Pecore v. Pecore

Pecore v. Pecore
Collection
Supreme Court Judgments
Date
2007-05-03
Neutral citation
2007 SCC 17
Report
[2007] 1 SCR 795
Case number
31202
Judges
McLachlin, Beverley; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall
On appeal from
Ontario
Subjects
Estates
Notes
SCC Case Information: 31202
Decision Content
SUPREME COURT OF CANADA
Citation: Pecore v. Pecore, [2007] 1 S.C.R. 795, 2007 SCC 17
Date: 20070503
Docket: 31202
Between:
Michael Pecore
Appellant
and
Paula Pecore and Shawn Pecore
Respondents
Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
Reasons for Judgment:
(paras. 1 to 76)
Concurring Reasons:
(paras. 77 to 107)
Rothstein J. (McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish and Charron JJ. concurring)
Abella J.
______________________________
Pecore v. Pecore, [2007] 1 S.C.R. 795, 2007 SCC 17
Michael Pecore Appellant
v.
Paula Pecore and Shawn Pecore Respondents
Indexed as: Pecore v. Pecore
Neutral citation: 2007 SCC 17.
File No.: 31202.
2006: December 6; 2007: May 3.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the court of appeal for ontario
Wills and estates — Joint bank and investment accounts with right of survivorship — Presumptions of resulting trust and advancement — Father gratuitously placing assets in joint accounts with daughter — Whether assets in joint accounts to be included in father’s estate upon his death — Whether presumption of resulting trust rebutted — Whether presumption of advancement applicable — Standard of proof applicable to rebut presumptions.
Wills and estates — Joint bank and investment accounts with right of survivorship — Presumptions of resulting trust and advancement — Father gratuitously placing assets in joint accounts with daughter — Evidence to be considered in ascertaining transferor’s intention — Whether evidence of intention that arises subsequent to transfer should be excluded.
Wills and estates — Joint bank and investment accounts with right of survivorship — Nature of survivorship in context of joint accounts.
Gifts — Gratuitous transfer from parent to child — Presumption of advancement — Whether presumption applies between mother and child — Whether presumption applies only to transfers made between parent and minor child.
An ageing father gratuitously placed the bulk of his assets in joint accounts with his daughter P, who was the closest to him of his three adult children. Unlike her siblings, who were financially secure, P worked at various low‑paying jobs and took care of her quadriplegic husband, M. P’s father helped P and her family financially, including buying them a van, making improvements to their home, and assisting her son while he was attending university. P’s father alone deposited funds into the joint accounts. He continued to use and control the accounts, and declared and paid all the taxes on the income made from the assets in the accounts. In his will, P’s father left specific bequests to P, M and her children but did not mention the accounts. The residue of the estate was to be divided equally between P and M. Upon the father’s death, P redeemed the balance in the joint accounts on the basis of a right of survivorship. P and M later divorced, and a dispute over the accounts arose during their matrimonial property proceedings. M claimed that P held the balance in the accounts in trust for the benefit of her father’s estate and, consequently, the assets formed part of the residue and should be distributed according to the will. The trial judge held that P’s father intended to make a gift of the beneficial interest in the accounts upon his death to P alone, concluding that the evidence failed to rebut the presumption of advancement. The Court of Appeal dismissed M’s appeal, but found that it was not necessary to rely on the presumption of advancement because the presumption is only relevant in the absence of evidence of actual intention or where the evidence is evenly balanced.
Held: The appeal should be dismissed.
