Tag: pecore v. pecore

03 Feb

A Third Look at PGT v Cherneyko, 2021

Ian Hull Capacity, Elder Law, Guardianship, Litigation, Power of Attorney Tags: , , , , , , 0 Comments

Earlier this year, our colleague Doreen So, blogged in two parts (here and here) on the matter of PGT v Cherneyko. It is a blog that discusses a litany of failures by an attorney for property. While Doreen covered the facts in full, they are worth repeating here in part:

“Jean Cherneyko is a 90-year-old woman.  Jean did not have any children of her own.  Her closest known relative was a niece in the US.  By the time of the PGT application, Jean was in a long-term care home.  Prior to that, Jean lived alone in the same home that she had lived in since 1969.  Jean had a friend named Tina who she had known for about five years.  On August 15, 2019, Jean and Tina went to a lawyer’s office.  Jean named Tina as her attorney for property and personal care.  Jean also made a new Will which named Tina as the estate trustee and sole beneficiary of her estate.  A week or so later on August 27th, Jean and Tina went to Jean’s bank where $250,000.00 was transferred to Tina […]”

The PGT applied to take over as guardian for property and, among other things, to set aside the gift to Tina. The court agreed and ordered the $250,000 returned to Jean on the basis of resulting trust.

In a novel approach to the law of gifts, the court in Cherneyko relied on Pecore to establish that the gift ought to be returned, saying: “The leading Canadian case on the law of gifts, the Supreme Court of Canada in Pecore v Pecore, 2007 SCC 17 (CanLII) at paras. 24-26 established that where a gratuitous transfer of property is found, there is a presumption of a resulting trust. The onus falls to the recipient to rebut the presumption.” In the court’s view, Tina failed to rebut the presumption.

But this represents a new application of the Supreme Court’s analysis and it’s worth revisiting Pecore.

In 2007, Justice Rothstein, writing for a unanimous court (Justice Abella concurring) looked closely at gratuitous gifts of joint bank accounts, between parents and children, and whether the presumption of resulting trust and advancement applied in modern times:

“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.”

The decision in Cherneyko represents a significant expansion of the principles of Pecore by applying them to inter vivos gifts between unrelated adults. Traditionally, if the courts determine that a transferor lacked the requisite capacity, the gift is void as the transferor lacked the capacity to form the proper intention to gift. Ball v. Mannin, an almost 200-year-old UK case established the original test for granting a gift and held that a person had capacity if the person was “capable of understanding what he did by executing the deed in question, when its general purport was fully explained to him.” The Supreme Court has previously outlined a separate test in Geffen v Goodman Estate in 1991, examining the nature of the relationship itself, and applying a presumption of undue influence where there is the presence of a dominant relationship. While the failed gift in Cherneyko was ultimately returned under a resulting trust, it will be fascinating to see if other courts also continue this expansion of Pecore.  We’ll keep you posted.

Thanks for reading!

Ian Hull and Daniel Enright

 

26 Aug

The Novel Case of Calmusky v. Calmusky

Ian Hull Litigation Tags: , , , 2 Comments

There are relatively few circumstances in which a court will stifle, rather than vindicate, a deceased person’s testamentary intentions. If a testator wished to give all of his or her assets to a charity for cats, but did not leave adequate funds for his or her dependants, the testator’s will may be varied in order to support the dependants. When a deceased person assigned insurance policy proceeds to his spouse, but previously he had promised an ex-spouse that if she paid the insurance premiums, the proceeds would go to her, the courts interceded, in spite of the designation to the spouse, and awarded the proceeds to the ex-spouse on the basis of unjust enrichment.

In this blog we shall discuss Calmusky v. Calmusky, a recent decision which may have added another context in which courts can upset a deceased person’s testamentary intentions.

Gary and Randy were the sons of Henry, the deceased. In Henry’s last will, he left the residue of his estate to one of Randy’s children and his, Henry’s, nephew. Upon Henry’s death, his interests in bank accounts jointly held between he and Gary were transferred to Gary by right of survivorship. He also made Gary a joint holder of his Registered Income Fund (RIF).

Part of the court’s decision was conventional: since the account transfers were gratuitous transfers between a parent and an adult child, according to Pecore, there is a presumption of resulting trust (with the transferee, Gary, holding the accounts in trust for Henry’s estate) that must be rebutted, with evidence of a donative intent on behalf of the parent, before the transferee can retain the assets. Since Gary could not show donative intent, the bank account funds were to revert to Henry’s estate. And then came the unconventional: the court determined that the rule in Pecore applied to the RIF:

“I see no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation.”

By stretching the rule in Pecore to this new context, the court may have burst open floodgates which protect beneficiaries of RIFs, pension plans, life insurance policies, and more. And as was observed in our recent blog on Calmusky, there is “legislation that uniquely applies to beneficiary designations (e.g. the Income Tax Act, the Succession Law Reform Act or the Insurance Act)” that appears to conflict with the decision.

And then there is the policy dilemma arising from Calmusky: if the designation is not good enough, what is? Should an affidavit be executed to corroborate the designation, or should a testator put a provision in his or her will that crystallizes existing beneficiary designations? The trouble with the latter option, which ostensibly seems to be the surest option, is that the subject matter of the beneficiary designation may, since it is mentioned in the will, have to be listed in the probate application and the Estate Information Return – leading to heightened expenses.

 The last time that estate solicitors were put in such a dubious position, arguably, was when the court in Re Milne ruled that a will is a trust, thereby rendering “basket clauses”, a common estate solicitor’s tool, precarious or even invalid. Now, while Calmusky stands, there is no clear best practice with respect to bullet-proofing beneficiary designations. And sadly, Gary, who prior to Calmusky would have received the RIF funds, is left disinherited; and Henry, who prior to Calmusky would have had reason to trust in the RIF beneficiary designation, may have had his testamentary intentions frustrated.

Thanks for reading – have a great day,

Ian Hull and Devin McMurtry

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