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When is a gift by cheque not a valid gift? Teixeira v. Markgraf, Revisited

In Teixeira v. Markgraf Estate[1], http://canlii.ca/t/hmqjn, the Ontario Court of Appeal reviews the elements of a legally valid gift, specifically with respect to a gift by cheque. We wrote about the lower court decision here.

Background Facts:

The appellant was a good neighbour of the donor for nearly 15 years. He assisted her with many of her daily chores. In her Will, the donor made a bequest to the appellant of $100,000.00. She also wrote a cheque to the appellant for $100,000.00 before her death. She asked her stepson to give this cheque to the appellant with instructions that he should take it to her bank the next day.

The appellant followed the deceased’s instructions and attended at her bank the next day. The bank declined to cash the cheque indicating that they would have to investigate the matter, and returned the cheque to him. The bank did not advise the appellant that there were insufficient funds in the account to cover the cheque. The donor did have over $200,000.00 in an alternate account, but the bank could not transfer the funds into her chequing account without her specific instructions.

The donor died six days later. Once notified, the bank froze her accounts. The appellant attended at his bank and attempted to deposit the cheque, but it was returned, marked “funds frozen.”

The donor’s stepson and estate trustee told the appellant that he would be receiving $100,000 from the estate and another $100,000 to cover the cheque. However, after obtaining legal advice, he took the position that the cheque was an imperfect gift that was not legally enforceable.

The appellant received the $100,000 bequest under the Will and brought an application seeking payment from the estate for the other $100,000, the value of the cheque.

The application judge dismissed his claim, finding that the gift failed for lack of delivery. Justice C. R. Whitten, made the following findings of fact in deciding the case:

  1. The appellant acted towards the donor without thought of compensation;
  2. There was no contract between the appellant and the donor; and
  3. The appellant had not acted to his detriment in anticipation of receiving the donor’s cheque.

Justice Whitten identified the three essential elements of a gift as being: a) the donor’s intention to make a gift; b) acceptance of the gift by the donee; and c) delivery of the gift to the donee.

The first two elements were not in dispute. However, Justice Whitten found that the third element, namely delivery of the gift, had not been made and dismissed the claim.

The Appeal:

Justice Strathy wrote the decision on behalf of the Court of Appeal and concluded that the application judge was correct in holding that the cheque was a gift inter vivos and that the law of gifts applied to the facts of this case.

For a gift to be legally valid, all three required elements (intention, acceptance, and delivery) must be present. The “delivery” requirement is an important distinguishing feature of gifts as compared to other methods of transferring property, such as by contract. In order for a gift to be valid and enforceable, the donor must have done everything necessary and in his or her power to affect the transfer of the property: Kavanagh v. Lajoie, 2014 ONCA 187, 317 O.A.C. 274, at para. 13.

While a gift of cash can be readily effected by delivery to the donee, the gift of a cheque can be problematic due to its nature. The Courts have previously described a cheque as “merely a direction to someone, who may or may not have in his possession funds of the drawer so authorising him to pay to the payee a certain sum of money.”[2]

The Court of Appeal of England and Wales, in Re Swinburne[3], held that the death of the donor ruins a gift inter vivos by way of cheque if the cheque is not deposited before the donor dies.

The appellant argued that the donor’s death only terminates the bank’s authority to pay on a cheque, not the drawer’s duty to pay. While the Court agreed that this statement was correct in law, it noted that there must still be some independent duty to pay for the payee to be able to enforce a claim against the estate.

The Court also noted that the doctrine of “estoppel by convention” was not helpful to the appellant. In order for estoppel by convention to be applicable three criteria must be met:

  • the parties must have a mutual understanding or acceptance of a certain set of facts or law;
  • one party must have acted in reliance on this shared assumption (resulting in a change in their legal position); and
  • it would be unfair or unjust to have the other party resile from the initial mutual assumption.

While the parties had formed a common assumption, the appellant did not change his legal position as a result of that assumption. He simply hoped that he would receive the gift.  Nor, was there anything unfair or unjust about the outcome.

Ultimately, Justice Strathy concluded that the purported gift by way of cheque failed because it was not delivered before the bank received notice of the donor’s death and dismissed the appeal.


A gift requires intention, acceptance and delivery to be legally valid. A gift by cheque is not delivered when the cheque is given to the donee, rather, when the cheque has been cashed or cleared. This is an important distinction, especially as there can be serious ramifications if the donor is on his or her deathbed.

[1] 2017 ONCA 819

[2] Re Bernard (1911), 2 O.W.N. 716 (Div. Ct.), at p. 717

[3] Re Swinburne, [1926] 1 Ch. 38 (C.A.)


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