Ontario's Court of Appeal (“COA”) recently released a decision clarifying the legal requirements for finding a purchase money resulting trust. The COA upheld the trial judge's decision and dismissed the appeal on several grounds.
The Appellant sought to appeal the trial judge's finding that his mother's estate held a 26% beneficial interest in a property his corporation owned. In 1980, the Appellant purchased a home for $38,500. He made a down payment of $8,000 and his mother, Violet, contributed $10,000 towards the purchase price. The Appellant financed the outstanding balance through a mortgage and covered most of those costs. The Appellant's position was that Violet loaned him the funds and he paid her back within a year. However, the trial judge found that Violet had contributed to the purchase price of the house and her estate now held a 26% interest in the house. The $10,000 sum was not a loan to her son but Violet intended to gain an equity share in the property when she contributed the $10,000. The Appellant appealed the trial judge's decision on several grounds.
The Appellant argued that the trial judge erred in failing to consider the legal requirements for a purchase money resulting trust. The COA noted that the doctrine of purchase money resulting trust focuses on the parties' intentions "at the time the purchase money is advanced". Evidence about how a claimant conducts themselves after advancing funds (i.e. representing themselves as a purchaser) may be relevant but only to degree that it sheds light on the claimant’s intentions when the funds were advanced. In any event, the trial judge did not accept the Appellant's position that Violet loaned him $10,000, so her post contribution behaviour was not determinative.
Referencing, Nishi v. Rascal Trucking Ltd, the COA noted the presumption can be rebutted by evidence that at the time of the contribution, the contributor intended to make a gift to the person taking title. Noting that it was no longer necessary to distinguish loans from gifts in the resulting trust analysis, the presumption of resulting trust is defeated if it is established that the contributor did not intend to acquire a beneficial interest in the property. As such, the onus was properly placed on the Appellant by the trial judge to establish that Violet's money was a loan and he did not do that.
The Appellant’s second ground of appeal was that the trial judge erred by finding that the corroboration requirement in Section 13 of the Evidence Act (Ontario) applied to his evidence as he was not an heir of Violet’s estate. The COA confirmed that Section 13 of the Evidence Act was properly applied by the trial judge as the Appellant was sued by his sister in her capacity as an estate trustee for Violet's estate and Section 13 applies to actions by but also against the person who falls into the Section 13 categories (heirs, nest of kin, executors, administrators, or assigns).
The appeal was dismissed with costs payable by the Appellant.
This article was originally published by All About Estates on May 29, 2024.
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