Property Division, Sharing & The Matrimonial Home

Was Spouse’s $515K in Home Down Payments a Gift to the Other Spouse? 

Written by Russell Alexander ria@russellalexander.com / (905) 655-6335

Was Spouse’s $515K in Home Down Payments a Gift to the Other Spouse? 

Did a man intend to give over a half-million dollars to his spouse, towards the purchase-price of their jointly-owned home?

This was the question for the Ontario Court of Appeal recently, where the facts gave rise to a broader examination of how a gift-giving spouse’s intentions, at the time of the funds transfer, are the key to determining whether a valid gift exists in law.

The case involved a longtime same-sex couple, Alex and Ron.  Their relationship started in 1994, and ended in 2017.  They never formally married, and had no children. Alex worked throughout as a hospital staff psychologist, while Ron had been unemployed since 2010 and was on long-term disability benefits.

Alex was 54 and Ron was aged 57 when they split.  The main dispute between them pertained to proceeds of their jointly-owned $1.4 million home, which was the second one they had purchased together.

They bought the first one in 1999, funded partly with $100,000 from Alex’s mother, and another $5,000 provided by Alex directly.  Six years later, they bought a more expensive home, financed with a joint mortgage, a line of credit, and additional funds provided by Alex.  All told over the years, Alex had contributed about $515,000 toward the purchase of the two homes he shared with Ron.

When they later split, an issue arose about how to characterize Alex’s significant down payments. He claimed it was always his intent that he should be repaid this money if he and Ron split. He therefore asked the court to award him about $480,000 off-the-top of the home’s sale proceeds, as reimbursement for his initial contribution.  (He was content to split the rest equally with Ron.)

Ron countered by claiming this money was a gift. He pointed to various facts in support, such as the lack of loan documentation, and the fact they had put title to their homes in both of their names jointly.

The matter first went before a trial judge, who concluded the funds were a gift, and ordered that the net proceeds of the sale of this home should be equally divided.

Alex appealed, successfully.  The Court of Appeal took the opportunity to examine the law around gifts between spouses; this required Ron to satisfy three conditions to prove that Alex made a gift to him.  They were: (1) an intent by Alex, without consideration or expectation of remuneration; (2) an acceptance by Ron of Alex’s gift;  and (3) a sufficient act of delivery or transfer of the property to complete the transaction.

The facts also triggered the examination of the legal presumption of gifts between spouses.  As applied here, that presumption – which is rebuttable – dictates that if there has been a gratuitous transfer from Alex to Ron, then the legal onus falls on Ron to demonstrate, on the balance of probabilities, that a gift to him was intended by Alex so that they could purchase their homes.

In this case, it was this question of Alex’s intent that led the trial judge to go wrong.  In law, it was only Alex’s intentions at the time of the funds transfer that had to be scrutinized; Ron’s intentions were wholly irrelevant.  Yet the trial judge had not only considered Ron’s point of view, but had gone on to examine several factors that had nothing to do with Alex’s mindset around the down payments, such as: 1) how long he and Ron lived together; 2) who would be responsible for expenses connected to the ongoing operation of the home;  and 3) the fact that Ron’s Will did not refer to the fact that he had a duty to repay Alex.

None of this was pertinent, in the Appeal Court’s view.  Here, the only direct evidence of what Alex intended, was from Alex’s own evidence. He said he did expect to have the money provided by his mother returned to him if his relationship failed, and that he and Ron had discussion to this effect.

Also, the Court also found that the mere fact the couple put title to their homes in their joint names was not determinative; it merely reflected their desire to ensure that if one of them predeceased the other, the home would go to the surviving partner.  This was different from proving Alex intended to gift funds to Ron.

Finally, the Court rejected Ron’s assertion that the lack of loan documentation was key; stating:

Our courts are strewn with cases where people in a relationship wound up in litigation because they did not take a commercial approach to their domestic arrangements from the outset. This is just another of those cases. While it may be regrettable, it does not change the fact that it is a very frequent reality. Although the absence of contemporaneous documentation is a relevant consideration … the absence of such documentation by itself is not necessarily sufficient to conclude that a gift was intended. The most that the evidence establishes, even taken entirely from Ron’s point of view, is that the issue was simply not discussed – an understandable result in a domestic relationship. It is precisely in such situations, where the evidence is insufficient, that the presumption of a resulting trust “determine[s] the result”.

In the end, the Appeal Court found that Ron had not met the onus to displace the presumption of a resulting trust, i.e. there had been no gift.  It allowed the appeal, and after making some adjustments to the final figure on other grounds, found that Alex was entitled to be paid $480,000 with interest from the proceeds of the sale.

For the full text of the decision, see:

MacIntyre v. Winter, 2021 ONCA 516

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About the author

Russell Alexander

Russell Alexander is the Founder & Senior Partner of Russell Alexander Collaborative Family Lawyers.