Canada: Case Commentaries: Pecore And Saylor

Last Updated: July 15 2007

Article by Archie J. Rabinowitz, B.A., L.L.B*

Pecore v. Pecore (2007) SCC 17

Overview of Case

In Pecore1 and it’s companion case, Madsen Estate v. Saylor2, the Supreme Court establishes rules and limitations regarding the treatment of gratuitous transfers of assets from a parent to their child. In particular, the Court addresses two conflicting presumptions which historically operated in such cases. The first, the presumption of resulting trust, which applies to most transfers of property without consideration, presumes that the transferor’s intention is to transfer legal title only to the transferee. This means that when the transferor dies, the transferred assets constitute part of the transferor’s estate, and will be passed on to the beneficiaries of their will. If the recipient wishes to assert ownership of the assets after the transferor’s death, they bear the burden of proving that the transferor intended them to have survivorship rights and a beneficial interest in the property.

The presumption of advancement presumes the opposite, starting from the position that such transfers represent gifts and that full beneficial and legal title passes to the transferee. Historically, this presumption only operated in the case of transfers from a husband to his wife or a father to his child. Where the presumption of advancement operates, the court will start from the position that the assets have been gifted in full, and are not part of the transferor’s estate. The burden of proof will be on the beneficiaries of the transferor’s will to show that the transferor never meant the transfer to commute to a gift on death.

In Pecore, the testator transferred a considerable portion of his assets into a joint bank account which he shared with his daughter. He also gave her power of attorney over his affairs. Evidence showed that the testator’s daughter depended on his financial support. During his lifetime the testator maintained control of the accounts, and paid all taxes and fees on them. His daughter could make withdrawals, but had to notify him beforehand. There was some evidence that the testator opened the account as a means of avoiding probate fees and taxes after his death. In the course of drafting his will, the testator’s lawyer specifically asked about assets such as those held in the joint accounts, and was satisfied that the testator did not intend those items to pass as a result of the will. When the testator died, his will named both his daughter and her husband as beneficiaries of the residue of his estate. The daughter and her husband later divorced, and the husband challenged her failure to include the assets held in the joint account in the contents of the estate. She said that her father meant her to have the contents of the account, while her ex-husband maintained that they should have been included in the estate, in which case he would have received half of their value as a residual beneficiary.

The Court held that the contents of the joint accounts represented an inter-vivos transfer to the daughter which included a right of survivorship. The daughter met the evidentiary burden, successfully rebutting the presumption of resulting trust. The Court considered a number of factors, including statements made by the testator to his lawyer and family prior to his death, his failure to include the accounts in his will, and banking documents granting right of survivorship to his daughter. The Court also considered the daughter’s financial dependence upon the testator. They concluded that the evidence indicated that the testator was concerned about his daughter’s financial well-being, and intended that she keep the contents of the accounts on his death.

Grounds for Decision

Rothstein J., writing for the majority, stated that the presumption of advancement is strictly limited to transfers by a mother or father to a minor child. The presumption of resulting trust operates in all other transfers without consideration. When gratuitous transfers are made from a parent to a grown, independent child, the primary justification for the presumption of advancement, parental obligation to support dependant children, does not apply. The Court asserted that, with people enjoying greater longevity, transfers by parents to an independent child are often made in order for child to help the parents to manage their affairs. It follows that the transfer of assets into a joint account may be motivated, not by the desire to gift money the child, but rather by other, more pragmatic concerns. More surprisingly, the Court also asserted that the presumption of advancement does not apply to adult dependant children, because to hold otherwise would mean that the courts would have to determine in each case whether a child was dependant. However, evidence of an adult child’s dependence may be introduced in order to rebut the presumption of resulting trust.

