Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m M A R C H 2 0 1 6 39 he scenario of affluent older parents providing financial help to their adult children is increasingly common — and now, so are disputes over who gets what when those children divorce. The December Ontario Superior Court judgment in Barber v. Magee, by Justice Dale Fitzpatrick, highlights the issue and offers some practical advice on how to avoid the fallout of clash- ing expectations when marriages dissolve. In that case, parents had transferred signifi- cant sums to an adult child for the purchase and maintenance of a matrimonial home. Following separation, the husband claimed the sums were a loan owing to the hus- band's parents. Without these funds, there was no home equity to be shared between the divorcing spouses. Litigation followed. "This is happening all the time," notes Julie Hannaford, a family lawyer in Toronto who says the issue is coming up more often. "Adult children are increasingly reliant on their parents to get along," she observes. Such help, she says, is "going to become epi- demic [in the future]." And too often, she adds, parents whose children are married are taking the view that the financial boost is conditional on the marriage continuing. "This is a gift — as long as the marriage stays together" as Hannaford puts it. "But, of course, that's not what the law says." In Barber, the husband's parents had advanced more than $140,000 to their son, to assist the son and his wife, both of whom worked in the father's pub, in the purchase of a home. There was one child of the mar- riage, born two months after the home was purchased. Part of the funds were advanced on an ongoing basis, after the home was acquired, to help the couple meet the costs of both the mortgage and home maintenance. The home was placed in the husband's name alone, which the wife testi- fied she was not aware of until she brought her application for equalization. Following separation, the home was sold and all pro- ceeds were retained by the husband, who then transferred them to his father. At trial, the husband, who was self-rep- resented, claimed the funds were a loan and should be treated as a liability in the calcula- tion of net family property. Alternatively, he claimed his father retained a resulting trust in the funds. As Fitzpatrick noted: "the fundamental issue before me is whether the monies advanced by the Respondent's father were advanced as loans or gifts." That issue required the judge to review the law of resulting trust, which, as he noted, presumes bargains, not gifts. To rebut the presumption, the recipient must establish that a gift was intended by the transferor, not a loan. But showing inten- tion in the context of family litigation is seldom easy. In noting the factors to be considered, Fitzpatrick referred to a 2015 L E G A L R E P O RT \ FA M I LY L AW PETE RYAN 'A cautionary tale for inter-family advances' Recent decision offers practical advice on avoiding the fallout of clashing expectations when marriages dissolve. By Patricia Chisholm T

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