SUPREME
COURT OF CANADA
Between:
Michael Pecore
Appellant
and
Paula
Pecore and Shawn Pecore
Respondents
Coram:
McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron
and Rothstein JJ.
Reasons for
Judgment:
(paras. 1 to 76)
Concurring
Reasons:
(paras. 77 to 107)
|
Rothstein J. (McLachlin C.J. and Bastarache, Binnie,
LeBel, Deschamps, Fish and Charron JJ. concurring)
Abella J.
|
______________________________
Pecore v. Pecore, [2007] 1 S.C.R. 795, 2007 SCC 17
Michael Pecore Appellant
v.
Paula Pecore and Shawn Pecore Respondents
Indexed as: Pecore v. Pecore
Neutral citation: 2007 SCC 17.
File No.: 31202.
2006: December 6; 2007: May 3.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel,
Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the court of appeal for ontario
Wills and estates — Joint bank and
investment accounts with right of survivorship — Presumptions of resulting
trust and advancement — Father gratuitously placing assets in joint accounts
with daughter — Whether assets in joint accounts to be included in father’s
estate upon his death — Whether presumption of resulting trust rebutted —
Whether presumption of advancement applicable — Standard of proof applicable to
rebut presumptions.
Wills and estates — Joint bank and
investment accounts with right of survivorship — Presumptions of resulting
trust and advancement — Father gratuitously placing assets in joint accounts
with daughter — Evidence to be considered in ascertaining transferor’s
intention — Whether evidence of intention that arises subsequent to transfer
should be excluded.
Wills and estates — Joint bank and
investment accounts with right of survivorship — Nature of survivorship in
context of joint accounts.
Gifts — Gratuitous transfer from parent to child —
Presumption of advancement — Whether presumption applies between mother and
child — Whether presumption applies only to transfers made between parent and
minor child.
An ageing father gratuitously placed the bulk of his
assets in joint accounts with his daughter P, who was the closest to him
of his three adult children. Unlike her siblings, who were financially secure,
P worked at various low‑paying jobs and took care of her quadriplegic
husband, M. P’s father helped P and her family financially, including buying
them a van, making improvements to their home, and assisting her son while he
was attending university. P’s father alone deposited funds into the joint
accounts. He continued to use and control the accounts, and declared and
paid all the taxes on the income made from the assets in the accounts. In
his will, P’s father left specific bequests to P, M and her children but did
not mention the accounts. The residue of the estate was to be divided equally
between P and M. Upon the father’s death, P redeemed the balance in the joint
accounts on the basis of a right of survivorship. P and M later divorced,
and a dispute over the accounts arose during their matrimonial property
proceedings. M claimed that P held the balance in the accounts in trust
for the benefit of her father’s estate and, consequently, the assets formed
part of the residue and should be distributed according to the will. The trial
judge held that P’s father intended to make a gift of the beneficial interest
in the accounts upon his death to P alone, concluding that the evidence failed
to rebut the presumption of advancement. The Court of Appeal dismissed M’s
appeal, but found that it was not necessary to rely on the presumption of advancement
because the presumption is only relevant in the absence of evidence of actual
intention or where the evidence is evenly balanced.
Held: The
appeal should be dismissed.
Per McLachlin C.J.
and Bastarache, Binnie, LeBel, Deschamps, Fish, Charron and
Rothstein JJ.: The long‑standing common law presumptions
of advancement and resulting trust continue to play a role in disputes over
gratuitous transfers. These presumptions provide a guide for courts where
evidence as to the transferor’s intent in making the transfer is unavailable or
unpersuasive. They also provide a measure of certainty and predictability for
individuals who put property in joint accounts or make other gratuitous
transfers. The presumption of resulting trust is the general rule for
gratuitous transfers and the onus is placed on the transferee to demonstrate
that a gift was intended. However, depending on the nature of the relationship
between the transferor and transferee, the presumption of advancement may apply
and it will fall on the party challenging the transfer to rebut the presumption
of a gift. The civil standard of proof is applicable to rebut the
presumptions. The applicable presumption will only determine the result where
there is insufficient evidence to rebut it on a balance of probabilities.
[23‑24] [27] [43‑44]
In the context of a transfer to a child, the
presumption of advancement, which applies equally to fathers and mothers, is
limited in its application to gratuitous transfers made by parents to minor
children. Given that a principal justification for the presumption of
advancement is parental obligation to support dependent children, the
presumption does not apply in respect of independent adult children. Moreover,
since it is common nowadays for ageing parents to transfer their assets into
joint accounts with their adult children in order to have that child assist
them in managing their financial affairs, there should be a rebuttable
presumption that the adult child is holding the property in trust for the
ageing parent to facilitate the free and efficient management of that parent’s
affairs. The presumption of advancement is also not applicable to dependent
adult children because it would be impossible to list the wide variety of the circumstances
that make someone “dependent” for the purpose of applying the presumption.
Courts would have to determine on a case‑by‑case basis whether or
not a particular individual is “dependent”, creating uncertainty and
unpredictability in almost every instance. While dependency will not be a
basis on which to apply the presumption, evidence as to the degree of
dependency of an adult transferee child on the transferor parent may provide
strong evidence to rebut the presumption of a resulting trust. [33] [36] [40‑41]
With joint accounts, the rights of survivorship, both
legal and equitable, vest when the account is opened. The gift of those rights
is therefore inter vivos in nature. Since the nature of a joint account
is that the balance will fluctuate over time, the gift in these circumstances
is the transferee’s survivorship interest in the account balance at the time of
the transferor’s death. The presumption of a resulting trust means in that
context that it will fall to the surviving joint account holder to prove that
the transferor intended to gift the right of survivorship to whatever assets
are left in the account to the survivor. [48] [50] [53]
The types of evidence that should be considered in
ascertaining a transferor’s intent will depend on the facts of each case. The
evidence considered by a court may include the wording used in bank documents,
the control and use of the funds in the account, the granting of a power of
attorney, the tax treatment of the joint account, and evidence subsequent to
the transfer if such evidence is relevant to the transferor’s intention at the
time of the transfer. The weight to be placed on a particular piece of
evidence in determining intent should be left to the discretion of the trial
judge. [55] [59‑62] [69]
In this case, the trial judge erred in applying the
presumption of advancement. P, although financially insecure, was not a minor
child. The presumption of a resulting trust should therefore have been
applied. Nonetheless, this error does not affect the disposition of the appeal
because the trial judge found that the evidence clearly demonstrated the
intention on the part of the father that the balance left in the joint accounts
was to go to P alone on his death through survivorship. This strong finding
regarding the father’s actual intention shows that the trial judge’s conclusion
would have been the same even if he had applied the presumption of a resulting
trust. [75]
Per
Abella J.: The trial judge properly applied the correct legal
presumption to the facts of the case. Historically, the presumption of
advancement has been applied to gratuitous transfers to children, regardless of
the child’s age, and there is no reason now to limit its application to non‑adult
children. The argument that a principal justification for the presumption was
the parental obligation to support dependent children unduly narrows and
contradicts the historical rationale for the presumption. Parental affection,
no less than parental obligation, has always grounded the presumption of
advancement. Furthermore, the intention to have an adult child manage a
parent’s financial affairs during his or her lifetime is hardly inconsistent
with the intention to make a gift of money in a joint account to that child.
Parents generally want to benefit their children out of love and affection. If
children assist them with their affairs, this cannot logically be a reason for
displacing the assumption that parents desire to benefit them. It is equally plausible
that an elderly parent who gratuitously enters into a joint bank account with
an adult child on whom he or she depends for assistance intends to make a gift
in gratitude for this assistance. If the intention is merely to have
assistance in financial management, a power of attorney would suffice, as would
a bank account without survivorship rights. Accordingly, since the presumption
of advancement emerged no less from affection than from dependency, and since
parental affection flows from the inherent nature of the relationship not of
the dependency, the presumption of advancement should logically apply to all
gratuitous transfers from parents to their children, regardless of the age or
dependency of the child or the parent. The natural affection parents are
presumed to have for their adult children when both were younger should not be
deemed to atrophy with age. [79] [89] [100] [102] [107]
In any event, bank account
documents which, as in this case, specifically confirm a survivorship interest
should be deemed to reflect an intention that what has been signed is sincerely
meant. There is no justification for ignoring the presumptive relevance of
clear language in banking documents in determining the transferor’s intention.
[104]
Cases Cited
By Rothstein J.
Referred to: Csak
v. Aumon (1990), 69 D.L.R. (4th) 567; Carter v. Carter
(1969), 70 W.W.R. 237; Re Mailman Estate, [1941]
S.C.R. 368; Niles v. Lake, [1947] S.C.R. 291; Rathwell v.
Rathwell, [1978] 2 S.C.R. 436; Saylor v. Madsen Estate
(2005), 261 D.L.R. (4th) 597, aff’g (2004), 13 E.T.R. (3d) 44; Hyman
v. Hyman, [1934] 4 D.L.R. 532; Grey (Lord) v. Grey (Lady) (1677),
Rep. Temp. Finch 338, 23 E.R. 185; Lattimer v.
Lattimer (1978), 18 O.R. (2d) 375; Edwards v. Bradley,
[1957] S.C.R. 599, rev’g [1956] O.R. 225; Rupar v. Rupar
(1964), 49 W.W.R. 226; Dagle v. Dagle Estate (1990),
38 E.T.R. 164; Re Wilson (1999), 27 E.T.R. (2d) 97; McLear
v. McLear Estate (2000), 33 E.T.R. (2d) 272; Cooper v. Cooper
Estate (1999), 27 E.T.R. (2d) 170; Christmas Estate v. Tuck
(1995), 10 E.T.R. (2d) 47; Cho Ki Yau Trust (Trustees of) v. Yau
Estate (1999), 29 E.T.R. (2d) 204; Bayley v. Trusts and
Guarantee Co., [1931] 1 D.L.R. 500; Johnstone v. Johnstone (1913),
12 D.L.R. 537; Pettitt v. Pettitt, [1970] A.C. 777; McGrath
v. Wallis, [1995] 2 F.L.R. 114; Dreger (Litigation Guardian
of) v. Dreger (1994), 5 E.T.R. (2d) 250; Burns Estate v. Mellon
(2000), 48 O.R. (3d) 641; Lohia v. Lohia, [2001] EWCA
Civ 1691 (BAILII); Standing v. Bowring (1885),
31 Ch. D. 282; Hill v. Hill (1904),
8 O.L.R. 710; Larondeau v. Laurendeau, [1954] O.W.N. 722;
Re Reid (1921), 64 D.L.R. 598; Mordo v. Nitting, [2006]
B.C.J. No. 3081 (QL), 2006 BCSC 1761; Shaw v. MacKenzie
Estate (1994), 4 E.T.R. (2d) 306; Reber v. Reber (1988),
48 D.L.R. (4th) 376; Russell v. Scott (1936),
55 C.L.R. 440; Young v. Sealey, [1949] 1 All
E.R. 92; Aroso v. Coutts, [2002] 1 All E.R. (Comm) 241,
[2001] EWHC Ch 443; Matter of Totten, 179 N.Y. 112
(1904); Matter of Berson, 566 N.Y.S.2d 74 (1991); Matter of
Halpern, 303 N.Y. 33 (1951); Clemens v. Clemens Estate,
[1956] S.C.R. 286; Jeans v. Cooke (1857), 24 Beav. 513, 53 E.R.
456; Shephard v. Cartwright, [1955] A.C. 431; Neazor v. Hoyle (1962),
32 D.L.R. (2d) 131; Lavelle v. Lavelle, [2004] EWCA
Civ 223 (BAILII); Taylor v. Wallbridge (1879), 2 S.C.R. 616.
By Abella J.
Madsen Estate v. Saylor, [2007] 1 S.C.R. 838, 2007 SCC 18, aff’g (2005),
261 D.L.R. (4th) 597, aff’g (2004), 13 E.T.R. (3d) 44; Nelson v.
Nelson (1995), 184 C.L.R. 538; Cho Ki Yau Trust (Trustees of)
v. Yau Estate (1999), 29 E.T.R. (2d) 204; Pettitt v. Pettitt,
[1970] A.C. 777; Rathwell v. Rathwell, [1978]
2 S.C.R. 436; Grey (Lord) v. Grey (Lady) (1677),
2 Swans. 594, 36 E.R. 742; Sidmouth v. Sidmouth
(1840), 2 Beav. 447, 48 E.R. 1254; Scawin v. Scawin
(1841), 1 Y. & C.C.C. 65, 62 E.R. 792; Hepworth v.
Hepworth (1870), L.R. 11 Eq. 10; Dreger (Litigation Guardian
of) v. Dreger (1994), 5 E.T.R. (2d) 250; Cooper v. Cooper Estate
(1999), 27 E.T.R. (2d) 170; McLear v. McLear Estate (2000),
33 E.T.R. (2d) 272; Young v. Young (1958), 15 D.L.R.
(2d) 138; Oliver Estate v. Walker, [1984] B.C.J. No. 460 (QL);
Dagle v. Dagle Estate (1990), 38 E.T.R. 164; Christmas
Estate v. Tuck (1995), 10 E.T.R. (2d) 47; Reain v. Reain (1995),
20 R.F.L. (4th) 30; Sodhi v. Sodhi, [1998]
10 W.W.R. 673; Re Wilson (1999), 27 E.T.R. (2d) 97; Kappler
v. Beaudoin, [2000] O.J. No. 3439 (QL); Clarke v. Hambly
(2002), 46 E.T.R. (2d) 166, 2002 BCSC 1074; Plamondon v.
Czaban (2004), 8 E.T.R. (3d) 135, 2004 ABCA 161; Re
Mailman Estate, [1941] S.C.R. 368; Niles v. Lake, [1947]
S.C.R. 291; Edwards v. Bradley, [1957] S.C.R. 599.
Statutes and Regulations Cited
Divorce Act,
R.S.C. 1985, c. 3 (2nd Supp .), s. 26.1(2) .
Family Law Act, R.S.N.L. 1990,
c. F‑2, s. 31(1).
Family Law Act, R.S.O. 1990,
c. F.3, ss. 14, 31, 32.
Family Law Act, R.S.P.E.I. 1988,
c. F‑2.1, s. 14(1).
Family Law Act, S.N.W.T. 1997,
c. 18, s. 46(1).
Family Property Act, S.S. 1997,
c. F‑6.3, s. 50(1).
Family Property and Support Act,
R.S.Y. 2002, c. 83, s. 7(2).
Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp .), s. 73 .
Marital Property Act, S.N.B. 1980,
c. M‑1.1, s. 15(1).
Matrimonial Property Act,
R.S.N.S. 1989, c. 275, s. 21(1).
Statute of Uses, 1535,
27 Hen. 8, c. 10.
Authors
Cited
American Law Institute. Restatement
(Third) of Trusts. St. Paul, Minn.: The Institute,
2003.
Chambers, Robert. “Resulting
Trusts in Canada” (2000), 38 Alta. L. Rev. 378.
Freedman, C. D. “Reassessing
Gratuitous Transfers by Parents to Adult Children” (2006), 25 E.T.P.J. 174.
Gillese, Eileen E., and
Martha Milczynski. The Law of Trusts, 2nd ed.
Toronto: Irwin Law, 2005.
Oosterhoff on Trusts: Text,
Commentary and Materials, 6th ed. by A. H.
Oosterhoff et al. Toronto: Thomson, 2004.
Sopinka, John, Sidney N.
Lederman and Alan W. Bryant. The Law of Evidence in Canada,
2nd ed. Toronto: Butterworths, 1999.
Waters’ Law of Trusts in Canada, 3rd ed. by Donovan W. M. Waters,
Mark R. Gillen and Lionel D. Smith, eds.
Toronto: Thomson, 2005.
Ziff, Bruce. Principles of
Property Law, 4th ed. Toronto: Thomson, 2006.
APPEAL from a judgment of the Ontario Court of Appeal
(Weiler, Rosenberg and Lang JJ.A.) (2005), 19 E.T.R. (3d) 162,
17 R.F.L. (6th) 261, 202 O.A.C. 158, [2005] O.J.
No. 3712 (QL), affirming a decision of Karam J. (2004), 7 E.T.R.
(3d) 113, 48 R.F.L. (5th) 89, [2004] O.J. No. 695 (QL).
Appeal dismissed.
Andrew M. Robinson
and Megan L. Mackey, for the appellant.
Bryan C. McPhadden and Fabrice Gouriou, for the respondents.
The judgment of McLachlin C.J. and Bastarache, Binnie,
LeBel, Deschamps, Fish, Charron and Rothstein JJ. was delivered by
Rothstein J. —
I. Introduction
1
This appeal involves questions about joint bank and investment accounts
where only one of the account holders deposits funds into the account. These
types of joint accounts are used by many Canadians for a variety of purposes,
including estate-planning and financial management. Given their widespread
use, the law relating to how these accounts are to be treated by courts after
the death of one of the account holders is a matter appropriate for this Court
to address.
2
Depending on the terms of the agreement between the bank and the two
joint account holders, each may have the legal right to withdraw any or all
funds from the accounts at any time and each may have a right of survivorship.
If only one of the joint account holders is paying into the account and he or
she dies first, it raises questions about whether he or she intended to have
the funds in the joint account go to the other joint account holder alone or to
have those funds distributed according to his or her will. How to answer this
question is the subject of this appeal.
3
In the present case, an ageing father gratuitously placed his mutual
funds, bank account and income trusts in joint accounts with his daughter, who
was one of his adult children. The father alone deposited funds into the
accounts. Upon his death, a balance remained in the accounts.
4
It is not disputed that the daughter took legal ownership of the balance
in the accounts through the right of survivorship. Equity, however, recognizes
a distinction between legal and beneficial ownership. The beneficial owner of
property has been described as “the real owner of property even though it is in
someone else’s name”: Csak v. Aumon (1990), 69 D.L.R. (4th) 567 (Ont.
H.C.J.), at p. 570. The question is whether the father intended to make a gift
of the beneficial interest in the accounts upon his death to his daughter alone
or whether he intended that his daughter hold the assets in the accounts in
trust for the benefit of his estate to be distributed according to his will.
5
While the focus in any dispute over a gratuitous transfer is the actual
intention of the transferor at the time of the transfer, intention is often
difficult to ascertain, especially where the transferor is deceased. Common
law rules have developed to guide a court’s inquiry. This appeal raises the
following issues:
1. Do the presumptions of resulting trust and
advancement continue to apply in modern times?
2. If so, on what standard will the
presumptions be rebutted?
