“The Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at paras. 24-26, explained the doctrine of the presumption of resulting trust as follows:
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.
25 The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of a resulting trust.
In Kerr, at para. 18, the Supreme Court of Canada explained how trial courts should consider the presumption of resulting trust:
18 The Court’s most recent decision in relation to resulting trusts is consistent with the view that, in these gratuitous transfer situations, the actual intention of the grantor is the governing consideration: Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at paras. 43-44. As Rothstein J. noted at para. 44 of Pecore, where a gratuitous transfer is being challenged, “[t]he 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” [emphasis added].
The presumption of resulting trust applies when a parent makes a gratuitous transfer to an adult child: see Pecore, at para. 36. The presumption is that the adult child is holding the property in trust for the aging parent. In other words, the parent holds an interest in the subject asset whether it is real property, money loaned or some other item. The parent is presumed not to have intended a gift. However, this presumption can be rebutted by the evidence.
Clearly, the evidence necessary to rebut the presumption depends on the facts of the case: see Pecore, at para. 55. Evidence of the parent’s post-transfer conduct is admissible, so long as it is relevant to the parent’s intention at the time of the transfer: see Pecore, at para. 59.”