“Equity 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”: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 4, quoting Csak v. Aumon (1990), 1990 CanLII 8070 (ON SC), 69 D.L.R. (4th) 567 (Ont. H.C.J.), at p. 570. Where a party holds title to a property but does not have a beneficial interest in that property, it does not form part of that party’s net family property for equalization purposes. In Dhillon v. Dhillon, 2014 ONSC 5608, at para. 87, André J. refused to include real estate in India belonging to the husband’s mother despite the husband being the sole person registered on title.
In family law proceedings, courts have routinely imposed trusts where it would be inequitable to treat the registered owner of a property as the true owner just because it is held in their name. Generally, but not necessarily, this type of trust is in favour of another spouse: Durakovic v. Durakovic, 2008 CarswellOnt 5329, at para. 110.
Resulting trusts have existed outside of the family law context under the common law for hundreds of years. Justice Cromwell wrote as follows, in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 12:
[I]t had been settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, “results” to the person who advances the purchase money: Dyer v. Dyer (1788), 2 Cox Eq. Cas. 92, 30 E.R. 42, at p. 43.
A title holder to property who provided no consideration will be found to be holding title in trust for the person who advanced the funds. Title then ‘results’ back to the true/beneficial owner. The respondent relies, in particular, on the following descriptive example of a purchase money resulting trust contained in Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, eds., Waters’ Law of Trusts in Canada, 4th ed., online, (Toronto: Carswell, 2012), ch. 10.II, at B. 2:
If A supplies the purchase money and conveyance is taken in the joint names of A and B, B during the joint lives will hold his interest for A, B will also hold his right of survivorship – again by way of resulting trust for A’s estate, because that right is merely one aspect of B’s interest. In other words, the starting point is that B holds all of his interest on resulting trust for A, or A’s estate. However, evidence may show that, while A intended B to hold his interest for A during the joint lives, it was also A’s intention that, should he (A) predecease, B should take the benefit of the property. The presumption of resulting trust would then be partially rebutted, in relation to the situation that has arisen, so that B would not hold his interest (now a sole interest and not a joint tenancy) on resulting trust. He would hold it for his own benefit.
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 and does not exercise the incidents of ownership over the property: Pecore, at para. 20.
Pecore remains the leading case on the presumption of resulting trust. In that case, the Supreme Court decided that the presumption of resulting trust applies to transfers between a parent and adult child. As explained by the Supreme Court, at para. 24, the presumption places the onus, where a transfer is made for no consideration, on the transferee to demonstrate that a gift was intended. This presumption will be determinative in the absence of evidence of the transferor’s intent to rebut the presumption on a balance of probabilities: at para. 44. It is the intention of the transferor at the time of the transfer that is relevant, although evidence of intention arising subsequent to the transfer that informs the intention at the time of the transfer may be relevant but must be evaluated in a manner that guards against after-the-fact evidence that may appear to be self-serving or to reflect a change in intention after the transfer: at para. 59.”