Per McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Charron and Rothstein JJ.: The long‑standing common law presumptions of advancement and resulting trust continue to play a role in disputes over gratuitous transfers. These presumptions provide a guide for courts where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive. They also provide a measure of certainty and predictability for individuals who put property in joint accounts or make other gratuitous transfers. The presumption of resulting trust is the general rule for gratuitous transfers and the onus is placed on the transferee to demonstrate that a gift was intended. However, depending on the nature of the relationship between the transferor and transferee, the presumption of advancement may apply and it will fall on the party challenging the transfer to rebut the presumption of a gift. The civil standard of proof is applicable to rebut the presumptions. The applicable presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities. [23‑24] [27] [43‑44]
In the context of a transfer to a child, the presumption of advancement, which applies equally to fathers and mothers, is limited in its application to gratuitous transfers made by parents to minor children. Given that a principal justification for the presumption of advancement is parental obligation to support dependent children, the presumption does not apply in respect of independent adult children. Moreover, since it is common nowadays for ageing parents to transfer their assets into joint accounts with their adult children in order to have that child assist them in managing their financial affairs, there should be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs. The presumption of advancement is also not applicable to dependent adult children because it would be impossible to list the wide variety of the circumstances that make someone “dependent” for the purpose of applying the presumption. Courts would have to determine on a case‑by‑case basis whether or not a particular individual is “dependent”, creating uncertainty and unpredictability in almost every instance. While dependency will not be a basis on which to apply the presumption, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust. [33] [36] [40‑41]
With joint accounts, the rights of survivorship, both legal and equitable, vest when the account is opened. The gift of those rights is therefore inter vivos in nature. Since the nature of a joint account is that the balance will fluctuate over time, the gift in these circumstances is the transferee’s survivorship interest in the account balance at the time of the transferor’s death. The presumption of a resulting trust means in that context that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. [48] [50] [53]
The types of evidence that should be considered in ascertaining a transferor’s intent will depend on the facts of each case. The evidence considered by a court may include the wording used in bank documents, the control and use of the funds in the account, the granting of a power of attorney, the tax treatment of the joint account, and evidence subsequent to the transfer if such evidence is relevant to the transferor’s intention at the time of the transfer. The weight to be placed on a particular piece of evidence in determining intent should be left to the discretion of the trial judge. [55] [59‑62] [69]
In this case, the trial judge erred in applying the presumption of advancement. P, although financially insecure, was not a minor child. The presumption of a resulting trust should therefore have been applied. Nonetheless, this error does not affect the disposition of the appeal because the trial judge found that the evidence clearly demonstrated the intention on the part of the father that the balance left in the joint accounts was to go to P alone on his death through survivorship. This strong finding regarding the father’s actual intention shows that the trial judge’s conclusion would have been the same even if he had applied the presumption of a resulting trust. [75]
Per Abella J.: The trial judge properly applied the correct legal presumption to the facts of the case. Historically, the presumption of advancement has been applied to gratuitous transfers to children, regardless of the child’s age, and there is no reason now to limit its application to non‑adult children. The argument that a principal justification for the presumption was the parental obligation to support dependent children unduly narrows and contradicts the historical rationale for the presumption. Parental affection, no less than parental obligation, has always grounded the presumption of advancement. Furthermore, the intention to have an adult child manage a parent’s financial affairs during his or her lifetime is hardly inconsistent with the intention to make a gift of money in a joint account to that child. Parents generally want to benefit their children out of love and affection. If children assist them with their affairs, this cannot logically be a reason for displacing the assumption that parents desire to benefit them. It is equally plausible that an elderly parent who gratuitously enters into a joint bank account with an adult child on whom he or she depends for assistance intends to make a gift in gratitude for this assistance. If the intention is merely to have assistance in financial management, a power of attorney would suffice, as would a bank account without survivorship rights. Accordingly, since the presumption of advancement emerged no less from affection than from dependency, and since parental affection flows from the inherent nature of the relationship not of the dependency, the presumption of advancement should logically apply to all gratuitous transfers from parents to their children, regardless of the age or dependency of the child or the parent. The natural affection parents are presumed to have for their adult children when both were younger should not be deemed to atrophy with age. [79] [89] [100] [102] [107]
In any event, bank account documents which, as in this case, specifically confirm a survivorship interest should be deemed to reflect an intention that what has been signed is sincerely meant. There is no justification for ignoring the presumptive relevance of clear language in banking documents in determining the transferor’s intention. [104]
Cases Cited
By Rothstein J.
