Teixeira v. Estate of Markgraf et al.
[Indexed as: Teixeira v. Markgraf Estate]
2017 ONCA 819
Court of Appeal for Ontario, Strathy C.J.O., van Rensburg and Trotter JJ.A.
October 26, 2017
Gifts — Inter vivos gifts — Delivery — Deceased giving applicant
cheque in mistaken belief that she had enough funds in her account to
cover it — Applicant unable to cash cheque and deceased dying before
becoming aware of shortfall — Gift by cheque not complete until cheque
is cashed or has cleared — Sufficient act of delivery not occurring —
Gift not valid — Estoppel by convention not applying as applicant did
not change his position in reliance on assumption that deceased had
sufficient funds in her account.
Shortly before her death, M decided to reward her neighbour, the applicant, for
his kindness to her. She wrote him a cheque for $100,000 and instructed her
stepson to deliver it to him. When the applicant went to M’s bank and presented
the cheque, the bank employee told him that they would have to investigate and
returned the cheque to him. The employee did not tell him that M had insufficient funds in her account to cover the cheque. M, who was unaware of the shortfall, died six days later. The bank froze her accounts. When the applicant tried to
deposit the cheque at his own bank, it was returned marked “funds frozen”.
The applicant sued M’s estate for the value of the cheque. The application judge
dismissed the claim, finding that there was no evidence of a contract between the
applicant and M, that M had intended to make a gift to the applicant, that
the applicant had accepted the gift and that the gift failed for lack of delivery.
The claim was dismissed. The applicant appealed.
Held, the appeal should be dismissed.
The cheque was not enforceable by virtue of the Bills of Exchange Act, R.S.C.
1985, c. B-4. As between the immediate parties, the failure or absence of consideration is a complete defence to an action on a bill of exchange. The application
judge’s findings of fact that there was no consideration or contract were determinative of the applicant’s arguments under the Bills of Exchange Act.
The application judge was correct in holding that the cheque was a gift inter
vivos. The necessary elements for a valid inter vivos gift are (1) an intention to
donate; (2) an acceptance; and (3) a sufficient act of delivery. The first two
elements were made out. However, a gift by cheque is not complete until the
cheque has been cashed or has cleared. Since M did not have sufficient funds
in her account, she could not deliver the gift. The gift was not perfected and
was not valid.
Estoppel by convention had no application in the circumstances of this case.
While everyone thought that M had the funds to satisfy the gift, the applicant did
not change his position in reliance on that assumption.
Bank Leu AG v. Gaming Lottery Corp.,  O.J. No. 3213, 231 D.L.R. (4th)
251, 175 O.A.C. 143, 37 B.L.R. (3d) 1, 124 A.C. W.S. (3d) 679 (C.A.); Bernard (Re),
 O.J. No. 792, 2 O. W.N. 716, 18 O. W.R. 525 (Div. Ct.); Campbell v. Fenwick,
 O.R. 692,  O.J. No. 285,  4 D.L.R. 787,  O.W.N. 576
(C.A.); Mordo v. Nitting,  B.C.J. No. 3081, 2006 BCSC 1761, 153 A.C.W.S.
(3d) 750; Swinburne (Re),  1 Ch. 38,  All E.R. Rep. 313 (C.A.);