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Rebutting the Presumption of Resulting Trust – A Refresher

Fichera v. McAllister

The Court’s decision in Fichera v. McAllister1 acts as an important reminder of the importance of creating a contemporaneous evidentiary record of a parent’s intention when gifting property to their adult children.

Fichera involved the transfer of real property from Gaetana Fichera (“Gaetana”) to her adult son, Salvatore.  Gaetana, represented by her son Aldo as her litigation guardian, argued that the transfer to Salvatore should be set aside on the following two grounds:

  1. Aldo argued that Gaetana did not intend to gift the Property to Salvatore at the time of the transfer and Salvatore2 was holding the property on resulting trust for Gaetana; and
  2. In the alternative, the transfer was procured by undue influence.

The Presumption of Resulting Trust3

In Pecore v. Pecore, the Supreme Court of Canada held that gifts from parents to their adult children give rise to the presumption of resulting trust, which means that the law presumes that the recipient child holds the property received on a resulting trust for the parent or the parent’s estate.  The onus then rests on the adult child to rebut the presumption by proving the contrary intent on the balance of probabilities.4

In Fichera, the Court relied heavily on the evidence of Mr. Talarico who was Gaetana’s solicitor.  Talarico facilitated and documented the transfer.  In particular, the Court highlighted that Mr. Talarico’s testimony and notes indicated the following:

  • Talarico was satisfied that Gaetana’s instructions to him were clear and that he had no concerns that she had been influenced by anyone;
  • Talarico was certain that Gaetana intended to gift the property to Salvatore;
  • Talarico explained the consequences of the transfer to Gaetana at the time; and
  • Talarico presented the option of not simply transferring the title to Salvatore alone, but transferring title to Gaetana and Salvatore as joint tenants. This option was rejected.Gaetana stated clearly that she wanted to transfer the property to Salvatore alone.

The court found that Mr. Talarico’s evidence rebutted the presumption of resulting trust. In contrast, the Court placed no weight on Aldo’s evidence that, in 2018 (i.e., one year after the transfer), Gaetana was shocked to learn that she no longer owned the property.  The Court found that Aldo’s evidence is post-transfer and it sheds no light on Gaetana’s intention at the time of the transfer.

Undue Influence

The Court, also, dismissed the allegation that Salvatore had unduly influenced Gaetana to procure the transfer.

Once again, relying on Mr. Talarico’s evidence, the Court determined that Gaetana appreciated the nature and effect of the transfer of the Property.  The Court further determined that Mr. Talarico provided a cogent, reasonable explanation for Gaetana’s desire to transfer the property.  The Court noted that Mr. Talarico was satisfied that Gaetana had not been influenced by anyone.

Conclusion

A legal presumption is only a starting point for the court.  Absent any evidence to the contrary that presumption is determinative.  When dealing with the presumption of a resulting trust it behooves litigants to remember that it is a rebuttable presumption.  For the professionals involved in transfers that will likely be challenged it is befitting to create contemporaneous documentation of the capacity of the transferor and the presence, or lack thereof, of undue influence.5

 

Footnotes
  1.   Fichera v. McAllister, 2021 ONSC 2685 (CanLII)
     
  2.   Salvatore had passed away intestate prior to the hearing of the motion and the actual respondents to the motion were Salvatore’s adult children who were the estate trustees of Salvatore’s estate.
     
  3.   For a more in depth analysis of the presumption of resulting trust, we refer you to our colleague, Peter Neufeld’s blog: Managing Joint Ownership and the Presumption of a Resulting Trust.
     
  4.   Pecore v. Pecore, 2007 SCC 17 at para. 44
     
  5.   We refer the reader to a lawyer’s checklist for undue influence drafted by Kim Whaley which can be found on her website at https://welpartners.com/resources/WEL_Undue_Influence_Checklist.pdf
     
Hershel Sahian and David Wagner

Hershel Sahian and David Wagner

The authors of this blog are Hershel Sahian and David Wagner. Hershel is a partner at Wagner Sidlofsky LLP. David is a member of the firm’s Estate and Commercial Litigation Groups. He received his TEP designation from STEP and he deals with will challenges, dependants support, guardianship and applications to compel an accounting.

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This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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