3. How should courts treat survivorship in the
context of a joint account?
4. What evidence may courts consider in
determining the intent of a transferor?
6
In this case, the trial judge found that the father actually intended a
gift and held that his daughter may retain the assets in the accounts. The
Court of Appeal dismissed the appeal of the daughter’s ex-husband.
7
I conclude that there is no basis to overturn this result. The appeal
should be dismissed.
II. Facts
8
The dispute is between Paula Pecore and her ex-husband Michael Pecore
regarding who is entitled to the assets held in joint accounts between Paula
and her father upon her father’s death. The assets in the joint accounts in
dispute totalled almost $1,000,000 at the time Paula’s father died in 1998.
9
Paula has two siblings but of the three, she was the closest to their
father. In fact, her father was estranged from one of her sisters until
shortly before his death in 1998. Unlike her siblings who were financially
secure, Paula worked at various low-paying jobs and took care of her
quadriplegic husband Michael. Her father helped her and her family financially
by, for example, buying them a van, making improvements to their home, and
assisting her son while he was attending university.
10
In 1993, Paula’s father was told by a financial advisor that by placing
his assets in joint ownership, he could avoid “the payment of probate fees and
taxes and generally make after-death disposition less expensive and less cumbersome”
((2004), 7 E.T.R. (3d) 113, at para. 7). In February of 1994, he began
transferring some of his assets which were mainly either in bank accounts or in
mutual funds to himself and to Paula jointly, with a right of survivorship (ibid.,
at para. 6). In 1996, Paula’s father was advised by his accountant that for
tax purposes, transfers to his daughter (as opposed to a spouse) could trigger
a capital gain, with the result that tax on the gain would be due as of the
year of disposition. As a result, Paula’s father wrote letters to the
financial institutions purporting to deal with the tax implications. In these
letters he stated that he was “the 100% owner of the assets and the funds are
not being gifted to Paula” (ibid., at para. 10).
11
Paula’s father continued to use and control the accounts after they were
transferred into joint names. He declared and paid all the taxes on the income
made from the assets in the accounts. Paula made some withdrawals but was
required to notify her father before doing so. According to her, this was
because her father wanted to ensure there were sufficient funds available for
her to withdraw.
12
In early 1998, Paula’s father drafted what was to be his last will. By
this time, he had already transferred the bulk of his assets into the joint
accounts with Paula. For the first time, he named Michael in his will. The
will left specific bequests to Paula, Michael and her children (whom Michael
had adopted), but did not mention the accounts. The residue of the estate was
to be divided equally between Paula and Michael.
13
The lawyer who drafted the will testified that he asked Paula’s father
“about such things as registered retirement savings plans, R.R.I.F.s,
registered pension plans, life insurance, and in each case satisfied [him]self
that they were not items which would pass as the result of a will and so that
they needn’t be included in the will” (ibid., at para. 37). There was no
discussion about the joint investment and bank accounts.
14
In 1998, Paula’s father moved into Paula and Michael’s house. In 1997
and 1998, the father had expressed to others, including one of Paula’s sisters,
that he was going to take care of Paula after his death, but said the “system”
would take care of Michael.
15
Paula’s father died in December 1998. His estate paid tax on the basis
of a deemed disposition of the accounts to Paula immediately before his death.
16
Paula and Michael later divorced. The dispute over the accounts arose
during their matrimonial property proceedings.
III. Judicial History
A. Ontario Superior Court of Justice
(2004), 7 E.T.R. (3d) 113
17
The trial judge looked at the operation of the presumption of a
resulting trust and the presumption of advancement and found that the latter
applied given Paula’s relationship with her father. Karam J. concluded that
the evidence failed to rebut the presumption of advancement and held that the
money in the joint accounts therefore belonged to Paula. He found that the
evidence clearly indicated that Paula’s father intended to gift the beneficial
ownership of those assets held in joint ownership to her while he continued to
manage and control them on a day-to-day basis before his death.
B. Ontario Court of Appeal (2005), 19
E.T.R. (3d) 162
18
The Court of Appeal agreed with the trial judge that there was ample
evidence to show that Paula’s father intended to give Paula beneficial interest
in his investments when he placed them in joint ownership. As a result, Lang
J.A. found that it was not necessary to rely on the presumption of advancement,
saying that a presumption is only relevant when evidence of actual intention is
evenly balanced or when there is no evidence of actual intention.
IV. Analysis
A. Do the Presumptions of Resulting Trust
and Advancement Continue to Apply in Modern Times?
19
A discussion of the treatment of joint accounts after the death of the
transferor must begin with a consideration of the common law approach to
ascertaining the intent of the deceased person.
20
A resulting trust arises when title to property is in one party’s name,
but that party, because he or she is a fiduciary or gave no value for the
property, is under an obligation to return it to the original title owner: see
D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts
in Canada (3rd ed. 2005), at p. 362. While the trustee almost always has
the legal title, in exceptional circumstances it is also possible that the
trustee has equitable title: see Waters’ Law of Trusts, at p. 365,
noting the case of Carter v. Carter (1969), 70 W.W.R. 237 (B.C.S.C.).
21
Advancement is a gift during the transferor’s lifetime to a transferee
who, by marriage or parent-child relationship, is financially dependent on the transferor:
see Waters’ Law of Trusts, at p. 378. In the context of the
parent-child relationship, the term has also been used because “the father was
under a moral duty to advance his children in the world”: A. H.
Oosterhoff et al., Oosterhoff on Trusts: Text, Commentary and Materials
(6th ed. 2004), at p. 575 (emphasis added).
22
In certain circumstances which are discussed below, there will be a
presumption of resulting trust or presumption of advancement. Each are
rebuttable presumptions of law: see e.g. Re Mailman Estate, [1941]
S.C.R. 368, at p. 374; Niles v. Lake, [1947] S.C.R. 291; Rathwell v.
Rathwell, [1978] 2 S.C.R. 436, at p. 451; J. Sopinka, S. N. Lederman and A.
W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 115. A
rebuttable presumption of law is a legal assumption that a court will make if
insufficient evidence is adduced to displace the presumption. The presumption
shifts the burden of persuasion to the opposing party who must rebut the
presumption: see Sopinka et al., at pp. 105-6.
23
For the reasons discussed below, I think the long-standing common law
presumptions continue to have a role to play in disputes over gratuitous
transfers. The 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. This may be especially true when the
transferor is deceased and thus is unable to tell the court his or her
intention in effecting the transfer. In addition, as noted by Feldman J.A. in
the Ontario Court of Appeal in Saylor v. Madsen Estate (2005), 261
D.L.R. (4th) 597, the advantage of maintaining the presumption of advancement
and the presumption of a resulting trust is that they provide a measure of
certainty and predictability for individuals who put property in joint accounts
or make other gratuitous transfers.
1. The Presumption of Resulting Trust
24
The presumption of resulting trust is a rebuttable presumption of law
and general rule that applies to gratuitous transfers. When a transfer is
challenged, the presumption allocates the legal burden of proof. Thus, where a
transfer is made for no consideration, the onus is placed on the transferee to
demonstrate that a gift was intended: see Waters’ Law of Trusts, at p.
375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed.
2005), at p. 110. This is so because equity presumes bargains, not gifts.
25
The presumption of resulting trust therefore alters the general practice
that a plaintiff (who would be the party challenging the transfer in these
cases) bears the legal burden in a civil case. Rather, the onus is on the
transferee to rebut the presumption of a resulting trust.
26
In cases where the transferor is deceased and the dispute is between the
transferee and a third party, the presumption of resulting trust has an
additional justification. In such cases, it is the transferee who is better
placed to bring evidence about the circumstances of the transfer.
2. The Presumption of Advancement
27
The presumption of resulting trust is the general rule for gratuitous
transfers. However, depending on the nature of the relationship between the transferor
and transferee, the presumption of a resulting trust will not arise and there
will be a presumption of advancement instead: see Waters’ Law of Trusts,
at p. 378. If the presumption of advancement applies, it will fall on the
party challenging the transfer to rebut the presumption of a gift.
28
Historically, the presumption of advancement has been applied in two
situations. The first is where the transferor is a husband and the transferee
is his wife: Hyman v. Hyman, [1934] 4 D.L.R. 532 (S.C.C.), at p. 538.
The second is where the transferor is a father and the transferee is his child,
which is at issue in this appeal.
29
One of the earliest documented cases where a judge applied the
presumption of advancement is the 17th century decision in Grey (Lord) v.
Grey (Lady) (1677), Rep. Temp. Finch 338, 23 E.R. 185:
. . . the Law will never imply a Trust, because the natural
Consideration of Blood, and the Obligation which lies on the Father in
Conscience to provide for his Son, are predominant, and must over‑rule
all manner of Implications. [Underlining added; p. 187.]
30
As stated in Grey, the traditional rationale behind the
presumption of advancement between father and child is that a father has an
obligation to provide for his sons. See also Oosterhoff on Trusts, at
p. 575. The presumption also rests on the assumption that parents so commonly
intend to make gifts to their children that the law should presume as much: ibid.,
at pp. 581 and 598.
