Many of our blogs around estate and will disputes deal with people looking to benefit from an estate after being left out as benefactors. But what happens when someone is gifted money in the form of a cheque but fails to cash it before the person who provided the gift dies. This was an issue at the heart of a dispute recently heard by the Court of Appeal for Ontario.
A generous gift
The appellant was the neighbor of the deceased, and the two lived close by for close to 15 years. During this time the appellant acted in a neighbourly fashion and helped the deceased with a number of maintenance problems and chores around the house, including driving her to the bank or to get groceries.
Shortly before the deceased passed away, she told the appellant she planned to leave him $100,000 in her will. She also handed him a cheque for $100,000 and instructed him to take it to the bank the following day. The appellant followed these instructions, but the bank informed him that the account the cheque was drawn from did not have sufficient funds to cover the amount of the cheque (it had $81,732). While the deceased had other accounts totaling over $200,000, the bank could not move funds from one account to another unilaterally.
Unfortunately the deceased passed away just six days later. The appellant tried to deposit the cheque at his own bank, but the cheque was returned because the deceased’s accounts were frozen.
The estate does not want to pay
The deceased’s stepson was appointed as the trustee for the estate. While he initially told the appellant he would be given a new cheque for $100,000 as well as $100,000 from the estate, he later changed his mind and said he had received legal advice that the cheque was an “imperfect gift” and was unenforceable. The appellant sued for the amount of the cheque but was unsuccessful at trial.
At trial and appeal
While the appellant initially argued that the cheque was provided to him in exchange for services rendered, the trial judge interpreted things differently, finding he had helped his neighbor without the expectation of pay.
The trial judge then addressed whether the cheque was a gift, outlining the three essential elements that must be found to make such a determination. They are:
- The donor’s intention to make the gift
- The acceptance of the gift by the done
- The delivery of the gift to the done
The trial judge determined that the first two elements had clearly been meant. But there was some nuance with a cheque (as opposed to cash) in that the delivery could not have occurred because there was no actual transfer of funds, especially since the account did not have enough money in it to cover the cheque.
The court agreed with the trial judge, emphasizing the impiortance of satisfying the third element of gifts, writing, ““The delivery requirement in the law of gifts continues to serve several important functions. It forces a would-be donor to consider the consequences of their expressed intention to make a gift and it furnishes tangible proof that a gift has in fact been made.”
If you are considering filing an application to challenge a will, contact the estates lawyers at Derfel Estates Law before you proceed. We can help you determine whether you are eligible to bring such a claim, can help you understand your options and rights, and can represent you throughout the challenge process. Call us at 1-844-2-DERFEL or contact us online to schedule a consultation.