Following a relationship breakdown, the separation process can be emotional and stressful. Many issues may arise, including spousal support and property division.
The recent case of MacIntyre v Winter in the Court of Appeal for Ontario examined whether one partner’s down payments for homes constituted a gift to the other partner, or whether the payments revert to the paying partner upon sale of the property.
Alex and Ron were in a relationship between 1994 and 2017. They were never married and had no children. Alex was 54 years of age and employed as a psychiatrist. Ron was 57 years of age and in receipt of long-term disability benefits.
In 1999, they purchased their first home, as joint tenants with a joint mortgage. Alex provided a $5,000 deposit and $100,000 down payment, the latter of which came from his mother. They agreed that Ron would pay the mortgage payments and Alex would be responsible for all other expenses associated with the home.
In 2005, they purchased a more expensive home. It was financed through a joint mortgage, the proceeds of sale of the first home and additional contributions from Alex totalling just over $500,000.
In 2017, the partners separated when Ron left the home. Ron commenced an application for spousal support and sought an equal division of the net proceeds of sale of the home.
The property was appraised at $1,400,000. Alex’s claim was for an order that he receive the first $480,000 of the net proceeds of the sale of the property, representing his initial contributions, and that the balance be divided equally between him and Ron.
Ron claimed that the issue of repayment was never discussed, whereas Alex said he intended to receive back the down payment if the house was ever sold.
According to Justice of Appeal Nordheimer, the key issue was whether Alex had gifted the down payments.
His Honour explained that the presumption of a resulting trust was relevant in this case. This means that where a gratuitous transfer (or transfer for no consideration) is made, the onus is on the person who receives the transfer to demonstrate that a gift was intended. The actual intention of the person that makes the transfer is relevant, rather than the intention of both parties.
In other words, there is a presumption in law that Alex did not intend to make a gift to Ron. Ron had the burden of proof to prove, on a balance of probabilities, that Alex intended to gift Ron the monies used to purchase both the properties.
Justice Shelston of the Superior Court of Justice cited a number of factors to support his conclusion that Alex intended to gift the money to Ron.
His Honour considered the length of time that the two had been living together, their agreement on who would be responsible for which expenses associated with the home, and the absence of any reference to repayment in Ron’s will.
His Honour found that it was not credible that the home would go to the surviving partner if either of them predeceased the other by virtue of the joint tenancy, but that Alex would insist upon payment if there was no death.
Justice Shelston attributed weight to their decision to deposit the sale proceeds of the first home in a joint bank account. Finally, his Honour considered the lack of a document evidencing Ron’s obligation to repay the money.
Justice of Appeal Nordheimer held that the first three factors referred to above did not relate to the issue of Alex’s intention at the time of the transfer of the funds.
On the issue of the joint tenancy, his Honour explained that survivorship can be separated from the intent of the gift. His Honour held that the trial judge erred in extrapolating from an intention of Ron taking a right of survivorship in the homes, a finding of an intention to gift Ron the funds contributed by Alex for acquiring the homes.
His Honour quickly dismissed the significance of depositing the sale proceeds into a joint account, noting that the two were in the process of buying a new home, which was partially financed by these proceeds.
On the issue of the lack of documentation, Justice of Appeal Nordheimer reflected:
Our courts are strewn with cases where people in a relationship wound up in litigation because they did not take a commercial approach to their domestic arrangements from the outset. This is just another of those cases. While it may be regrettable, it does not change the fact that it is a very frequent reality. Although the absence of contemporaneous documentation is a relevant consideration…, the absence of such documentation by itself is not necessarily sufficient to conclude that a gift was intended.
His Honour noted that, even on Ron’s evidence, the issue of repayment was not discussed. As a result, His Honour held that Ron had not rebutted the presumption that the transfer was not a gift. An order was granted paying Alex $480,000, with the remaining balance to be split equally.
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