Family, Estates & Trusts 



Use Presumptions to Your Advantage or Lose

By Candace Cho, Onyx Law Group,
with the assistance of Joty Sandhu, Articled Student

When commencing an estate litigation action, Plaintiffs’ counsel must be careful to leverage every possible legal advantage in their clients’ favour because it is always an uphill battle. Representing the disinherited is fraught with challenges because the Defendants are usually the people who hold all the advantages. The Defendants are often the people who controlled the financial and health care decisions of the Deceased persons, and are the people who possess all the documents and other evidence that the Plaintiffs would need to prove their case to obtain their just inheritances. The Defendants are often the people who held the power of attorney or were the Representative under a Representation Agreement or Committee of the Deceased persons’ affairs prior to their death, and are often the executors of the Deceased persons’ estates after their deaths.

Fortunately for Plaintiffs’ counsel, our legal predecessors of antiquity have made great leaps and bounds to develop the common law so that certain presumptions of law can be used in our favour to make up for the power imbalance that is often found in estate litigation cases between the disinherited and the inherited.

This paper will cover the following legal concepts that should always be considered part of the Plaintiff counsel’s arsenal to advance the case of the disinherited: the presumption of resulting trust, and the presumption of undue influence.

  1. Presumption of Resulting Trust
  2. a) The Law

One of the most common issues in dispute in estate litigation is whether an inter vivos, gratuitous transfer of an asset from a parent to child was a gift to that child, or whether that child was merely holding that asset in trust for the Deceased’s estate to be distributed according to the Deceased’s last will and testament. The actual intention of the transferor at the time of the transfer has always been and is still the determinative issue that answers this question. However, the transferor’s intention is often difficult to ascertain in estate litigation cases because the transferor is deceased. As such, the common law has developed two rules to guide the court’s inquiry to making a determination when there is insufficient evidence to determine what the intention of the transferor was: 1) the presumption of advancement, and 2) the presumption of resulting trust.

The leading decision and starting point of any analysis regarding the presumption of resulting trust is the 2007 Supreme Court of Canada case of Pecore v. Pecore, 2007 SCC 17. An older Supreme Court of Canada case, called Niles v. Lake, 1947 SCR 291 is also an important presumption of resulting trust case regarding joint accounts between siblings.

In Pecore, the Deceased had added his daughter’s name to all of his substantial mutual funds, bank accounts and income trusts as a joint account holder. His will left his estate equally divided between his daughter, and his daughter’s husband. The daughter and her husband subsequently divorced, with the daughter claiming that she inherited the bank and investment accounts by right of survivorship as an inter vivos gift from her father, and that these assets did not form a part of the estate. The daughter’s ex-husband claimed that the daughter was holding these assets in trust for the Deceased’s estate, and that he was therefore entitled to a 50% interest in the assets as per the Deceased’s will. The trial judge found that the Deceased’s intention at the time of transfer was to gift the assets to his daughter. The Supreme Court of Canada upheld this finding of fact to determine that the daughter was able to keep the joint assets to the exclusion of her ex-husband, but not before it made groundbreaking determinations regarding the application of the presumptions of advancement and resulting trust.

Prior to Pecore, there was an established presumption of advancement (i.e. the transferee is presumed to have received the transferred asset as a gift from the transferor) between a father and child. This case changed the guiding presumption from the presumption of advancement applying to gratuitous transfers made between parent and child to the presumption of resulting trust (i.e. the transferee is presumed to be holding the transferred asset in trust for the transferor).

Numerous principles regarding how and when the presumption of resulting trust is to be applied was explored by Rothstein J. in Pecore as follows:

  1. “The presumption of resulting trust 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” (para. 24).
  1. “The presumption of resulting trust therefore alters the general practice that a plaintiff (who would be the party challenging the transfer in these cases) bears the legal burden in a civil case. Rather, the onus is on the transferee to rebut the presumption of resulting trust” (para 25).
  1. “In cases where the transferor is deceased and the dispute is between the transferee and a third party, the presumption of resulting trust has an additional justification. In such cases, it is the transferee who is better placed to bring evidence about the circumstances of the transfer” (para. 26).
  1. In cases where there is insufficient evidence to determine the actual intention of the transferor, the presumption of resulting trust applies to all gratuitous transfers from a parent to an adult child, whether that child is financially independent or dependent from the parent (paras. 36 and 40).
  1. “There will of course be situations where a transfer between a parent and adult child was intended to be a gift. It is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In addition, while dependency will not be a basis on which to apply the presumption of advancement, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of resulting trust” (para. 41).
  1. “As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus…the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities” (para 44).
  1. “Rights of survivorship, both legal and equitable, vest when the joint account is opened and the gift of those rights is therefore inter vivos” (para 48). “[T]he presumption of resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will” (para 53).

