All About Estates

You can’t gift what you don’t have

Kindly Arlindo Teixeira took care of his elderly neighbour Mary Markgraf. Mary died shortly after writing a large cheque to Arlindo which could not be cashed due to insufficient funds. In Teixeira v. Markgraf Estate, 2017 ONCA 819, the Court of Appeal upheld the application judge’s ruling that this gift failed for lack of delivery.

Arlindo helped Mary for nearly 15 years, with household maintenance, driving her to appointments and assisting her with chores. Mary made a will bequesting $100,000 to Arlindo. She also had her stepson deliver a cheque for $100,000 to Arlindo with instructions for him to take it to the bank the next day. Arlindo attended at the bank to cash the cheque. While Mary had more than $100,000 at the bank, her chequing account did not contain sufficient funds for the cheque to clear. Six days later, Mary died.

Mary’s stepson, her estate trustee, initially told Arlindo that he would receive $100,000 under the will and another $100,000 to cover the cheque. However, after receiving legal advice, the estate trustee took the position that the cheque was an imperfect gift. Arlindo commenced an application for the value of the cheque which was dismissed earlier this year (my co-blogger Darren Lund blogged about the application judge’s ruling here).

The Court of Appeal agreed with the application judge’s ruling. Chief Justice Strathy held that the application judge had correctly identified the test for a valid gift:  (a) the donor’s intention to make a gift; (b) acceptance of the gift by the donee; and (c) delivery of the gift to the donee. Clearly, the first two requirements had been met as Mary intended to make the gift and Arlindo accepted it.

Arlindo argued that the gift by cheque was perfected by delivery. The Court of Appeal disagreed. Mary could not give what she did not have: because there was insufficient funds to cash the cheque, it was never delivered. A gift by cheque is only delivered when it is successfully cashed (after all, before the cheque was cashed Mary always had the option of putting in a stop payment).

Arlindo argued that he had a claim in contract with his good deeds being the consideration. But the Chief Justice found no palpable or overriding error in the application judge’s determination that Arlindo’s good deeds were performed gratuitously with no expectation of compensation. As there was no consideration, Arlindo also had no argument under the Bills of Exchange Act (this statute allows a claim where a cheque is dishonoured but only where there is consideration.

There were also no equitable principles that assisted Arlindo. The equitable doctrine of estoppel by convention holds parties to the facts or law or other assumption they have agreed to as the basis for a transaction to which they are parties. Here, Arlindo did not act in reliance on the assumption that Mary’s cheque would be honoured: he simply hoped he would receive the gift.

The Court of Appeal declined to interfere with the application judge’s cost award, which took into account the relevant legal principles and Arlindo’s failure to accept a “generous offer” to settle.

Ironically, had Arlindo been more grasping and mercenary with his elderly neighbour he may have been able to establish that he had provided consideration for the $100,000 cheque. However, it was clear his acts were gratuitous. Ultimately then, the only real question was whether the gift was delivered. The principle of nemo dat quod non habet applied – Mary could not give what she did not have in her account and the gift could not have been delivered. While the estate trustee’s instincts were to pay out the cheques, he ultimately “could not” do so; as a fiduciary he had a responsibility to the estate and could not make gratuitous payments out to Arlindo.

At the end of the day, Arlindo did receive $100,000 under Mary’s will (of course, he is also on the hook for his legal fees before the application judge and the Court of Appeal).

About Jacob Kaufman
Jacob Kaufman is a lawyer with de VRIES LITIGATION LLP. Jacob assists clients with will challenges, dependant support claims, guardianship applications, power of attorney disputes and other estate and trust litigation matters. He has appeared before various levels of court, including the Superior Court of Justice and the Court of Appeal for Ontario. Jacob obtained his law degree from the University of Western Ontario (with distinction) after completing an Honours Bachelor of Arts degree from Queen’s University in history (with distinction). He has written articles for the International Law Office, Legal Alert and the OBA’s Deadbeat. Email:


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