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.

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