After a Boyfriend and Girlfriend Relationship Ends, How Does the Law Treat Any Money That Was Provided to One By the Other During the Relationship?

When a Couple Breaks Up After a Relationship Wherein Money or Other Valuable Thing Was Provided By One of the People to the Other, Legally the Money or Thing Will Be Viewed As a Loan Unless the Person Who Received the Money or Thing Proves the Donative Intent to Show That the Money or Thing Was Clearly a Gift.

Determining Whether Monies or Things Provided During a Relationship Were Gifts or Loans

Young Couple With Relationship Breakdown When dating people break up, a common legal problem that may arise involves disputes about money that was extended by one to the other during the period of the relationship whereas the person who extended the money will state that the money was merely a loan and the other person states the money was a gift.

The Law
What Is the Legal Difference Between Loans and Gifts

When money or a thing of value is extended from one person within a dating relationship to the other person, the law presumes that such was a loan rather than a gift. Of course, this is without saying that the final determination will be that what occurred was a loan; however, this initial legal presumption provides the starting point whereas once it is proven that one person in the relationship provided money or a thing of value to the other person, the loan presumption occurs and then the burden shifts to the person who received the money or thing of value to disprove that that such was a loan by proving instead that such was a gift.  This principle of presumption was loan and duty upon the recipient to prove otherwise was explained in Colangelo v. Amore, 2010 ONSC 5657, Pietro v. Lampe, 2014 CanLII 15441, and Greco v. Frano, 2015 ONSC 7217 wherein these cases in was respectively stated:

[59]  Halsbury’s Laws of Canada nicely summarizes the principles of law applicable to the issue of donative intent:

Donative Intent

To establish the requisite intention to donate, or animus donandi, it must be shown that the donor intended to part with the property and did not intend to reserve to himself or herself the ultimate right of disposal.  The evidence should be inconsistent with any other intention or purpose than that the donor intended to divest himself or herself of the possession of the property.  The intention of a donor may be inferred from an examination of that person’s acts along with various extrinsic factors, including the nature of the relationship between the parties to the transaction, the size of the gift as measured against the total of the donor’s property, and the importance of the gifted item in relation to the donor’s overall property.  There must be some evidence that a gift was intended other than a self-serving affidavit by the alleged donee.

Gift or loan

In considering whether a gift or a loan was intended, the court may look at the surrounding circumstances, as well as the evidence of the alleged donor.  If it is proven that the payment of money was made, the burden is on the recipient of the money to show that both parties knew and intended that the money not be repaid.  It is not sufficient that the recipient of the property assumed that a gift was being made: a donative intent must be clearly fastened upon the donor.[3]

The onus on the donee to prove a gift

[60]  The onus of proof to establish a valid gift rests on the donee.[4]  The cases reveal two schools of thought about the standard of proof a donee must meet in order to prove a gift.  In Johnstone v. Johnstone, a 1913 decision which is frequently quoted in current cases, the Court of Appeal stated that “the preponderance [of evidence] must be such as to leave no reasonable room for doubt as to the donor’s intention.[5]  More recently, however, in Burns v. Mellon[6] the Court of Appeal disapproved of the notion that some standard of proof approaching the criminal one should apply:

Admittedly, both Bayley and Johnstone have been followed in subsequent cases and neither has been expressly overruled by this court. In my view, however, a gift may be established under s. 13 [of the Ontario Evidence Act] and a presumption of resulting trust may be rebutted by proof on a balance of probabilities, recognizing that proof within the civil standard may vary depending on gravity of the issues. When a claim of gift is asserted against a deceased's estate, a trial judge is justified in carefully scrutinizing the cogency of the supporting evidence. A "healthy scepticism" may be appropriate. But it is the civil standard not the criminal standard that should be applied. The passage from Bayley relied on for applying the criminal standard has been taken out of context. Moreover, both principle and recent case law support the application of the civil standard.

[61]  In F.H. v. McDougall[7] the Supreme Court of Canada definitively settled the law about the standard of proof applicable in all civil cases:

…I think it is time to say, once and for all in Canada, that there is only one civil standard of proof at common law and that is proof on a balance of probabilities. Of course, context is all important and a judge should not be unmindful, where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences. However, these considerations do not change the standard of proof. I am of the respectful opinion that the alternatives I have listed above should be rejected for the reasons that follow.

In the result, I would reaffirm that in civil cases there is only one standard of proof and that is proof on a balance of probabilities. In all civil cases, the trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred.[8]

[62]  In light of the Supreme Court’s decision in F.H. v. McDougall, the standard of proof which the recipient of a thing must meet to establish that the transfer of the thing was an inter vivos gift is the general standard of proof on the balance of probabilities applicable to all civil cases.

