A parent adds a child’s name to a bank account. A friend helps buy a property. Years later, the question arises: who really owns it? The answer often lies in the doctrine of resulting trusts – where equity informs the story of ownership.
Types of Resulting Trusts
The resulting trust, as well as the constructive trust, is a trust structure which arises by operation of law; they are validated by court order. In principle, the presumption of resulting trust, which remains rebuttable in a majority of circumstances, arises whenever legal or equitable title to property is in one party’s name, but that party is under an obligation to return it to the original title owner, or to the person who paid the money to purchase it.[1] This definition is quite efficient because it captures both sub-categories of resulting trust; those being:
(1) Resulting trusts arising from gratuitous transfer; and
(2) Resulting trusts arsing on exhaustion, or failure of an express trust.
Resulting trusts may occur on the exhaustion/ failure of an express trust, in favour of the settlor – these sorts of resulting trusts have been deemed by the courts to automatically arise.[2] As such, this branch of the resulting trust is relatively straightforward and will not be the focus of this blog.
Gratuitous Transfer Resulting Trusts
Gratuitous transfer resulting trusts, on the other hand, arise by one of two way: either through a purchase money resulting trust,[3] or by voluntary (gratuitous) transfers of property directly into the name of another person[4]. It is important to keep in mind that, the following situations detailed below give rise to a presumption of resulting trust and the court will weigh the evidentiary record to determine whether the presumption may be rebutted.
- Purchase Money Resulting Trusts
A purchase money resulting trust arises where person “A” purchases property in the name of person “B”. Person “B” is then deemed to have been holding title as resulting trustee of the property.[5] This category of resulting trust can trace its origin/ lineage to the rule from Dyer v Dyer, 1788[6], which holds,
“… a trust of legal estate, whether freehold, copyhold, or leasehold, whether taken in names of the purchasers and other jointly, or in the names of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the money.”[7]
The rule from Dyer v Dyer has since been affirmed by the Supreme Court of Canada in Nishi v Rascal. In this case, Nishi, who was assisted by Rascal in the purchase of 2 acres which was foreclosed on due to tax arrears accrued by Rascal, argued that a purchase money resulting trust doctrine should be abandoned in favour of an approach based on unjust enrichment and that no unjust enrichment occurred here.[8] Rothstein J., delivering judgement for the Supreme Court, provided the following definition of purchase money resulting trusts:
…The purchase money resulting trust is a species of gratuitous transfer resulting trust, where a person advances a contribution to the purchase price of property without taking legal title. Gratuitous transfer resulting trusts presumptively arise any time a person voluntarily transfers property to another unrelated person or purchases property in another person’s name (D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (4th ed. 2012), at p. 397).[9]
The court then immediately cited Kerr v. Baranow[10] for the following proposition:
[the category of trust] “…has been settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”.[11]
The remaining analysis largely relied on Pecore to examine the following:
(1) whether a purchase money resulting trust arose; and
(2) whether Nishi could rebut the presumption, how, and on what standard.
- Gratuitous Transfer Resulting Trusts
Pecore v Pecore, 2007 SCC 17, is the authoritative case examining voluntary (gratuitous) transfers, which thereby give rise to the presumption of resulting trust. Pecore has gone on to be the leading case, and it was heavily relied upon in Nishi v Rascal.
In this case, a bank account was transferred directly into the name of another person and was held in joint tenancy. The court began surveying the law as it pertains to donative transfers generally. The court found that the presumption of resulting trust stands as the general rule for gratuitous transfers, but this varies depending on relationship between the transferor and transferee.[12] For example, in cases of a parent gratuitously transferring property to a dependent child, there will be a presumption of advancement which stands.[13]
This still remains true and has been historically true in two circumstances: (1) where the transferor is a husband and the transferee is his wife[14] and (2) where the transferor is a father and the transferee is his child.[15]
The court reasoned that the latter category ought to be expanded to applying to mothers as well,[16] but should not be expanded to apply between parents and independent children for two reasons. Firstly, the principal justification for presumption of advancement is parental obligation to support dependent children.[17] Secondly, it is common for ageing parents to transfer assets in joint tenancy with adult children for assistance in managing assets.[18]
Rebutting the Presumption
The court then established the standard necessary to rebut the presumption, finding that the civil standard, a balance of probabilities, is applicable to rebut the presumptions.[19]
Insofar as what evidence may be considered in determining intent, the court found that where a gratuitous transfer is being challenged, the trial judge must begin the inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted.[20] Additionally, evidence subsequent to the transfer ought to be viewed with suspicion as 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.[21] Further, the court in Pecore finds that the relevant intention is the intention of the person who advanced the funds at the time of the contribution to the purchase price.[22]
Final Remarks
Resulting trusts continue to play a critical role in Canadian law by ensuring that property transferred without clear donative intent remains subject to equitable obligations. Whether arising from the historic purchase money or the presumption of resulting trust in gratuitous transfers, the doctrine remains firmly rooted in the principle that equity looks to intent and presumes bargains as opposed to gifts.
