COURT FILE NO.: FS-21-00000076-0000 DATE: 2024-05-22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Cheryl Diedre McCready, Applicant AND: Charles Edward McCready, Respondent
BEFORE: P.J. Boucher, R.S.J.
COUNSEL: Paul Trenker, for the Applicant Adam Lake, for the Respondent
HEARD: May 15, 2024, via videoconference
Endorsement on Focused Hearing
Introduction
[1] The parties are involved in matrimonial proceedings. They cannot agree on the nature of the respondent’s ownership interest in the property municipally known as 970 Highway 522, Trout Creek, Ontario (hereinafter “the Hwy 522 property”). A focused hearing was held to determine this issue.
[2] The respondent acquired the Hwy 522 property in his name prior to his marriage with the applicant. During their marriage the respondent transferred the Hwy 522 property to himself and to his adult son, Christopher McCready, as joint tenants, for no consideration.
[3] The parties separated several years after this transfer. The respondent argues the transfer was a gift. The applicant disagrees and submits the legal and beneficial ownership of the property remains with the respondent pursuant to a resulting trust.
Background
[4] The respondent purchased the Hwy 522 property in 2007. Over the next few years, he improved the property and constructed a house, which he lived in as his principal residence. He eventually built a secondary residence in the basement which he rented to his daughter and then to a tenant.
[5] The parties were married on September 13, 2015. They resided in the Hwy 522 property as a matrimonial home until they jointly purchased the property municipally known as 202 Corkery Street, Trout Lake, Ontario (hereinafter “the Corkery Street property”). Although the respondent’s evidence is that they moved into the Corkery Street property in July 2018, the applicant agreed during the hearing that they bought the property jointly in April 2017 and moved in several months thereafter.
[6] Christopher McCready separated from his spouse around this time and needed a place to live. The parties agreed he would reside at the Hwy 522 property. The respondent’s health had been failing and, according to the respondent, his son agreed he “would manage the Hwy 522 property for [him] because [he] was not well enough to continue caring for and maintaining it as a rental property”.
[7] The respondent gratuitously transferred the Hwy 522 property to himself and Christopher McCready as joint tenants on September 21, 2018. Christopher McCready moved into the property in October 2018. The parties separated on May 19, 2021, at which time the respondent moved back to the Hwy 522 property. He continues to reside there with his son.
The Law
[8] The rebuttable presumption of resulting trust arises upon gratuitous transfers between adults. This means the transferee holds the beneficial ownership of the property in trust for the transferor unless the presumption is rebutted. A beneficial owner has been described as “the real owner of property even though it is in someone else’s name”: Pecore v. Pecore, 2007 SCC 17 at para 4, citing Csak v. Aumon (1990), 69 D.L.R. (4th) 567 (Ont. H.C.J.), at p. 570. The presumption of resulting trust can be rebutted by evidence establishing, on a balance of probabilities, the transferor’s intention to gift the property: Pecore, at paras. 24, 43 and 44.
[9] This standard of proof requires “clear, convincing and cogent” evidence: F.H. v. McDougall, 2008 SCC 52, at para. 46; MacIntyre v. Winter, 2021 ONCA 516 at para. 25. In other words, absent this evidence, the presumption will determine the result: Pecore, at para. 44.
[10] A party that seeks to establish that a transfer was a gift must show the following three conditions have been met, as set out in Falsetto v. Falsetto, 2023 ONCA 469, at para. 27:
a. The donor intended to gift the property;
b. The gift was accepted by the recipient; and
c. A sufficient act of delivery or transfer of the property occurred to complete the transaction.
The Positions of the Parties
[11] The respondent argues the transfer of the Hwy 522 property was a gift. In support of his position, he submits that his son moved into the property because he needed a place to live and he became solely responsible for its upkeep, expenses, and the collection of rent. Further, he argues his Last Will and Testament, signed prior to the transfer, contains a provision indicating that jointly held property would pass by right of survivorship upon his death. Finally, he submits, without stating it in his evidence, that he ran a business throughout his working life and would have known the importance of having the appropriate legal documents drafted if he wished to retain beneficial ownership over his son’s share of the Hwy 522 property.
[12] The applicant submits the evidence filed is insufficient to establish the transfer was a gift. In the alternative, she argues that if the transfer was a gift, it was in the nature of a right of survivorship. In either case, the applicant denies the presumption of resulting trust has been rebutted.
Analysis
[13] In this dispute the respondent bears the onus of rebutting the presumption of resulting trust. The court begins its analysis with the presumption in place and weighs “all of the evidence” to determine if it establishes “the transferor’s actual intention”: Kerr v. Baranow, 2011 SCC 10, at para. 18.
[14] The evidence on this focused hearing was extremely brief, consisting of three affidavits and two consent exhibits (the respondent’s Last Will and Testament dated May 15, 2017 and the transfer, land transfer tax statement and parcel register regarding the Hwy 522 property). Two affidavits were delivered by the respondent and Christopher McCready. The applicant delivered an affidavit in which she acknowledges she supported Christopher McCready’s move into the Hwy 522 property. She denies any knowledge of the transfer until after these proceedings were commenced.
