August 11, 2026
The Ontario Court of Appeal is not fooling around when it comes to common sense and evidence of a resulting trust.
A BIT OF BACKGROUND
The modern law of contract in Canada favours interpretations which are not absurd. In commercial law, this is often called reflecting commercial reality or a commercially reasonable result.
This approach is not limited to interpreting contracts. Courts apply in in other area, including Trusts law. Because trusts law is a subset of Equity, fairness is always the objective, and with that goal in mind, interpretation is flexible, fact oriented and grounded in common sense.
THE CASE
Singh v. Persaud demonstrates this principle.
In Singh:
- Singh had some money, but eventually qualified for Ontario Works government assistance.
- Persaud was her aunt.
- Persaud was a small-scale property investor and landlady.
- Singh’s common-law spouse had poor credit. They wished to purchase the home in question, and entered into the original agreement of purchase and sale, but were unable to qualify for a mortgage.
- As a result, Ms. Persaud was substituted as purchaser, and title was registered in her sole name.
- Singh lived in the home.
- Singh funded the downpayment and made monthly payments which covered the mortgage payments and carrying costs of the house.
- About a month after the purchase, Ms. Persaud signed an Acknowledgement of Trust and Statutory Declaration (affidavit) which recognized that Ms. Singh was the true or beneficial owner of the property.
- After a falling out between the parties, Ms. Singh applied for a vesting order transferring title into her name, and other remedies.
- Persaud defended, alleging that Ms. Singh was simply a tenant.The Acknowledgement was central to the finding that a trust existed, though the other evidence was certainly much more in favour of finding a resulting trust than in a case like Lalli v. Lalli, discussed in a previous article.
Because the Acknowledgement, if it applied, was basically fatal to Ms. Persaud’s position, her lawyer argued:
- That it was ineffective, based on an indemnity or “exculpatory” clause in the document;
- An alleged one-year term limit, and
- Because, they argued, it was illegal, because Ms. Singh had not disclosed her funds, or her interest in the home, to Ontario Works.
The trial judge had already rejected all these arguments, and the Court of Appeal agreed. The court said, with respect to the three issues;
- “the so-called exculpatory clause cannot be read as an agreement between the parties that the appellant could simply ignore the Acknowledgement of Trust and take beneficial ownership of the property for herself while barring any claim by the respondent. That would be an absurd result.”
- The alleged one-year term dealt with a reference to paying out the mortgage within one year. The idea that failure to pay out the mortgage within that year caused ownership to flow to Ms. Persaud was also considered absurd.
- In order for a contract to be void as illegal, the illegal objective must be proven. There was no evidence to support that the agreement was entered into with the object of illegality. It was intended to be a simple trust agreement.
In our opinion, the Court’s finding on illegality was a stretch, but the Court of Appeal was not about to interfere with the trial judge’s findings of fact. This is an example of equity favouring the party with the moral high ground.
It certainly leads to a result which makes common sense.
TAKEAWAYS
- Courts do not like absurd results.
- Courts continue to favour the party with the moral high ground.
- Each case is decided on its own evidence.
- Documents often outweigh the self-serving evidence of the parties.
- This case illustrates the benefits of a written document such as the Acknowledgement of Trust to protect the interests of the beneficial owner.
- This need for protection must still be balanced with other consideration, such as flexibility and confidentiality, as discussed in a recent article. You cannot take back a gift.
HOW WEILERS LLP CAN HELP YOU
We can be your trusted advisors on estate planning and real estate issues. We will work with you and your financial advisors to avoid unintended results.
If you find yourself in a lawsuit over property, the experienced litigation team at Weilers LLP may be the right lawyers for you.