This question surfaces quite regularly in the context of estate administration. Did the deceased advance funds to an individual with the intention that they be repaid, or was the advance a gift?
This very question is the subject of the recent, instructive ruling of Justice Brown in Colangelo v. Amore, 2010 ONSC 5657 (CanLII). In this action, Justice Brown was not dealing with an estate matter, but a series of transactions whereby the Plaintiff provided cheques and bank transfers totalling $16,000 to the Defendant, his erstwhile girlfriend. When they later broke up, the Plaintiff claimed repayment.
In determining whether the advances were gifts or loans, Brown J. considered the evidence before him, and the law relating to inter vivos gifts. Brown J. noted that where there is no element of indebtedness, and no presumption of advancement arises, once the transfer is proved, the burden falls on the recipient to show that the money is not repayable. The standard of proof is the general balance of probabilities applicable to all civil cases.
To show a gift, the recipient must establish:
i. an intention to donate;
ii. a sufficient act of delivery, and
iii. acceptance of the gift.
In the case before him, there was clear delivery and acceptance, and the issue became, as usual, whether there was sufficient evidence to prove intention to donate.
As to donative intent, the recipient must show that the donor intended to part with the property and did not intend to reserve the ultimate right of disposal. The evidence should be inconsistent with any other intention or purpose other than to divest himself of the property.
Intention may be inferred from the donor’s acts, and various extrinsic factors, such as the nature of the relationship, the size of the “gift”, and the importance of the “gift” in relation to the donor’s overall property.
In finding that the advances were loans and not gifts, Brown J. reviewed a number of relevant factors. He concluded by citing the words of Ritchie D.C.J. in Simmins v. Clarke (1983), 40 Nfld. & P.E.I.R. 446 (Nfld. Dist. Ct.): “Persons who obtain substantial sums of money from friends should be careful to ensure that if there is no intention to repay the money that this is evidenced satisfactorily so that there can be no doubt. Public policy demands that such casual passing of monies should be repayable unless there is satisfactory evidence to show that it was not intended by both parties to be repaid.”
Thank you for reading,
Paul E. Trudelle - Click here for more information on Paul Trudelle.
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