August 21 – Creditor Proofing and Resulting Trusts

“As I have said, under the Act, questions of title must be settled before property can be equalized.  By reason of s. 10 of the [Family Law] Act, trust claims – including claims based on constructive or resulting trust – may be advanced prior to equalization.  And, crucially, s. 14 legislates a presumption of a proprietary resulting trust.  Where the presumption applies, it yields a finding of beneficial ownership in the context of a gratuitous property transfer.  The Act contains no analogous presumption of constructive trust.

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Furthermore, any motivation to shield the property from the Husband’s potential creditors does not in itself rebut the presumption of a resulting trust.  In Nussbaum v. Nussbaum(2004), 9 R.F.L. (6th) 455 (Ont. S.C.), Karakatsanis J., then of the Superior Court of Justice, noted that, despite “a line of cases … where the court has found the specific intention to evade creditors means an implied intention to deprive oneself of beneficial ownership”, and “[w]hile evidence that someone intended to fully evade creditors can be evidence that they intended to gift their entire interest in the property, the intention of the parties is a question of fact to be determined from all the evidence”: at paras. 19-27 and 32.  See also Schwartz, at para. 43”

Korman v. Korman, 2015 ONCA 578 at paras 29 & 38

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