It is a frequent occurrence in estate litigation that situations arise where the executor is unable to act, or there is no executor or administrator at all, and the validity of the will or the estate is very much in question.
In such circumstances it is absolutely necessary that it administrator be appointed to essentially preserve the assets of the estate, ”pending the litigation”, or in Latin, pendante lite.
The parties typically agree on a neutral person to be appointed as administrator pendante lite and a court application is made to chambers for such an order.
Such administrator has all the rights and powers of a general administrator, other than the right to distribute the estate assets.
He or she is very much subject to the control of the court, and acts under its direction, and the authority of section 8 of the Estate Administration act.
The purpose of this appointment is to provide interim administration of the estate until the action as being concluded, and basically nothing else.
Once the action has been concluded, this grant will cease, either upon the will been proved and probate granted, or upon the will being set aside and letters of administration granted in its place.
Courts frequently ask that administrators pendante lite be bonded, or that some other restriction be ordered such as real property not be sold or mortgaged without further order of the court.
A creditor or any person beneficially interested in the estate me apply for the appointment of an administrator pendante lite. Generally the court will not appoint a party to the litigation as administrator vessel the creditors and persons would agree to do so, but there is no absolute rule to this effect, it is just generally a conflict.
The court application is brought in these same litigation that is challenging the estate, and usually has an affidavit of the proposed administrator setting out the assets, the litigation, and the proposal.
‘Equity is a roguish thing: for law we have a measure, know what to trust to; equity is according to the conscience of him that is Chancellor, and as that is larger or narrower, so is equity. ‘Tis all one as if they should make the standard for the measure we call a foot, a Chancellor’s foot; what an uncertain measure would this be? One Chancellor has a long foot, another a short foot, a third an indifferent foot: ’tis the same thing in a Chancellor’s conscience.’
-17th cent. J Selden, Table Talk, quoted in M B Evans and RI Jack (eds), Sources of English Legal and Constitutional History, Butterworths, Sydney, 1984,223-224
Kellogg v Kellogg estate 2013 BCSC 946 involves a situation that is very common in estate litigation-a self represented plaintiff alleging serious allegations such as fraud or undue influence, lack of capacity and so forth,when in fact all of the allegations are groundless, and amounts to an abuse of process..
In the Kellogg case one of the testator’s three children applied for probate of the testator’s will, and was opposed by one of the other children, the plaintiff, alleged that the will was procured by fraud and undue influence.
The court pronounced the will in solemn form.
The plaintiff then appealed that order and commenced an action alleging that the defendant was not entitled to act as executor, and that he had obtained the grant of probate an appointment as executor through misrepresentation and fraud on the court.
On the defendant’s application to strike out the claim is disclosing no reasonable cause of action, the court also found that the plaintiffs action was an abuse of process, that included baseless allegations of fraud, and accordingly awarded special costs of $3500 against the plaintiff.
‘abuse of process is a flexible doctrine that allows the Court to prevent a claim from proceeding where it violates such principles as “judicial economy, consistency, finality and the integrity of the administration of justice”.
Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 at para. 37.
(g) categories of abuse of process include those that “involve a deception on the court or constitute a mere sham; where the process of the court is not being fairly or honestly used, or is employed for some ulterior or improper purpose; proceedings which are without foundation or serve no useful purpose and multiple or successive pleadings which cause or are likely to cause vexation or oppression.”
Babavic v. Babowech, [1993] B.C.J. No. 1802 at para. 18 (S.C.).”
Re Newton estate 2013 BCSC 799, involves a court application between two competing trustees to be appointed the third majority vote trustee of the family trust. When only two remaining trustees were unable to agree on a replacement. One of the trustees applied to appoint a well-qualified person for the trust position that was opposed by the other party on the basis that he was too friendly with the other trustee.
The dissenting trustee instead asks the court to appoint a Judicial Trustee, but the court refused and appointed the friend of the family who was better qualified.
The trust document require that there be three trustees but did not delineate that any one of them should be an independent, institutional or corporate trustee.
