More on Rebutting The Presumption of Resulting Trust

March 24, 2015 Hull & Hull LLP Estate & Trust, Estate Planning, Executors and Trustees, Litigation, TOPICS, Trustees, Wills Tags: , , , , , , 0 Comments

In Mroz v. Mroz, 2015 ONCA 171 (Ont. C.A.), the Court of Appeal returned to the issue of rebutting the presumption of resulting trust that arises upon a gratuitous transfer from the owner of the property to another or into joint tenancy with another. Here, the testatrix transferred her home to one child in joint tenancy and made a Will at the same time that provided for gifts and referred to the home. In one sense the issues were ones of interpretation of the Will (essentially were the gifts charges against the home) and in another were ones of beneficial ownership (whether the inter vivos transfer of the home was a gift). In writing for the Court, Justice Gillese made three points:

First, the transfer to the daughter inter vivos firmly engaged the presumption of resulting trust as set out in the seminal case of Pecore v. Pecore, [2007] 1 SCR 795 (S.C.C.).

Second, the onus was on the daughter who held title to the which passed to her by survivorship on her mother’s death to rebut the presumption. As set out in Sawdon Estate v. Sawdon, 2014 ONCA 101 (Ont. C.A.) the onus is discharged by rebutting the presumption on a balance of probabilities with respect to the transferor’s actual intention at the time of the gratuitous transfer.

Third, the presumption cannot be rebutted while at the same time allowing the asset to be dealt with as part of the Estate. Here the trial judge had erred in both finding that the transferor wished “to gift… [the daughter] full title to the house upon Kay’s death” and at the same time to pay out bequests set our in the Will out of proceeds of the sale of the same house. Justice Gillese held that “once the trial judge found that the sale of the Property after… [the mother’s] death was to be the source of funds for bequests under the 2004 Will, she could not find that the presumption had been rebutted.” In other words, the fact that the Will provided for gifts out of or against the house, it was clear that the presumption was correct rather than rebutted – the house was part of the Estate, not the sole property of the daughter.

It is clear that evidence and common sense respecting the intention of the transferor remains key to resolving these sorts of disputes. In Mroz v. Mroz, 2015 ONCA 171 (Ont. C.A.), it would make no sense that the read the Will as placing an obligation on the Estate Trustee (pay out bequests from the sale of the house) and at the same time put that asset beyond his or her control. The presumption of resulting trust is just that; a presumption of probable intent. Where that presumption is said to be wrong in the circumstances, it must be proved to be so.

David Freedman

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