Rothstein J. in Pecore also made important determinations on what evidence a court may consider in determining the intent of the transferor:

  1. “Where a gratuitous transfer is being challenged, the trial judge must begin his or her inquiry by determining the proper presumption to apply and then weigh all of the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted” (para 55).
  1. “The traditional rule is that evidence adduced to show the intention of the transferor at the time of the transfer ‘ought to be contemporaneous, or nearly so,’ to the transaction” (para 56). However, “evidence of intention that arises subsequent to a transfer should not automatically be excluded…Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer…The trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention” (para 59).
  1. “[B]anking documents in modern times may be detailed enough that they provide strong evidence of the intentions of the transferor regarding how the balance in the account should be treated on his or her death…Therefore, if there is anything in the bank documents that specifically suggests the transferor’s intent regarding the beneficial interest in the account…the courts should not be barred from considering it. Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry” (para 61).
  1. “[C]ontrol and use of the funds, like the wording of the bank documents, should not be ruled out in the ascertainment of the transferor’s intention” (para 62).
  1. “[T]he trier of fact has the discretion to consider the granting of power of attorney when deciding the transferor’s intention. This will be especially true when other evidence suggests that the transferor appreciated the distinction between granting that power and gifting the right of survivorship” (para 68).
  1. “The weight to be placed on tax-related evidence in determining a transferor’s intent should be left to the discretion of the trial judge. However, whether or not a transferor continues to pay taxes on the income earned in the joint accounts during his or her lifetime should not be determinative of his or her intention in the absence of other evidence” (para 69).
  1. Statements made by the Deceased to the solicitor drafting his will are an important indicator of intention. Rothstein J. concurred with the trial judge in Pecore that “ ‘if [the father’s] intention was to have his jointly held assets devolve through the estate, they were of such magnitude that he would have at least discussed that matter with this solicitor, since they constituted a substantial proportion of what he owned’, particularly after the lawyer asked him about life insurance policies, RRIFs and other assets” (para 73).

What is important to note, however, is that while Pecore changed the presumption of law to apply the presumption of resulting trust for gratuitous transfers from a parent to an adult child, Pecore did not change the law that the presumption of advancement applies to gratuitous transfers to minor children. This is likely because the court in Pecore recognized that the “principal justification for the presumption of advancement is parental obligation to support their dependent children…[and that] parental support obligations under provincial and federal statutes normally end when the child is no longer considered be a minor” (para 36).

As such, it is accurate to say the presumption of advancement from parent to child was narrowed in scope to transfers by parents to minor children in Pecore.

Furthermore, Halsbury’s Laws of Canada[1] notes that the presumption of advancement regarding gratuitous transfers from parents to minor children “is not limited to the natural children of the donor, and may include those children to whom the donor stands in loco parentis.” In fact, it cites the following examples of these extended applications of the presumption of advancement:

  1. The presumption of advancement extended to a stepfather and stepson in Young v. Young [1958] B.C.J. No. 134 (B.C.C.A); and
  1. In Evong Estate v. Lawton, [1990] N.S.J. no. 309 (N.S.T.D.), the presumption of advancement was found to extend to a gift from an uncle to his niece.
  1. b) The Practice

While Pecore was clear to establish that the presumption of resulting trust only applies if the court ascertains that there is insufficient evidence to prove the actual intention of the donor, which seemingly limits the applicability and use of the presumption in litigation, I have found the presumption to be a key tool to rely on in the plaintiff counsel’s arsenal. This is because neither party’s counsel knows if there will be sufficient evidence to prove the actual intention of the donor at trial, until there is a finding of fact made by the trial judge. It follows, then, that the threat of the application of the presumption of resulting trust looms large over any resulting trust case prior to trial.

While resulting trust cases are often brought on where the single issue at stake is whether there was a gift or not of particular assets, resulting trust cases are also often made in conjunction with wills variation cases or validity of will cases where the Plaintiff was disinherited. Indeed, it is often the first of many hurdles that Plaintiffs’ counsel must jump over in order to be able to obtain any result for their clients. It goes without saying that it is not worth fighting over whether there should be a variation of a will, or the striking down of a will if there is no estate to be distributed. Accordingly, being able to leverage the presumption of resulting trust as a real litigation risk of bringing assets back into the estate serves as a strategic advantage to negotiating any settlement for a Plaintiff. Of course, the better the evidence is that there was no gift, the better the settlement you can obtain for your client, but it is the presumption of resulting trust that often gets the Plaintiff into the realm of settlement negotiations in the first place.