The instrument further was broad in its scope and who should be appointed as trustee, and a principle of law was that the wishes of the trust beneficiaries had to be held above other interests. Neither beneficiary objected to the appointment of the applicant, and in fact they promoted. The other concern that the court has in these situations is that the appointment should promote as opposed to impede the execution of the trust.
Appointment of a Trustee
[49] Pursuant to s. 31 of the Trustee Act, R.S.B.C. 1996, c. 464 (Ac)], the court may appoint a new trustee:
If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.
[50] The principles that guide the court’s discretion in appointing a new trustee were set out in the English Court of Appeal decision In Re Tempest, (1866) 1 Ch. App. 485 (Tempest) at 487 – 488:
[1.] … the Court will have regard to the wishes of the persons by whom the trust has been created, if expressed in the instrument creating the trust, or clearly to be collected from it. [2.] … the Court will not appoint a person to be trustee with a view to the interest of some of the persons interested under the trust, in opposition either to the wishes of the testator or to the interests of others of the cestuis que trusts. [3.] … the Court in appointing a trustee will have regard to the question, whether his appointment will promote or impede the execution of the trust, for the very purpose of the appointment is that the trust may be better carried into execution.
Appointment of a Judicial Trustee
[51] The Act also provides that the court has a discretionary power to appoint a judicial trustee:
97 (1) If an application is made to the court by or on behalf of the person creating or intending to create a trust, or by or on behalf of a trustee or beneficiary, the court may, in its discretion, appoint a judicial trustee to be a trustee of that trust, either jointly with any other person or as sole trustee, and, if sufficient cause is shown, in place of all existing trustees.
[52] The appointment of a judicial trustee was considered in Wright v. Canada Trust Company (1984), 55 B.C.L.R. 349 (S.C.) at 358 (Wright). The court discussed the function of a judicial trustee and the circumstances where an appointment will be warranted:
Judicial trustees are trustees appointed by the court in those circumstances where the court, on application of the settlor, intending settlor, trustees and beneficiaries, considers that such a person should be appointed. Persons not coming within one of the categories have no status or right to apply under this section. His duties will be determined by the court, and he will either act with the existing trustees or be authorized to act alone, or be required to act in place of the existing trustees. …
In Alexander v. Royal Trust Co., [1949] 1 W.W.R. 867, [1949] 2 D.L.R. 824, the Alberta Supreme Court [Appellate Division] considered s. 58 of the Trustee Act, R.S.A. 1942,c. 215, which is similar to s. [97] of our Trustee Act. The court said a judicial trustee should only be appointed for special reasons and where the circumstances warrant, e.g., where an administration of property by a trustee has broken down, or where the administration is being unduly prolonged and the court does not consider it proper itself to undertake the administration (followed in O’Kelly v. Canada Permanent Trust Co., [1972] 1 W.W.R. 41 (Sask. C.A.), and Re Burr (1968), 1 D.L.R. (3d) 78, (B.C.S.C.)
[53] In view of these reasons, the appointment of a judicial trustee will only be justified on the basis of “special reasons” where the circumstances warrant it.
The term “legal disability” is only defined in the BC Rules of Court, and not in any other statute in this province. Rule 20-2(2) of the BC Rules of Court provides that “a proceeding brought by or against a person under legal disability must be started or defended by his or her litigation guardian.”
According to Rule 20-2(8)(a), persons under legal disability are infants or “mentally incompetent” persons.
The phrase “mentally incompetent person” is defined in the Interpretation Act, R.S.B.C. 1996, c. 238, s.29, to mean “a person with a mental disorder as defined by s. 1 in the Mental Health Act”.
The following definition appears in the Mental Health Act:
“person with a mental disorder” means a person who has a disorder of the mind that requires treatment and seriously impairs the person’s ability to react appropriately to the person’s environment, or to associate with others.
