Regretting the Gift

February 16, 2018 Hull & Hull LLP Estate & Trust, Estate Planning, Uncategorized Tags: 0 Comments

On January 5, 2018, I blogged on the unwillingness of the court to undo a gift made by a father to an adult child.  There, the court held that the gift was valid, and that it could not be undone despite the later change of heart of the father. The decision was upheld by the Ontario Court of Appeal.

The issue was considered again, in the context of a marriage breakdown, in the decision of Johnston v. Song, 2018 ONSC 1005 (CanLII). There, the man purchased a home in 2003. He began to cohabit with the woman in 2005. They had a child together, born in 2007. In December 2016, the man transferred the house from himself to himself and the woman as joint tenants. The woman left the man in January 2017.

In the separation proceedings, the woman claimed half of the value of the house. The man sought an order removing the woman’s name from title.

The court considered the presumption of resulting trust. A resulting trust arises when title to property is put in one person’s name, but that party, because they gave no consideration, is under an obligation to return it to the original titleholder. A presumption of resulting trust arises where the transfer is gratuitous. However, the presumption is rebuttable. The recipient must demonstrate, on a balance of probabilities, that a gift was intended.

[Note that in the context of married spouses, s. 14 of the Family Law Act provides that property held in the name of married spouses as joint tenants is proof, in absence of evidence to the contrary, that the spouses intended to own the property as joint tenants. This section ousts the presumption of resulting trust. However, this provision did not apply in this case as the spouses were not married.]

As the presumption applied, the woman had to establish that the transfer to joint tenancy was a gift. To establish a gift, she had to show: 1. an intention to make a gift on the part of the donor; 2. acceptance of the gift; and 3. a sufficient act of delivery. The court held that these elements were established, and that the transfer was a gift, thereby rebutting the presumption of resulting trust.

To support this conclusion, the court observed that the man was not misled or pressured into making the transfer. There was no evidence that the transfer was conditional upon their relationship surviving. There was no evidence of undue influence or coercion that would invalidate the gift. Finally, there was no evidence that the man retained any right, express or implied, to revoke the transfer.

Importantly, the court stated that “While [the man’s] intentions may have changed after December 6, 2016 and, in particular, after January 6, 2017, it was his intention at the time of the transfer that governs.” The court quoted from Griffith v. Davidson, a similar transfer to joint tenancy case, where the court stated: “the fact that the donor comes to regret the gift based on an unexpected turn of events cannot cause an otherwise absolute gift to morph into a conditional one”.

The man also asserted the doctrine of unjust enrichment. The court rejected this argument by stating that the finding of a gift fully rebuts any “presumption” of unjust enrichment. Put another way, the gift is the juristic reason for the enrichment.

A lesson from this line of cases is to be careful of what you give. If you make an unconditional gift, you will not likely be able to get it back.

Have a great weekend.

Paul Trudelle

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