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TRUSTS - Resulting trusts - Rebuttal of presumption of trust

Wednesday, January 10, 2018 @ 8:35 AM  

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Appeal by MacKinnon from the dismissal of her claim to an interest in a property owned by her daughter and son-in-law, the Donauers. In 2005, MacKinnon paid $150,000 to the Donauers to assist in their purchase of a home with a basement suite, on the understanding that MacKinnon and her husband could live in the basement indefinitely, rent-free. MacKinnon also made periodic payments to the Donauers to defray house-related expenses. After nine years and the death of her husband, MacKinnon moved out of the home, amidst a family dispute. She demanded repayment of the funds she had contributed to the home. When such repayment was not forthcoming, she sued the Donauers for a 29 per cent interest commensurate with her contributions. She relied on the doctrine of resulting trust and alternatively, claimed the Donauers were unjustly enriched. The judge found that the parties did not intend MacKinnon to have a beneficial ownership interest in the home at the time she made her $150,000 payment, such that a resulting trust was not created. The judge refused to grant a remedy based on unjust enrichment because the parties were family members who did not intend that their arrangement, freely entered into on both sides, would have legal consequences. The judge did find that MacKinnon’s ongoing contributions to the home were over and above the parties’ arrangement and ordered the Donauers to repay her $28,500.

HELD: Appeal allowed in part. The judge was correct in refusing to grant MacKinnon a proprietary interest in the home based on a resulting trust, given that MacKinnon herself never intended that she would benefit from her contribution by way of an ownership interest in the home. The only benefit MacKinnon sought, which she did obtain, was rent-free living in the home. The judge erred in finding that the parties’ arrangement constituted a juristic reason for the Donauers to retain the entire benefit of MacKinnon’s funds, given that MacKinnon was denied the entire benefit, which was rent-free living for life. Evidence was required to determine the value of rent-free living for the remainder of MacKinnon’s estimated life span. The Court directed that if the parties were unable to determine or agree upon an appropropriate value within 60 days of the Court's order, either party would be at liberty to return to the Supreme Court of British Columbia, where an amount would be determined in accordance with the Court’s reasons.

MacKinnon v. Donauer, [2017] B.C.J. No. 2553, British Columbia Court of Appeal, M.V. Newbury, S.D. Frankel and J.E.D. Savage JJ.A., December 14, 2017. Digest No. TLD-January82018009