In Holland v. Marshall, 2009 BCCA 311 at paras. 29 and 37, Neilson J. A. held that the “environment” referred to in the definition of mental disorder contemplates the larger community of which the person was a part, and not just the environment of the court system and process. It was not enough that the plaintiff in that case had ADHD and memory problems because his mental disorder did not impair his ability to react appropriately to his environment or to associate with others. As such, he was not found to be legally disabled.
While the definition of “mentally incompetent” seems clear, the term “legal disability” has also been determined by the courts to mean something less stringent. In Pavlick v. Hunt, 2005 BCSC 285 at para. 20, for example, the court applied the definition of “a person under disability” found in Kirby v. Leather, [1965] 2 All E.R. 441 (Eng. C.A.), in which it was held by Lord Denning that the issue of whether or not a person was under a legal disability required a determination of: “whether or not the person had the capacity to exercise judgment in relation to the claims in issue in this lawsuit and possible settlement, as a reasonable person would be expected to do.”
– See more at: http://www.disinherited.com/blog/being-under-legal-disability-bc#sthash.Mq8vIT2D.dpuf
In Anderson v Anderson 2010 BCSC 911, the deceased prior to his death transferred his interest in a cottage to his second wife for one dollar and other good and valuable consideration.
The plaintiffs were the deceased’s children from his first marriage. For several years following the deceased’s death, the plaintiffs and their families continue to enjoy access to the recreational property.
The defendants second wife however plan to sell the cottage, and the plaintiffs commenced court action for a declaration that the defendant held the property in trust for the plaintiffs, or for relief based on the equitable doctrines of promissory estoppel or proprietary estoppel.
The action was dismissed as the court found that the deceased intended to make a gift of the cottage to his spouse, and that she did not hold the property on any conditions of trust.
disinherited.com has previously blogged on the issue of proprietary estoppel, but not promissory estoppel.
The following is a good excerpt of the law on promissory estoppel:
Promissory Estoppel
198 As a final point, I address the plaintiff’s claim based on promissory estoppel. Although some other jurisdictions have relaxed the restriction, the law in Canada is that promissory estoppel can operate only as a shield and not as a sword. In other words, promissory estoppel cannot create a new cause of action where none existed before: Romfo v. 1216393 Ontario Inc., 2007 BCSC 1375(B.C. S.C.); and Halsbury’s Laws of Canada, 1st ed., vol. Contracts (Markham, Ont.: LexisNexis, 2008) at 233.
199 In view of my findings that the plaintiffs have not established any actionable claim against the defendant, the plaintiffs’ claim must fail.
200 Moreover the Supreme Court of Canada in Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50(S.C.C.) at 57 stated that a party who wishes to invoke the doctrine of promissory estoppel must establish:
1) That the other party by words or conduct made a promise that was intended to affect the parties’ legal relationship; and
2) That, in reliance on the promise, the party has acted or in some way changed his or her position.
201 The promise must have been unambiguous and precise; it must have been intended to have a “binding effect”: M. (N.) v. A. (A.T.), 2003 BCCA 297(B.C. C.A.) at para. 19.
disinherited.com obtained a presumption of death order for a missing person, after a police investigation concluded it was clearly a suicide by jumping from a bridge. Her body had not been found for several months and without giving away the details of her circumstances, there was no other conclusion to reach but that she jumped from a bridge and has never been found.
The problem in these types of cases is that at common law, a person had to wait 7 years to obtain such an order unless there was clear evidence for a court to decide to shorten that period of time and make a presumption of death order. In recent years it has become known that several people have faked their own deaths for a myriad of reasons and then surfaced many years later still alive.
The decision of is such – did the missing person disappear because he was a gangster and learned he had a hit on his life, or was he hit and now sleeping with the fish. In Cyr the Judge could not decide which it was and stated that the onus of proof on the balance of probabilities to prove the person is likely dead. Cyr’s application was opposed by an insurance company that refused to pay out on a life insurance policy. My application will not be opposed.
The issue is whether there is sufficient admissible evidence to make the declaration sought by Ms. Byrne. Her alternative, if Cyr is, in fact, dead, is to wait seven years from late October 2003, the date at which Cyr is last known to have been alive. This is because the common law presumes death if a person is not heard of or from for seven years.