The Court sought to clarify the law regarding several types of evidence of intention that may be introduced in order to rebut either of the presumptions. Specifically, the court stated that:

  1. Evidence of the transferor’s intention obtained subsequent to the transfer should not automatically be excluded if it is relevant to the intentions of the transferor at the time of the transfer.
  2. Bank Documents, especially where they are clear and detailed, may provide strong evidence of intention.
  3. The existence of a joint account with survivorship rights will not necessarily be sufficient to rebut the presumption of resulting trust - something more may be required in the way of evidence of the transferor’s intention to gift the right of survivorship.
  4. Control and use of the funds during the lifetime of the transferor are of limited utility in determining the transferor’s intention.
  5. Granting a power of attorney may be evidence of an intention to gift where right of survivorship is also granted, especially when there is evidence that the transferor understood the difference between the two. This is because the goal of having one’s child assist in the management of one’s affairs can be accomplished through the granting of a power of attorney alone, rendering the joint accounts unnecessary if the only goal was to have the child help in arranging the parents affairs.

The trial judge erred in applying the presumption of advancement, as the transferee, though financially dependant, was not a minor. The daughter was able to rebut the presumption of resulting trust through the evidence introduced at trial. Evidence showed that the daughter relied on her father’s financial assistance, and the father had expressed a wish to provide for her after his death. Statements made by the transferor to his lawyer indicated that he thought that the accounts would not form part of the estate. These statements were deemed to be important indicators of intention, even though they were made subsequent to the transfer. The father’s efforts to avoid taxes by saying that the transfers were not gifts were held not to be inconsistent with an intention to make a gift to his daughter.

Assessment of Decision

The Pecore decision resolves at least one controversy in the law of trusts in Canada; it is now settled that where assets are transferred without consideration the presumption of resulting trust will operate in all but very limited cases. Only transfers from a parent to a minor child will give rise to a presumption of advancement. The court also clarified the traditional role of these presumptions in determining whether a transfer of beneficial interest has occurred. The Court of Appeal had declared that resort was to be had to such presumptions only after the evidence of intention had been examined and found wanting. This represents a reversal of usual order of events where a presumption is in operation. In Pecore, the Supreme Court righted this topsyturvy analysis, and affirmed that a presumption exists as a starting point, which may be rebutted by evidence.

It is not clear what sort of evidence of intention should be in place in cases where a parent does not want to relinquish control over a joint asset while they are alive, but wishes the child to gain full ownership when they die. The Court has given trial judges great leeway in assessing evidence, which leaves open the question of what evidence might be considered conclusive. In most cases, it will fall to the surviving joint account holder to prove that the transferor intended to gift a beneficial interest in the assets. It is open to the judge to assign varying weights to evidence, and none of the factors to be considered are necessarily determinative of intention. For those seeking legal certainty, these decisions provide little comfort. In Saylor, The Court held that the proven intention to grant survivorship rights to an account would represent a complete inter-vivos gift, but went on to hold that banking documents designating accounts as having survivorship rights were insufficient evidence of intention. Clearly something more is required, and it may be that in order to achieve certainty in such cases, banking institutions and lawyers will need to adjust the wording of joint-account agreements to include a specific reference to the transfer of beneficial interest upon the death of the transferor, or a form of deed or gift may be required.

This element of uncertainty becomes even more apparent when one compares the conclusions reached by the court in Pecore and its sister decision, Saylor3. Abella, J., dissenting in both cases, pointed out that the two fact sets are very similar. In both cases a parent transferred assets into a joint account with a child and gave the same child power of attorney. In both cases the accounts provided for right of survivorship. Abella argues that a presumption of advancement ought to follow any gratuitous transfers from a parent to their child, based on the natural affection that a parent can be supposed to feel for their child. Abella points out, correctly, that a parent’s wish to have their child manage their affairs during their lifetime is not inconsistent with the wish to make a gift on death. However, given that the challengers in many of these cases will also be children of the testator as well, it may be argued that the parental affection argument militates equally for the presumption of resulting trust.

