In a recent British Columbia decision, a mother attempted to reclaim property she had transferred to her children 33 years prior. The court, finding that she had only transferred the land to avoid creditors, rejected the mother’s claim.
Mother Transfers Property to Children
In 1984, the mother acquired a 160-acre farm located near Cranbrook, B.C.
In March 1986, the mother executed and transferred her fee simple interest in the property to her two children. The transfer documents named her son and daughter by their middle names, rather than by first names. The mother claimed that she transferred the property upon her lawyer’s legal advice to protect the land from “frivolous” claims and to ensure that it stayed in the control of the family.
In 1986, the mother faced a claim by a bank, which was later dismissed. In 1987, bankruptcy proceedings were commenced in respect of the mother. The property was not listed as an asset in the bankruptcy records.
Mother Tries to Reclaim Property from Children
In 2019, the mother applied to court for an order declaring that the property had been held in trust by her children for her absolutely. She sought the transfer of the property to her, as well as an accounting of rents, profits, dividends, interests, monies and income received by the children on her account in respect of the property. She also claimed that the children had been unjustly enriched as a result of her upkeep of the property since 1986.
In response, the children asserted that they owned the property as a result of the transfer in 1986. In support of their claim, the children stated that consideration had been paid for the transfer of the property, in which case the presumption of a resulting trust did not arise. They also submitted that the transfer had been a fraudulent conveyance in which case the mother was not entitled to the re-conveyance of the property. Finally, they argued that the mother had intended to transfer the beneficial interest in the property to make it inexigible to creditors.
Court Dismisses Mother’s Claim
At the outset, the court held that the children had not met the onus of proving that there had been consideration paid for the transfer. As such, they had not rebutted thepresumption of a resulting trust.
However, the court then explained:
“[E]ven where no consideration is paid for the transfer, a party who transfers land to avoid creditors may not reclaim it.”
Taking into consideration the evidence presented, the court therefore found:
“In this case, the facts clearly support that [the mother] transferred the property in 1986 to avoid claims…. In her original notice of civil claim she said she transferred it to avoid creditors. In her examination for discovery of May 22, 2019 she said that she transferred the property to avoid “frivolous claims” by possible creditors of her new business venture.
It is likely that the defendants were named by their middle names on the transfer form to avoid creditors knowing that she transferred the property to her children.
It is reasonable to assume that not owning the property was advantageous to her in the action against her by [the bank]. Though there are no documents regarding the action, I find that it is reasonable to infer that [the mother] defended the action by claiming that the defendants had paid consideration for the property and that [the bank] could not claim against it, as it was no longer hers…
The bankruptcy proceedings in 1987 do not refer to her owning property. That would interfere in her ability to declare bankruptcy and avoid creditors on that basis.”
Noting that the mother had been successful in protecting her property from creditors by transferring the property to her children, the court concluded:
“The result is that [the mother], who transferred the property to avoid her creditors, may not reclaim it 35 years later.”
The court also rejected the mother’s claim of unjust enrichment, finding she had not presented sufficient evidence to support it.
As a result, the court dismissed the mother’s claim.
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