[3] Section 3(1) of the Act provides:
3 (1) If, on the application of an interested person under the Rules of Court, the court is satisfied that
(a) a person has been absent and not heard of or from by the applicant, or to the knowledge of the applicant by any other person, since a day named,
(b) the applicant has no reason to believe that the person is living, and
(c) reasonable grounds exist for supposing that the person is dead,
the court may make an order declaring that the person is presumed to be dead for all purposes, or for those purposes only as are specified in the order.
The wording of subsection (c) suggests that the evidence need not establish death on a balance of probabilities but the case law to date in this province seems to import such a requirement. If there were not earlier decisions on the point, including the one discussed immediately below, I would not apply what I perceive to be a higher test than the Legislature intended.
[4] In Re Burgess, 2004 BCSC 62, the missing person had not been seen in the 22 months preceding the hearing. He was a family man who was greatly missed by his two children. The missing person had a historical association with the Hells Angels Motorcycle Club. Based on confidential information received, the police informed the wife of the missing person that the Hells Angels had killed her husband. The court accepted that evidence under the principled exception to the hearsay rule and concluded that the “dark side” of the missing person’s life had “caught up with him and the only reasonable inference is that his life has been ended by ‘person unknown'”. The court concluded on a balance of probabilities that the missing person died by misadventure.
[5] It appears that counsel invited the court to apply the test for proof of death law set out in the Saskatchewan Court of Appeal decision in Re Noga and Prudential Insurance Co. of America (1971), 20 D.L.R. (3d) 331, and the British Columbia Court of Appeal decision inMartin v. Prudential Insurance Company of America, [1954] 1 D.L.R. 762. Both those decisions were concerned with the proof of death required under the applicable provincial insurance legislation and not with survivorship and presumption of death legislation.
[6] In Noga, ss. 170 and 171 ofthe Saskatchewan Insurance Act, R.S.S. 1965, c. 143, permitted the court to make an order declaring that the evidence of death furnished to the insurance company was sufficient to establish the death of the insured. In Martin, the court addressed s. 128 of the Insurance Act, R.S.B.C. 1948, c. 164, which is described in the judgment as raising the sole question of “whether or not the husband of the respondent was dead”. Both cases address the effect of evidence of conflicting probabilities such that “the scales are left in equilibrium” (Noga at 334; Martin at 763) as between the presumption of continuing life and the presumption of death. In Noga, the court concluded that any choice between conflicting inferences of equal degrees of probability is conjecture and inadequate. Instead, there must be evidence to render one probability more reasonable than the other. The court applied that aspect of the test in Martin. If the authorities went no further, it might still have been open to me to apply a lesser test, more consonant in my view, with the wording of the Act in issue here.
[7] It is not open to me to do so. In Re Schmit, 12 B.C.L.R. (2d) 186 (C.A.), the Court of Appeal considered s. 3 of the Act and held, albeit without any discussion, that the applicant was required “to show on the balance of probabilities that the death took place as she alleges” (at 189). I am bound by Re Schmit. I conclude that I must proceed on the basis that Ms. Byrne is required to prove, on a balance of probabilities, the death of Cyr as she alleges.
[8] While there is a reasonable basis for believing that Cyr is dead, there is also some basis for concluding that he has chosen to disappear. I am unable to find on a balance of probabilities that he is dead.
[9] Cyr and Ms. Byrne have a young son. There is strong evidence that Cyr had a very close relationship with his son. It is clear that Cyr moved to Victoria to be near his son and that he took full advantage of his access to the child. I am satisfied that the relationship was a close and loving one. Ms. Byrne invites me to infer from that evidence that Cyr would have been in contact with his son if he were still alive but I do not agree that is the only available inference. If Cyr decided to disappear for the possible reasons set out later, he would be very careful not to contact Ms. Byrne or his son.