As can be seen in Rothstein J.’s findings in Pecore, it is clear that almost all evidence is susceptible to being interpreted either way, depending on how the trier of fact wants to determine the final issue. In fact, it is my opinion that on the face of the facts of Pecore itself, the decision could have come out completely reversed if the case had been tried before a different judge.

In Pecore, the Deceased treated all of his accounts as his own, and had total control of these accounts in his lifetime. He went as far as to write to the Canada Revenue Agency stating that the adding of his daughter to his accounts as joint account holder was not a gift of these accounts to her. Furthermore, it does not appear that he obtained independent legal advice as to these transfers; rather, he executed the transfers on the advice of his financial advisor to avoid “the payment of probate fees and taxes and generally make after-death dispositions less expensive and less cumbersome” (para 10). All of these facts would be evidence in favour of finding that no gift was intended by the Deceased to his daughter.

However, the facts that the trial judge ultimately relied on (and which the Supreme Court of Canada upheld) to find that a gift was intended was the fact that the Deceased has a close and loving relationship with his daughter, (he was in fact estranged from one of his other children) and had a long history of financially helping her in her adult life. Another key fact that was relied on was that the Deceased did not mention any of the joint accounts as his assets when he met with his solicitor to prepare his will.

Although never mentioned by Rothstein J. as a reason, I have a sneaking suspicion that the fact the contest in this case was not between warring siblings, but a case between a daughter and a now ex-son-in law weighed heavy with the original trier of fact as a reason to find that the transfers were all gifts. Given the murkiness of the evidence, it was open to the trial judge to err on the side of one interpretation of fairness to find that the Deceased intended a gift at the time of transfers to his daughter, in order to prevent the ex-son-in-law from inheriting 50% of the Deceased’s wealth. It is therefore my opinion that had the contest been between the daughter and her other siblings, the end result may well have been completely reversed.

What can we conclude from the foregoing? Resulting trust cases are inherently risky cases where evidence can, most of the time, be interpreted either way, leading to unpredictable results. The fact that the governing presumption at law is the presumption of resulting trust, and not the presumption of advancement, however, is a direct strategic advantage that Plaintiffs’ counsel can and should take advantage of to maximize the result they can obtain for their clients in these cases. 

2. Presumption of Undue Influence

a) The Law

i) Overview

Cotton L.J. set out the doctrine of undue influence in the seminal case of Allcard v. Skinner, 36 Ch. D. 145, [1886-90] All E.R. Rep 90 (C.A.) [Allcard]. There are essentially two categories where courts have tended to set aside voluntary gifts: 1) Where the court has been satisfied that the gift was the result of influence expressly used by the donee for the purpose of obtaining the gift; and 2) where the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor (Allcard, p.93, cited in Geffen, para 26).

In the second case, the courts are willing to set a gift aside unless it is proven that in fact, the donor was acting under circumstances which enabled him to exercise an independent will (Allcard, cited in Halsbury’s Laws of Canada (online), Gifts, at HGF-36 “Doctrine of Undue Influence”).

Cotton L.J. also emphasized that in cases where the presumption applies, the court interferes not on the ground that any wrongful act has in fact been committed by the donee, “but on the ground of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom being abused.” (Allcard at p.93 cited in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 [Geffen] para. 39.)

Furthermore, Cotton L.J. opined that the equitable doctrine of undue influence was developed not to save people from the consequences of their own folly but to prevent them from being victimized by other people (p. 99, cited in Geffen para. 24).

In the leading case, Geffen, Justice Wilson at para 41 described influence as:

…really referring to the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power. … To dominate the will of another simply means to exercise a persuasive influence over him or her. The ability to exercise such influence may arise from a relationship of trust or confidence but it may arise from other relationships as well.

A more recent case, Longmuir v. Holland (2000), 233 W.A.C. 248, 142 B.C.A.C. 248, [2000] B.C.J. No. 1995, 35 E.T.R. (2d) 29, 192 D.L.R. (4th) 62, 81 B.C.L.R. (3d) 99, 2000 CarswellBC 1951, 2000 BCCA 538 (B.C. C.A.) at para. 74, defined undue influence as influence which overbears the will of the person influenced so that in truth what she does is not his or her own act.


ii) When Does the Presumption of Undue Influence Arise?

In addition to affirming that Allcard v. Skinner is still good law, the Supreme Court of Canada in Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 [Geffen], provided further clarification and guidance by outlining the legal framework of the presumption of undue influence. The following relevant paragraphs of the decision set out the mechanics of how the presumption is applied:

43        What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself. This test embraces those relationships which equity has already recognized as giving rise to the presumption, such as solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency which defy easy categorization.

