July 19, 2023 – Gifts & The Presumption of Resulting Trust

“The leading decision on the subject of gifting is Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. In that decision, Rothstein J. confirmed that two presumptions, that is, the presumption of a resulting trust and the presumption of advancement, continue to have a role to play in disputes over gratuitous transfers. He said that the presumptions “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive”: at para. 23.

The presumption of advancement does not apply in this case. Neither party suggests that it does. Rather, it is the presumption of a resulting trust that is in play. With respect to that presumption, Rothstein J. said, at para. 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. This is so because equity presumes bargains, not gifts. [Citations omitted.]

Accepting that is the case, one must examine the balance of the evidence to determine what the intention was with respect to the monies that Alex contributed to the purchase of the two homes. In considering that issue, the trial judge failed to address the central point that arises from the presumption, that is, the intention of the transferor, namely, Alex. Contrary to the respondent’s submission, it is not the intention of both parties that is relevant. This central point was made clear in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, where Cromwell J. said, at para. 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, [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 in original.]

On this point, the nature of the onus or burden that rests on Ron, in terms of rebutting the presumption, is the civil standard of a balance of probabilities. In other words, Ron must establish, on a balance of probabilities, that it was Alex’s intention to gift these monies: Pecore, at para. 43. The standard of proof on a balance of probabilities requires “clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, at para. 46.

The trial judge erred in extrapolating from the fact of joint tenancy, entered into with the intention of Ron taking a right of survivorship in the homes, to a finding of an intention to gift Ron the funds contributed by Alex for the acquisition of the homes. The point that a right of survivorship alone is not sufficient to rebut the presumption of a resulting trust that operates during the parties’ joint lives is clearly made in Mark Gillen, Lionel Smith & Donovan W.M. Waters, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada, 2012), at § 10.II.B.2 (WL):

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 a 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. [Footnote omitted.] [Emphasis added.]

To assert an “immediate gift” of the “beneficial ownership” of the funds contributed by Alex, Ron “must, in Rothstein J.’s words, ‘rebut the presumption of resulting trust by bringing evidence to support [his] claim’”: Bergen v. Bergen, 2013 BCCA 492, 52 B.C.L.R. (5th) 258, at para. 42, citing Pecore, at para. 41; see also Christopher v. Freitas, 2019 ONCA 84, at para. 5.”

         MacIntyre v. Winter, 2021 ONCA 516 (CanLII) at 17-18, 24-25, 33-34