Referred to: Csak v. Aumon (1990), 69 D.L.R. (4th) 567; Carter v. Carter (1969), 70 W.W.R. 237; Re Mailman Estate, [1941] S.C.R. 368; Niles v. Lake, [1947] S.C.R. 291; Rathwell v. Rathwell, [1978] 2 S.C.R. 436; Saylor v. Madsen Estate (2005), 261 D.L.R. (4th) 597, aff’g (2004), 13 E.T.R. (3d) 44; Hyman v. Hyman, [1934] 4 D.L.R. 532; Grey (Lord) v. Grey (Lady) (1677), Rep. Temp. Finch 338, 23 E.R. 185; Lattimer v. Lattimer (1978), 18 O.R. (2d) 375; Edwards v. Bradley, [1957] S.C.R. 599, rev’g [1956] O.R. 225; Rupar v. Rupar (1964), 49 W.W.R. 226; Dagle v. Dagle Estate (1990), 38 E.T.R. 164; Re Wilson (1999), 27 E.T.R. (2d) 97; McLear v. McLear Estate (2000), 33 E.T.R. (2d) 272; Cooper v. Cooper Estate (1999), 27 E.T.R. (2d) 170; Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47; Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204; Bayley v. Trusts and Guarantee Co., [1931] 1 D.L.R. 500; Johnstone v. Johnstone (1913), 12 D.L.R. 537; Pettitt v. Pettitt, [1970] A.C. 777; McGrath v. Wallis, [1995] 2 F.L.R. 114; Dreger (Litigation Guardian of) v. Dreger (1994), 5 E.T.R. (2d) 250; Burns Estate v. Mellon (2000), 48 O.R. (3d) 641; Lohia v. Lohia, [2001] EWCA Civ 1691 (BAILII); Standing v. Bowring (1885), 31 Ch. D. 282; Hill v. Hill (1904), 8 O.L.R. 710; Larondeau v. Laurendeau, [1954] O.W.N. 722; Re Reid (1921), 64 D.L.R. 598; Mordo v. Nitting, [2006] B.C.J. No. 3081 (QL), 2006 BCSC 1761; Shaw v. MacKenzie Estate (1994), 4 E.T.R. (2d) 306; Reber v. Reber (1988), 48 D.L.R. (4th) 376; Russell v. Scott (1936), 55 C.L.R. 440; Young v. Sealey, [1949] 1 All E.R. 92; Aroso v. Coutts, [2002] 1 All E.R. (Comm) 241, [2001] EWHC Ch 443; Matter of Totten, 179 N.Y. 112 (1904); Matter of Berson, 566 N.Y.S.2d 74 (1991); Matter of Halpern, 303 N.Y. 33 (1951); Clemens v. Clemens Estate, [1956] S.C.R. 286; Jeans v. Cooke (1857), 24 Beav. 513, 53 E.R. 456; Shephard v. Cartwright, [1955] A.C. 431; Neazor v. Hoyle (1962), 32 D.L.R. (2d) 131; Lavelle v. Lavelle, [2004] EWCA Civ 223 (BAILII); Taylor v. Wallbridge (1879), 2 S.C.R. 616.
By Abella J.
Madsen Estate v. Saylor, [2007] 1 S.C.R. 838, 2007 SCC 18, aff’g (2005), 261 D.L.R. (4th) 597, aff’g (2004), 13 E.T.R. (3d) 44; Nelson v. Nelson (1995), 184 C.L.R. 538; Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204; Pettitt v. Pettitt, [1970] A.C. 777; Rathwell v. Rathwell, [1978] 2 S.C.R. 436; Grey (Lord) v. Grey (Lady) (1677), 2 Swans. 594, 36 E.R. 742; Sidmouth v. Sidmouth (1840), 2 Beav. 447, 48 E.R. 1254; Scawin v. Scawin (1841), 1 Y. & C.C.C. 65, 62 E.R. 792; Hepworth v. Hepworth (1870), L.R. 11 Eq. 10; Dreger (Litigation Guardian of) v. Dreger (1994), 5 E.T.R. (2d) 250; Cooper v. Cooper Estate (1999), 27 E.T.R. (2d) 170; McLear v. McLear Estate (2000), 33 E.T.R. (2d) 272; Young v. Young (1958), 15 D.L.R. (2d) 138; Oliver Estate v. Walker, [1984] B.C.J. No. 460 (QL); Dagle v. Dagle Estate (1990), 38 E.T.R. 164; Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47; Reain v. Reain (1995), 20 R.F.L. (4th) 30; Sodhi v. Sodhi, [1998] 10 W.W.R. 673; Re Wilson (1999), 27 E.T.R. (2d) 97; Kappler v. Beaudoin, [2000] O.J. No. 3439 (QL); Clarke v. Hambly (2002), 46 E.T.R. (2d) 166, 2002 BCSC 1074; Plamondon v. Czaban (2004), 8 E.T.R. (3d) 135, 2004 ABCA 161; Re Mailman Estate, [1941] S.C.R. 368; Niles v. Lake, [1947] S.C.R. 291; Edwards v. Bradley, [1957] S.C.R. 599.
