All About Estates

Of Love, Resulting Trusts, Matrimonial Homes and Fenelon Falls

Fenelon Falls has been called the “Jewel of the Kawarthas”. It is not a big place, but its summertime population swells due to tourism and cottagers. Lock 34 of the Trent-Severn Waterway is situated at Fenelon Falls.

In 1983, Marian Graham bought a property in Fenelon Falls and starting living there alone. In 1996, Marian transferred title to the Fenelon Falls property from herself alone to herself and her only child, Janice, as joint tenants. The transfer was for nominal consideration and, it was later argued, for estate planning purposes.

Janice was married to Gordon and they had two children together, Elissa and Graham. In 2008, the family relocated to Fenelon Falls and moved in with Marian. Unfortunately, Janice died in 2014, but Gordon continued to live with Marian. Marian eventually moved to a long term care facility in 2015. Nevertheless, she continued to pay all of the bills and expenses of the Fenelon Falls property until she died in 2016. At no time while they were living there did Janice or Gordon pay rent or any of the property expenses.

Marian made a new will in 2015 in which she gifted the Fenelon Falls property equally to Gordon, Elissa and Graham. In addition, after Janice’s death, Marian conveyed the property to herself, Gordon, Elissa and Graham as joint tenants.

After Marian’s death, questions arose as to the ownership of the Fenelon Falls property. In March 2018, Gordon brought an application for a declaration the he owned a two-thirds share of the property. Elissa, Graham and Marian’s estate opposed the application.

The judge hearing the application at first instance dismissed Gordon’s claim that he owned a two-thirds share of the property. The applications judge found that the 1996 transfer from Marian alone to Marian and Janice as joint tenants raised a presumption of a resulting trust[1]. Gordon failed to rebut the presumption of a resulting trust by adducing evidence of Marian’s contrary intention (i.e. she meant to gift it outright to Janice), with the result that the Fenelon Falls property belonged to Marian at the time of her death. As a result, Marian’s 2015 will governed the distribution of the property. Gordon appealed to the Ontario Court of Appeal.

The ONCA held that the principles in Pecore applied not just to the gratuitous transfer of bank accounts from a parent to a capable, adult child, but to the gratuitous transfer of other forms of property as well. The ONCA held that the applications judge was therefore correct in finding that a presumption of a resulting trust arose in respect of the 1996 gratuitous transfer of the Fenelon Falls property to Janice as a joint tenant. Moreover, the ONCA held that there was no error on the part of the applications judge in finding that Gordon had failed to rebut the presumption.

Finally, the ONCA did not accept Gordon’s submissions that in allowing him, Janice and their children to live together in the Fenelon Falls property, the property became Janice and Gordon’s matrimonial home (which, he argued, trumped any consideration of a resulting trust). The court held that Janice did not have an interest in the Fenelon Falls property such that s. 18(1) of the Family Law Act was not triggered.[2] The effect of the 1996 transfer was to place Janice on title as a trustee and fiduciary, not as an owner. Janice therefore did not have an interest in the Fenelon Falls property. The ONCA also held that Gordon did not have an interest in the property pursuant to s. 18(1) of the FLA and s. 26(1) of the FLA did not give Gordon such an interest.[3]

Take Away

Careful estate planning with the requisite professionals is always a must (the world is only getting more complicated and fraught, not less). Family conversations about the consequences of such planning and the intention of the person doing the planning are also a must. Hiding your head in the sand or hoping the next generation will work it out only condemns those that follow to an endless and tiring round of uncertainty, tension and litigation. Be smart, plan smart.

[1] Pecore v. Pecore, 2007 SCC 17 held that a gratuitous transfer of property from a parent into joint names with a capable, adult child is subject to a rebuttable presumption that the transferred property was held in trust by the child for the parent. The evidence needed to rebut the presumption needs to be “contemporaneous or nearly so” to the transfer itself. Evidence of the transferor’s intention arising subsequent to the transfer is admissible, but must be carefully assessed.

[2] Section 18(1) of the FLA reads in part: “Every property in which a person has an interest and that is… ordinarily occupied by the person and his or her spouse as their family resident is their matrimonial home”.

[3] Section 26(1) reads: “If a spouse dies owing an interest in a matrimonial home as a joint tenant with a third person and not with the other spouse, the joint tenancy shall be deemed to have been severed immediately before the time of death.”

About Justin de Vries
Justin has been consistently named as one of the Best Lawyers in Canada/Trusts & Estates. He is an accomplished litigator who has appeared before all levels of the Ontario Court & the Federal Court of Canada. Justin's areas of expertise include: estate, trust, and capacity litigation, as well as probate applications and estate administration. He regularly speaks on estate, trust and capacity issues. Email: jdevries@devrieslitigation.com

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