For further reading on resulting trusts, check out the following links:
- Rebutting the Presumption of Trust | WEL Partners Blog
- Vested Interest – Probing a Purchase Money Resulting Trust in Falsetto v. Falsetto | WEL Partners Blog
—
[1] Mark R Gillen et al., The Law of Trusts: A Contextual Approach, 4th ed (Toronto: Emond Publishing, 2021), at pp 372. (“Gillen et al.,”)
[2] See Poirier v. Brulé, 1891 CanLII 23 (SCC), 20 SCR 97 & Schmidt v. Air Products Canada Ltd., 1994 CanLII 104 (SCC), [1994] 2 SCR 611.
[3] See Nishi v. Rascal Trucking Ltd., 2013 SCC 33 (CanLII), [2013] 2 SCR 438. (“Nishi v Rascal”)
[4] As seen in Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 SCR 795. (“Pecore”)
[5] Gillen et al., at pp 374.
[6] Dyer v Dyer, (1788) 2 Cox Eq Cas 92, 30 ER 42. (“Dyer v Dyer”)
[7] Ibid. at 43.
[8] Nishi v Rascal, at para 20.
[9] Ibid. at para 21.
[10] Kerr v. Baranow, 2011 SCC at para 12.
[11] Nishi v Rascal, at para 21.
[12] Pecore, at para 27.
[13] Ibid. at para 36.
[14] As seen in Hyman v. Hyman, 1934 SCC at p 538.
[15] Pecore, at para 28.
[16] Ibid. at para 33.
[17] Ibid. at para 34.
[18] Ibid. para 36.
[19] Riordan v. Mellon, 2000 CanLII 5739 (ON CA), at para 13. Also indexed as Burns Estate v. Mellon
[20] Pecore, at para 44.
[21] Clemens v. Clemens Estate, Crown Trust Co. et al., 1956 CanLII 3 (SCC), [1956] SCR 286, at para 56.
[22] Pecore, at para. 59.
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Written by: Grant Swedak
Posted on: November 4, 2025
Categories: Commentary, WEL Newsletter
A parent adds a child’s name to a bank account. A friend helps buy a property. Years later, the question arises: who really owns it? The answer often lies in the doctrine of resulting trusts – where equity informs the story of ownership.
Types of Resulting Trusts
The resulting trust, as well as the constructive trust, is a trust structure which arises by operation of law; they are validated by court order. In principle, the presumption of resulting trust, which remains rebuttable in a majority of circumstances, arises whenever legal or equitable title to property is in one party’s name, but that party is under an obligation to return it to the original title owner, or to the person who paid the money to purchase it.[1] This definition is quite efficient because it captures both sub-categories of resulting trust; those being:
(1) Resulting trusts arising from gratuitous transfer; and
(2) Resulting trusts arsing on exhaustion, or failure of an express trust.
Resulting trusts may occur on the exhaustion/ failure of an express trust, in favour of the settlor – these sorts of resulting trusts have been deemed by the courts to automatically arise.[2] As such, this branch of the resulting trust is relatively straightforward and will not be the focus of this blog.
Gratuitous Transfer Resulting Trusts
Gratuitous transfer resulting trusts, on the other hand, arise by one of two way: either through a purchase money resulting trust,[3] or by voluntary (gratuitous) transfers of property directly into the name of another person[4]. It is important to keep in mind that, the following situations detailed below give rise to a presumption of resulting trust and the court will weigh the evidentiary record to determine whether the presumption may be rebutted.