Statutes and Regulations Cited
Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .), s. 26.1(2) .
Family Law Act, R.S.N.L. 1990, c. F‑2, s. 31(1).
Family Law Act, R.S.O. 1990, c. F.3, ss. 14, 31, 32.
Family Law Act, R.S.P.E.I. 1988, c. F‑2.1, s. 14(1).
Family Law Act, S.N.W.T. 1997, c. 18, s. 46(1).
Family Property Act, S.S. 1997, c. F‑6.3, s. 50(1).
Family Property and Support Act, R.S.Y. 2002, c. 83, s. 7(2).
Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .), s. 73 .
Marital Property Act, S.N.B. 1980, c. M‑1.1, s. 15(1).
Matrimonial Property Act, R.S.N.S. 1989, c. 275, s. 21(1).
Statute of Uses, 1535, 27 Hen. 8, c. 10.
Authors Cited
American Law Institute. Restatement (Third) of Trusts. St. Paul, Minn.: The Institute, 2003.
Chambers, Robert. “Resulting Trusts in Canada” (2000), 38 Alta. L. Rev. 378.
Freedman, C. D. “Reassessing Gratuitous Transfers by Parents to Adult Children” (2006), 25 E.T.P.J. 174.
Gillese, Eileen E., and Martha Milczynski. The Law of Trusts, 2nd ed. Toronto: Irwin Law, 2005.
Oosterhoff on Trusts: Text, Commentary and Materials, 6th ed. by A. H. Oosterhoff et al. Toronto: Thomson, 2004.
Sopinka, John, Sidney N. Lederman and Alan W. Bryant. The Law of Evidence in Canada, 2nd ed. Toronto: Butterworths, 1999.
Waters’ Law of Trusts in Canada, 3rd ed. by Donovan W. M. Waters, Mark R. Gillen and Lionel D. Smith, eds. Toronto: Thomson, 2005.
Ziff, Bruce. Principles of Property Law, 4th ed. Toronto: Thomson, 2006.
APPEAL from a judgment of the Ontario Court of Appeal (Weiler, Rosenberg and Lang JJ.A.) (2005), 19 E.T.R. (3d) 162, 17 R.F.L. (6th) 261, 202 O.A.C. 158, [2005] O.J. No. 3712 (QL), affirming a decision of Karam J. (2004), 7 E.T.R. (3d) 113, 48 R.F.L. (5th) 89, [2004] O.J. No. 695 (QL). Appeal dismissed.
Andrew M. Robinson and Megan L. Mackey, for the appellant.
Bryan C. McPhadden and Fabrice Gouriou, for the respondents.
The judgment of McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Charron and Rothstein JJ. was delivered by
Rothstein J. —
I. Introduction
1 This appeal involves questions about joint bank and investment accounts where only one of the account holders deposits funds into the account. These types of joint accounts are used by many Canadians for a variety of purposes, including estate-planning and financial management. Given their widespread use, the law relating to how these accounts are to be treated by courts after the death of one of the account holders is a matter appropriate for this Court to address.
2 Depending on the terms of the agreement between the bank and the two joint account holders, each may have the legal right to withdraw any or all funds from the accounts at any time and each may have a right of survivorship. If only one of the joint account holders is paying into the account and he or she dies first, it raises questions about whether he or she intended to have the funds in the joint account go to the other joint account holder alone or to have those funds distributed according to his or her will. How to answer this question is the subject of this appeal.