44        Having established the requisite type of relationship to support the presumption, the next phase of the inquiry involves an examination of the nature of the transaction…

46        Once the plaintiff has established that the circumstances are such as to trigger the application of the presumption, i.e., that apart from the details of the particular impugned transaction the nature of the relationship between the plaintiff and defendant was such that the potential for influence existed, the onus moves to the defendant to rebut it…the plaintiff must be shown to have entered into the transaction as a result of his own “full, free and informed thought.” Substantively, this may entail a showing that no actual influence was deployed in the particular transaction, that the plaintiff had independent advice, and so on. Additionally, I agree with those authors who suggest that the magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether influence was exercised…

50        …It remains, therefore, to be determined whether the presumption has been rebutted. In making that determination it is necessary to conduct “a meticulous examination of the facts”…

There is recent authority from BC Courts that the presumption does not arise automatically in the case of a child’s alleged undue influence of a parent (Modonese v. Delac Estate, 2011 BCSC 82 at paras. 102, aff’d 2011 BCCA 501 [Modonese]). This is likely if the parent is in good health and has possession of his or her faculties (Calmusky v. Karaloff (1946), [1947] S.C.R. 110, cited in Modonese para. 103). In some cases, the presumption of undue influence may not arise even where the parent is considered a potentially vulnerable person (Chender v. Lewaskewicz, 2007 NSCA 108 (N.S. C.A.) at paras. 62-65, (2007), 259 N.S.R. (2d) 330 (N.S. C.A.), cited in Modonese para. 104).

However, the presumption may apply if the relationship between the elderly parent and child is characterized by dependency (Modonese at para. 105). Such evidence of dependency may be found where the child is in a dominant position in the elderly parent’s life, particularly as the parent grows older and their health concerns increase (Dempsey v. Dempsey, 2010 NSSC 96, para. 44; and MacNeill v. MacNeill, [2002] O.J. No. 3206 (Ont. S.C.J.), para. 8, as cited in Modonese para. 108).


iii) No “manifest disadvantage” requirement

It is noteworthy that in a commercial context, where a party seeks to set aside a contract on the ground on undue influence, the additional requirement of demonstrating a “manifest disadvantage” may be appropriate and justified. This is because a court of equity, “must accord some degree of deference to the principle of freedom of contract and the inviolability of bargains. Moreover, it can be assumed in the vast majority of commercial transactions that parties act in pursuance of their own self interest,” (Geffen para. 44).

By contrast, in situations where consideration is not an issue, it may be entirely inappropriate to require the plaintiff to provide proof of the undue disadvantage or benefit. As outlined by Forest J. in Geffen, the “manifest disadvantage” requirement does not make sense where the challenged transaction concerns a gift. This is because a gift is, by its very nature, inherently disadvantageous in a material sense, so the requirement is unnecessary (para. 83). It is enough, therefore, to establish the presence of a dominant relationship (para 45).

iv) Rebutting the Presumption of Undue Influence

If the presumption of undue influence has been established, the onus shifts to the defendant to rebut it on a balance of probabilities (Geffen, para 46).

The test to rebut the presumption of undue influence is summarized nicely by Punnet J. in Stewart v. McLean, 2010 BCSC 64 at para 97:

“To rebut the presumption of undue influence, the defendant must show that the donor gave the gift as a result of her own “full, free and informed thought”: Geffen at 379. A defendant could establish this by showing:

a. no actual influence was used in the particular transaction or the lack of opportunity to influence the donor (Geffen at 379; Longmuir at para. 121);

b. the donor had independent advice or the opportunity to obtain independent advice (Geffen at 379; Longmuir at para. 121);

c. the donor had the ability to resist any such influence (Calbick v. Warne, 2009 BCSC 1222 at para. 64);

d. the donor knew and appreciated what she was doing (Vout v. Hay, [1995] 2 S.C.R. 876 at para. 29, 125 D.L.R. (4th) 431); or

e. undue delay in prosecuting the claim, acquiescence or confirmation by the deceased (Longmuir at para. 76).”

Another relevant factor may be the magnitude of the benefit or disadvantage (Geffen para. 46; Longmuir para. 121).

