Testamentary intentions can be significant in determining whether a property was purchased by way of joint tenancy as a gift or as a trust.
The Ontario Superior Court of Ontario recently overturned an arbitrator’s decision in Griffith v. Davidson, 2017 ONSC 187 where the parties, Mr. Griffith and Ms. Davidson, had been living as common law spouses in a home which they held as joint tenants. Mr. Griffith paid for the entire amount of the down payment and made all of the mortgage, tax and insurance payments. Mr. Griffith argued that as a result, Ms. Davidson held her joint interest in the property on a resulting trust for his benefit.
At arbitration, Mr. Griffith’s argument succeeded. The arbitrator concluded that the presumption of a resulting trust applied, and that Ms. Davidson had failed to rebut the presumption by proving that Mr. Griffith intended to gift her an interest in the property.
Ms. Davidson appealed the arbitrator’s decision to the Superior Court of Ontario, arguing that the arbitrator made an error of mixed fact and law.
Justice Donohue overturned the arbitrator’s decision.
A resulting trust arises where property is acquired by one person and placed in their name jointly with another person, without consideration passing between the two. The presumption of a resulting trust is a rebuttable presumption, according to the Supreme Court in Pecore v. Pecore. The arbitrator confirmed that Mr. Griffith put the title to the property in joint tenancy with Ms. Davidson for estate planning purposes, but found that this was insufficient to prove that Mr. Griffith intended at the time of the purchase of the property to gift to Ms. Davidson one-half of the interest in the property.
Justice Donohue found that the arbitrator erred in not giving weight to the new wills that Mr. Griffith and Ms. Davidson executed shortly after the purchase of the joint property. Mr. Griffith and Ms. Davidson executed wills shortly after the property was purchased to gift their estates to each other. Five years later, Mr. Griffith changed his will to remove Ms. Davidson as a beneficiary. This error was material to the issue of whether Mr. Griffith intended to gift an interest in the property to Ms. Davidson, as the arbitrator appeared to conclude that, because one can change one’s will and estate plan, that one can unilaterally revoke a joint interest in property at some later date if they change their mind.
The transferor’s intention at the time of making the transfer is relevant: not what the transferor later intended. Mr. Griffith was not entitled to support a claim of resulting trust by showing that at some later date, he intended a resulting trust. At the time when Mr. Griffith purchased the property, he understood the significance of joint tenancy, he knew that if he died the whole property would devolve to Ms. Davidson, they made wills to benefit each other, and he put both of their names on title in the expectation that they would cohabit as a couple. Based on these facts that were before the arbitrator, Justice Donohue found that Mr. Griffith’s intention was to gift the property to Ms. Davidson at the time he placed title in joint tenancy. The fact that their relationship dissolved and he later changed his estate plan did not change the fact that he had intended the transfer to be a gift.
Mr. Griffith’s argument that Ms. Davidson was unjustly enriched as a result of the gift was rejected. The principle of unjust enrichment does not apply when there is a gift. If a gift is found, joint title vests and there is no need to do an analysis as to whether there was unjust enrichment.
Therefore, great caution must be paid in adding a person to title as a joint tenant.
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