31
While historically the relationship between father and child gave rise
to the presumption of advancement, courts in Canada have been divided as to
whether the relationship between mother and child does as well. Some have
concluded that it does not: see e.g. Lattimer v. Lattimer (1978), 18
O.R. (2d) 375 (H.C.J.), relying on Cartwright J.’s concurring judgment in Edwards
v. Bradley, [1957] S.C.R. 599. Others have found that it does: see e.g. Rupar
v. Rupar (1964), 49 W.W.R. 226 (B.C.S.C.); Dagle v. Dagle Estate
(1990), 38 E.T.R. 164 (P.E.I.S.C., App. Div.); Re Wilson (1999), 27
E.T.R. (2d) 97 (Ont. Ct. (Gen. Div.)). In concluding that the presumption
applies to mothers and children in Re Wilson, Fedak J., at para. 50,
took into consideration “the natural affection between a mother and child,
legislative changes requiring mothers to support their children, the economic
independence of women and the equality provisions of the Charter”.
32
The question of whether the presumption applies between mother and child
is not raised in these appeals, as the transfers in question occurred between a
father and daughter, but I shall deal with it briefly. Unlike when the
presumption of advancement was first developed, women today have their own
financial resources. They also have a statutory obligation to financially
support their children in the same way that fathers do. Section 26.1(2) of the
Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .), for instance, refers to the
“principle” that spouses have a “joint financial obligation to maintain the
children”, and s. 31(1) of the Family Law Act, R.S.O. 1990, c. F.3,
provides that “[e]very parent has an obligation to provide support for his or
her unmarried child who is a minor or is enrolled in a full time program of
education, to the extent that the parent is capable of doing so.” Oosterhoff
et al. have also commented on this issue in Oosterhoff on Trusts, saying
at p. 575, “Mothers and fathers are now under equal duties to care for their
children and are equally likely to intend to make gifts to
them. . . . In Canada, it is now accepted that mothers and
fathers should be treated equally.”
33
I agree. As women now have both the means as well as obligations to
support their children, they are no less likely to intend to make gifts to
their children than fathers. The presumption of advancement should thus apply
equally to fathers and mothers.
34
Next, does the presumption of advancement apply between parents and
adult independent children? A number of courts have concluded that it should
not. In reaching that conclusion, Heeney J. in McLear v. McLear Estate
(2000), 33 E.T.R. (2d) 272 (Ont. S.C.J.), at paras. 40-41, focussed largely on
the modern practice of elderly parents adding their adult children as joint
account holders so that the children can provide assistance with the management
of their parents’ financial affairs:
Just as Dickson J. considered “present social
conditions” in concluding that the presumption of advancement between husbands
and wives had lost all relevance, a consideration of the present social
conditions of an elderly parent presents an equally compelling case for doing away
with the presumption of advancement between parent and adult child. We are
living in an increasingly complex world. People are living longer, and it is
commonplace that an ageing parent requires assistance in managing his or her
daily affairs. This is particularly so given the complexities involved in
managing investments to provide retirement income, paying income tax on those
investments, and so on. Almost invariably, the duty of assisting the ageing
parent falls to the child who is closest in geographic proximity. In such
cases, Powers of Attorney are routinely given. Names are “put on” bank accounts
and other assets, so that the child can freely manage the assets of the parent.
Given these social conditions, it seems to me that
it is dangerous to presume that the elderly parent is making a gift each time
he or she puts the name of the assisting child on an asset. The presumption
that accords with this social reality is that the child is holding the property
in trust for the ageing parent, to facilitate the free and efficient management
of that parent’s affairs. The presumption that accords with this social reality
is, in other words, the presumption of resulting trust.
35
Heeney J. also noted that the fact that the child was independent and
living away from home featured very strongly in Kerwin C.J.’s reasons for
finding that no presumption of advancement arose in Edwards v. Bradley.
A similar conclusion was reached by Klebuc J., as he was then, in Cooper v.
Cooper Estate (1999), 27 E.T.R. (2d) 170 (Sask. Q.B.), at para. 19: “I have
serious doubts as to whether presumption of advancement continues to apply with
any degree of persuasiveness in Saskatchewan in circumstances where an older
parent has transferred property to an independent adult child who is married
and lives apart from his parent.” Waters et al., too in Waters’ Law of
Trusts, at p. 395, said: “It may well be that, reflecting the financial
dependency that it probably does, contemporary opinion would accord [the
presumption of advancement] little weight as between a father and an
independent, adult child.”
36
I am inclined to agree. First, given that a principal justification for
the presumption of advancement is parental obligation to support their
dependent children, it seems to me that the presumption should not apply in
respect of independent adult children. As Heeney J. noted in McLear, at
para. 36, parental support obligations under provincial and federal statutes
normally end when the child is no longer considered by law to be a minor: see
e.g. Family Law Act, s. 31. Indeed, not only do child support
obligations end when a child is no longer dependent, but often the reverse is
true: an obligation may be imposed on independent adult children to support
their parents in accordance with need and ability to pay: see e.g. Family
Law Act, s. 32. Second, I agree with Heeney J. that it is common nowadays
for ageing parents to transfer their assets into joint accounts with their
adult children in order to have that child assist them in managing their
financial affairs. There should therefore be a rebuttable presumption that
the adult child is holding the property in trust for the ageing parent to
facilitate the free and efficient management of that parent’s affairs.
37
Some commentators and courts have argued that while an adult,
independent child is no longer financially dependent, the presumption of
advancement should apply on the basis of parental affection for their children:
see e.g. Madsen Estate, at para. 21; Dagle; Christmas Estate
v. Tuck (1995), 10 E.T.R. (2d) 47 (Ont. Ct. (Gen. Div.)); and Cho Ki Yau
Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204 (Ont.
S.C.J.). I do not agree that affection is a basis upon which to apply the
presumption of advancement to the transfer. Indeed, the factor of affection
applies in other relationships as well, such as between siblings, yet the
presumption of advancement would not apply in those circumstances. However, I
see no reason why courts cannot consider evidence relating to the quality of
the relationship between the transferor and transferee in order to determine
whether the presumption of a resulting trust has been rebutted.
38
The remaining question is whether the presumption of advancement should
apply in the case of adult dependent children. In the present case the trial
judge, at paras. 26-28, found that Paula, despite being a married adult with
her own family, was nevertheless dependent on her father and justified applying
the presumption of advancement on that basis.
39
The question of whether the presumption applies to adult dependent
children begs the question of what constitutes dependency for the purpose of
applying the presumption. Dependency is a term susceptible to an enormous
variety of circumstances. The extent or degree of dependency can be very wide
ranging. While it may be rational to presume advancement as a result of
dependency in some cases, in others it will not. For example, it is not
difficult to accept that in some cases a parent would feel a moral, if not
legal, obligation to provide for the quality of life for an adult disabled
child. This might especially be the case where the disabled adult child is
under the charge and care of the parent.
40
As compelling as some cases might be, I am reluctant to apply the
presumption of advancement to gratuitous transfers to “dependent” adult
children because it would be impossible to list the wide variety of the
circumstances that make someone “dependent” for the purpose of applying the
presumption. Courts would have to determine on a case-by-case basis whether or
not a particular individual is “dependent”, creating uncertainty and
unpredictability in almost every instance. I am therefore of the opinion that
the rebuttable presumption of advancement with regard to gratuitous transfers
from parent to child should be preserved but be limited in application to
transfers by mothers and fathers to minor children.
41
There will of course be situations where a transfer between a parent and
an adult child was intended to be a gift. It is open to the party claiming
that the transfer is a gift to rebut the presumption of resulting trust by
bringing evidence to support his or her claim. In addition, while dependency
will not be a basis on which to apply the presumption of advancement, evidence
as to the degree of dependency of an adult transferee child on the transferor
parent may provide strong evidence to rebut the presumption of a resulting
trust.
B. On What Standard Will the Presumptions
Be Rebutted?
42
There has been some debate amongst courts and commentators over what
amount of evidence is required to rebut a presumption. With regard to the
presumption of resulting trust, some cases appear to suggest that the criminal
standard, or at least a standard higher than the civil standard, is applicable:
see e.g. Bayley v. Trusts and Guarantee Co., [1931] 1 D.L.R. 500 (Ont.
S.C., App. Div.), at p. 505; Johnstone v. Johnstone (1913), 12 D.L.R.
537 (Ont. S.C., App. Div.), at p. 539. As for the presumption of advancement,
some cases seem to suggest that only slight evidence will be required to rebut
the presumptions: see e.g. Pettitt v. Pettitt, [1970] A.C. 777 (H.L.),
at p. 814; McGrath v. Wallis, [1995] 2 F.L.R. 114 (Eng. C.A.), at pp.
115 and 122; Dreger (Litigation Guardian of) v. Dreger (1994), 5 E.T.R.
(2d) 250 (Man. C.A.), at para. 31.
43
The weight of recent authority, however, suggests that the civil standard,
the balance of probabilities, is applicable to rebut the presumptions: Burns
Estate v. Mellon (2000), 48 O.R. (3d) 641 (C.A.), at paras. 5-21; Lohia
v. Lohia, [2001] EWCA Civ 1691 (BAILII), at paras. 19-21; Dagle, at
p. 210; Re Wilson, at para. 52. See also Sopinka et al., at p. 116.
This is also my view. I see no reason to depart from the normal civil standard
of proof. The evidence required to rebut both presumptions, therefore, is
evidence of the transferor’s contrary intention on the balance of
probabilities.
44
As in other civil cases, regardless of the legal burden, both sides to
the dispute will normally bring evidence to support their position. The 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. Thus, as discussed by
Sopinka et al. in The Law of Evidence in Canada, at p. 116, the
presumption will only determine the result where there is insufficient evidence
to rebut it on a balance of probabilities.
