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Trusts - Resulting Trust - Purchase Money Resulting Trust

Andrade v Andrade (Ont CA, 2016)

In this case the Court of Appeal commented as follows on purchase money resulting trusts:
[57] “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”: Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at para. 20.

[58] A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of property without taking legal title”: Nishi v. Rascal Trucking Ltd., 2013 SCC 33 (CanLII), [2013] 2 S.C.R. 438, at para. 21. It is one of the “classic resulting trust situations” and can arise when a party contributes directly to the purchase price or the mortgage: Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 S.C.R. 269, at para. 12, Cromwell J. noted that it has 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”.

[59] Except where title is taken in the name of a minor child, where property is acquired with one person’s money and title is put in the name of another, there is a presumption of resulting trust. While some authorities refer to a presumption of resulting trust arising when a gratuitous transfer is made between unrelated persons, the presumption of advancement between spouses was abolished by statute in Ontario (see Family Law Act, R.S.O. 1990, c. F.3, s. 14) and between parents and adult children by the Supreme Court in Pecore: see para. 36.

[60] In this case the respondent argued both at trial and on appeal that the appellant had not overcome the presumption that the legal title holders owned the house. Given the evidence of Luisa’s contributions to the purchase price and mortgages, however, the presumption here was one of resulting trust.

[61] The decision in this case however does not turn on the application of a presumption. A presumption is of greatest value in cases where evidence concerning the transferor’s intention may be lacking (for example where the transferor is deceased). “[T]he focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer … “[T]he presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities”: Pecore, at paras. 5 and 44.

[62] The trial judge referred on multiple occasions to “the parties’ intentions”, stating that he could find “no real evidence of a commonly shared intention to purchase and hold the [house] in trust for Luisa.” Common intention, however, is not the issue. The intention of the grantor or contributor alone counts, as the point of the resulting trust is that the claimant is asking for his or her own property back: Kerr v. Baranow, at para. 25.

[63] The relevant time for ascertaining intention is the time of the acquisition of the property, when the funds were advanced: Nishi v. Rascal Trucking Ltd., at paras. 30 and 41; Pecore, at para. 59. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. The court must assess the reliability of such evidence and determine what weight it should be given, guarding against evidence that is self-serving or tends to reflect a change in intention: Pecore, at para. 59.


[93] In Schwartz v. Schwartz, 2012 ONCA 239 (CanLII), title to a matrimonial home was transferred from the wife to the husband. There were competing claims to the house by the wife and the husband’s judgment creditor. The central issue was whether the wife had conveyed her entire interest in the matrimonial home to her husband. Simmons J.A. held that the fact that the transfer may have been for the purpose of insulating the wife from claims by her own potential creditors did not in itself rebut the statutory presumption of resulting trust between spouses. She stated, at paras. 42-43:
In Kerr, the Supreme Court of Canada also confirmed the view expressed in Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795, at paras. 43-44, that where there is a gratuitous transfer, the actual intention of the transferor is the governing consideration. At para. 44 of Pecore, Rothstein J. noted that 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.”

Further, as Karakatsanis J. observed in Nussbaum v. Nussbaum (2004), 2004 CanLII 23086 (ON SC), 9 R.F.L. (6th) 455 (Ont. S.C.), at paras. 20 and 32, while the “intention to gift property trumps the presumption of resulting trust”, a party's intention at the time of a conveyance is a question of fact. Further, as she stated, at para. 32, “[w]hile evidence that someone intended to fully evade creditors can be evidence that they intended to gift their entire interest in the property”, a party's actual intention remains a question of fact to be determined based on the whole of the evidence.
[94] See also Korman v. Korman, 2015 ONCA 578 (CanLII), at para. 38, where, citing the same passage from Nussbaum, and the Schwartz decision, this court confirmed that the motivation to shield property from a transferring spouse’s potential creditors does not in itself rebut the presumption of a resulting trust in a gratuitous transfer of property between spouses.

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