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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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