C. How Should Courts Treat Survivorship in
the Context of a Joint Account?
45
In cases where the transferor’s proven intention in opening the joint
account was to gift withdrawal rights to the transferee during his or her
lifetime (regardless of whether or not the transferee chose to exercise that
right) and also to gift the balance of the account to the transferee alone on
his or her death through survivorship, courts have had no difficulty finding
that the presumption of a resulting trust has been rebutted and the transferee
alone is entitled to the balance of the account on the transferor’s death.
46
In certain cases, however, courts have found that the transferor
gratuitously placed his or her assets into a joint account with the transferee
with the intention of retaining exclusive control of the account until his or
her death, at which time the transferee alone would take the balance through
survivorship: see e.g. Standing v. Bowring (1885), 31 Ch. D. 282, at p.
287; Edwards v. Bradley, [1956] O.R. 225 (C.A.), at p. 234; Yau
Estate, at para. 25.
47
There may be a number of reasons why an individual would gratuitously
transfer assets into a joint account having this intention. A typical reason
is that the transferor wishes to have the assistance of the transferee with the
management of his or her financial affairs, often because the transferor is
ageing or disabled. At the same time, the transferor may wish to avoid probate
fees and/or make after-death disposition to the transferee less cumbersome and
time consuming.
48
Courts have understandably struggled with whether they are permitted to
give effect to the transferor’s intention in this situation. One of the
difficulties in these circumstances is that the beneficial interest of the
transferee appears to arise only on the death of the transferor. This
has led some judges to conclude that the gift of survivorship is testamentary
in nature and must fail as a result of not being in proper testamentary form:
see e.g. Hill v. Hill (1904), 8 O.L.R. 710 (H.C.), at p. 711; Larondeau
v. Laurendeau, [1954] O.W.N. 722 (H.C.); Hodgins J.A.’s dissent in Re
Reid (1921), 64 D.L.R. 598 (Ont. S.C., App. Div.). For the reasons that
follow, however, I am of the view that the rights of survivorship, both legal
and equitable, vest when the joint account is opened and the gift of those
rights is therefore inter vivos in nature. This has also been the
conclusion of the weight of judicial opinion in recent times: see e.g. Mordo
v. Nitting, [2006] B.C.J. No. 3081 (QL), 2006 BCSC 1761, at paras. 233-38; Shaw
v. MacKenzie Estate (1994), 4 E.T.R. (2d) 306 (N.S.S.C.), at para. 49; and Reber
v. Reber (1988), 48 D.L.R. (4th) 376 (B.C.S.C.); see also Waters’ Law of
Trusts, at p. 406.
49
An early case that addressed the issue of the nature of survivorship is Re
Reid in which Ferguson J.A. of the Ontario Court of Appeal found that the
gift of a joint interest was a “complete and perfect gift inter vivos”
(p. 608) from the moment that the joint account was opened even though the
transferor in that case retained exclusive control over the account during his
lifetime. I agree with this interpretation. I also find MacKay J.A.’s reasons
in Edwards v. Bradley (C.A.), at p. 234, to be persuasive:
The legal right to take the balance in the account if A predeceases
him being vested in B on the opening of the account, it cannot be the subject
of a testamentary disposition. If A’s intention was that B should also have
the beneficial interest, B already has the legal title and there is nothing
further to be done to complete the gift of the beneficial interest. If A’s
intention was that B should not take the beneficial interest, it belongs to A
or his estate and he is not attempting to dispose of it by means of the joint
account. In either event B has the legal title and the only question that can
arise on A’s death is whether B is entitled to keep any money that may be in
the account on A’s death or whether he holds it as a trustee under a resulting
trust for A’s estate. [Emphasis added.]
Edwards v.
Bradley was appealed to the Supreme Court of Canada but the issue of
survivorship was not addressed.
50
Some judges have found that a gift of survivorship cannot be a complete
and perfect inter vivos gift because of the ability of the transferor to
drain a joint account prior to his or her death: see e.g. Hodgins J.A.’s
dissent in Re Reid. Like the Ontario Court of Appeal in Re Reid,
at p. 608, and Edwards v. Bradley, at p. 234, I would reject this view.
The nature of a joint account is that the balance will fluctuate over time.
The gift in these circumstances is the transferee’s survivorship interest in
the account balance — whatever it may be — at the time of the transferor’s
death, not to any particular amount.
51
Treating survivorship in these circumstances as an inter vivos gift
of a joint interest has found favour in other jurisdictions, including
Australia and the United Kingdom: see Russell v. Scott (1936), 55 C.L.R.
440, at p. 455; Young v. Sealey, [1949] 1 All E.R. 92 (Ch. Div.), at pp.
107-8; (in obiter) Aroso v. Coutts, [2002] 1 All E.R. (Comm) 241,
[2001] EWHC Ch 443, at paras. 29 and 36.
52
While not entirely analogous, the American notion of the “Totten trust”
(sometimes referred to as the “Bank account trust”) is now recognized as valid
in most states in the United States; an individual places money in a bank
account with the instruction that upon his or her death, whatever is in that
bank account will pass to a named beneficiary: see Restatement (Third) of
Trusts (2003), at para. 26 of Part 2, Chapter 5. The Totten trust is so
named for the leading case establishing its validity: see Matter of Totten,
179 N.Y. 112 (1904). While a Totten trust does not deal with joint accounts as
such, it recognizes the practicality of the depositor having control of an
account during his or her lifetime but allowing the depositor’s named
beneficiary of that account to claim the funds remaining in the account upon
the death of the depositor without the disposition being treated as
testamentary: see e.g. Matter of Berson, 566 N.Y.S.2d 74 (App. Div.
1991); Matter of Halpern, 303 N.Y. 33 (1951).
53
Of course, the presumption of a resulting trust means that it will fall
to the surviving joint account holder to prove that the transferor intended to
gift the right of survivorship to whatever assets are left in the account to
the survivor. Otherwise, the assets will be treated as part of the
transferor’s estate to be distributed according to the transferor’s will.
54
Should the avoidance of probate fees be of concern to the legislature,
it is open to it to enact legislation to deal with the matter.
D. What Evidence May a Court Consider in
Determining Intent of the Transferor?
55
Where a gratuitous transfer is being challenged, the trial judge must
begin his or her inquiry by determining the proper presumption to apply and
then weigh all the evidence relating to the actual intention of the transferor
to determine whether the presumption has been rebutted. It is not my intention
to list all of the types of evidence that a trial judge can or should consider
in ascertaining intent. This will depend on the facts of each case. However,
I will discuss particular types of evidence at issue in this appeal and its
companion case that have been the subject of divergent approaches by courts.
1. Evidence Subsequent to the Transfer
56
The traditional rule is that evidence adduced to show the intention of
the transferor at the time of the transfer “ought to be contemporaneous, or
nearly so”, to the transaction: see Clemens v. Clemens Estate, [1956]
S.C.R. 286, at p. 294, citing Jeans v. Cooke (1857), 24 Beav. 513, 53
E.R. 456. Whether evidence subsequent to a transfer is admissible has often
been a question of whether it complies with the Viscount Simonds’ rule in Shephard
v. Cartwright, [1955] A.C. 431 (H.L.), at p. 445, citing Snell’s
Principles of Equity (24th ed. 1954), at p. 153:
The acts and declarations of the parties before or
at the time of the purchase, [or of the transfer] or so immediately after it as
to constitute a part of the transaction, are admissible in evidence either for
or against the party who did the act or made the declaration . . . . But
subsequent declarations are admissible as evidence only against the party who
made them . . . .
The reason
that subsequent acts and declarations have been viewed with mistrust by courts
is because a transferor could have changed his or her mind subsequent to the
transfer and because donors are not allowed to retract gifts. As noted by
Huband J.A. in Dreger, at para. 33: “Self-serving statements after the
event are too easily fabricated in order to bring about a desired result.”
57
Some courts, however, have departed from the restrictive — and somewhat
abstruse — rule in Shephard v. Cartwright. In Neazor v. Hoyle (1962),
32 D.L.R. (2d) 131 (Alta. S.C., App. Div.), for example, a brother transferred
land to his sister eight years before he died and the trial judge considered
the conduct of the parties during the years after the transfer to see whether they
treated the land as belonging beneficially to the brother or the sister.
58
The rule has also lost much of its force in England. In Lavelle v.
Lavelle, [2004] EWCA Civ 223 (BAILII), at para. 19, Lord Phillips, M.R.,
had this to say about Shephard v. Cartwright and certain other
authorities relied on by the appellant in that case:
It seems to me that it is not satisfactory to apply rigid rules of
law to the evidence that is admissible to rebut the presumption of advancement.
Plainly, self-serving statements or conduct of a transferor, who may long after
the transaction be regretting earlier generosity, carry little or no weight.
[Emphasis added.]
59
Similarly, I am of the view that the evidence of intention that arises
subsequent to a transfer should not automatically be excluded if it does not
comply with the Shephard v. Cartright rule. Such evidence, however,
must be relevant to the intention of the transferor at the time of the
transfer: Taylor v. Wallbridge (1879), 2 S.C.R. 616. The trial judge
must assess the reliability of this evidence and determine what weight it
should be given, guarding against evidence that is self-serving or that tends
to reflect a change in intention.