3 In the present case, an ageing father gratuitously placed his mutual funds, bank account and income trusts in joint accounts with his daughter, who was one of his adult children. The father alone deposited funds into the accounts. Upon his death, a balance remained in the accounts.
4 It is not disputed that the daughter took legal ownership of the balance in the accounts through the right of survivorship. Equity, however, recognizes a distinction between legal and beneficial ownership. The beneficial owner of property has been described as “the real owner of property even though it is in someone else’s name”: Csak v. Aumon (1990), 69 D.L.R. (4th) 567 (Ont. H.C.J.), at p. 570. The question is whether the father intended to make a gift of the beneficial interest in the accounts upon his death to his daughter alone or whether he intended that his daughter hold the assets in the accounts in trust for the benefit of his estate to be distributed according to his will.
5 While the focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer, intention is often difficult to ascertain, especially where the transferor is deceased. Common law rules have developed to guide a court’s inquiry. This appeal raises the following issues:
1. Do the presumptions of resulting trust and advancement continue to apply in modern times?
2. If so, on what standard will the presumptions be rebutted?
3. How should courts treat survivorship in the context of a joint account?
4. What evidence may courts consider in determining the intent of a transferor?
6 In this case, the trial judge found that the father actually intended a gift and held that his daughter may retain the assets in the accounts. The Court of Appeal dismissed the appeal of the daughter’s ex-husband.
7 I conclude that there is no basis to overturn this result. The appeal should be dismissed.
II. Facts
8 The dispute is between Paula Pecore and her ex-husband Michael Pecore regarding who is entitled to the assets held in joint accounts between Paula and her father upon her father’s death. The assets in the joint accounts in dispute totalled almost $1,000,000 at the time Paula’s father died in 1998.
9 Paula has two siblings but of the three, she was the closest to their father. In fact, her father was estranged from one of her sisters until shortly before his death in 1998. Unlike her siblings who were financially secure, Paula worked at various low-paying jobs and took care of her quadriplegic husband Michael. Her father helped her and her family financially by, for example, buying them a van, making improvements to their home, and assisting her son while he was attending university.
10 In 1993, Paula’s father was told by a financial advisor that by placing his assets in joint ownership, he could avoid “the payment of probate fees and taxes and generally make after-death disposition less expensive and less cumbersome” ((2004), 7 E.T.R. (3d) 113, at para. 7). In February of 1994, he began transferring some of his assets which were mainly either in bank accounts or in mutual funds to himself and to Paula jointly, with a right of survivorship (ibid., at para. 6). In 1996, Paula’s father was advised by his accountant that for tax purposes, transfers to his daughter (as opposed to a spouse) could trigger a capital gain, with the result that tax on the gain would be due as of the year of disposition. As a result, Paula’s father wrote letters to the financial institutions purporting to deal with the tax implications. In these letters he stated that he was “the 100% owner of the assets and the funds are not being gifted to Paula” (ibid., at para. 10).
11 Paula’s father continued to use and control the accounts after they were transferred into joint names. He declared and paid all the taxes on the income made from the assets in the accounts. Paula made some withdrawals but was required to notify her father before doing so. According to her, this was because her father wanted to ensure there were sufficient funds available for her to withdraw.
12 In early 1998, Paula’s father drafted what was to be his last will. By this time, he had already transferred the bulk of his assets into the joint accounts with Paula. For the first time, he named Michael in his will. The will left specific bequests to Paula, Michael and her children (whom Michael had adopted), but did not mention the accounts. The residue of the estate was to be divided equally between Paula and Michael.
13 The lawyer who drafted the will testified that he asked Paula’s father “about such things as registered retirement savings plans, R.R.I.F.s, registered pension plans, life insurance, and in each case satisfied [him]self that they were not items which would pass as the result of a will and so that they needn’t be included in the will” (ibid., at para. 37). There was no discussion about the joint investment and bank accounts.
14 In 1998, Paula’s father moved into Paula and Michael’s house. In 1997 and 1998, the father had expressed to others, including one of Paula’s sisters, that he was going to take care of Paula after his death, but said the “system” would take care of Michael.
