Ontario Resulting Trusts: Automatic Resulting Trusts, Presumption of Advancement, and Unjust Enrichment

1. What Is a Resulting Trust?

A resulting trust arises when the beneficial interest in property "results back" to the person who originally provided the purchase money or transferred the property, rather than vesting in the legal owner. The name comes from the Latin "resultare" — to spring back.

Resulting trusts are not imposed by the court as a remedy for wrongdoing — they arise from the presumed intentions of the parties at the time of the original transaction. This distinguishes them from constructive trusts, which are remedial.

2. Categories of Resulting Trusts

The traditional categorization, adopted by the Supreme Court of Canada inPecore v Pecore 2007 SCC 17, divides resulting trusts into two categories:

2.1 Automatic Resulting Trusts

Automatic resulting trusts arise by operation of law in situations including:

• Failed express trust: Where an express trust fails in whole or in part (for uncertainty of objects, illegality, or failure to complete), the property subject to the failed trust results back to the settlor (or their estate);
• Surplus of trust property: Where a trust fully achieves its purpose and a surplus remains, the surplus results back to the settlor;
• Incomplete disposal of beneficial interest: Where the settlor transfers legal title but does not completely exhaust the equitable interest.

2.2 Presumed Resulting Trusts

Presumed resulting trusts arise from the presumption that a gratuitous transfer of property is not intended as a gift — the transferee is presumed to hold on trust for the transferor. The presumption is rebuttable.

3. The Presumption of Resulting Trust

The foundation principle is: where a person gratuitously transfers property to another without consideration, equity presumes the transferee holds the property on trust for the transferor. This presumption shifts the burden to the transferee to prove that the transfer was intended as a gift.

The presumption applies to:

• Gratuitous transfers of real property;
• Gratuitous transfers of personal property with legal documentation (e.g., shares, bank accounts);
• Purchase money resulting trusts — where A pays the purchase price and title is taken in B's name.

4. The Presumption of Advancement: Pecore v Pecore

The presumption of advancement is the counterpart to the presumption of resulting trust. It arises where the relationship between the parties is one in which the law presumes a gift was intended:

• Parent to minor child: A parent who gratuitously transfers property to a minor child is presumed to have intended a gift (advancement). The presumption of resulting trust does not apply.
• Parent to adult child: The presumption of advancement historically applied to adult children as well, but weakens as the child becomes independent.

In Pecore v Pecore 2007 SCC 17, the Supreme Court of Canada held that the presumption of advancement from parent to child survives in Canada and applies to transfers to adult children — but it is rebuttable and its strength diminishes as the child achieves financial independence. The Court rejected the English approach (eliminating the presumption for adult children).

5. Resulting Trusts in the Family Law Context

5.1 Joint Bank Accounts

One of the most common resulting trust disputes in Ontario involves joint bank accounts created by parents for estate planning purposes. A parent adds an adult child as a joint account holder for convenience (to manage accounts in the event of incapacity), but on the parent's death, the child claims the joint account passes to them by survivorship as a gift.

Pecore v Pecore addressed this directly: where a gratuitous transfer into joint tenancy is made by a parent to an adult child, the presumption of advancement applies (though weakened). The child must rebut the presumption of resulting trust by demonstrating on a balance of probabilities that the parent intended to give the entire account to the child by survivorship. Courts examine: the parent's stated purposes, access and use of the account during the parent's lifetime, tax treatment, and evidence of the parent's testamentary intentions.

5.2 Common Law Partners and Unjust Enrichment

Common law spouses in Ontario do not have equalization rights under the Family Law Act (those rights are limited to married spouses). A common law partner who has contributed to the acquisition or improvement of the other's property may have a claim based on:

• Resulting trust: Where the common law partner directly contributed to the purchase price of property held in the other's name (purchase money resulting trust);
• Unjust enrichment and constructive trust: Where the partner's contributions (financial or domestic labour) enriched the other at the partner's expense with no juristic reason for the enrichment — Kerr v Baranow 2011 SCC 10.

6. Resulting Trust vs Constructive Trust

The distinction between resulting trusts and constructive trusts is significant:

7. Purchase Money Resulting Trusts

A purchase money resulting trust arises where A contributes to the purchase price of property that is registered in B's name (or jointly in A and B's name). A's proportional contribution to the purchase price creates a beneficial interest in A's favour — the resulting trust reflects the parties' presumed intention that beneficial ownership follows the money.

Key issues in purchase money resulting trust disputes:

• Whether A's payment was a loan, gift, or contribution to purchase (characterization);
• The proportion of A's contribution to the total purchase price (quantum of beneficial interest);
• Subsequent mortgage payments — Ontario courts have generally not extended the resulting trust proportional share to post-purchase mortgage payments (unlike contributions to the original purchase).

8. Limitations Act 2002

Claims based on resulting trust are subject to the general two-year limitation period under the Limitations Act, 2002, running from the date the claim was discovered. In the context of resulting trusts arising on death (e.g., joint account survivorship disputes), the limitation period typically begins running when the plaintiff has actual or constructive knowledge of the transfer and the circumstances giving rise to the trust claim — which may be upon or after the death of the original transferor.

The ultimate 15-year limitation period applies from the act or omission (typically the date of the original transfer).

Frequently Asked Questions

What is a resulting trust in Ontario?

A resulting trust arises when the beneficial interest in property "results back" to the original transferor. It arises from the presumed or actual common intention at the time of the original transaction — not from wrongdoing. The two main categories are automatic resulting trusts (failed trusts) and presumed resulting trusts (gratuitous transfers).

What is the presumption of resulting trust in Ontario?

When a person gratuitously transfers property to another without consideration, Ontario law presumes a resulting trust — the transferee holds on trust for the transferor. The transferee can rebut the presumption by showing a gift was intended.

What is the presumption of advancement in Ontario family law?

The presumption of advancement presumes a gift (not a resulting trust) in certain relationships. Following Pecore v Pecore 2007 SCC 17, the presumption applies to transfers from parent to child (minor or adult, though weakened for adults) and is rebuttable. Common law partner transfers are governed by resulting trust and unjust enrichment principles.

What is the difference between a resulting trust and a constructive trust in Ontario?

A resulting trust reflects presumed intentions at the time of transfer and returns beneficial ownership to the original transferor. A constructive trust is a court-imposed remedy for unjust enrichment (under Kerr v Baranow 2011 SCC 10 andPettkus v Becker [1980] 2 SCR 834) — it arises regardless of original intentions to reverse an unjust enrichment.