Launchbury v. Launchbury: What happens when the matrimonial home is put in one spouse’s name to shield the property from creditors?

Prior to Launchbury, it was often thought that if a matrimonial home was put into one spouse's name for the purpose of shielding it from creditors, the non-titled spouse could not then come to the Court arguing that it was theirs in the context of family law.

According to the Ontario Court of Appeal in Launchbury, this is no longer the case.

Facts

In Launchbury, the wife was employed by a telephone company and the husband was a constable with the policy. The matrimonial home was purchased from funds in a joint bank account. However, the home was put into the wife's name alone in order to, among other reasons, shield it from potential creditors. The house was valued at $450,000 at the time of separation and the wife sold the home two years after separation for $586,000.

Issue

The husband claimed an interest in the value by way of resulting trust (i.e. he argued that the wife held one half of the matrimonial home for him).

Trial Decision

The trial judge found that because joint funds were used to purchase the home and the home was only placed in one of the parties' names, the presumption of resulting trust was applicable. Justice Van Melle found that the wife here did not rebut the presumption of resulting trust. Furthermore, no creditors were prejudiced in this case and the husband did not intend to gift his half of the home to the wife.

Appeal

The Court of Appeal found that in this type of situation the presumption of resulting trust comes into play. According to this presumption, the burden was on the wife to rebut the presumption and show that a gift was intended by the husband. Moreover, given the dangerous work done by the husband, there was a legitimate purpose in placing the home in the wife's name alone and no creditors were prejudiced in doing so.