[10] At the time of his disappearance, Cyr owned a house in Victoria worth about $1.5 million. Since his disappearance, Cyr has not attempted to sell this property or use it to generate revenue or borrowings. It seems unreasonable that someone who is alive would disappear and leave such a valuable commodity behind. On the other hand, Cyr was a sophisticated businessman who was familiar with off shore corporations. It is likely that he earned money through the illegal drug trade and had sizable hidden assets. He may have had the financial ability to disappear independently of the property in Victoria.
[11] There is evidence that Cyr, as a youth, sold drugs and associated with the Hells Angels. In October 2003, he told his ex-wife that he had to go to Vancouver. The Vancouver police have since informed Ms. Byrne that Cyr was “taken out” by underworld connections and “suffered at hands of associates”.
Sabey v von Hopffgarten Estate 2013 BCSC 64 NB- OVERTURNED ON APPEAL) is an excellent example of a plaintiff receiving his just claim through the equitable principles of proprietary estoppel.
The plaintiff worked on the deceased’s horse farm for many years, being assured that the farm would be his one day when the couple died. Their wills in fact did leave the farm to the defendant, although the testators had executed subsequent odicils leaving the farm to the plaintiff, the codicils were invalid for lack of proper witnesses. The court held for the plaintiff and applied the broad approach endorsed by the court of appeal. The plaintiff also succeeded on proprietary estoppel as he developed a gradual understanding that he was to be given the farm after their deaths, largely based on his credible evidence that they said this to him any times over the years.The plaintiff relied upon those assurances , and organized his time and work on the assumption that it was to be his. It was not incumbent on the plaintiff to show an economic loss, as his reliance and detriment are often one and the same. Equity demanded that the plaintiff be granted the farm.
PROPRIETARY ESTOPPEL
[41] The plaintiffs primary claim is based on proprietary estoppel.
A. Principles of proprietary estoppel
[42] The Court of Appeal has endorsed the broad approach to proprietary estoppel that had been previously adopted by the courts in England. (This is opposed to the older English approach of looking at a five-part test set out by Fry J. in Willmott v. Barber (1880), 15 Ch. D. 96.) In Sykes v. Rosebery Parklands Development Society, 2011 BCCA 15 at paras. 44-46, the Court of Appeal cited with approval the following statement from Halsbury’s Laws of England, 4th ed. vol. 16 (London: Butterworths, 1992) at para. 1072:
The real test is said to be whether upon the facts of the particular case the situation has become such that it would be dishonest or unconscionable for the plaintiff, or the person having the right sought to be enforced, to continue to seek to enforce it.
[43] The broad approach is not without some rigour. As noted by Mummery LJ, in Scottish & Newcastle Pic. v. Lancashire Mortgage Corporation Ltd., [2007] EWCA Civ 684 at para. 23:
… It is not enough for [the plaintiff] simply to assert to the court, as if it were sitting under a palm tree on a legal and evidential desert island, that it would be unfair for [the defendant] to rely on their statutory right to priority.
Therefore the courts have normally looked to three main elements as a foundation for a proprietary estoppel claim: a representation made to the claimant; reasonable reliance on the representation; and a detriment to the claimant flowing from the reliance.
Thorner v. Major, [2009] UKHL 18 per Lord Walker at para. 29 Suggitt v. Suggitt, [2012] EWCA Civ 1140 at para. 19
[44] At para. 47 of Sykes, Finch C.J. said this of detrimental reliance:
While detrimental reliance is sometimes identified as a necessary element, it is perhaps better to consider it as part of the question of unconscionability. In the absence of detrimental reliance it would rarely, if ever, be unconscionable to insist on strict legal rights: see Harpum, Bridge and Dixon, Megarry & Wade: The Law of Real Property, 7th ed. (London: Sweet & Maxwell, 2008) at 711.