2. Bank Documents
60
In the past, this Court has held that bank documents that set up a joint
account are an agreement between the account holders and the bank about legal
title; they are not evidence of an agreement between the account holders as to
beneficial title: see Niles and Re Mailman.
61
While I agree that bank documents do not necessarily set out equitable
interests in joint accounts, banking documents in modern times may be detailed
enough that they provide strong evidence of the intentions of the transferor
regarding how the balance in the account should be treated on his or her death:
see B. Ziff, Principles of Property Law (4th ed. 2006), at p. 332.
Therefore, if there is anything in the bank documents that specifically
suggests the transferor’s intent regarding the beneficial interest in the
account, I do not think that courts should be barred from considering it.
Indeed, the clearer the evidence in the bank documents in question, the more
weight that evidence should carry.
3. Control and Use of the Funds in the
Account
62
There is some inconsistency in the caselaw as to whether a court should
consider evidence as to the control of joint accounts following the transfer in
ascertaining the intent of the transferor with respect to the beneficial interest
in the joint account. In the present case, for example, Paula’s father
continued to manage the investments and to pay the taxes after establishing the
joint accounts. The Court of Appeal, at para. 40, held that this factor was
not determinative of Paula’s father’s intentions: “[w]hile control can be
consistent with an intention to retain ownership, it is also not inconsistent
in this case with an intention to gift the assets.” In contrast, in Madsen
Estate, at para. 34, one of the main factors the Court of Appeal relied on
to show that the father did not intend to create a beneficial joint tenancy was
that he remained in control of the accounts, and that he paid the taxes on the
interest earned on the funds in the accounts.
63
I am of the view that control and use of the funds, like the wording of
the bank documents, should not be ruled out in the ascertainment of the
transferor’s intention. For example, the transferor’s retention of his or her
exclusive beneficial interest in the account in his or her lifetime may support
the finding of a resulting trust, unless other evidence proves that he or she
intended to gift the right of survivorship to the transferee. However,
evidence of use and control may be of marginal assistance only and, without
more, will not be determinative for three reasons.
64
First, it may be that the dynamics of the relationship are such that the
transferor makes the management decisions. He or she may be more experienced
with the accounts. This does not negate the beneficial interest of the other
account holder. Conversely, evidence that a transferee controlled the funds
does not necessarily mean that the transferee took a beneficial interest.
Ageing parents may set up accounts for the sole purpose of having their adult
child manage their funds for their benefit.
65
Second, in cases involving an ageing parent and an adult child, it may
be that the transferee, although entitled both legally and beneficially to
withdraw funds, will refrain from accessing them in order to ensure there are
sufficient funds to care for the parent for the remainder of the parent’s life.
66
Finally, as previously discussed, the fact that a transferor controlled
and used the funds during his or her life is not necessarily inconsistent with
an intention at the time of the transfer that the transferee would acquire the
balance of the account on the transferor’s death through the gift of the right
of survivorship.
4. Granting of Power of Attorney
67
Courts have also relied to varying degrees on the transferor’s granting
of a power of attorney to the transferee in determining intent. The Court of
Appeal in Madsen Estate, at para. 72, noted that the transferor had
granted the transferee power of attorney but did not view it “as a factor that
suggested that the joint account was not set up merely as a tool of convenience
for mutual access to funds”. The Court of Appeal in the present case, on the
other hand, placed substantial weight on Paula’s father having given her both
joint ownership of the accounts and power of attorney in finding that he
intended to gift the assets to her. Lang J.A. reasoned, at para. 34, that had
Paula’s father intended only for Paula to assist in the managing of the
accounts, this could have been accomplished solely by giving her power of
attorney: “With that power of attorney, joint ownership of the investments was
unnecessary unless [Paula’s father] intended something more: to ensure the
investments were given to Paula and to avoid probate fees, both entirely
legitimate purposes.” Lang J.A. also found, at para. 35, that the weight to
be afforded a particular piece of evidence is a matter within a trial judge’s
discretion.
68
I share Lang J.A.’s view that the trier of fact has the discretion to
consider the granting of power of attorney when deciding the transferor’s
intention. This will be especially true when other evidence suggests that the
transferor appreciated the distinction between granting that power and gifting
the right of survivorship. Again however, this evidence will not be
determinative and courts should use caution in relying upon it, because it is
entirely plausible that the transferor granted power of attorney and placed his
or her assets in a joint account but nevertheless intended that the balance of
the account be distributed according to his or her will. For example, the
transferor may have granted power of attorney in order to have assistance with
other affairs beyond the account and may have made the transferee a joint
account holder solely for added convenience.
5. Tax Treatment of Joint Accounts
69
Courts have relied to varying degrees on the transferor’s tax treatment
of the account in determining intent. In Madsen Estate, the trial judge
relied in part on the fact that the transferor was the one who declared and
paid income tax on the money in the joint accounts in finding that the
transferor intended a resulting trust ((2004), 13 E.T.R. (3d) 44, at para.
29). In the present case, at para. 44, the trial judge noted that Paula’s
father continued to pay taxes on the income in joint accounts but nevertheless
found that he intended to gift the joint accounts to her. I do not find either
of these approaches inappropriate. The weight to be placed on tax-related
evidence in determining a transferor’s intent should be left to the discretion
of the trial judge. However, whether or not a transferor continues to pay
taxes on the income earned in the joint accounts during his or her lifetime should
not be determinative of his or her intention in the absence of other evidence.
For example, it may be that the transferor made the transfer for the sole
purpose of obtaining assistance in the management of his or her finances and
wished to have the assets form a part of his or her estate upon his or her
death. Or, as discussed above, it is open to a transferor to gift the right of
survivorship to the transferee when the joint accounts are opened, but to
retain control over the use of the funds in the accounts (and therefore to
continue to pay taxes on them) during his or her lifetime.
70
As for the matter of taxes on capital gains, it was submitted to this
Court that for public policy reasons, transferors should not be permitted to
transfer beneficial title while asserting to the tax authorities that such
title has not been passed in order to defer or avoid the payment of taxes:
appellant’s factum, at p. 24. In principle, I agree. Where, in setting up a
joint account, the transferor intends to transfer full legal and equitable
title to the assets in the account immediately and the value of the assets
reflects a capital gain, taxes on capital gains may become payable in the year
the joint account is set up. However, where the transferor’s intention is to
gift the right of survivorship to the transferee but retain beneficial
ownership of the assets during his or her lifetime, there would appear to be no
disposition at the moment of the setting up of the joint account: see s. 73 of
the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp .). That said, the issue
of the proper treatment of capital gains in the setting up of joint accounts
was not argued in this appeal. I can say no more than these are matters for
determination between the Canada Revenue Agency and taxpayers in specific
cases.
E. Should the Decision of the Trial Judge
Be Overturned?
71
The trial judge in the present case found that, at the time of the
transfers, Paula and her father had a very close relationship and that Paula “clearly
was the person, other than his wife, that he was closest to and most concerned
about” (para. 32). Given this relationship and her financial hardships, her
father preferred her over her siblings. Indeed, he was estranged from one of
his daughters at the time the accounts were set up (para. 25). While he may
have grown close to his son-in-law, the trial judge concluded they were simply
“good friends” (para. 38). Moreover, his wife was seriously ill and not
expected to outlive him.
72
Paula and her family relied on her father for financial assistance.
While he maintained control of the accounts and used the funds for his benefit
during his life, the trial judge found his concern lay with providing for Paula
after his death. This is consistent with an intention to gift a right of
survivorship when the accounts were set up.
73
The statements of Paula’s father while drafting his last will are also
an important indicator of intention. Although the statements were made in
years subsequent to the transfer, the trial judge considered the lawyer’s
testimony about them reliable. The lawyer had nothing to gain from his
testimony. This evidence indicates that Paula’s father was of the view that
the accounts had already been dealt with and understood these assets would not
form part of the estate. I agree with the trial judge that “if [the father’s]
intention was to have his jointly held assets devolve through the estate, they
were of such magnitude that he would have at least discussed that matter with
his solicitor, since they constituted a substantial proportion of what he
owned” (para. 43), particularly after the lawyer asked him about life insurance
policies, RRIFs and other assets. All of this evidence is consistent with
Paula’s father having gifted away the right of survivorship when the
joint accounts were opened, and thus is relevant to his intention at the time
of the transfer.
74
There is of course the issue of Paula’s father writing to financial
institutions saying that the transfers were not gifts to Paula. Consistent
with these letters, Paula’s father continued to control the funds in the
accounts and paid income tax on the earnings of the investments before his
death. The trial judge found that Paula’s father’s intention when he wrote the
letters was “simply to avoid triggering an immediate deemed disposition of the
assets in question, and therefore avoid capital gains taxes” (para. 39). I
agree with the trial judge that this is not inconsistent with an intention that
the balance remaining in the accounts would belong to Paula on his death.
75
The trial judge erred in applying the presumption of advancement.
Paula, although financially insecure, was not a minor child. Karam J. should
therefore have applied the presumption of a resulting trust. Nonetheless, this
error does not affect the ultimate disposition of the appeal because the trial
judge found that the evidence “clearly demonstrate[d] the intention” on the
part of the father that the balance left in the joint accounts he had with
Paula were to go to Paula alone on his death through survivorship (para. 44).
I am satisfied that this strong finding regarding the father’s actual intention
shows that the trial judge’s conclusion would have been the same even if he had
applied the presumption of a resulting trust.
