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Resulting Trusts: Critical Time for Determining Intent


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Resulting trusts are as firmly grounded in the settlor’s intent as express trusts, but with this difference: the intent is inferred or presumed as a matter of law from the circumstances of the case. In Friskie v. Piovesan Estate, [1998] B.C.J. No. 1837 (S.C.), Saunders J. applied the doctrine of resulting trust where children transferred their half-interest in a property to their father in reliance on his promise that they would inherit his half-interest in that property upon his death. The interesting twist in this case was that the father may have later changed his intention with respect to the property, as evidenced by a will prepared several years after the transfer of title from the children to their father. Saunders J. ultimately concluded that the critical time for determining intent was the moment that the children transferred title to their father, acting upon their father’s representations with respect to his half-interest in the property. At that moment, the father’s half-interest in the property became impressed with a resulting trust in favour of the children.

The facts in Friskie v. Piovesan Estate

Gino Piovesan originally purchased two neighbouring lots with his first wife. One lot was vacant, while the family home was situated on the other. When Mr. Piovesan’s first wife died in 1982, she expressed her wish that her interest in the property be distributed in equal shares among their three children, and she made it clear that she expected Mr. Piovesan would also leave his interest in the property to the children when he died. Mr. Piovesan agreed, and his will was drafted to reflect that intention.

In 1985 Mr. Piovesan married his second wife, Rosa, and together they lived in the family home. They entered into a marriage agreement which stated that when each died, their respective estates would benefit their own children and not each other. Mr. Piovesan also made a new will after his marriage to Rosa, confirming his intention that his estate be divided equally among his children and making no provision for Rosa.

Mr. Piovesan and his second wife decided to sell the family home and build a new house on the vacant lot. Relying upon the promises of inheritance made by Mr. Piovesan, his children agreed to convey to him their half-interest in the lot. The children were given their father’s will and the marriage agreement; those documents further satisfied them that they would inherit their father’s interest in the property when he died. Thus, in 1987, the property was transferred to Gino and Rosa Piovesan as joint tenants. The children received payment of $40,000 from Rosa Piovesan for their half interest in the lot, which was one-half of its assessed value.

On July 5, 1990, unbeknownst to his children, Mr. Piovesan made a new will which nominated Rosa as his executor. His new will made specific cash bequests to each of his children with the balance of his estate to be conveyed to Rosa or, should she predecease him, one-half to her daughter and one-half to his children. At that time, Rosa’s will was also prepared to be the mirror image of Mr. Piovesan’s.

Upon Mr. Piovesan’s death on November 13, 1995, his children discovered that their father’s will had been changed, and that the property was owned in joint tenancy with Rosa, so they did not acquire their father’s half-interest in it.

Children claim property impressed with resulting trust

Mr. Piovesan’s three children contended that one-half of the property was impressed with a trust in their favour.

Is there a resulting trust?

The court was tasked with determining whether the implied or express intention of Mr. Piovesan to share the property with his children was proved on a balance of probabilities. In Saunders J.’s view, the necessary intention of Mr. Piovesan was so established, sufficient to create a resulting trust. His promises leading up to the transfer were not of a fleeting nature; they were expressions of the same intent he expressed in his earlier wills, and they were the same intentions expressed in the marriage agreement made in 1985, all of which he brought to his children’s attention. Mr. Piovesan’s promises were also consistent with the manner in which he and Rosa Piovesan had, prior to the transfer, organized their business affairs.

Critical time for analysis of intention

After the transfer, Mr. Piovesan prepared a new will reflecting a different intention. But the critical time for the creation of the resulting trust was the moment the children transferred the property, acting on their father’s representations (at para. 66):

66    Although Gino Piovesan may have changed his intention after the children transferred their interest in Lot 1, the critical time for purposes of this discussion is the moment that the children transferred the property, acting upon his representations. At that moment, assuming he intended to share his property with his children, his interest in the property became impressed with a resulting trust in favour of the children. I have concluded that once the transfer in 1987 was effected, the property interest of Gino Piovesan was impressed with a trust in favour of the children.

Resulting trust severs joint tenancy

At the time of Mr. Piovesan’s death, the property was registered jointly to himself and Rosa Piovesan. Saunders J. found that at the time the transfer to Gino and Rosa Piovesan was signed by his children, the children did not intend to transfer the title in a fashion that precluded them from taking the half-interest in the property promised by their father, and they relied upon his representations that they would in time inherit his half-interest in the house. The children did not notice or understand that the term “joint tenant” on the title document would remove the property from their father’s testamentary reach. A remedial trust would have the effect of severing the joint tenancy of Gino and Rosa Piovesan at equity by breaking their unity of interest in the property. This would afford remedy against Rosa despite her right of survivorship as a joint tenant, for legal title does not prevent a plaintiff from claiming an interest in trust.

The remedy

Mr. Piovesan’s children had already received $100,000 by way of bequest under their father’s will. In recognition of that bequest and the fact that Rosa Piovesan held one-half of the property, the children received judgment against Rosa in the amount of $100,000, roughly the difference between one-half of the value of the property on the date of Mr. Piovesan’s death ($430,000) and the $100,000 they already received.

Take home point on intention and resulting trusts

When applying the doctrine of resulting trust, intent is inferred or presumed as a matter of law from the circumstances of the case. Where a plaintiff claims that property is impressed with a resulting trust, the court must analyze all of the circumstances, and in particular, must give careful consideration to the timing of any representations made that evidence intention.

 

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