15 Paula’s father died in December 1998. His estate paid tax on the basis of a deemed disposition of the accounts to Paula immediately before his death.
16 Paula and Michael later divorced. The dispute over the accounts arose during their matrimonial property proceedings.
III. Judicial History
A. Ontario Superior Court of Justice (2004), 7 E.T.R. (3d) 113
17 The trial judge looked at the operation of the presumption of a resulting trust and the presumption of advancement and found that the latter applied given Paula’s relationship with her father. Karam J. concluded that the evidence failed to rebut the presumption of advancement and held that the money in the joint accounts therefore belonged to Paula. He found that the evidence clearly indicated that Paula’s father intended to gift the beneficial ownership of those assets held in joint ownership to her while he continued to manage and control them on a day-to-day basis before his death.
B. Ontario Court of Appeal (2005), 19 E.T.R. (3d) 162
18 The Court of Appeal agreed with the trial judge that there was ample evidence to show that Paula’s father intended to give Paula beneficial interest in his investments when he placed them in joint ownership. As a result, Lang J.A. found that it was not necessary to rely on the presumption of advancement, saying that a presumption is only relevant when evidence of actual intention is evenly balanced or when there is no evidence of actual intention.
IV. Analysis
A. Do the Presumptions of Resulting Trust and Advancement Continue to Apply in Modern Times?
19 A discussion of the treatment of joint accounts after the death of the transferor must begin with a consideration of the common law approach to ascertaining the intent of the deceased person.
20 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: see D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (3rd ed. 2005), at p. 362. While the trustee almost always has the legal title, in exceptional circumstances it is also possible that the trustee has equitable title: see Waters’ Law of Trusts, at p. 365, noting the case of Carter v. Carter (1969), 70 W.W.R. 237 (B.C.S.C.).
21 Advancement is a gift during the transferor’s lifetime to a transferee who, by marriage or parent-child relationship, is financially dependent on the transferor: see Waters’ Law of Trusts, at p. 378. In the context of the parent-child relationship, the term has also been used because “the father was under a moral duty to advance his children in the world”: A. H. Oosterhoff et al., Oosterhoff on Trusts: Text, Commentary and Materials (6th ed. 2004), at p. 575 (emphasis added).
22 In certain circumstances which are discussed below, there will be a presumption of resulting trust or presumption of advancement. Each are rebuttable presumptions of law: see e.g. Re Mailman Estate, [1941] S.C.R. 368, at p. 374; Niles v. Lake, [1947] S.C.R. 291; Rathwell v. Rathwell, [1978] 2 S.C.R. 436, at p. 451; J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 115. A rebuttable presumption of law is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption. The presumption shifts the burden of persuasion to the opposing party who must rebut the presumption: see Sopinka et al., at pp. 105-6.
23 For the reasons discussed below, I think the long-standing common law presumptions continue to have a role to play in disputes over gratuitous transfers. 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. This may be especially true when the transferor is deceased and thus is unable to tell the court his or her intention in effecting the transfer. In addition, as noted by Feldman J.A. in the Ontario Court of Appeal in Saylor v. Madsen Estate (2005), 261 D.L.R. (4th) 597, the advantage of maintaining the presumption of advancement and the presumption of a resulting trust is that they provide a measure of certainty and predictability for individuals who put property in joint accounts or make other gratuitous transfers.
1. The Presumption of Resulting Trust
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.
26 In cases where the transferor is deceased and the dispute is between the transferee and a third party, the presumption of resulting trust has an additional justification. In such cases, it is the transferee who is better placed to bring evidence about the circumstances of the transfer.
2. The Presumption of Advancement
27 The presumption of resulting trust is the general rule for gratuitous transfers. However, depending on the nature of the relationship between the transferor and transferee, the presumption of a resulting trust will not arise and there will be a presumption of advancement instead: see Waters’ Law of Trusts, at p. 378. If the presumption of advancement applies, it will fall on the party challenging the transfer to rebut the presumption of a gift.
28 Historically, the presumption of advancement has been applied in two situations. The first is where the transferor is a husband and the transferee is his wife: Hyman v. Hyman, [1934] 4 D.L.R. 532 (S.C.C.), at p. 538. The second is where the transferor is a father and the transferee is his child, which is at issue in this appeal.
