Background

In Afatmirni v. Sharifi, the Ontario Superior Court of Justice conducted a focused trial of an issue arising from the breakdown of a short marriage with no children. The central dispute concerned whether a condominium property held in the wife’s name should be included in her Net Family Property (“NFP”) for the purposes of equalization, and if so, to what extent.

The parties’ relationship lasted approximately 30 to 31 months. They married in January 2021 and separated in the fall of 2022. Prior to the marriage, the husband purchased the matrimonial home in his sole name, while a separate mixed-use condominium in Richmond Hill was acquired years earlier and placed solely in the wife’s name.

Although the wife held legal title to the condominium, it was undisputed that her mother paid all of the deposits toward the purchase, totaling approximately $140,000. The wife later obtained a mortgage in her own name to complete the purchase. The condominium was sold in May 2022 before separation generating net proceeds of approximately $340,000, which were deposited into the wife’s account and immediately transferred to her mother, who used the funds to purchase a cottage.

The husband argued that the condominium was entirely the wife’s property and should be fully included in her NFP. The wife argued that she held the property entirely in trust for her mother under a purchase money resulting trust, such that it should be excluded altogether. The Court was asked to resolve this ownership issue before the parties proceeded to a Binding Judicial Dispute Resolution on the remaining financial matters.

The Law

A purchase money resulting trust arises where one party advances funds toward the purchase of property but does not take legal title. In such cases, equity presumes that the contributor intended to retain a beneficial interest proportionate to their contribution, unless the presumption is rebutted.

The Supreme Court of Canada has confirmed that:

• the presumption of resulting trust applies to transfers between parents and adult children;
• the presumption of advancement does not apply in such cases; and
• the Court’s task is to determine the actual intention of the transferor at the time the funds were advanced, assessed on the whole of the evidence.

Legal title is not determinative. Courts must consider contemporaneous documents, financial contributions, subsequent conduct, credibility, and objective indicia of ownership.

Analysis

Did Legal Title Decide Beneficial Ownership?

No. Although the wife was the sole registered owner and mortgagor, the Court reiterated that legal title is not determinative of beneficial ownership. Equity recognizes a distinction between legal and beneficial ownership, and the Court must look beyond title to determine the true ownership interest.

Who Bore the Onus in the Resulting Trust Analysis?

The husband bore the onus because he opposed the operation of the presumption of resulting trust. The wife’s position that her mother retained beneficial ownership was consistent with the presumption. However, the Court emphasized that both sides were required to adduce evidence, and the outcome would turn on the totality of the evidence rather than the presumption alone.

How Did the Court Assess Mother’s Contributions?

The Court placed significant weight on the undisputed fact that the wife’s mother paid all deposits toward the purchase price, totaling just under $140,000. These payments were made both before and after the agreement of purchase and sale was amended to place the property in the wife’s name.

The Court rejected the argument that these payments were not gratuitous or that the mother relinquished her interest when the contract was assigned. Instead, the Court found that the mother continued to contribute financially and remained exposed to contractual obligations, supporting the conclusion that she retained a beneficial interest.

Did the Wife’s Mortgage Payments Affect the Ownership Analysis?

Yes. The Court found that the wife paid the mortgage and carrying costs after closing. While such payments occurred after acquisition, the Court held that subsequent mortgage payments can be integrally connected to the acquisition of property and may properly be considered when determining proportional ownership.

Relying on appellate authority, the Court rejected the argument that only contributions made at the moment of purchase are relevant. Instead, the wife’s assumption of mortgage debt and ongoing payments were treated as contributions toward her own beneficial interest.

How Did Credibility and Missing Evidence Factor into the Decision?

The Court identified serious credibility issues in the evidence of both the wife and her mother, particularly concerning cash transactions, undocumented deposits, mortgage financing explanations, and tax reporting. However, credibility concerns alone did not justify rejecting the existence of a resulting trust.

Where documentary evidence was lacking, the Court relied on objective facts that were not disputed, including the deposits paid, the mortgage structure, and the flow of sale proceeds.

Did the Wife’s Tax Filings Determine Ownership?

No. Although the wife improperly reported the condominium as her principal residence and paid no capital gains tax on the sale, the Court held that tax treatment is relevant but not determinative. Improper tax reporting did not override the substantive ownership analysis, nor did it bar equitable relief under the “clean hands” doctrine.

What Was the Court’s Ultimate Finding on Ownership?

The Court rejected both extreme positions. It did not accept that the condominium was entirely the wife’s property, nor that it was held entirely in trust for her mother. Instead, the Court found that the mother was a 64% beneficial owner, reflecting her proportionate financial contributions, and that the wife owned the remaining 36%.

This allocation allowed the condominium to be partially included in the wife’s Net Family Property for equalization purposes.

Conclusion

Afatmirni v. Sharifi provides a detailed and practical illustration of how Ontario courts approach resulting trust claims involving parents and adult children in family law proceedings. The decision confirms that:

• legal title does not determine beneficial ownership;
• purchase money resulting trusts apply in family contexts;
• subsequent mortgage payments can affect proportional ownership; and
• courts will seek a fair, evidence-based allocation rather than adopting all-or-nothing positions.

For family law practitioners, the case highlights the importance of tracing financial contributions, producing documentary evidence, and carefully assessing credibility. For parties, it serves as a reminder that informal family arrangements particularly involving property can have significant legal consequences when relationships break down.