Pecore v. Pecore, (2007) 361 N.R. 1 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 06, 2006
• Jurisdiction: Canada (Federal)
• Citations: (2007), 361 N.R. 1 (SCC);2007 SCC 17;[2007] 1 SCR 795;224 OAC 330;[2007] SCJ No 17 (QL);[2007] ACS no 17;32 ETR (3d) 1;37 RFL (6th) 237;279 DLR (4th) 513;361 NR 1;[2007] CarswellOnt 2752

Pecore v. Pecore (2007), 361 N.R. 1 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2007] N.R. TBEd. MY.002

Michael Pecore (appellant) v. Paula Pecore and Shawn Pecore (respondents)

(31202; 2007 SCC 17; 2007 CSC 17)

Indexed As: Pecore v. Pecore

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ.

May 3, 2007.

Summary:

An ageing father gratuitously placed his mutual funds, bank account and income trusts in joint accounts with his adult daughter. The father later made a will in which he left specific bequests, but did not mention the joint accounts. The residue of his estate was left to the daughter and her husband equally. The father died. The daughter and her husband divorced. A dispute over the joint accounts arose during their matrimonial property proceedings. The husband sought a declaration that the joint accounts formed part of the residue of his father-in-law's estate. At issue was whether the father intended to make a gift of the beneficial interest in the joint accounts to his daughter upon his death 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.

The Ontario Superior Court, in a decision reported at [2004] O.T.C. 188, held that the evidence failed to rebut the presumption of advancement and the money in the joint accounts belonged to the daughter. The court also found that the evidence clearly indicated that the father intended to gift beneficial ownership of the joint accounts to the daughter. The husband appealed.

The Ontario Court of Appeal, in a decision reported at 202 O.A.C. 169, dismissed the appeal. The court agreed with the trial judge that the father intended to give his daughter a beneficial interest in the accounts when he placed them in joint ownership. It was therefore not necessary to rely on the presumption of advancement. The husband appealed.

The Supreme Court of Canada dismissed the appeal. The court held that the trial judge erred in applying the presumption of advancement. The daughter, although financially insecure, was not a minor child. The trial judge should therefore have applied the presumption of a resulting trust. However, the error did not affect the ultimate disposition of the appeal because the trial judge found that the evidence clearly demonstrated the father's intention that the balance left in the joint accounts was to go to the daughter on his death through survivorship. That finding regarding the father's actual intention showed that the trial judge's conclusion would have been the same even if he had applied the presumption of a resulting trust.

Banks and Banking - Topic 2723

Bank accounts - Joint accounts - Title - [See first Gifts - Topic 554 ].

Gifts - Topic 501

Gifts inter vivos - General principles - Gifts inter vivos - Defined - The Supreme Court of Canada stated 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" - The court further stated that "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 ... 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" - See paragraphs 45 to 54.

Gifts - Topic 527

Gifts inter vivos - Presumption against gift - Resulting trust - Rebuttal of presumption -  [See first Gifts - Topic 554 and Gifts - Topic 565 ].

Gifts - Topic 554

Gifts inter vivos - Presumption of gift - Advancement - Transfers from parent or grandparent to children - An ageing father gratuitously placed his mutual funds, bank account and income trusts in joint accounts with his adult daughter - The father died - The trial judge held that the evidence failed to rebut the presumption of advancement and the money in the joint accounts belonged to the daughter - The trial judge also found that the evidence clearly indicated that the father intended to gift beneficial ownership of the joint accounts to the daughter - The Ontario Court of Appeal dismissed an appeal - The court agreed with the trial judge that the father intended to give his daughter a beneficial interest in the accounts when he placed them in joint ownership - It was therefore not necessary to rely on the presumption of advancement - The Supreme Court of Canada dismissed a further appeal - The court held that the trial judge erred in applying the presumption of advancement - The daughter, although financially insecure, was not a minor child - The trial judge should therefore have applied the presumption of a resulting trust - However, the error did not affect the ultimate disposition of the appeal because the trial judge found that the evidence clearly demonstrated the father's intention that the balance left in the joint accounts was to go to the daughter on his death through survivorship - The trial judge's conclusion would therefore have been the same even if he had applied the presumption of a resulting trust - See paragraph 75.

Gifts - Topic 554

Gifts inter vivos - Presumption of gift - Advancement - Transfers from parent or grandparent to children - The Supreme Court of Canada held that the presumption of advancement applied between mother and child - The court stated that "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" - See paragraphs 31 to 33.

