BACKGROUND
Xiaoqun Qu (the Appellant) and Xuenong Zhang (the Respondent) were married on July 3, 2016, and separated on August 1, 2017. The Respondent, who was residing in Canada, added the Appellant to one of his bank accounts. Before the marriage, the Appellant transferred $312,000 into this joint account. Shortly after the marriage, a house was purchased using a total of $240,506.07 from the joint account. Shortly before the parties separated, the Appellant was removed from the joint account.
The principal issue relates to the beneficial ownership of the house. The Appellant claimed she never intended to gift the Respondent any portions of the funds or property and viewed the transaction as an investment. The Respondent claimed that the money was a gift, and the house was jointly owned.
The application judge concluded that, by way of resulting trust, the Appellant was the 100% beneficial owner of the house and ordered the title be transferred solely into her name.
THE LAW
In Pecore v Pecore, 2007 SCC 17, the court upheld the principle that gratuitous transfers between individuals are presumed to create a resulting trust. However, this presumption can be rebutted, on a balance of probabilities, by demonstrating that the transferor intended the transfer, whether money or other property, to be considered a gift.
The standard of proof in rebutting the presumption of resulting trust is clarified in F. H. v McDougall, 2008 SCC 53, where the court indicated that evidence must be sufficiently clear and persuasive.
However, Section 14 of the Family Law Act (FLA) alters the presumption of resulting trust between spouses. Specifically, property held in joint tenancy is sufficient to prove joint ownership in the absence of evidence to the contrary, on a balance of probabilities. In these circumstances, the transferor has the onus to rebut the presumption that the property or funds were intended to be a gift.
ANALYSIS
The application judge analyzed the financial arrangements between the parties through three time periods: (1) pre-marriage deposits; (2) during marriage deposits; and (3) the purchase of the house from the joint account during the marriage.
Pre-Marriage Deposits
Since the parties were not yet married, the Respondent held the onus to rebut the presumption of resulting trust.
The court concluded that the Respondent failed to adequately rebut the presumption of resulting trust and held that the Applicant’s intentions were to invest the money. In China, the Applicant was an experienced real estate investor. Further, the Applicant’s daughter’s testimony confirmed that the Applicant wished to purchase an investment property in Canada and vest the title in her daughter’s name. The judge found that the Applicant’s evidence was credible and consistent with her stated intentions.
During-Marriage Deposits & Purchase of the House
The application judge found that the Applicant provided sufficient evidence to rebut the presumption arising from s. 14 of the FLA through the Applicant’s stated intentions and testimony from her daughter. As a result, the judge reached the same conclusion regarding the purchase of the house – that the money was not intended to be a gift.
CONCLUSION
The appeal is dismissed, and the finding of trust is upheld, preserving the Applicant as the sole beneficial owner of the property.