Background
This case involved an appeal from a trial judge’s determination that there should be an equal division of the net proceeds of the sale of the jointly owned home.
Mr. MacIntyre and Mr. Winter began a relationship in 1994 and separated in February 2017. The parties were never married and had no children. Mr. MacIntyre was 57 years old and had been under the care of a psychiatrist since 2009. In 2010, he eventually had to stop working as a result of mental health issues. Mr. Winter also had been under the care of a psychiatrist since 2009 and worked as a staff psychiatrists at hospital. At the beginning of their relationship, the parties lived in Mr. MacIntyre’s apartment. Mr. Winter’s mother provided the parties with $100,000 to put towards a down payment of a home which the parties purchased in January 1999. The parties were joint tenants and took out a joint mortgage against the property. The parties agreed that Mr. MacIntyre would be responsible for the mortgage payments and Mr. Winter would cover all other household expenses. Mr. Winter paid a $5,000 deposit and the $99,081.92 down payment. About six years later, the parties purchased a new home which had a joint mortgage and line of credit secured against it. This second home was financed through the mortgage, the proceeds of sale from the first home and additional funds from Mr. Winter.
In early 2017 when the parties separated, the home was worth $1.4 million. Mr. Winter claimed that he should receive the first $480,248.82 of the net sale proceeds based on his initial constributions of $105,000 for the first home, his additional contributions of $515,000 for the second home and dividing the remaining balance equally with Mr. MacIntyre. Mr. Winter took the position that the “presumption against gifts” applied to the down payment and that his intent had always been to be reimbursed for this gift if the property was sold. The trial judge ordered an equal division of the proceeds of sale as he found that there was never an intention that Mr. Winter was to be repaid for the deposit and down payment.
Analysis
Mr. Winter appealed the trial judge’s decision primarily on the ground that the trial judge had erred in finding that he had gifted the down payments. The Court of Appeal cited the SCC decision in Pecore v. Pecore which stated that presumptions “provide a guide for courts in resolving disputes over transfers where evidence as to the transferor’s intent in making the transfer is unavailable or unpersuasive”. The presumption relevant in this case was the presumption of resulting trust which is a rebuttable presumption which applies to gratuitous transfers. The SCC in Pecore held that where a transfer is made, the onus is placed on the transferee to demonstrate that a gift was intended. The Court of Appeal found that while the trial judge referenced the presumption of resulting trust in his decision, he did not actually apply the presumption. The Court of Appeal determined that the trial judge had failed to address the main point of the presumption which was the intent of the transferor which is what governs. The Court of Appeal determined that the onus was solely on Mr. MacIntyre to rebut the presumption of resulting trust as it was Mr. Winter’s intention at the time of the transfer for the funds to be a gift. The Court of Appeal determined that this was an error of law on the part of the trial judge.
The Court of Appeal determined that of the factor’s the trial judge considered, three of the six had nothing to do with Mr. Winter’s intention at the time of the transfer of the funds which were (a) the length of time the parties had been living together, (b) the parties agreement on who would be responsible for which expenses and (c) the absence of the repayment in Mr. Winter’s will.
The Court of Appeal did not think it was irrational that Mr. Winter would not require Mr. MacIntyre to repay the down payment and deposit if Mr. Winter died, but that he would insist upon the repayment if the parties separated. The main problem with the trial judge’s decision was that the trial judge did not recognize that a gift of the right of survivorship can be separated from a gift of the full beneficial interest. The Court of Appeal made it clear that a gift of the right of survivorship alone will not be sufficient to rebut the presumption of a resulting trust which operates during the parties joint lives. The Court of Appeal found that the trial judge erred by not requiring Mr. MacIntyre to rebut this presumption.
The Court of Appeal made it clear in this case that the absence of loan documentation will not, on it’s own be sufficient to conclude that a gift was intended. Rather, Mr. MacIntyre needed to prove that this was a gift on a balance of probabilities showing (1) an intention to make a gift, (2) an acceptance of the gift; and (3) a sufficient act of delivery or transfer of the property to complete the transaction.
Conclusion
The Court of Appeal found that Mr. MacIntyre did not present clear evidence to prove that a gift was intended and that this burden rested with him to prove. Mr. Winter’s appeal was allowed.
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