Gifts - Topic 554

Gifts inter vivos - Presumption of gift - Advancement - Transfers from parent or grandparent to children - The Supreme Court of Canada stated that "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" - The court further stated 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" - The court also did not agree that affection was a basis upon which to apply the presumption of advancement - However, the court stated that it saw no reason why courts could not 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 had been rebutted - See paragraphs 34 to 37.

Gifts - Topic 554

Gifts inter vivos - Presumption of gift - Advancement - Transfers from parent or grandparent to children - The Supreme Court of Canada stated that "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 regards to gratuitous transfers from parent to child should be preserved but be limited in application to transfers by mothers and fathers to minor children. 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" - See paragraphs 40 to 41.

Gifts - Topic 558

Gifts inter vivos - Presumption of gift - Advancement - Transfers where presumption inapplicable - [See first, third and fourth Gifts - Topic 554 ].

Gifts - Topic 565

Gifts inter vivos - Presumption of gift - Advancement - Rebuttal of presumption - The Supreme Court of Canada held that the standard of proof required to be met in order to rebut both the presumption of resulting trust and the presumption of advancement was evidence of the transferor's contrary intention on the balance of probabilities - See paragraphs 42 to 44.

Gifts - Topic 578

Gifts inter vivos - Transfer by donor to donee and donor jointly - Intention - The Supreme Court of Canada stated that "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 ... 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 ... 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" - See paragraphs 60 to 61.

Gifts - Topic 578

Gifts inter vivos - Transfer by donor to donee and donor jointly - Intention - The Supreme Court of Canada stated that evidence as to the control of joint accounts following the transfer should not be ruled out in ascertaining the intent of the transferor with respect to the beneficial interest in the joint account - However, the court stated that such evidence may be of marginal assistance only and, without more, would not be determinative for three reasons - "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. 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. Finally, ... 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" - See paragraphs 62 to 66.

Gifts - Topic 578

Gifts inter vivos - Transfer by donor to donee and donor jointly - Intention - The Supreme Court of Canada discussed how courts should treat survivorship in the context of joint accounts and what evidence a court could consider in determining the intent of the transferor - The court stated, inter alia, 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" - See paragraphs 67 to 68.

Gifts - Topic 578

Gifts inter vivos - Transfer by donor to donee and donor jointly - Intention - The Supreme Court of Canada discussed how courts should treat survivorship in the context of joint accounts and what evidence a court could consider in determining the intent of the transferor - The court stated, inter alia, that "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" - See paragraph 69.

Gifts - Topic 724

Gifts inter vivos - Transfers in joint tenancy - Transfers to joint bank accounts - [See Gifts - Topic 501 , first Gifts - Topic 554 , and all Gifts - Topic 578 ].

Gifts - Topic 953

Gifts inter vivos - Evidence and proof - Donor's intention - The Supreme Court of Canada stated that "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 ... 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" - See paragraph 23.

Gifts - Topic 953

Gifts inter vivos - Evidence and proof - Donor's intention - The Supreme Court of Canada discussed what evidence a court could consider in determining the intent of a transferor where a gratuitous transfer was being challenged - The court stated, inter alia, 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 ... 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" - See paragraphs 56 to 59.

Trusts - Topic 1906

Resulting trusts - General principles - Gifts - [See Gifts - Topic 565 ].

Trusts - Topic 1907

Resulting trusts - General principles - Circumstances when not imposed - [See first Gifts - Topic 554 ].

Trusts - Topic 2044

Resulting trusts - Voluntary property transfers - Presumption of resulting trust - [See first Gifts - Topic 554 and Gifts - Topic 565 ].

Trusts - Topic 2144

Resulting trusts - Intention - Evidence - [See Gifts - Topic 565 ].

Cases Noticed:

Csak v. Aumon (1990), 69 D.L.R.(4th) 567 (Ont. H.C.), refd to. [para. 4].

Carter v. Carter (1969), 70 W.W.R.(N.S.) 237 (B.C.S.C.), refd to. [para. 20].

Mailman Estate, Re, [1941] S.C.R. 368, refd to. [paras. 22, 104].

Niles v. Lake, [1947] S.C.R. 291, refd to. [paras. 22, 104].

Rathwell v. Rathwell, [1978] 2 S.C.R. 436; 19 N.R. 91, refd to. [paras. 22, 87].

Saylor v. Madsen Estate - see Saylor et al. v. Brooks.

Saylor et al. v. Brooks (2005), 203 O.A.C. 295; 261 D.L.R.(4th) 597 (C.A.), refd to. [para. 23].

