McNamee v. McNamee: Ontario Court of Appeal 2011

In this case the Ontario Court of Appeal was faced with the difficult task of defining what is considered a gift under Section 4(2) of the Family Law Act.  The court determined that there is no charity or affection necessary for something to be a gift.

Connie and Clayton McNamee’s 18 year long marriage ended on August 5, 2007. The couple had a generally respectful and accommodated separation. The main issue which divided the couple was the characterization of a gift from Clayton’s father John McNamee.  In an effort to protect the McNamee family’s cement company, John McNamee gave his son 500 shares in a holding company, which in turn controlled the cement company.  The Father retained control of the company, his two sons were employed at the company and John McNamee indicated that he hoped that one day they would take over running of the company.

The question before the court was whether or not the gratuitous transfer of the shares to Clayton McNamee was a gift.  If it fell under the definition of a gift, then the value of the shares would not be included in Clayton’s Net Family Property, as it would fall under an exception in Section 4(2) of the Family Law Act:

4(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.

The trial judge determined that the 500 shares did not fall under the definition of a gift.  The judge argued that it was not a gift because it was not given “gratuitously, out of generosity and as his kindly motivating intent.” The trial judge stated it was not intended as a gift, but rather it was just a necessary step to protect the share from spouses and preserve John McNamee’s control of the company.

The Court of Appeal disagreed with this characterization. The intention behind a gift does not have to be out of charity or infection; this is rather the motivation which underlies a gift.  The trial judge made an error conflating the two concepts. The court of Appeal stated there was no requirement for there to be any feeling of motivation or charity behind the gift. The court reaffirmed the traditional definition of a gift in that its central feature is the “intentional giving to another without expectation of remuneration.” The court found that the transfer of the shares was a gift under the Family Law Act. John McNamee had signed a declaration that the transfer was a gift, and Clayton paid nothing for the shares.  The court determined that whether or not Connie could make out a trust claim against the shares was an issue to be tried in a new trial, as there was not enough information on the record to decide that issue.

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