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Legal vs. Beneficial Ownership – Not so easily distinguished?

Khan v. Estate of Ahmed I. Khan et al., 2018 ONSC 4063 is a recent decision in which the primary issue between the widow of the deceased and two of the deceased’s siblings was the beneficial ownership of a real property.

The property was purchased in 1995, with title held as between the deceased’s brother and sister as joint tenants (75:25). The deceased resided in the property and paid its expenses until his death in 2014. Prior to this death, the deceased sought agreement to have the property transferred to himself, but the transfer did not proceed.

The deceased’s widow (his second spouse) pursued a claim to the property on behalf of the deceased’s estate, asserting that it was bought by the deceased as the beneficial owner and that legal title was in the names of his siblings because of the deceased’s matrimonial proceedings. The sister and brother counter-sued, saying that they bought the property to assist the deceased financially during a difficult time and let him live in the property provided he pay the day-to-day expenses. There were also allegations on both sides of loans owing as between them.

A large part of the debate centered on the contributions towards the purchase price and whether or not that constituted evidence of the purchase of a beneficial interest in the property, which was an issue muddied by allegations regarding the source of funds paid from the bank account in question (the account was in the name of the sister, but to which the deceased had access and to which other siblings contributed).

The Court heard oral testimony, and concluded that although legal title to the property was in the names of the sister and brother, the deceased was the beneficial owner and his sister and brother were bare trustees. In so doing, it made various factual findings, including that (i) there was no evidence that the brother contributed towards the purchase price, (ii) at the time of purchase the subject bank account was comprised of monies from multiple sources, including the deceased, (iii) the deceased was entitled to the use of and had control over the monies in the account, (iv) neither the deceased nor his sister could independently fund the full purchase price (one would have needed a loan from the other), and (v) on balance, it was more likely that the sister loaned monies to the deceased to fund the purchase price.

Interestingly, section 10 of the Statute of Frauds was found to apply, thereby saving the claim from being barred as a result of the application of section 9.

Thanks for reading and have a great day,

Natalia Angelini

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