Applicable Case Law

Issue 1
McIntyre v Royal Trust Co., [1945] 3 DLR 71
An individual issued instructions to the respondent to sell certain shares and give the
earnings to the appellant. He died after the shares had been sold, but before the earnings had
been deposited. The appellant sued in order to receive the proceeds. Among her reasons for the
cause of action was the belief that the earnings had been an inter vivos exchange of gifts between
the deceased appellant and herself.
Dysart J articulated the test for inter vivos gifts in p. 12: Gifts are of two kinds inter
vivos and mortis causa. A gift inter vivos is a gratuitous transfer of property from the owner to
another, with the full intention on the part of both donor and donee that the thing shall not be
returned to the donor but shall be retained by the donee as his own: 15 Halsbury, 2nd ed., p. 693.
There are three modes, and three modes only, by which such gift can be made:
(1) By deed or instrument in writing;
(2) By delivery to the donee, in cases where the subject-matter of the gift admits of delivery; and
(3) By a declaration of trust in favour of the donee.
In all these modes a present transfer, or the equivalent of a transfer, is required.
Thus, because the transfer of proceeds did not satisfy these conditions, the appellants
cause of action did not succeed.
Kibsey Estate v Stutsky, [1990] MJ No 112.
The respondent borrowed a large sum of money from her now-deceased brother. She
verbally offered to repay him several times, but he accepted only a fraction of the owed amount
and otherwise verbally declined to accept any further payment from her. The appellants, the
brothers estate appeared before the Manitoba Court of Appeal. They argued that the sum of
money was a loan, not a gift, and that his sister must repay the total sum with interest.
After examining existing case law, Lyon JA held that when an inter vivos gift is in
dispute, the onus of proof falls upon the defendant. They must conclusively demonstrate that the
plaintiff intended to give them the gift. Moreover, the standard of proof demands that the

defendant show beyond a reasonable doubt that the plaintiffs intentions to give them the
contested gift were unambiguous. Thus, after applying these principles, the court held that clear
and repeated verbal refusal to accept repayment characterizes a transaction as a gift, not a loan.
Schroeder v Schroeder, 2001 MBQB 79.
The respondents mother provided him with a monetary advance for the purchase of
property. The sum was characterized as a loan to avoid the gift, with a promissory note indicating
the annual amount of repayment. This amount was never paid by the respondent, but his mother
never formally forgave the loan. When the respondent was divorcing the appellant, she argued
that the sum he received from his mother was a loan and therefore marital property. He countered
that the sum was, in fact, a gift.
Mykle J affirmed the reasoning presented by Carr J in Dashevsky v Dashevsky (1986), 40
Man. R. (2d) 58 (Man. Q.B.), where the court held that it would not permit a party to
characterize the same transfer of funds as both a gift and a loan, depending on their financial
convenience. The original character of the transfer would be preserved, along with its financial
advantages and disadvantages. Thus, the sum received by the defendant from his mother was
ruled a loan, and therefore marital property.
Application/Analysis
Two issues must be addressed during this appeal. The first is whether the learned trial
judge erred in her finding that the $12,000 mortgage payment was a gift.
The judge in McIntyre establishes a three-category test, one of which must be satisfied for
a valid inter vivos gift to be given. These terms apply in the case of Mr. Smith and Mrs. Stanley,
as both parties were and are living. The deed, mortgage, affidavit of payment, and Mr. Smiths
note, indicating that the payment of $2000 annually would be forgiven over the next six years,
constitute an instrument in writing and therefore satisfy the test.
In Kibsey, the court held that the burden of proof falls on the defendant, who must show
beyond a reasonable doubt that the plaintiff both gave and intended to give them the contested
gift. While Mrs. Stanley possesses the paperwork to prove that Mr. Smith agreed to waive the
payment of $12,000 over six years, his intentions are more challenging to prove. There is no

suggestion that he has completely forfeited his rights to seek repayment after the six year term is
over. Moreover, Mrs. Stanleys uncertain financial status at the time of the property conveyance
as well as the appellant and respondents long-standing relationship further complicates Mr.
Smiths intentions. He may have chosen to forgive the mortgage payment for six years to give
Mrs. Stanley time to improve her financial situation as a favour to her.
In Schroeder, the court held that the respondent was not permitted to characterize a
transfer of funds as both a gift and a loan, depending on what suited his financial interests. It
appears that Mrs. Stanley did something similar. She was willing to enter into a mortgage
agreement for the financial benefit of not having to pay gift taxes on the property. Thus, she
legally agreed not to characterize the property as a gift. Then, when Mr. Smith agreed with this
characterization and sought mortgage payment, she presented the view that the property was,
contrary to her prior opinion, a gift. This contradicts contemporary jurisprudence.