In the decision of Teixeira v Estate of Maria Markgraf, released January 20, 2017, the Ontario Superior Court of Justice (“Court”) considered the validity of a gift of money that the donor did not actually have. The issue of the validity of a gift was raised when the payor, Maria Markgraf (“Markgraf”), made an inter vivos gift to the payee, Arlindo Teixeira, her long-time neighbour (“Teixeira”), in the form of a $100,000 cheque, despite having only $81,732 in her account.
The facts of the case were not in dispute: in appreciation for the kindness shown to her by Teixeira, Markgraf wrote a cheque for $100,000 payable to Teixeira and instructed a family member to deliver it. Even though Markgraf had other investments with her bank amounting to a total of greater than $100,000, the account on which the cheque was drawn had only $81,732, which caused the cheque to be returned to Teixeira. By then, Markgraf had passed away, so Teixeira brought an application against the estate to enforce the gift.
In considering the issue at hand, the Court looked at the necessary elements for a valid gift: i) donative intent; ii) acceptance; and iii) sufficient delivery. It found that Markgraf had “voluntarily intended” to make the $100,000 gift and, even though she may have been mistaken as to the funds available in her account, this was sufficient to meet the donative intent element of a valid gift. The second element of acceptance was also satisfied, as Teixeira had accepted the cheque and attempted to deposit it at his bank. With regard to the third element for a valid gift, the Court acknowledges that, while not a necessary part of a contract, delivery is a basic requisite of gifts. Moreover, the Court states that “there must be an efficient delivery of the gifted property or some accepted substitute. As a rule the gift must be literally given away.” As the Court found that this third element had not been satisfied in this case, it thereby rendered the gift invalid.
The Court stated that the delivery by cheque “is neither money nor representation of money, it is only a direction to the drawer’s bank” and, thus, the gift is not complete until the cheque has cleared. In this case, because Markgraf’s account did not have sufficient funds, the Court found that the delivery of the cheque was not complete. As a result, the gift was consequently not perfected and was unenforceable. Furthermore, the decision confirmed the equitable principle of estoppel was not applicable to the facts of this case.
While this case did not involve a charity, it does serve as a reminder to charities, as well as donors, that all three elements of a gift must be present in order for the gift to be valid. Even where clear donative intent and acceptance of the gift are present, a gift may fail where it cannot be properly delivered to the intended recipient.