When Is a Family Money Transfer a Trust? The Ontario Court of Appeal Revisits Resulting Trusts in Lalli v. Lalli

By Judd Law Professional Corporation

Few fact patterns generate more litigation in Ontario than this one: parents advance money toward a home, the home is registered in an adult child’s name, and years later — often after a falling-out, a marriage breakdown, or a death — everyone disagrees about what the money was for.

Was it a gift? A loan? Repayment of a debt? Or did the parents intend to keep an

ownership stake all along?

In Lalli v. Lalli, 2026 ONCA 123, released in February, a divided Ontario Court of Appeal gave its most detailed treatment in years of the purchase money resulting trust — and,

importantly, of when the presumption of resulting trust actually matters. The decision has real consequences for anyone contributing to a family member’s property purchase, and for anyone litigating over one.

The Facts

Parents and their adult son set out together in 2006 to buy real estate — two investment

condominiums and a family residence on Farwell Crescent. The father advanced $55,000

toward the purchase of the Farwell home, but title was registered solely in the son’s name.

When the relationship soured, the parents claimed a 50% beneficial interest in the property under a resulting trust. The son’s answer was that the $55,000 wasn’t gratuitous at all: he said it discharged a debt his father owed him for unpaid wages, plus a loan. The trial judge accepted the debt-repayment theory and dismissed the parents’ claim.

Critically, the parents had also called their realtor — the only independent third-party

witness to the purchase. The realtor testified that the father’s plan from the outset was to

contribute a large down payment to a family home that the son would hold on title, with the parents retaining an ownership interest. The trial judge gave this evidence no weight on the question of the father’s intention, reasoning that the realtor had never dealt with the sonand knew nothing about the alleged debt.

What the Majority Held

The majority (Roberts and Miller JJ.A.) allowed the appeal, and its reasons contain two

points every estates and property litigator should note.

First, the presumption of resulting trust is a tiebreaker, not the starting point. The

majority emphasized that the presumption only does any work where the evidence of the

transferor’s intention is unpersuasive, neutral, truly equivocal, non-existent or

uninformative. Where there is actual, meaningful evidence of what the person advancing the funds intended at the time of the transaction, courts should decide the case on that

evidence — the presumption simply never needs to be engaged. This continues the trend, traceable through Pecore v. Pecore and the Court’s own earlier decisions, of courts

examining the whole evidentiary record rather than resolving these disputes on

presumptions.

Second, in a resulting trust analysis, only the transferor’s intention counts. This was

the trial judge’s fatal error. He effectively sidelined the realtor’s evidence because the

realtor could say nothing about the son’s understanding or the alleged debt. But the legal question was the father’s objective intention when he advanced the $55,000 — and on that question, the realtor was the sole impartial witness, and his evidence squarely supported the father. Disregarding it for a legally irrelevant reason was an error requiring the issue to be considered afresh.

Rather than ordering a new trial, the Court exercised its power under s. 134(1)(a) of the

Courts of Justice Act to decide the claim itself. The arithmetic helped: the son’s own

evidence put the alleged wage debt at $47,280, leaving more than $7,000 of the $55,000 unexplained once the trial judge had rejected the loan component — while $55,000 happened to equal exactly half of the down payment and closing costs. The Court declared the parents entitled to a 50% beneficial interest in the property.

The Dissent

Monahan J.A. would have dismissed the appeal, and his reasons are a forceful reminder that these cases usually rise or fall on credibility. In his view, the presumption of resulting trust applies only to gratuitous transfers. The trial judge found the $55,000 repaid a debt — meaning the father received consideration, no presumption was ever engaged, and the claim failed at the threshold. The realtor knew nothing about the debt question, so there was nothing wrong with giving his evidence little weight on it. Appellate courts, the dissent stressed, should not be re-weighing credibility findings that were the trial judge’s to make.

The majority-dissent split matters. The dissent frames the “was it gratuitous?” question as a threshold factual finding entitled to deference; the majority treats the mishandling of intention evidence as an extricable legal error. Expect that fault line to be argued in resulting trust appeals for years.

Practical Takeaways

For families, the lesson is the same one we give clients every week: document your

intentions at the time of the transfer. A short written acknowledgment — gift, loan, or

retained beneficial interest — signed when the money moves, would have avoided nearly

two decades of uncertainty and a trip to the Court of Appeal.

For litigators, Lalli offers three tools. Independent third-party evidence of the transferor’s

contemporaneous intention (a realtor, a lawyer, a banker) can be decisive, and it cannot be discounted merely because the witness knows nothing about the transferee’s side of the story. The presumption of resulting trust should be argued as a fallback, not the centrepiece — build the case on actual evidence of intention. And where the trial record permits, the Court of Appeal has shown it is prepared to substitute its own result under s. 134(1)(a) rather than remit for a new trial, particularly where the numbers themselves undermine the competing theory.

These principles reach well beyond parent-child home purchases. They apply wherever one person funds an asset held in another’s name — joint accounts, survivorship disputes, estate claims involving gratuitous transfers to adult children — territory the Supreme Court mapped in Pecore and that Lalli has now refined.

If you are contributing to a family member’s property purchase, or find yourself in a dispute over one, we would be pleased to assist.

This post is for general information only and is not legal advice. For advice on your specific circumstances, please contact our office.