust Upheld Transfer to One Child When Will Left Estate Equally

Resulting Trust Upheld Transfer to One Child When Will Left Estate Equally

Van De Keere v. Turner 81 ETR (3d) 175 , Manitoba Court of Appeal is important in that the court clearly recognizes that is is usually inconsistent for a parent who treats his children equally thorughout life, and his will, would have gifted %90 of his assets to just one of five children.

The deceased had five children, applicants J, R, G, I, and defendant D, with whom he had good relationships.

In August 2000, the deceased executed a new will, which divided his property equally to children and named D as executrix .

Between 2003 and 2007, the deceased transferred approximately $408,000 and camper van to D and her husband, B .

Applicants successfully claimed that deceased’s transfers to D and B were subject to resulting trust .

The trial judge held that deceased intended to gift camper to D and B , but the  Trial judge held that D did not rebut presumption of resulting trust with respect to the transfer of $408,000.

The trial judge found that gifting D over 90 per cent of his estate was inconsistent with deceased’s behaviour that showed intention to treat children equally

The trial judge found that there was no explanation why deceased would strip himself of almost all of his assets at time when he was still in relatively good health

D appealed but the appeal was dismissed holding that the trial judge did not introduce new test or place additional onus on D in determining whether presumption of resulting trust was rebutted, but rather, looked at evidence from common sense perspective

” The law states that, where a parent makes a gratuitous transfer of assets to an adult child, there is a presumption of a resulting trust, such that the child is presumed not to be the beneficial owner, but rather to hold the assets as a trustee for the parent. This is a rebuttable presumption, so the child claiming that the transfer was a valid gift can rebut it by bringing evidence to support his or her claim. The evidence required to rebut the presumption is evidence of the parent’s intention to make a gift, which must be proved on a balance of probabilities. (See Pecore v. Pecore.2001 SCC 17 (S.C.C.) at paras. 19-44, {2007]J_ S.C.R. 795fS.C.C.Ut paras. 19-44.)

Transfer of Land to Minor Nephew For No Consideration Upheld as Valid Gift

Transfer of Land

Wong v Huang 2012 BCSC 975  involves a case where the court upheld the transfer of a haft interest in a house as joint tenants between an elderly man and his 6 year old great nephew, the grandson of the plaintiff’s brother.

The defendant was born in 2000 and shortly after his birth the plaintiff executed a will leaving all his assets to the defendant instead of the plaintiff’s own children.

In September 2006 the plaintiff executed a transfer of an undivided one half interest in his home to the defendant as joint tenant. The defendant was six years old at the time and did not provide any consideration for the transfer.

The plaintiff signed an affidavit stating that the transfer was the”less expensive than giving ownership of the house to the defendant in my will”.

The plaintiffs reasoning for the transfer was that he wanted to be part of a larger family but the family bond that he had hoped for did not materialize, so he unsuccessfully requested the return of the half interest in property from the infant defendant which was refused.

The transferor then brought a court application for a declaration that the defendant held the property in trust for the transferor.

The court dismissed the claim and held that the effect of the transfer was to make a completed gift.

Because the transfer was made without consideration, the presumption of resulting trust did apply, but that presumption was rebutted by the evidence.

The court found that on the balance of probabilities, the transfers intention when he made the transfer was to make an unconditional gift to the transferee of one half interest in the property.

While the transfers wish that the property would become the family home and that may have been the motive for the gift, the gift was not conditional upon that wish becoming a reality.

The court further held that since the defendant is a minor child and the plaintiff is not his mother or father, then in that event the presumption of advancement should not apply.

Accordingly since the transfer was made without consideration, the presumption of resulting trust applies unless the presumption is rebutted on a balance of probabilities.

The onus is on the defendant to prove on a balance of probabilities that the plaintiffs intention in making the transfer was to complete a gift of one half interest in the property to the defendant.

The court found that the transfer of the property in 2006 was not an isolated event, but instead should be viewed in the context of the plaintiffs expressed intentions going back to 2000 when the defendant was born. The court in fact found five reasons in total to support the rum bottle of the presumption of resulting trust.

The Court quoted from the leading case Pecore v Pecore 2007 SCC 17:


[20]    Regardless of which presumption applies, either presumption may be rebutted by evidence on the ordinary civil standard of a balance of probabilities. The Court explained at paras. 42-44:

[42]     There has been some debate amongst courts and commentators over what amount of evidence is [page814] required to rebut a presumption. With regard to the presumption of resulting trust, some cases appear to suggest that the criminal standard, or at least a standard higher than the civil standard, is applicable: see e.g. Bayley v. Trusts and Guarantee Co., [1931] 1 D.L.R. 500 (Ont. S.C., App. Div.), at p. 505; Johnstone v. Johnstone (1913), 12 D.L.R. 537 (Ont. S.C., App. Div.), at p. 539. As for the presumption of advancement, some cases seem to suggest that only slight evidence will be required to rebut the presumptions: see e.g. Pettitt v. Pettitt, [1970] A.C. 777 (H.L), at p. 814; McGrath v. Wallis, [1995] 2 F.LR. 114 (Eng. C.A.), at pp. 115 and 122; Dreger (Litigation Guardian of) v. Dreger (1994), 5 E.T.R. (2d) 250 (Man. C.A.), at para. 31.

[43]     The weight of recent authority, however, suggests that the civil standard, the balance of probabilities, is applicable to rebut the presumptions: Burns Estate v. Mellon (2000), 48 O.R. (3d) 641 (C.A.), at paras. 5-21; Lohia v. Lohia, [2001] EWCA Civ 1691 (BAILII), at paras. 19-21; Dagle, at p. 210; Re Wilson, at para. 52. See also Sopinka et al., at p. 116. This is also my view. I see no reason to depart from the normal civil standard of proof. The evidence required to rebut both presumptions, therefore, is evidence of the transferor’s contrary intention on the balance of probabilities.

[44]     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 the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.

[21]    In Pecore, the Court considered whether the presumption of advancement should be expanded to apply to a wider class of family relationships, including dependant adult children. The Court concluded at para. 40:

I am therefore of the opinion that the rebuttable presumption of advancement with regard to gratuitous transfers from parent to child should be preserved but be limited in application to transfers by mothers and fathers to minor children.

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