Hyman v. Hyman, [1932] 4 D.L.R. 532 (S.C.C.), refd to. [para. 28].

Grey (Lord) v. Grey (Lady) (1677), Rep. Temp. Finch 338; 23 E.R. 185 (H.C.), refd to. [para. 29].

Lattimer v. Lattimer (1978), 18 O.R.(2d) 375 (H.C.), refd to. [para. 31].

Edwards v. Bradley, [1957] S.C.R. 599, refd to. [para. 31].

Rupar v. Rupar (1964), 49 W.W.R.(N.S.) 226 (B.C.S.C.), refd to. [para. 31].

Dagle v. Dagle Estate et al. (1990), 81 Nfld. & P.E.I.R. 245; 255 A.P.R. 245; 38 E.T.R. 164 (P.E.I.C.A.), refd to. [paras. 31, 97].

Wilson, Re (1999), 95 O.T.C. 81; 27 E.T.R.(2d) 97 (Gen. Div.), refd to. [paras. 31, 99].

McLear v. McLear Estate - see McLear v. Crowder et al.

McLear v. Crowder et al., [2000] O.T.C. 505; 33 E.T.R.(2d) 272 (Sup. Ct.), refd to. [paras. 34, 95].

Cooper v. Cooper Estate et al. (1999), 181 Sask.R. 63; 27 E.T.R.(2d) 170 (Q.B.), refd to. [paras. 35, 95].

Christmas Estate v. Tuck (1995), 10 E.T.R.(2d) 47 (Ont. Gen. Div.), refd to. [paras. 37, 97].

Yau Estate, Re, [1999] O.T.C. 106; 29 E.T.R.(2d) 204 (Sup. Ct.), refd to. [paras. 37, 85].

Bayley v. Trusts and Guarantee Co., [1931] 1 D.L.R. 500 (Ont. C.A.), refd to. [para. 42].

Johnstone v. Johnstone (1913), 12 D.L.R. 537 (Ont. C.A.), refd to. [para. 42].

Pettitt v. Pettitt, [1970] A.C. 777 (H.L.), refd to. [paras. 42, 87].

McGrath v. Wallis, [1995] 2 F.L.R. 114 (Eng. C.A.), refd to. [para. 42].

Dredger v. Dredger (1994), 5 E.T.R.(2d) 250 (Man. C.A.), refd to. [paras. 42, 95].

Burns Estate v. Mellon (2000), 133 O.A.C. 83; 48 O.R.(3d) 641 (C.A.), refd to. [para. 43].

Lohia v. Lohia, [2001] EWCA Civ. 1691, refd to. [para. 43].

Standing v. Bowring (1885), 31 Ch. D. 282 (C.A.), refd to. [para. 46].

Edwards v. Bradley, [1956] O.R. 225 (C.A.), refd to. [paras. 46, 104].

Hill v. Hill (1904), 8 O.L.R. 710 (H.C.), refd to. [para. 48].

Larondeau v. Laurendeau, [1954] O.W.N. 722 (H.C.), refd to. [para. 48].

Reid, Re (1921), 50 O.L.R. 595; 64 D.L.R. 598 (Ont. C.A.), refd to. [para. 48].

Mordo v. Nitting, 2000 BCSC 1761, refd to. [para. 48].

Shaw v. MacKenzie Estate (1994), 131 N.S.R.(2d) 118; 371 A.P.R. 118; 4 E.T.R.(2d) 306 (S.C.), refd to. [para. 48].

Reber v. Reber, [2002] B.C.T.C. 884; 48 D.L.R.(4th) 376 (S.C.), refd to. [para. 48].

Russell v. Scott (1936), 55 C.L.R. 440, refd to. [para. 51].

Young v. Sealey, [1949] 1 All E.R. 92 (Ch. Div.), refd to. [para. 51].

Aroso v. Coutts, [2002] 1 All E.R. (Comm.) 241; [2001] E.W.H.C. Ch. 443, refd to. [para. 51].

Matter of Totten, Re (1904), 179 N.Y. 112, refd to. [para. 52].

Matter of Berson, Re (1991), 566 N.Y.S.2d 74, refd to. [para. 52].

Matter of Halpern, Re (1951), 303 N.Y. 33, refd to. [para. 52].

Clemens v. Clemens Estate, [1956] S.C.R. 286, refd to. [para. 56].

Jeans v. Cooke (1857), 24 Beav. 513; 53 E.R. 456 (Rolls. Ct.), refd to. [para. 56].

