The Presumption of Resulting Trust
Part 1 of 2
There are laws floating out there that are the equivalent of silent sharks ready to devour reasonable expectations. One of those laws is the presumption of resulting trust. In the recent Ontario Court of Appeal decision in MacIntyre v. Winter, the court permitted the shark to devour what a 33 year common law relationship had created. The legal concept of the presumption of resulting trust has been discussed in other blog articles and I recommend them to the reader. This law was not made by any legislature or parliament. It was never debated publicly before a committee. No political party ever campaigned on its existence. It is entirely a judge made law stretching back many years. However, this law is alive and well in Ontario. The law was given a blood transfusion by the 2007 Supreme Court decision in Pecor v. Pecor. Boiled down to its simplest meaning, the presumption of resulting trust holds the following. Equity presumes bargains, not gifts. In other words, the starting point is you get nothing for free even if you have been in a relationship for 33 years unless you can prove that it was a gift.
In the MacIntyre case, we have two men co-habiting for 33 years. Both had some mental health issues although one was a high functioning psychiatrist. The psychiatrist of course had greater financial means including financial assistance from his family. The parties bought a succession of two houses, which were registered in both of their names as joint tenants. The concept of joint tenancy produces a right of survivorship upon the death of the first. In other words, if your co-owner dies first, the house is all yours. The psychiatrist contributed over the course of their relationship almost $500,000.00 more than his partner towards the purchase of these two homes. Despite the fact that there was not a drop of evidence confirming either of the opposing positions of this common law couple, the Court of Appeal reversed the trial judge’s decision and found that the presumption of resulting trust did apply. In essence, the court held that it was necessary for the trial judge to investigate the intention of the psychiatrist when he contributed more money towards the purchase of the two homes. Did the psychiatrist intend to make a gift of that money to his then partner by registering the property in both names? The court held that there was no evidence, nothing in writing, nothing independent to corroborate the position taken by either of the two men and then held that the shark would be allowed to bite. In essence, the presumption of resulting trust was found to apply. The court held that it should begin from a starting point that this was not a gift and that it was money that should be repaid to the psychiatrist in the event of a breakdown of the relationship. This was despite the fact that indeed it was the intention of the psychiatrist that should he die first, that his partner would become the sole owner of the entire home. The court held that there was no difficulty in splitting these two different intents. Intending to grant a right of survivorship was deemed to be a separate intention from what would have occurred if the parties separated.
I am certain that other commentators will not have the same adverse reaction to the applicability of the presumption to a 33-year common law relationship. The law would be very different had these people ever formally married. There has been much conjecture that the law in Ontario will eventually change to erase the different property of common law and formally married partners. The title of this blog article comes from a direct quote in the decision. The very senior Justice Nordeimer writing for the Court of Appeal held the following; “Our courts are strewn with cases where people in a relationship wound up in litigation because they did not take a commercial approach to their domestic arrangements from the outset”. I find that statement heavy with irony and lacking in recognition of human emotion. What could the psychiatrist have been thinking when he injected the majority of the money towards the purchase of two homes yet registered title in both names equally.
The court citing another decision of the Ontario Court of Appeal, MacName, held that it was the responsibility of the psychiatrist’s partner to prove that it was a gift, and to do so he needed to satisfy three conditions, which are:
- An intention to make a gift on the part of the donor with no consideration or expectation of renumeration.
- An acceptance of a gift by the donee.
- A sufficient act for delivery or transfer of the property to complete the transaction.
The court held, that there was no evidence either way, so the presumption applies. The psychiatrist’s partner was ordered to re-pay the psychiatrist out the sale proceeds of the home almost $500,000.00. See part 2 of this blog for a further analysis.