A case study of Walker v. Farsijani
In Walker v. Farsijani1 (“Walker”), Peter Walker sought to recover $96,000 he claimed to have transferred to Maryam Farsijan (with whom he was in an intimate relationship at the time). Maryam refused to return the funds claiming that she had received the money as a gift. Peter said it was a loan.
Peter and Maryam were engaged in an extramarital affair. Peter claimed that his paramour began asking him for money incessantly after their first sexual encounter. First $60,000 then another $5,000. Then $16,000 for car repairs, cosmetic surgery, and household repairs, and then another $15,000 for a total of $96,000.
Peter claimed he advanced the funds to Maryam with the expectation of repayment, but conceded that there was no documentation, no discussion of an interest rate, and no discussion of a repayment plan.
Maryam testified that Peter commented on her physical appearance and told her that he would give her money to fix it. She claimed that Peter told her they were gifts and that she wouldn’t have accepted the money if they weren’t gifts, because she could never repay them.
Peter claimed that the relationship ended when Maryam told him that she was pregnant and that she wanted a relationship. When he said no, she demanded $1.2 million for an abortion or “there would be trouble”. Peter further claimed that Maryam admitted to him that the relationship had been a fraud from the beginning.
Maryam claimed that she took a pregnancy test which was positive and when she told the plaintiff she was pregnant, he assaulted her. She also claimed that her request for $1.2 million was not serious and she was just trying to force him to live with her.
The key legal question in this case was whether the funds advanced were a gift or a loan.
The Supreme Court of Canada’s decision in Pecore v. Pecore establishes a systematic approach to guide the court’s determination of whether such gratuitous transfers should be considered loans or gifts.
The Court’s legal analysis starts with the presumption of resulting trust, which 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.
The case law is also clear that common law relationships or romantic relationships do not give rise to a presumption of gift. Thus, in situations like the Walker case, the onus is on the recipient to establish on a balance of probabilities that the money that’s been transferred to her is a gift.
The Walker Decision is a particularly apt demonstration of the ramifications of legal presumptions and onuses.
As the court explained in Walker citing Pecore, in paragraph 16, the presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. …This is so because equity presumes bargains, not gifts.
At paragraph 24 of the Walker decision, the Judge explains,
“The onus is critical in this case. If the onus was on the plaintiff, I would have found that he had not shown that these transfers are loans. But the onus is on the defendant to show that these transfers were gifts. The defendant’s position rests on her testimony and the text messages. For reasons set out below, I cannot accept the defendant’s testimony as there are significant concerns with her veracity. I also find that the text messages are equivocal on the issue. The defendant has not met her onus”.
In other words, the Judge determined that the evidence was inconclusive, but because the defendant failed to discharge her onus of proving that the funds were a gift, the presumption of resulting trust governed and the advances must be assumed to have been a loan.
When people like Peter and Maryam enter into these types of relationships, transfer property or make promises, the last thing on their minds is the possible dissolution of the relationship. In the fog of romance they might feel it inconsistent to document what transpired to corroborate their narrative for their day in court. That’s where professional advisors, accountants, lawyers and family can play a role. When there is no proof, the presumptions rule.
- Walker v. Farsijani 2021 ONSC 5571. ↵
- For those interested in this topic, we refer you to the following blogs and articles: