As a follow up to my last blog which considered Andrade v. Andrade, 2016 ONCA 368, today we further consider the specific issues that can arise in the litigation of competing interests in real estate and the importance of a declaration of trust.

The scenario is common: one party holds legal title to real estate and another asserts that he or she is beneficially entitled to the property having provided the funds to purchase the property or pay down the mortgage.

While evidence may be led to establish the existence of a resulting or constructive trust in favour of the applicant or plaintiff, it is tempting to simply argue that an express trust existed:  the legal owner held the property from inception in trust for the person who alleges that he or she is the beneficial owner.  Successfully advancing such an argument relieves the disappointed party from having to tender vast amounts of bank records and cancelled cheques to establish, say, a purchase money resulting trust.

The simplicity of the argument, however, requires clear evidence that satisfies the basic requirements of an express trust, and meets the requirements of the Statute of Frauds.  The successful applicant or plaintiff will have to establish that the legal owner assumed the obligations of trustee by:

• certainty of intention to create the trust;
• certainty of the identification of the subject property of the trust; and
• certainty as to the persons intended to be beneficiaries of the trust

Proving the three certainties requires documentation evidencing a property interest in trust.  The gold standard would be a trust declaration attached to a reporting letter from the purchaser’s solicitor.  In the absence of such evidence, the three certainties cannot be proved and the provisions of the Statute of Frauds are violated.  Recent cases considering this issue include Sundarampillai v. Ponnambalam, 2015 ONSC 5466, and Roberts v. Hyland, 2017 ONSC 2164.

In the absence of an express trust, equitable remedies may still be available but, as noted, the case becomes more complex from an evidentiary point of view.

Thanks for reading,

David Morgan Smith

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Resulting Trusts and What it Means to Pay for the House