A purchase money resulting trust arises where person “A” purchases property in the name of person “B”. Person “B” is then deemed to have been holding title as resulting trustee of the property.[5] This category of resulting trust can trace its origin/ lineage to the rule from Dyer v Dyer, 1788[6], which holds,
“… a trust of legal estate, whether freehold, copyhold, or leasehold, whether taken in names of the purchasers and other jointly, or in the names of others without that of the purchaser; whether in one name or several; whether jointly or successive, results to the man who advances the money.”[7]
The rule from Dyer v Dyer has since been affirmed by the Supreme Court of Canada in Nishi v Rascal. In this case, Nishi, who was assisted by Rascal in the purchase of 2 acres which was foreclosed on due to tax arrears accrued by Rascal, argued that a purchase money resulting trust doctrine should be abandoned in favour of an approach based on unjust enrichment and that no unjust enrichment occurred here.[8] Rothstein J., delivering judgement for the Supreme Court, provided the following definition of purchase money resulting trusts:
…The purchase money resulting trust is a species of gratuitous transfer resulting trust, where a person advances a contribution to the purchase price of property without taking legal title. Gratuitous transfer resulting trusts presumptively arise any time a person voluntarily transfers property to another unrelated person or purchases property in another person’s name (D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (4th ed. 2012), at p. 397).[9]
The court then immediately cited Kerr v. Baranow[10] for the following proposition:
[the category of trust] “…has been settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”.[11]
The remaining analysis largely relied on Pecore to examine the following:
(1) whether a purchase money resulting trust arose; and
(2) whether Nishi could rebut the presumption, how, and on what standard.
Pecore v Pecore, 2007 SCC 17, is the authoritative case examining voluntary (gratuitous) transfers, which thereby give rise to the presumption of resulting trust. Pecore has gone on to be the leading case, and it was heavily relied upon in Nishi v Rascal.
In this case, a bank account was transferred directly into the name of another person and was held in joint tenancy. The court began surveying the law as it pertains to donative transfers generally. The court found that the presumption of resulting trust stands as the general rule for gratuitous transfers, but this varies depending on relationship between the transferor and transferee.[12] For example, in cases of a parent gratuitously transferring property to a dependent child, there will be a presumption of advancement which stands.[13]
This still remains true and has been historically true in two circumstances: (1) where the transferor is a husband and the transferee is his wife[14] and (2) where the transferor is a father and the transferee is his child.[15]
The court reasoned that the latter category ought to be expanded to applying to mothers as well,[16] but should not be expanded to apply between parents and independent children for two reasons. Firstly, the principal justification for presumption of advancement is parental obligation to support dependent children.[17] Secondly, it is common for ageing parents to transfer assets in joint tenancy with adult children for assistance in managing assets.[18]
Rebutting the Presumption
The court then established the standard necessary to rebut the presumption, finding that the civil standard, a balance of probabilities, is applicable to rebut the presumptions.[19]
Insofar as what evidence may be considered in determining intent, the court found that where a gratuitous transfer is being challenged, the trial judge must begin the inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted.[20] Additionally, evidence subsequent to the transfer ought to be viewed with suspicion as 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.[21] Further, the court in Pecore finds that the relevant intention is the intention of the person who advanced the funds at the time of the contribution to the purchase price.[22]
Final Remarks
Resulting trusts continue to play a critical role in Canadian law by ensuring that property transferred without clear donative intent remains subject to equitable obligations. Whether arising from the historic purchase money or the presumption of resulting trust in gratuitous transfers, the doctrine remains firmly rooted in the principle that equity looks to intent and presumes bargains as opposed to gifts.
For further reading on resulting trusts, check out the following links:
—
[1] Mark R Gillen et al., The Law of Trusts: A Contextual Approach, 4th ed (Toronto: Emond Publishing, 2021), at pp 372. (“Gillen et al.,”)
[2] See Poirier v. Brulé, 1891 CanLII 23 (SCC), 20 SCR 97 & Schmidt v. Air Products Canada Ltd., 1994 CanLII 104 (SCC), [1994] 2 SCR 611.
[3] See Nishi v. Rascal Trucking Ltd., 2013 SCC 33 (CanLII), [2013] 2 SCR 438. (“Nishi v Rascal”)
[4] As seen in Pecore v. Pecore, 2007 SCC 17 (CanLII), [2007] 1 SCR 795. (“Pecore”)
[5] Gillen et al., at pp 374.
[6] Dyer v Dyer, (1788) 2 Cox Eq Cas 92, 30 ER 42. (“Dyer v Dyer”)
[7] Ibid. at 43.
[8] Nishi v Rascal, at para 20.
[9] Ibid. at para 21.
[10] Kerr v. Baranow, 2011 SCC at para 12.
[11] Nishi v Rascal, at para 21.
[12] Pecore, at para 27.
[13] Ibid. at para 36.
[14] As seen in Hyman v. Hyman, 1934 SCC at p 538.
[15] Pecore, at para 28.
[16] Ibid. at para 33.
[17] Ibid. at para 34.
[18] Ibid. para 36.
[19] Riordan v. Mellon, 2000 CanLII 5739 (ON CA), at para 13. Also indexed as Burns Estate v. Mellon
[20] Pecore, at para 44.
[21] Clemens v. Clemens Estate, Crown Trust Co. et al., 1956 CanLII 3 (SCC), [1956] SCR 286, at para 56.
[22] Pecore, at para. 59.
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