Furthermore, at paragraph 98 of Stewart, Punnett J. set a very high standard of independent legal advice that would have to be given in order to rebut the presumption of undue influence by following Coish v. Walsh, 2001 NFCA 41, 203 Nfld. & P.E.I.R. 226 (Nfld. C.A.) [Coish], where Wells C.J.N. addressed the issue of whether independent advice rebuts the presumption of undue influence as follows:

[23] The trial judge also correctly set forth the law respecting the manner in which such a presumption may be rebutted. In particular, he identified, from the comments of Green J., in [Fowler Estate], factors to be taken into account in considering whether or not evidence of legal advice given to the granting party is sufficient to rebut the presumption. At paragraph 24 of [Fowler Estate], Green J. identified factors which may affect the character of legal advice to be as follows:

  1. Whether the party benefiting from the transaction is also present at the time the advice is given and/or at the time the documents are executed.
  1. Whether, though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence.
  1. In a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact and discussed the financial implications with the grantor.
  1. Whether the lawyer enquired as to whether the donor discussed the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place.
  1. Whether the solicitor discussed with the grantor other options whereby she could achieve her objective with less risk to her.


v) Challenging Validity of a Will

The court in Geffen was careful to limit the application of the presumption of undue influence to the setting aside of inter vivos transfers, and not to setting aside wills. Section 52 of the Wills, Estates and Succession Act, S.B.C. 2009, c-13 [WESA], however, appears to apply the same presumption of undue influence as set out in Geffen to wills:

52  In a proceeding, if a person claims that a will or any provision of it resulted from another person

(a) being in a position where the potential for dependence or domination of the will-maker was present, and

(b) using that position to unduly influence the will-maker to make the will or the provision of it that is challenged,

and establishes that the other person was in a position where the potential for dependence or domination of the will-maker was present, the party seeking to defend the will or the provision of it that is challenged or to uphold the gift has the onus of establishing that the person in the position where the potential for dependence or domination of the will-maker was present did not exercise undue influence over the will-maker with respect to the will or the provision of it that is challenged.

Because s. 186 of WESA provides that the Act only applies to cases where the death occurred after the Act came into force on March 31, 2014, there have been no reported cases that I could find that applied s. 52 of WESA. However, I have found three cases which have cited s. 52 of WESA, acknowledging how it has changed the law such that the presumption of undue influence can now apply to set aside wills. These cases are: Becker v. Becker, 2016 BCSC 487; Elder Estate v. Bradshaw, 2015 BCSC 1266; and Hegel Estate v. Logan, 2014 BCSC 1026.


b) The Practice

Like the presumption of resulting trust, the presumption of undue influence can be used as a powerful tool by Plaintiffs’ counsel to leverage better settlements for their clients. It is yet another strategic advantage because it is another legitimate litigation risk for the defendants if you can prove a relationship of dependency between the transferor and transferee for inter vivos transfers, and between the will-maker and the beneficiary for wills.

However, the application of evidence by the trial judge for presumption of undue influence cases is definitely less murky than resulting trust cases because the rules for the interpretation of evidence is less discretionary. The language used in the cases does not leave a lot of room for interpretation like Rothstein J. left in Pecore for resulting trust cases. Rather, there are a number of objective, enumerated factors that a judge can look at to interpret whether 1) there is a relationship of dependence that triggers the presumption, and 2) there is enough evidence to rebut the presumption.

When advising a client on whether to plead the presumption of undue influence, one also needs to warn the client of potential special costs consequences if the claim ultimately fails. It is trite law that a failed claim of actual undue influence may well attract an award of special costs (Bates v. Finley Estate, 2002 BCSC 159; Mawdsley v. Meshen, 2011 BCSC 923). However, the law is murky as to whether a claim of special costs can be made when only the presumption of undue influence, and not actual undue influence is pleaded, because the facts pleaded for a presumption of undue influence case are simply of a relationship of dependency.

Nonetheless, the presumption of undue influence is a good claim to be pleaded at the outset of an action if it is obvious that you can establish a special dependency relationship, and if the transferor or will-maker likely did not receive independent legal advice regarding the asset transfer or the will.

  1. Conclusion

The presumptions of resulting trust and undue influence should always remain at the forefront of consideration when commencing estate litigation. Their applicability to the scenarios of estate litigation is far reaching, and their effectiveness in helping your clients obtain better results cannot be dismissed. If Plaintiffs’ counsel do not take advantage of these presumptions, they are forced to negotiate smaller settlements for their clients, or obtain inferior results at trial. This is because the value of the Deceased’s asset pool is often substantially, if not wholly diminished without bringing assets back into the estate through the strategic use of the presumptions.

As such, it is obvious that Plaintiffs’ counsel should use these presumptions to their clients’ advantage, or lose.

[1] Halsbury’s Laws of Canada (online), at HGF-18 “Transfers from Parent to Child”.

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