V. Disposition
76
For the reasons above, I would dismiss this appeal, with costs. Michael
Pecore asked this Court for costs throughout from Paula or the estate. As
noted in the judgment of the Ontario Court of Appeal, at para. 48, the trial
judge denied Michael costs out of the estate or from Paula. He did so because
he found that on the issues raised in the divorce proceeding, success was
divided, Paula made an offer to settle that exceeded the result, and Michael’s
conduct was “less than candid”. I see no reason to interfere with that
disposition, or that costs should not follow the event in this Court.
The following are the reasons delivered by
77
Abella J. — Tolstoy wrote
at the beginning of Anna Karenina: “Happy families are all alike, every
unhappy family is unhappy in its own way.” That unhappiness often finds its
painful way into a courtroom.
78
This appeal involves a father who opened joint bank accounts with his
daughter, signing documents that specifically confirmed that the daughter was
to have a survivorship interest. The daughter’s entitlement to the remaining
funds in the accounts was challenged by her ex-husband. The trial judge, who
was upheld in the Court of Appeal ((2005), 19 E.T.R. (3d) 162), applied the
presumption of advancement and concluded that the father’s intention was to
make a gift of the money to his daughter ((2004), 7 E.T.R. (3d) 113). In the
companion appeal, Madsen Estate v. Saylor, [2007] 1 S.C.R. 838, 2007 SCC
18, the daughter’s entitlement to the funds was challenged by her siblings.
The trial judge applied the presumption of resulting trust rather than the
presumption of advancement, and concluded that the father had not
intended to make a gift to his daughter ((2004), 13 E.T.R. (3d) 44). The issue
in both appeals is which presumption applies and what the consequences of its
application are.
Analysis
79
Historically, the presumption of advancement has been applied to
gratuitous transfers to children, regardless of the child’s age. If we are to
continue to retain the presumption of advancement for parent-child transfers, I
see no reason, unlike Rothstein J., to limit its application to non-adult
children. I agree with him, however, that the scope of the presumption should
be expanded to include transfers from mothers as well as from fathers.
80
The presumptions of advancement and resulting trust are legal tools
which assist in determining the transferor’s intention at the time a gratuitous
transfer is made. The tools are of particular significance when the transferor
has died.
81
If the presumption of advancement applies, an individual who transfers
property into another person’s name is presumed to have intended to make a gift
to that person. The burden of proving that the transfer was not intended to be
a gift, is on the challenger to the transfer. If the presumption of resulting
trust applies, the transferor is presumed to have intended to retain the
beneficial ownership. The burden of proving that a gift was intended,
is on the recipient of the transfer.
82
There is an ongoing academic and judicial debate about whether the
presumptions, and particularly the presumption of resulting trust, ought to be
removed entirely from the judicial tool box in assessing intention. E. E.
Gillese and M. Milczynski offer the following criticism, echoed by others, in The
Law of Trusts (2nd ed. 2005):
. . . modern life has caused many to question the utility of the
presumptions. When I voluntarily transfer title to property to another, is it
more sensible to assume that I have made a gift or that I transferred title
under the assumption that the transferee would hold title for me? Surely, it
is more likely that, had I intended to create a trust, I would have taken steps
to expressly create the trust and document it. It is more plausible to presume
the opposite to that which equity presumed. If someone today gives away
property, it is at least as likely that they intended a gift as that they
intended to create some type of trust. And, if they did intend to create a
trust, they should be held to the requirements that exist for express trusts
and not be favoured by the presumption of a resulting trust. The fact that the
presumption is out of step with modern thought explains the courts’ new
approach to such cases, which is to look at all the evidence with an open mind
and attempt to determine intention on that basis. If that were the end of the
matter, we could say that the presumption of resulting trust had been
eradicated. Unfortunately, the courts have not gone that far, and the
presumption will operate where the evidence is unclear. [pp. 109-10]
83
Similarly, in Nelson v. Nelson (1995), 184 C.L.R. 538, the High
Court of Australia dealt with a case involving a mother’s purchase of a house
which she then transferred into the names of her children. In his concurring
reasons, McHugh J. made the following comments about the presumption of
resulting trust:
No doubt in earlier centuries, the practices and modes of thought of
the property owning classes made it more probable than not that, when a person
transferred property in such circumstances, the transferor did not intend the
transferee to have the beneficial as well as the legal interest in the
property. But times change. To my mind — and, I think, to the minds of most
people — it seems much more likely that, in the absence of an express
declaration or special circumstances, the transfer of property without
consideration was intended as a gift to the transferee. . . .
A presumption is a useful aid to decision making
only when it accurately reflects the probability that a fact or state of
affairs exists or has occurred. . . . If the presumptions do not reflect common
experience today, they may defeat the expectations of those who are unaware of
them. [Emphasis added; p. 602.]
84
McHugh J.’s allusion to “earlier centuries” reflects the origins of the
presumption of resulting trust. In the 15th century, it was not uncommon for
landowners in England to have title to their property held by other individuals
on the understanding that it was being held for the “use” of the landowner and
subject to his direction. This had the effect of separating legal and
beneficial ownership. The purpose of the scheme was to avoid having to pay
feudal taxes when land passed from a landowner to his heir.
85
It became so common for owners to transfer land to be held for their own
use, that the courts began to presume that a transfer made without
consideration, or gratuitously, was intended to be for the transferor’s own
use, giving rise to the presumption of resulting use. Because these nominal
transfers caused a significant loss of revenue to the Crown, the Statute of
Uses, 1535 was enacted, which “executed the use”, reuniting legal and
equitable title (R. Chambers, “Resulting Trusts in Canada” (2000), 38 Alta.
L. Rev. 378; Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29
E.T.R. (2d) 204 (Ont. S.C.J.)).
86
The presumption of resulting trust is the vestigial doctrine that
emerged from the evolutionary remains of the executed use. The presumption of
advancement, on the other hand, evolved as a limited exception to the
presumption of resulting trust, generally arising in two situations: when a
gratuitous transfer was made by a father to his child; and when a gratuitous
transfer was made by a husband to his wife.
87
The traditional presumption of advancement as between husband and wife
has been largely abandoned, both judicially (Pettitt v. Pettitt, [1970]
A.C. 777 (H.L.), and Rathwell v. Rathwell, [1978] 2 S.C.R. 436) and
legislatively (New Brunswick, Marital Property Act, S.N.B. 1980, c.
M-1.1, s. 15(1); Prince Edward Island, Family Law Act, R.S.P.E.I. 1988,
c. F-2.1, s. 14(1); Nova Scotia, Matrimonial Property Act, R.S.N.S.
1989, c. 275, s. 21(1); Newfoundland and Labrador, Family Law Act, R.S.N.L.
1990, c. F-2, s. 31(1); Ontario, Family Law Act, R.S.O. 1990, c. F.3, s.
14; Northwest Territories and Nunavut, Family Law Act, S.N.W.T. 1997, c.
18, s. 46(1); Saskatchewan, The Family Property Act, S.S. 1997, c.
F-6.3, s. 50(1); Yukon, Family Property and Support Act, R.S.Y. 2002, c.
83, s. 7(2)).
88
But in the case of gratuitous transfers to children, the presumption
“appears to retain much of its original vigour” (D. W. M. Waters,
M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in
Canada (3rd ed. 2005), at p. 381). As noted by Cullity J. in Yau Estate,
at para. 35:
[I]t would be a mistake to extrapolate the treatment of the equitable
presumptions in Rathwell out of their matrimonial property context to
other situations including those involving the acquisition, or transfer, of
property between strangers and between parents and their children.
89
Rothstein J. rejects parental affection as being a basis for the
presumption, stating that “a principal justification for the presumption of
advancement” in the case of gratuitous transfers to children was the “parental
obligation to support their dependent children” (para. 36). With respect, this
narrows and somewhat contradicts the historical rationale for the presumption.
Parental affection, no less than parental obligation, has always grounded the
presumption of advancement.
90
It is in fact the rationale of parental affection that was cited in Waters’
Law of Trusts in Canada as an explanation for the longevity of the presumption
of advancement in transfers to children:
The presumption of advancement between father and
child has not been subjected to the same re-evaluation which in recent years
has overtaken the presumption between husband and wife. . . . The factor of
affection continues to exist, something which cannot be presumed in the
relationship between strangers, and possibly for this reason the courts have
seen no reason to challenge its modern significance. [Emphasis added; p.
395.]
91
In his article, “Reassessing Gratuitous Transfers by Parents to Adult
Children” (2006), 25 E.T.P.J. 174, Professor Freedman acknowledges that
while the “original rationale of the advancement rule is somewhat difficult to
pin down” (p. 190), it did not arise only from the parental obligation to
provide support for dependent children:
Would that satisfaction of legal obligations was the explicit rationale
of the presumption of advancement in the older cases; unfortunately, the
authorities are inconsistent in approach and lead to little certainty in
justifying doctrine. Indeed, this was decidedly an inquiry into gifting, not
compelling support payments, and gratuitous transfers were recognised as
advancements in a number of situations that are problematic for this elegant
explanation of the equitable doctrine — for example, where the donee was of
legal age and even independent of his father, or was already provided for, or
was illegitimate, or where the loco parentis principle was liberally
applied to a wider class of people that would not be the object of any
enforceable legal obligation. While later cases have gone on to demonstrate
the highly refined skills of both counsel and judges in distinguishing one case
from another based on factual considerations in determining whether the
presumption ought to apply in any given circumstance, I would suggest that no
uniform principle can be found in the cases. The simple fact is that the
extent of the obligation between the transferor and transferee was never the
focus of the inquiry, only the probable intent of the transferor in seeking to
retain the beneficial interest for himself in the context of a given
relationship that on its face gave rise to reasonable expectations that such
gifts might be forthcoming. [Emphasis added; pp. 190-91.]