[45] In Suggitt, the English Court of Appeal recognised that reliance and detriment often overlap:
He [the trial judge] was satisfied that there was both reliance and detriment and he dealt with both of those matters separately. They are clearly connected matters; reliance is what a person does on the faith of some matter and detriment is usually the result: they are very closely connected. Clearly, the same factual matters may show both reliance and detriment. That is why Walker LJ held in Gillett v Holt at 225 that the concepts were “often intertwined”, (at para. 35)
[46] A central issue in this case is the nature or quality of the assurances. This was also a major issue in Thornerv. Major, which dealt, in part, with the issue of whether the assurances have to be unequivocal and certain. In that case, the trial court found that over the course of 30 years, the plaintiff did substantial work on a relative’s farm without pay because the relative encouraged the plaintiff to believe that he would inherit the farm. There was no express promise, but the Law Lords found that was not necessary in order for the plaintiff to succeed. As stated by Lord Rodger at paras. 24 to 26:
Given the actual situation, there was never going to be what Mr Simmonds described as a “signature event”, such as a family wedding or christening, at which Peter would make a dramatic announcement, in front of the assembled family, about the destination of his estate. Indeed, since Peter was in the habit of saying so little, it was scarcely to be expected that he would ever address the matter directly. But the judge found – and the Court of Appeal accepted – that, by his oblique remarks on a number of occasions, Peter had intended to indicate to David that he was to inherit Steart Farm. David interpreted Peter’s remarks in the way that he intended.
The contention for the respondents was that, even though David had correctly interpreted Peter’s remarks as assurances about inheriting the farm, his remarks were not “clear and unequivocal”. There was therefore no way of saying that they were intended to be relied on and they could accordingly not give rise to an estoppel. I would reject that contention.
Even though clear and unequivocal statements played little or no part in communications between the two men, they were well able to understand one another. So, however clear and unequivocal his intention to assure David that he was to have the farm after his death, Peter was always likely to have expressed it in oblique language. Against that background, respectfully adopting Lord Walker’s formulation, I would hold that it is sufficient if what Peter said was “clear enough”. To whom? Perhaps not to an outsider. What matters, however, is that what Peter said should have been clear enough for David, whom he was addressing and who had years of experience in interpreting what he said and did,
[Emphasis added]
[47] Lord Hoffman said, at para. 8, that it would be unrealistic to try to pinpoint an exact date at which an assurance became unequivocal. Lord Walker, with whom all the other Law Lords concurred, said at para. 56:
/ would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context. I respectfully concur in the way Hoffmann LJ put it in Walton v Walton (in which the mother’s “stock phrase” to her son, who had worked for low wages on her farm since he left school at fifteen, was “You can’t have more money and a farm one day”). Hoffmann LJ stated at para 16:
‘The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made.”
[48] On a somewhat related note, proprietary estoppel is retrospective in two senses. First, past events can inform subsequent events, and vice versa. Lord Hoffman said, at para. 8:
Past events provide context and background for the interpretation of subsequent events and subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk. The finding was that David reasonably relied upon the assurance from 1990, even if it required later events to confirm that it was reasonable for him to have done so.
[49] Second, it looks back in time to assess the equities of the situation. As stated by Lord Neuberger at para. 101:
As Hoffmann LJ memorably said in Walton v Walton (unreported, 14 April 1994), para 21, “equitable estoppel [by contrast with contract]… does not look forward into the future [; it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept”.
[50] The House of Lords in Thomer v. Major noted that what the representor actually intended was irrelevant. The issue is what the representations would reasonably convey to the plaintiff. Further, it is unnecessary for the representor to know that the plaintiff was thinking about alternate courses of action when the assurances were given.
Buccilli v Pillitteri 2012 ONSC 6624, is a misrepresentation case.
It involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business. After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium. Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including MISREPRESENTATION. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice and was misrepresentented to neter into the contract.. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.Patricia also asks that the Transfer Agreement be set aside on the basis that it was induced by a misrepresentation. An agreement induced by a misrepresentation can be set aside if the representation was as to a material fact and reasonably relied on. This applies to a representation whether innocent, negligent or fraudulent. See Waddams at paras. 419-421.