The case also leaves wide open the question of how the courts will decide cases which involve transfers of funds to dependant children. Although Rothstein J. states that the presumption of advancement should not apply to dependant children, since that would mean that judges would be put in the impossible position of determining which children were dependant and which were not, he also asserts that evidence of dependence and the degree of such dependence may be strong factors in establishing an intention to transfer beneficial ownership. It seems that, where evidence of dependence is introduced in such cases, the courts will have to engage in the very determinations that Rothstein J. sought to avoid.

Madsen Estate v. Saylor

Overview of Case

A father made his daughter a joint signatory to his bank accounts, which provided a right of survivorship. He also granted her power of attorney. The father retained control of the accounts and his daughter did not use the funds during his lifetime. On the father’s death, his other children commenced litigation against the daughter when she did not include the accounts in the estate, of which she was sole executrix.

The Court upheld the trial judge’s finding that the transferee had not met her evidentiary burden sufficiently to rebut the presumption of resulting trust. As result, the accounts in dispute formed part of the transferor’s estate upon his death, to be divided equally among the beneficiaries of his will.

Grounds for Decision

Rothstein J., writing for the majority, held that, although the trial judge erred in determining that there was no evidence to support an intention to transfer beneficial interest in the disputed accounts, her conclusion was correct. The Court held that the financial documents, i.e. account agreement, indicating that the father had chosen to include a right of survivorship in the account agreements, along with the transferee’s testimony as to her father’s wishes, constituted evidence which the trial judge ought to have considered. Rather than sending the case back for a retrial, the Court asserted jurisdiction to consider the evidence, but determined that it was not sufficiently persuasive to change the outcome of the case.

The Court found the wording of the banking documents establishing the account agreements to be insufficiently clear, and for this reason accorded them little weight in determining whether the transferor had intended to transfer beneficial ownership. The court accepted the findings of the trial judge that the transferee’s testimony was not candid and at times conflicting. The transferee’s lack of candour, combined with her failure to obey the judges instructions in court and her removal of estate files without authorization, led the court to the conclusion that her testimony could not be relied upon.

The Court concluded that even after having included and reviewed the evidence of the bank documents and the transferee’s testimony there was insufficient evidence to rebut the presumption of resulting trust.

Assessment of Decision

In some respects the Saylor decision seems to represent an affirmation of the principles set out in Pecore. Certainly the two cases work together to provide a definitive statement of the law as concerns the presumption of advancement, which is now applicable only to transfers from a parent to a minor child. However, Saylor adds no clues as to what sort of evidence may be sufficient to rebut this presumption. Legal certainty is unlikely to be achieved while courts still enjoy significant discretion in assigning weight to evidence.

The different conclusions reached in Pecore and Saylor turned, at least in part, on the credibility of oral evidence regarding the intentions of the transferor. In Pecore, testimony provided by the transferors lawyer was deemed to be disinterested and credible, whereas the trial judge in Saylor found the testimony of the transferee to be "evasive and conflicting".

Footnotes

* Of Fraser Milner Casgrain LLP. The author gratefully acknowledges the assistance of Adrienne Silk, Student-at- Law for her assistance in the preparation of this paper.

1 Pecore v. Pecore (2007) SCC 17.

2 Madsen Estate v. Saylor (2007) SCC 18.

3 Summarized below.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Oct 2018, Other, Toronto, Canada

Dentons and SheEO are coming together for an evening of #radicalgenerosity on October 23, 2017. Meet Vicki Saunders, Founder of SheEO, and learn about how SheEO is changing the landscape for female entrepreneurs.

23 Oct 2018, Seminar, Montreal, Canada

Dentons is pleased to invite you to join us for a breakfast seminar as part of the Les Matinées Dentons series on issues relevant to you and your business.

24 Oct 2018, Other, Toronto, Canada

If you build it, claims may come. Join the Dentons Construction group for breakfast and an informative discussion on current topics in construction law.

 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions