Jun 9, 2016

A Gift Made is Made: Presumed Resulting Trust Rebutted

Bradford v Lyell, 2013 SKQB 330 (CanLII)

Inter vivos transfers of property, often non-arm’s length and between family members, are done for various purposes. Documentation of the terms of the transfer will be of great assistance should dispute later occur, such as in this case.

BCKGROUND: Gladys Lyell (“Gladys”) had a close relationship with her granddaughter, Alana Lyell (“Alana”), who provided much assistance to Gladys in managing her affairs. In July 2003, on advice of her family lawyer, Lorne Jamieson (“Jamieson”), Gladys transferred her condominium (condo) unit into joint names with Alana as part of an estate plan. In 2004, Alana got married and moved to Greece, and thereafter Gladys’ grandson, James Bradford (“James”) provided living assistance to Gladys.

On April 16, 2009, Gladys made a will, which provided that her estate was to be divided into three equal shares, with one share to be given to each of her grandsons: Allan Bradford, Garry Bradford, and James Bradford. Gladys’ will also mentioned that: “I have not benefited my granddaughter, Alana Lyell, because she will receive title to my Heritage Green residence on my death.”

On June 29, 2009, Gladys made a new will, which stated in part, that the residue of her estate was to be divided between the same three Bradford brothers and no bequest to Alana. The final clause of the will contained these words: “I do not want my granddaughter, Alana Lyell, to have any share of my condo at Heritage Green.” Literally, Gladys changed her mind about gifting her condo to Alana.

Gladys died on March 20, 2011 at the age of 92. James, the executor of Gladys’s estate applied to court for a declaration that Alana held the beneficial interest in the condo subject to a resulting trust in favour of the estate. Alana, the respondent, contended that she was the beneficial owner of the condo by way of her survivorship because Gladys transferred the property as an inter vivos gift to her.

HELD: The plaintiff’s application was dismissed. That Alana Lyell successfully rebutted the presumption of resulting trust; that the gift was complete when the joint tenancy was created; and that she was the owner of the condo by reason of survivorship free and clear of any claim of Gladys’ estate.

ANALYSIS: This is a case of presumption of resulting trust with allied issues in property law and succession law.

Presumption of Resulting Trust

A presumption of resulting trust arises where a person gratuitously conveys inter vivos his property to another person or into joint names of himself and another’s. The presumption yields to contrary evidence, in that the person who claims the benefit of a resulting trust has the onus to prove that a gift was intended, in effect having to rebut the presumed resulting trust. The pertinent principle was derived from Dyer v. Dyer (1788) Ch, and its application was endorsed by the Supreme Court of Canada in Pecore v. Pecore (2007) SCC.

Application

As a volunteer, Alana was burdened to displace the presumption. Jamieson, Gladys’ lawyer, testified that the transfer of the condo into joint names with Alana was partly to avoid some probate fees and was also intended as a gift to Alana. This was augmented by Gladys’ statement in her will of April 16, 2009: “. . . My granddaughter Alana Lyell will receive title to my Heritage Green residence on my death.” On evidence adduced, including circumstantial evidence and the factor of special relationship, the judge was satisfied that Alana had discharged the burden of showing, on the balance of probabilities, that Gladys intended to gift her an interest in the joint title to the property.

To hold that Alana acquired a joint legal interest upon Gladys’ voluntary conveyance of the condo into joint names of her and Alans’s, the gift must be complete and it was. Although Gladys later changed her mind and wanted to revoke the gift to Alana, she could not reach Alana to sign a transfer back to her. The revocation of the gift never took place.

COMMENTARY: Gladys was found to have made an inter vivos gift of a legal and equitable interest in the condo to Alana. Yet, an academic argument arises as at what time the right of survivorship would pass to Alana. Between the time when the transfer of property was made and the death of Gladys, the transferor could revoke the gift. Since Alana’s beneficial interest was contingent on survivorship, she as a volunteer, would acquire her beneficial interest only upon Gladys’ death. From this viewpoint, Gladys’ gift to Alana was testamentary rather than inter vivos, and testamentary formality would have to be complied with, such as subsection 7(1) of the Wills Act 1996 SS.