It is necessary for a plaintiff to establish that the misrepresentation was a material inducement upon which the plaintiff relied. It is not necessary for a plaintiff to establish that the misrepresentation was the sole inducement for acting and it matters not if the misrepresentation was only one of several factors contributing to the plaintiffs decision. See Sidhu Estate v. Bains (1996).25B.C.L.R.(3d)41 (B.C. C.A.) at paras 35-36; Kripps v. Touche Ross & Co. (1997). 89 B.C.A.C. 288 (B.C. C.A.) at paras. 102-103; NBD Bank, Canada v. Dofasco Inc. (1999). 46 O.R. (3d) 514 (Ont. C.A.) at para 81.
175 In Sidhu Estate, supra, Finch J. A. (as he then was) quoted with approval from Fleming, The Law of Torts, 7th ed.
(Sydney: Law Book, 1987), which stated at 604
At the same time, a defendant cannot excuse himself by proving that his misrepresentation was not the sole inducing cause, because it might have been precisely what tipped the scales…
and from Barton v. Armstrong (1973). T19761 A.C. 104 (New South Wales P.C.) in which Lord Cross, who wrote for the majority, in part stated at 118
If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to execute the deed, for in this field the court does not allow an examination into the relative importance of contributory causes.
[Emphasis Finch J.A.’s]
In this case, I have found that before Patricia signed the Transfer Agreement, Christina told Patricia that she would hold the shares of CDC and Birchland in trust for Patricia. This was a representation of a present fact, i.e. she intended to hold the shares in trust for Patricia. However, Christina was quite clear in her evidence that from the time of the Transfer Agreement, she intended to transfer Patricia’s shares in CDC and Birchland to Ron Venture and Pat Pillitteri. This was a misrepresentation of fact.
Reliance can be inferred from all of the circumstances and it is not necessary for Patricia to have testified that she relied on the representation of Christina. See NBD Bank, Canada v. Dofasco Inc. (1999). 46 O.R. (3d) 514 (Ont. C.A.) at para 81. However, Patricia did testify that she relied on the representation of Christina, and I accept that. In any event, in my view it is an obvious inference from the evidence of Patricia that it was a material inducement to her signing the Transfer Agreement that Christina told her that she would hold the shares of CDC and Birchland in trust for her. Patricia testified that she did not think that she would have signed the Transfer Agreement had she known that Christina intended on transferring the shares to Ron Venture and Pat Pillitteri, and while that is not the issue, the issue being if she relied on what she was told rather than if she would have relied on the statement if told something else, I accept her evidence. It would have been completely different from what she had been told and what she relied on.
Some transactions are so unconscionably bad that the law will set them aside.
Buccilli v Pillitteri 2012 ONSC 6624, involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business. After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium. Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including unconscionability. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.
153 Unconscionability is closely aligned to undue influence, as stated by LaForest J. in Hodekinson v. Simms. In Norberg v. Wvnrib. 19921 2 S.C.R. 226 (S.C.C.) LaForest J. stated the doctrine of unconscionability to be as follows:
30. An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties. In Morrison v. Coast Finance Ltd. (1965). 55 D.L.R. (2d) 710 (B.C.C.A.). at p. 713, Davey J. A. outlined the factors to be considered in a claim of unconscionability:
… a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker. On such a claim the material ingredients are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of those circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable.
33. An inequality of bargaining power may arise in a number of ways. As Boyle and Percy, Contracts: Cases and Commentaries (4th ed. 1989), note, at pp. 637-38:
[A person] may be intellectually weaker by reason of a disease of the mind, economically weaker or simply situationally weaker because of temporary circumstances. Alternatively, the “weakness” may arise out of a special relationship in which trust and confidence has been reposed in the other party. The comparative weakness or special relationship is, in every case, a fact to be proven.
As the last sentence of this passage suggests, the circumstances of each case must be examined to determine if there is an overwhelming imbalance of power in the relationship between the parties.
40. It must be noted that in the law of contracts proof of an unconscionable transaction involves a two-step process: (1) proof of inequality in the positions of the parties, and (2) proof of an improvident bargain.
