Lack of formal documentation was not fatal to claim of funds being advanced as loan, not as gift

Defendant was married to plaintiff’s daughter Z. Plaintiff alleged that she and defendant entered into verbal agreement whereby she would lend defendant $20,653.24 to pay taxes he owed. After separating from Z defendant refused to repay loan. Plaintiff brought action for payment. Action granted; defendant was ordered to pay plaintiff $20,653.24 plus pre-judgment interest. Defendant alleged that monies were subject to presumption of advancement as parties were related. Payment of tax balance for or on behalf of defendant by plaintiff was loan and was not considered a gift. Defendant failed to demonstrate that both parties knew and intended that money not be repaid. Plaintiff’s intention at time she advanced money to defendant was that she would be repaid. Plaintiff had maintained that position consistently, her evidence on point was uncontradicted and defendant did not rebut it. Advance was not between parent and child so there was no presumption of advancement. Funds were not given by plaintiff to her daughter Z but were paid directly to tax agency by plaintiff on defendant’s part. Z did not receive loan amount and did not receive any benefit from it. Presumption of advancement does not apply to related parties generally. There was no evidence that defendant was “dependent” or that he came within definition of “child” under any legislation. Mother-in-law relationship did not support argument of presumed gift. Plaintiff was not in loco parentis to defendant. Terms of loan were not specific but that was not necessarily variation from earlier financial commitments and repayments to plaintiff. Evidence was clear that loans were regularly made without documentation in family but there was frequent repayment and number of instances of loans under same terms. Defendant did not provide any evidence to contrary. Lack of formal documentation was not fatal to claim of funds being advanced as loan, not as gift.

Ridlov v. Shohat (2019), 2019 CarswellOnt 6814, A. Davis D.J. (Ont. S.C.J.).

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