57.  The Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 S.C.R. 269 discussed the remedies available to unmarried parties in domestic relationships who seek to address the property or financial consequences of a breakdown in the relationship.  The first mechanism, the doctrine of resulting trust, does not appear to be helpful on the facts of this case, and the plaintiff relies instead on the doctrine of unjust enrichment.

58.  I note that the parties here cohabited only briefly.  They can not be said to have been in a common-law relationship according to the law of Ontario.

59.  In any event, the requirements for a finding of unjust enrichment, whether in a family law context or not, are repeated in Kerr (at paragraph 32):

a.  The conferral of a benefit on the defendant;

b.  A corresponding deprivation to the plaintiff; and

c.  A lack of juristic reason for the enrichment.

60.  The Court in Kerr stressed that the analysis of the first two elements should be straightforward – and indeed, that process is quite simple on the facts of this case:  money was transferred to the defendant by the plaintiff, and the benefit and corresponding deprivation are easily established.

61.  The key question is whether there was a juristic reason for the conferral of the benefit.  It is in this analysis that the Supreme Court says that moral and policy questions should be considered.  (Kerr at paragraph 37)

62.  The Supreme Court in Kerr (paragraph 41) said:

Juristic reasons to deny recovery may be the intention to make a gift (referred to as a “donative intent”), a contract, or a disposition of law (Peter, at pp. 990-91; Garland, at para. 44; Rathwell, at p. 455). The latter category generally includes circumstances where the enrichment of the defendant at the plaintiff’s expense is required by law, such as where a valid statute denies recovery (P. D. Maddaugh and J. D. McCamus, The Law of Restitution (1990), at p. 46; Reference re Goods and Services Tax, 1992 CanLII 69 (SCC), [1992] 2 S.C.R. 445; Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737 (C.A.)). However, just as the Court has resisted a purely categorical approach to unjust enrichment claims, it has also refused to limit juristic reasons to a closed list.  This third stage of the unjust enrichment analysis provides for due consideration of the autonomy of the parties, including factors such as “the legitimate expectation of the parties, the right of parties to order their affairs by contract” (Peel, at p. 803).

63.  I have found that there was no contract.

64.  I do not find any legal obligation on the plaintiff to have provided the money to the defendant.  The real question is whether the transfer of money by the plaintiff to the defendant was a gift; if it was, that donative intent could support a finding of a juristic reason to deny recovery to the plaintiff.

65.  The evidence does not support a finding of a gift, or donative intent.  Even though Mr. Pietro might have been clearer in expressing his intentions to Ms. Lampe, I accept that he is not a person who would have given this sum of money away.  He intended the money to be a loan.

66.  If it could be said that the evidence of Mr. Pietro’s intention were unclear, I would still find that the defendant is obliged to repay the money to the plaintiff.

67.  In Pecore v. Pecore 2007 SCC 17 (CanLII), [2007] 1 S.C.R. 795 the Supreme Court confirmed the continued operation of the presumption of resulting trust in cases of gratuitous transfer (except for in certain relationships which are not present here).  Equity presumes a bargain.

68.  The onus of rebutting that presumption and showing that a gift was intended falls to Ms. Lampe, and on the evidence the presumption here was not rebutted.

69.  Accordingly I find that the money was a loan, and must be repaid.

[28]  Equity presumes bargains not gifts, see: Colangelo v. Amore, 2010 ONSC 5657, paras 59 - 62.  As a result, when as in this instance, money is advanced to the defendant, the onus is upon the defendant to rebut the presumption that this advance was a loan.  The burden is the general standard of proof on a balance of probabilities applicable to all civil cases, but it is a burden nonetheless that must be met by the defendant, Felice.  Mr. Greco does not have to prove the advance was a loan.  Felice has to prove the advance was a gift from Mr. Greco.  It is not enough for Felice to say that he intended to receive the $90,000 as a gift.  He must prove that both he and Mr. Greco knew and intended the $90,000 to be a gift rather than a loan.

As shown within the cases, where a person within an unmarried relationship or within a domestic relationship without common law status provides money or object or other thing of value, the law presumes that such was a loan and repayment will be required unless the recipient person is able to the balance of probability that there was a donative intention and thus a gifting occurred.

Summary Comment

After a couple within an unmarried relationship breaks up, a legal dispute over money provided during the relationship may occur. In such a situation, a presumption in law deems that the money, or other valuable thing, was intended as, and provided as, a loan and the requirement to prove that the money was other than a loan falls upon the recipient of the money.

Learn More About
Donative Intention

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