29 One of the earliest documented cases where a judge applied the presumption of advancement is the 17th century decision in Grey (Lord) v. Grey (Lady) (1677), Rep. Temp. Finch 338, 23 E.R. 185:
. . . the Law will never imply a Trust, because the natural Consideration of Blood, and the Obligation which lies on the Father in Conscience to provide for his Son, are predominant, and must over‑rule all manner of Implications. [Underlining added; p. 187.]
30 As stated in Grey, the traditional rationale behind the presumption of advancement between father and child is that a father has an obligation to provide for his sons. See also Oosterhoff on Trusts, at p. 575. The presumption also rests on the assumption that parents so commonly intend to make gifts to their children that the law should presume as much: ibid., at pp. 581 and 598.
31 While historically the relationship between father and child gave rise to the presumption of advancement, courts in Canada have been divided as to whether the relationship between mother and child does as well. Some have concluded that it does not: see e.g. Lattimer v. Lattimer (1978), 18 O.R. (2d) 375 (H.C.J.), relying on Cartwright J.’s concurring judgment in Edwards v. Bradley, [1957] S.C.R. 599. Others have found that it does: see e.g. Rupar v. Rupar (1964), 49 W.W.R. 226 (B.C.S.C.); Dagle v. Dagle Estate (1990), 38 E.T.R. 164 (P.E.I.S.C., App. Div.); Re Wilson (1999), 27 E.T.R. (2d) 97 (Ont. Ct. (Gen. Div.)). In concluding that the presumption applies to mothers and children in Re Wilson, Fedak J., at para. 50, took into consideration “the natural affection between a mother and child, legislative changes requiring mothers to support their children, the economic independence of women and the equality provisions of the Charter”.
32 The question of whether the presumption applies between mother and child is not raised in these appeals, as the transfers in question occurred between a father and daughter, but I shall deal with it briefly. Unlike when the presumption of advancement was first developed, women today have their own financial resources. They also have a statutory obligation to financially support their children in the same way that fathers do. Section 26.1(2) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .), for instance, refers to the “principle” that spouses have a “joint financial obligation to maintain the children”, and s. 31(1) of the Family Law Act, R.S.O. 1990, c. F.3, provides that “[e]very parent has an obligation to provide support for his or her unmarried child who is a minor or is enrolled in a full time program of education, to the extent that the parent is capable of doing so.” Oosterhoff et al. have also commented on this issue in Oosterhoff on Trusts, saying at p. 575, “Mothers and fathers are now under equal duties to care for their children and are equally likely to intend to make gifts to them. . . . In Canada, it is now accepted that mothers and fathers should be treated equally.”
33 I agree. As women now have both the means as well as obligations to support their children, they are no less likely to intend to make gifts to their children than fathers. The presumption of advancement should thus apply equally to fathers and mothers.
34 Next, does the presumption of advancement apply between parents and adult independent children? A number of courts have concluded that it should not. In reaching that conclusion, Heeney J. in McLear v. McLear Estate (2000), 33 E.T.R. (2d) 272 (Ont. S.C.J.), at paras. 40-41, focussed largely on the modern practice of elderly parents adding their adult children as joint account holders so that the children can provide assistance with the management of their parents’ financial affairs:
Just as Dickson J. considered “present social conditions” in concluding that the presumption of advancement between husbands and wives had lost all relevance, a consideration of the present social conditions of an elderly parent presents an equally compelling case for doing away with the presumption of advancement between parent and adult child. We are living in an increasingly complex world. People are living longer, and it is commonplace that an ageing parent requires assistance in managing his or her daily affairs. This is particularly so given the complexities involved in managing investments to provide retirement income, paying income tax on those investments, and so on. Almost invariably, the duty of assisting the ageing parent falls to the child who is closest in geographic proximity. In such cases, Powers of Attorney are routinely given. Names are “put on” bank accounts and other assets, so that the child can freely manage the assets of the parent.