[15] Neither the respondent nor Christopher McCready expressly state in their evidence that the transfer was intended as a gift. Christopher McCready’s evidence regarding intention can be summarized as follows:
a. He and the parties agreed he would “move in so [he] could help [his] father maintain the property and they could move to 202 Corkery Street”;
b. Because of his own health issues, the parties understood he would work on the property “at his own pace” and would “pay all of the bills, maintain the property, collect rent and [he] would be transferred on to title”;
c. The applicant was aware of this arrangement including the transfer;
d. Based on legal advice, they could not transfer the property for nominal consideration because “the Income Tax Act deems non-arm’s length transfers to be at Fair Market Value”. Accordingly, the value was set at one-half the MPAC value; and
e. The respondent transferred fifty percent of the property rather than 100 per cent for estate planning purposes. This was done to “receive the right of survivorship” and to avoid probate fees and to reduce Land Transfer Tax.
[16] The respondent’s evidence regarding intention is summarized as follows:
a. His son was recently separated and needed a place to live. His son agreed to “manage” the Hwy 522 property because the respondent “was not well enough to continue caring for and maintaining it as a rental property”;
b. Since “approximately October 2018” the respondent has “not received any rent or paid any of the costs of upkeep. If [he has] it would have been on behalf of [his son]”;
c. Because of his own health problems, and because his son suffers from Multiple Sclerosis, the two of them “assist one another in the upkeep” of the Hwy 522 property. The respondent’s contribution consists of “occasional upkeep and general fixes”. He describes this as a joint venture;
d. The applicant was very involved in the discussions about Christopher McCready moving to the property and the fact the respondent wanted to transfer to him one-half of the property for no consideration;
e. He repeats the same evidence as his son concerning the value attributed to the transfer; and
f. He states he was advised “for estate planning purposes” to transfer only one-half of the property into joint tenancy “to avoid probate fees and to reduce Land Transfer Tax”.
[17] In addition, the respondent’s Last Will and Testament dated May 15, 2017 contains a statement of the respondent’s intention that jointly held property pass on his death to the joint owner by right of survivorship. The respondent submits, without stating it in his evidence, that this is proof of his intention to gift the property. The parties do not agree on whether this was the Last Will and Testament in place when half of the Hwy 522 property was transferred.
[18] I find the evidence regarding the respondent’s intention to gift the property to his son falls far short of the “clear, convincing and cogent” evidence required to rebut the presumption of resulting trust.
[19] There is disagreement in the evidence about whether the applicant was aware of the respondent’s intention to gratuitously transfer the Hwy 522 property to his son. It cannot be resolved without the benefit of cross-examination.
[20] The dispute is of no moment in this hearing, however, because this evidence is equivocal about the respondent’s intention to gift the legal and beneficial ownership of the property at the time of transfer. Put another way, saying it was transferred without consideration does not answer the question about whether it was intended as a gift.
[21] Christopher McCready had recently separated from his spouse and needed a place to stay. His health was deteriorating, as was the respondent’s. He agreed to move to the property, maintain it, collect rent apparently from one tenant, and pay “all of the bills”. The respondent’s evidence is that he intended to assist with the maintenance at his own pace. He states this maintenance did not include paying for “any of the costs of upkeep” or collecting any rent. However, he also states that if he paid for any costs or collected any rent, he did so for his son, without saying he was reimbursed in any way for these possible payments.
[22] Further, the evidence regarding the land transfer tax statement and estate planning suggests the transfer was completed to grant a right of survivorship upon the respondent’s death.
[23] In MacIntyre v. Winter, the parties were in a common law relationship. Winter contributed $100,000 to the purchase of their jointly owned home, with funds he received from his mother. The parties lived together in the home. They subsequently sold it and purchased another, partly with the equity from the first home. The parties thereafter separated, and Winter asked that he receive his $100,000 contribution to the purchase of the first property. MacIntyre opposed the request, arguing it was intended as a gift, partly because the property was held in joint tenancy, granting him a right of survivorship.
[24] In agreeing with Winter, the Ontario Court of Appeal held that survivorship can be separated from the intent to gift: para 32. Survivorship alone is not sufficient to rebut the presumption of resulting trust during the parties’ joint lives: para. 33.
[25] The evidence, considered as a whole, is equivocal about the respondent’s intention to gift an interest in the Hwy 522 property to his son. I find that the intention of the respondent was that his son would live there and help the respondent manage the property during their lives. There is insufficient evidence the property was intended as a gift and survivorship adds nothing to prove this fact. The respondent has accordingly failed to rebut the presumption.
Conclusion
[26] For these reasons, I find the presumption of resulting trust decides the question posed by the parties. I therefore declare the respondent is the beneficial owner of Christopher McCready’s one-half interest in the Hwy 522 property.
[27] If the parties cannot agree on costs, the applicant may file submissions on costs of no more than two pages, double-spaced, not including any bills of costs and offers to settle within fifteen days of the date of this endorsement. The respondent will have thirty days from the date of this endorsement to file submissions. Reply submissions of two pages may be filed within forty days of this endorsement.
Regional Senior Justice Patrick J. Boucher Date: May 22, 2024