Shephard v. Cartwright, [1955] A.C. 431 (H.L.), refd to. [para. 56].

Neazor v. Hoyle (1962), 32 D.L.R.(2d) 131 (Alta. C.A.), refd to. [para. 57].

Lavelle v. Lavelle, [2004] EWCA Civ. 223, refd to. [para. 58].

Taylor v. Wallbridge (1879), 2 S.C.R. 616, refd to. [para. 59].

Saylor et al. v. Brooks (2007), 360 N.R. 327; 2007 SCC 18, refd to. [para. 78].

Nelson v. Nelson (1995), 184 C.L.R. 538 (Aust. H.C.), refd to. [para. 83].

Grey (Lord) v. Grey (Lady) (1677), 2 Swans 594; 36 E.R. 742 (H.C. Ch.), refd to. [para. 92].

Sidmouth v. Sidmouth (1840), 2 Beav. 447; 48 E.R. 1254 (Rolls Ct.), refd to. [para. 94].

Scawin v. Scawin (1841), 1 Y. & C.C.C. 65; 62 E.R. 792 (Ch. Ct.), refd to. [para. 94].

Hepworth v. Hepworth (1870), L.R. 11 Eq. 10, refd to. [para. 94].

Young v. Young (1958), 15 D.L.R.(2d) 138 (B.C.C.A.), refd to. [para. 97].

Oliver Estate v. Walker, [1984] B.C.J. No. 460 (S.C.), refd to. [para. 97].

Reain v. Reain (1995), 20 R.F.L.(4th) 30 (Ont. Gen. Div.), refd to. [para. 97].

Sodhi v. Sodhi, [1998] 10 W.W.R. 673 (B.C.S.C.), refd to. [para. 97].

Kappler v. Beaudoin, [2000] O.T.C. 666 (Sup. Ct.), refd to. [para. 97].

Clarke v. Hambly, [2002] B.C.T.C. 1074; 46 E.T.R.(2d) 166; 2002 BCSC 1074, refd to. [para. 97].

Plamondon et al. v. Czaban (2004), 348 A.R. 103; 321 W.A.C. 103; 8 E.T.R.(3d) 135;  2004 ABCA 161, refd to. [para. 97].

Authors and Works Noticed:

American Law Institute, Restatement of the Law (Third), Trusts (2003), Part. 2, c. 5, para. 26 [para. 52].

Chambers, Robert, Resulting Trusts in Canada (2000), 38 Alta. L. Rev. 378, generally [para. 85].

Freedman, C.D., Reassessing Gratuitous Transfers by Parents to Adult Children (2006), 25 E.T.P.J. 174, pp. 190, 191 [para. 91]; 196 [para. 93].

Gillese, Eileen E., and Milczynski, Martha, The Law of Trusts (2nd Ed. 2005), pp. 109 [para. 82]; 110 [paras. 24, 82].

Oosterhoff, A.H., Text, Commentary and Materials on Trusts (6th Ed. 2004), pp. 573 [para. 21]; 575 [paras. 30, 32]; 581 [paras, 30, 95]; 582 to 586 [para. 95]; 598 [para. 30].

Snell, E.H.T., Principles of Equity (24th Ed. 1954), p. 153 [para. 56].

Sopinka, John, Lederman, Sidney N., and Bryant, Alan W., The Law of Evidence in Canada (2nd Ed. 1999), pp. 105, 106, 115 [para. 22]; 116 [para. 44].

Waters, Donovan W.M., The Law of Trusts in Canada (3rd Ed. 2005), pp. 362, 365 [para. 20]; 375 [para. 24]; 378 [paras. 21, 27]; 381 [para. 88]; 395 [paras. 35, 90]; 406 [para. 48].

Ziff, Bruce H., Principles of Property Law (4th Ed. 2006), p. 332 [para. 61].

Counsel:

Andrew M. Robinson and Megan L. Mackey, for the appellant;

Bryan C. McPhadden and Fabrice Gouriou, for the respondents.

Solicitors of Record:

Miller Thomson, Toronto, Ontario, for the appellant;

McPhadden, Samac, Merner, Barry, Toronto, Ontario, for the respondents.

This appeal was heard on December 6, 2006, before McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein, JJ., of the Supreme Court of Canada. The judgment of the Supreme Court of Canada was delivered in both official languages on May 3, 2007, including the following opinions:

Rothstein, J. (McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Fish and Charron, JJ., concurring) - see paragraphs 1 to 76;

Abella, J. - see paragraphs 77 to 107.