92
Even at the elemental stage in the development of the doctrine, the
court in Grey (Lord) v. Grey (Lady) (1677), 2 Swans. 594, 36 E.R.
742, identified natural affection as a rationale for the application of the
presumption of advancement:
For the natural consideration of blood and
affection is so apparently predominant, that those acts which would imply a
trust in a stranger, will not do so in a son; and, ergo, the father who
would check and control the appearance of nature, ought to provide for himself
by some instrument, or some clear proof of a declaration of trust, and not
depend upon any implication of law . . . . [Emphasis added; p. 743.]
93
In Yau Estate, Cullity J. also observed that parental affection
is a rationale for the presumption, leading Professor Freedman in his article
to conclude:
In other words, parental affection grounds the presumption and is the
greatest indicator of the probable intent of the transferor. This is an
attractive argument which I suggest most would agree accords with common
experience. [p. 196]
94
Because parental affection has historically been seen as a basis for the
presumption of advancement, it was routinely applied to adult as well as to
minor children. In Sidmouth v. Sidmouth (1840), 2 Beav. 447, 48 E.R.
1254, for example, the court applied it in the case of a gratuitous transfer to
an adult son, explaining:
As far as acts strictly contemporaneous appear,
there does not appear to be anything to manifest an intention to make the son a
trustee for the father. The circumstance that the son was adult does not
appear to me to be material. It is said that no establishment was in
contemplation, and that no necessity or occasion for advancing the son had
occurred, but in the relation between parent and child, it does not appear to
me that an observation of this kind can have any weight. The parent may judge
for himself when it suits his own convenience, or when it will be best for his
son, to secure him any benefit which he voluntarily thinks fit to bestow upon
him, and it does not follow that because the reason for doing it is not known,
there was no intention to advance at all. [Emphasis added; p. 1258.]
(See also Scawin
v. Scawin (1841), 1 Y. & C.C.C. 65, 62 E.R. 792, and Hepworth v.
Hepworth (1870), L.R. 11 Eq. 10.)
95
It is true, as was noted in Oosterhoff on Trusts: Text, Commentary
and Materials (6th ed. 2004), at pp. 581-86, that some courts in the
mid-90s began questioning whether the presumption of advancement should apply
to transfers between parents and their adult children (see Dreger
(Litigation Guardian of) v. Dreger (1994), 5 E.T.R. (2d) 250 (Man. C.A.); Cooper
v. Cooper Estate (1999), 27 E.T.R. (2d) 170 (Sask. Q.B.), and McLear v.
McLear Estate (2000), 33 E.T.R. (2d) 272 (Ont. S.C.J.)).
96
But in most cases, the presumption of advancement continues to be
applied to gratuitous transfers from parents to their children, regardless of
age. In Madsen Estate v. Saylor, for example, the companion appeal, the
Ontario Court of Appeal found that the trial judge erred in applying the
presumption of resulting trust, concluding that “the presumption of advancement
can still apply to transfers of property from a father to a child, including an
independent adult child” ((2005), 261 D.L.R. (4th) 597, at para. 21).
97
And in this appeal, the Ontario Court of Appeal took no issue with the
trial judge’s application of the presumption of advancement to the transfer by
the father, notwithstanding that the beneficiary of the transfer, his daughter,
was an adult at the time. (See also Young v. Young (1958), 15 D.L.R.
(2d) 138 (B.C.C.A.); Oliver Estate v. Walker, [1984] B.C.J. No. 460 (QL)
(S.C.); Dagle v. Dagle Estate (1990), 38 E.T.R. 164 (P.E.I.S.C., App.
Div.); Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47 (Ont. Ct.
(Gen. Div.)); Reain v. Reain (1995), 20 R.F.L. (4th) 30 (Ont. Ct. (Gen.
Div.)); Sodhi v. Sodhi, [1998] 10 W.W.R. 673 (B.C.S.C.); Re Wilson
(1999), 27 E.T.R. (2d) 97 (Ont. Ct. (Gen. Div.)); Yau Estate; Kappler
v. Beaudoin, [2000] O.J. No. 3439 (QL) (S.C.J.); Clarke v. Hambly
(2002), 46 E.T.R. (2d) 166, 2002 BCSC 1074; and Plamondon v. Czaban (2004),
8 E.T.R. (3d) 135, 2004 ABCA 161.)
98
The origin and persistence of the presumption of advancement in
gratuitous transfers to children cannot, therefore, be attributed only to the
financial dependency of children on their father or on the father’s obligation
to support his children. Natural affection also underlay the presumption that
a parent who made a gratuitous transfer to a child of any age, intended to make
a gift.
99
Rothstein J. relied too on the argument made in McLear, at paras.
40-41, against applying the presumption of advancement to adult children,
namely, that since people are “living longer” and there are more aging parents
who will require assistance in the managing of their daily financial affairs,
it is “dangerous to presume that the elderly parent is making a gift each time
he or she puts the name of the assisting child on an asset”.
100
This, with respect, seems to me to be a flawed syllogism. The intention
to have an adult child manage a parent’s financial affairs during one’s
lifetime is hardly inconsistent with the intention to make a gift of money in a
joint account to that child. Parents generally want to benefit their children
out of love and affection. If children assist them with their affairs, this
cannot logically be a reason for assuming that the desire to benefit them has
been displaced. It is equally plausible that an elderly parent who gratuitously
enters into a joint bank account with an adult child on whom he or she depends
for assistance, intends to make a gift in gratitude for this assistance. In
any event, if the intention is merely to have assistance in financial
management, a power of attorney would suffice, as would a bank account without
survivorship rights.
101
The fact that some parents may enter into joint bank accounts because of
the undue influence of an adult child, is no reason to attribute the same
impropriety to the majority of parent-child transfers. The operative paradigm
should be based on the norm of mutual affection, rather than on the exceptional
exploitation of that affection by an adult child.
102
I see no reason to claw back the common law in a way that disregards the
lifetime tenacity of parental affection by now introducing a limitation on the
presumption of advancement by restricting its application to minor children.
Since the presumption of advancement emerged no less from affection than from
dependency, and since parental affection flows from the inherent nature of the
relationship, not of the dependency, the presumption of advancement should
logically apply to all gratuitous transfers from parents to any of their
children, regardless of the age or dependency of the child or the parent. The
natural affection parents are presumed to have for their adult children when
both were younger, should not be deemed to atrophy with age.
103
While, as Rothstein J. observes, affection arises in many relationships,
familial or otherwise, it is not affection alone that had earned the
presumption of advancement for transfers between father and child. It was the
uniqueness of the parental relationship, not only in the legal obligations
involved, but, more significantly, in the protective emotional ties flowing
from the relationship. These ties are not attached only to the financial
dependence of the child. Affection between siblings, other relatives, or even
friends, can undoubtedly be used as an evidentiary basis for assessing a
transferor’s intentions, but the reason none of these other relationships has
ever inspired a legal presumption is because, as a matter of common sense, none
is as predictable of intention.
104
It seems to me that bank account documents which specifically confirm a
survivorship interest, should be deemed to reflect an intention that what has
been signed, is sincerely meant. I appreciate that in Re Mailman Estate,
[1941] S.C.R. 368, Niles v. Lake, [1947] S.C.R. 291, and Edwards
v. Bradley, [1957] S.C.R. 599, this Court said that the wording of
bank documents was irrelevant in determining the intention behind joint bank
accounts with respect to beneficial title. Fifty years later, however, I have
difficulty seeing any continuing justification for ignoring the presumptive,
albeit rebuttable, relevance of unambiguous language in banking documents in
determining intention. I think it would come as a surprise to most Canadian
parents to learn that in the creation of joint bank accounts with rights of
survivorship, there is little evidentiary value in the clear language of what
they have voluntarily signed.
105
It is significant to me that even though the presumption of advancement
has generally been replaced in the spousal context by the presumption of
resulting trust, it has nonetheless been conceptually retained in the case of
spousal property which is jointly owned, such as joint bank accounts. Section
14(a) of the Ontario Family Law Act, for example, provides that “the
fact that property is held in the name of spouses as joint tenants is proof, in
the absence of evidence to the contrary, that the spouses are intended to own
the property as joint tenants”. Section 14(b) further specifies that “money on
deposit in the name of both spouses shall be deemed to be in the name of the
spouses as joint tenants for the purposes of clause (a)”.
106
Equally, a presumed intention of joint ownership in the case of jointly
held property should apply to parent-child relationships, and the appropriate
mechanism for achieving this objective, absent legislative intervention, is the
application of the presumption of advancement.
107
The trial judge, whose conclusion was upheld by the Court of Appeal,
properly applied the correct legal presumption to the facts of the case. Like
Rothstein J., therefore, I would dismiss the appeal.
Appeal dismissed with costs.
Solicitors for the appellant: Miller Thomson, Toronto.
Solicitors for the respondents: McPhadden, Samac, Merner,
Barry, Toronto.