The Ontario CA recently released an interesting decision in McNamee v McNamee
http://www.canlii.org/en/on/onca/doc/2011/2011onca533/2011onca533.html

In the context of the very Canadian “estate freeze” (in which a family business corporation is restructured so that future taxable capital gains accrue to the children), a father gave his son some valuable corporate shares. However, expressly aiming to keep their value out of the hands of anyone else, he retained prior dividend rights in his own shares (leaving him with the possibility of rendering the son’s shares valueless), and also stipulated as a condition of the gift that the shares should not fall into any community of property. Following some detailed examination of the requirements for a gift at common law, the court held that the transfer was indeed rightly characterized as a gift, which meant that it did not fall into family property (since gifts received during the relationship are always excluded from family property division in Ontario).

The former wife had sought a declaration of constructive trust over the shares based on unjust enrichment; the court ordered a new trial on this issue. In fact the Court held that this question comes logically prior to the exemption question, since the court has to determine beneficial interests in property before calculating equalization, and it is the equalization issue that raises the question of exempt property. At this point, the Court held that the condition imposed by the father could not affect this question of unjust enrichment, and indeed that the condition (which had been unnecessary to make the property exempt) was ‘of no force or effect’.

LDS

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