Given these social conditions, it seems to me that it is dangerous to presume that the elderly parent is making a gift each time he or she puts the name of the assisting child on an asset. The presumption that accords with this social reality is that the child is holding the property in trust for the ageing parent, to facilitate the free and efficient management of that parent’s affairs. The presumption that accords with this social reality is, in other words, the presumption of resulting trust.
35 Heeney J. also noted that the fact that the child was independent and living away from home featured very strongly in Kerwin C.J.’s reasons for finding that no presumption of advancement arose in Edwards v. Bradley. A similar conclusion was reached by Klebuc J., as he was then, in Cooper v. Cooper Estate (1999), 27 E.T.R. (2d) 170 (Sask. Q.B.), at para. 19: “I have serious doubts as to whether presumption of advancement continues to apply with any degree of persuasiveness in Saskatchewan in circumstances where an older parent has transferred property to an independent adult child who is married and lives apart from his parent.” Waters et al., too in Waters’ Law of Trusts, at p. 395, said: “It may well be that, reflecting the financial dependency that it probably does, contemporary opinion would accord [the presumption of advancement] little weight as between a father and an independent, adult child.”
36 I am inclined to agree. First, given that a principal justification for the presumption of advancement is parental obligation to support their dependent children, it seems to me that the presumption should not apply in respect of independent adult children. As Heeney J. noted in McLear, at para. 36, parental support obligations under provincial and federal statutes normally end when the child is no longer considered by law to be a minor: see e.g. Family Law Act, s. 31. Indeed, not only do child support obligations end when a child is no longer dependent, but often the reverse is true: an obligation may be imposed on independent adult children to support their parents in accordance with need and ability to pay: see e.g. Family Law Act, s. 32. Second, I agree with Heeney J. that it is common nowadays for ageing parents to transfer their assets into joint accounts with their adult children in order to have that child assist them in managing their financial affairs. There should therefore be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs.
37 Some commentators and courts have argued that while an adult, independent child is no longer financially dependent, the presumption of advancement should apply on the basis of parental affection for their children: see e.g. Madsen Estate, at para. 21; Dagle; Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47 (Ont. Ct. (Gen. Div.)); and Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204 (Ont. S.C.J.). I do not agree that affection is a basis upon which to apply the presumption of advancement to the transfer. Indeed, the factor of affection applies in other relationships as well, such as between siblings, yet the presumption of advancement would not apply in those circumstances. However, I see no reason why courts cannot consider evidence relating to the quality of the relationship between the transferor and transferee in order to determine whether the presumption of a resulting trust has been rebutted.
38 The remaining question is whether the presumption of advancement should apply in the case of adult dependent children. In the present case the trial judge, at paras. 26-28, found that Paula, despite being a married adult with her own family, was nevertheless dependent on her father and justified applying the presumption of advancement on that basis.
39 The question of whether the presumption applies to adult dependent children begs the question of what constitutes dependency for the purpose of applying the presumption. Dependency is a term susceptible to an enormous variety of circumstances. The extent or degree of dependency can be very wide ranging. While it may be rational to presume advancement as a result of dependency in some cases, in others it will not. For example, it is not difficult to accept that in some cases a parent would feel a moral, if not legal, obligation to provide for the quality of life for an adult disabled child. This might especially be the case where the disabled adult child is under the charge and care of the parent.
40 As compelling as some cases might be, I am reluctant to apply the presumption of advancement to gratuitous transfers to “dependent” adult children because it would be impossible to list the wide variety of the circumstances that make someone “dependent” for the purpose of applying the presumption. Courts would have to determine on a case-by-case basis whether or not a particular individual is “dependent”, creating uncertainty and unpredictability in almost every instance. I am therefore of the opinion that the rebuttable presumption of advancement with regard to gratuitous transfers from parent to child should be preserved but be limited in application to transfers by mothers and fathers to minor children.
41 There will of course be situations where a transfer between a parent and an adult child was intended to be a gift. It is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In addition, while dependency will not be a basis on which to apply the presumption of advancement, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust.
B. On What Standard Will the Presumptions Be Rebutted?
42 There has been some debate amongst courts and commentators over what amount of evidence is required to rebut a presumption. With regard to the presumption of resulting trust, some cases appear to suggest that the criminal standar