Iintention to gift property trumps the presumption of resulting trust

Schwartz v. Schwartz, 2012 ONCA 239 is another decision dealing with the issue of the gifting of property and trusts in the context of domestic situation:

[40]      As I have said, assuming that the motion judge was entitled to weigh the evidence and make findings of fact, I see no basis on which to interfere with his findings that Ms. Schwartz did not intend to gift her interest in the matrimonial home to her husband. Accordingly, on the facts of this case, the presumption of resulting trust established under s. 14 of the Family Law Act, R.S.O. 1990, c. F.3, was not rebutted in relation to the 2006 transfer. Similarly, the conclusion that Ms. Schwartz did not divest herself of any interest she may have acquired in the home by way of constructive trust was not undermined.

[41]      In its recent decision in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, the Supreme Court of Canada confirmed the basic principle that a resulting trust may arise in the domestic context where there has been a gratuitous transfer of property. As Cromwell J., writing for the court, stated at para. 16:

[I]t is widely accepted that the underlying notion of the resulting trust is that it is imposed “to return property to the person who gave it and is entitled to it beneficially, from someone else who has title to it. Thus, the beneficial interest ‘results’ (jumps back) to the true owner”: [A. H. Oosterhoff, et al., Oosterhoff on Trusts: Text, Commentary and Materials, 7^th ed. (Toronto: Carswell, 2009)], at p. 25. There is also widespread agreement that, traditionally, resulting trusts arose where there had been a gratuitous transfer….

[42]      In Kerr, the Supreme Court of Canada also confirmed the view expressed in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 43-44, that where there is a gratuitous transfer, the actual intention of the transferor is the governing consideration. At para. 44 of Pecore, Rothstein J. noted that where a gratuitous transfer is being challenged, “[t]he trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention.”

[43]      Further, as Karakatsanis J. observed in Nussbaum v. Nussbaum (2004), 9 R.F.L. (6th) 455 (Ont. S.C.), at paras. 20 and 32, while the “intention to gift property trumps the presumption of resulting trust”, a party’s intention at the time of a conveyance is a question of fact. Further, as she stated, at para. 32, “[w]hile evidence that someone intended to fully evade creditors can be evidence that they intended to gift their entire interest in the property”, a party’s actual intention remains a question of fact to be determined based on the whole of the evidence.