Unconscionable Procurement

Unconscionable Procurement

Sandwell v Sayers 2022 BCSC 605 discussed at length the legal construct referred to as unconscionable procurement, however dismissed the plaintiff’s claim that the defendant held her interest in the property in trust for the plaintiff, or that she be removed from title, and that the property vest with the plaintiff.

The plaintiff was the 91-year-old father of the defendant, and had recently transferred an interest in his home to the defendant, making them joint tenants. He signed a Deed of Gift at the time of the transfer.

The primary dispute focused on whether the doctrine of unconscionable procurement exists in British Columbia.

The court initially looked that the law of resulting trusts and followed Pecore v Pecore 2007 SCC 17 that transfers between parents and adult children are presumed to be bargains and not gifts. As a result in the absence of proof that the transferor intended to make a gift, the transferee holds the title in trust for the transferor.

Where there is evidence of a gift, the presumption of resulting trust me would be rebutted, and the court found that the deed of gift was evidence of the plaintiff’s intention to make a gift.

Unconscionable Procurement

The doctrine appears to have its foundation as far back as 1851 in the Chancery Court of England. It was popular in the 1800s and the early 1900s and then fell from vogue.

Generally speaking, the doctrine indicates that where there is a transfer of significant benefit that the recipient actively caused to occur, there must be proof of the donors full comprehension and understanding of the effects of the transfer for it to be upheld.

Fichera v. McAllister, 2021 ONSC 2685 [Fichera], provides a useful summary of the doctrine of unconscionable procurement:

31 The doctrine of unconscionable procurement renders an inter vivos gift voidable; at issue is the “donor’s necessary understanding to make a transaction conscionable when it takes place in circumstances that suggest, on a prima facie basis, the contrary”: Gefen v. Gaertner, 2019 ONSC 6015, at para. 158, citing John E.S. Poyser, Capacity and Undue Influence (Toronto: Thomson Reuters Canada, 2014), at p. 571.

32 The onus rests on the party attacking the transaction to prove, on a balance of probabilities, that it was unconscionably procured. Once the party challenging the transaction has established a significant benefit and the active involvement on the part of the person obtaining the benefit in the procurement or arrangement of the transfer, then there is a presumption that the donor of the gift did not truly understand what she was doing in making the transaction: Gefen, at para. 159. This presumption is not determinative. Both parties must adduce evidence about the donor’s understanding of what she was doing; the “issue turns on whether the donor appreciated the effect, nature and consequence of the transaction in a manner sufficient to render it fair, just and reasonable”: Gefen, at paras. 161-162, citing Poyser, at pp. 570 and 574.

The court referred to Pinsonneault v Courtney 2022 BCSC 120 that also dealt with the transfer of property by the plaintiff to the defendants without consideration and was accompanied by a deed of gift. The plaintiff subsequently wish to avoid the transfer.

The court in that decision focused on whether the plaintiff understood the effect of the documents that were signed, and did he or she intend to transfer an outright gift to the defendants.
The BC Court stated:

187] The doctrine of wrongful (or unconscionable) procurement is derived from the principle that where a donee obtains a benefit from a donor that in turn disadvantages that donor, the donee must prove that the donor had the “necessary level of understanding to make a transaction conscionable”: John E.S. Poyser, Capacity and Undue Influence 2nd ed (Toronto: Carswell, 2019) at 629 in Gefen v. Gaertner, 2019 ONSC 6015 at para.158. It is an equitable principle: Poyser at 628. A finding of wrongful procurement renders a transfer voidable by the court: Gefen at para. 158.

[188] The Court in Gefen provided that the onus is on the party attacking the transaction to prove on a balance of probabilities that: (1) a significant benefit was provided; and (2) active involvement by the person obtaining the benefit of the procurement: at para. 159. Once these two elements are established, it is presumed that the donor “did not truly understand what they were doing when they made the transaction.” Gefen at para. 159.

[189] Once the presumption is established, the transaction is voidable and the Court must determine whether it would be unconscionable to let the transaction stand. As stated in Gefen at para. 161, at this stage,

[161] …Both parties must adduce evidence about the donor’s actual understanding of what she was doing. If the evidence does not come down on either side, the attacker will have failed to meet the onus and the transaction will stand: Poyser, at p. 570.

[162] The attacker must ensure that there is enough evidence before the court in the final weighing to allow the court to conclude, as a finding of fact, that the donor failed to have a conscionable understanding of what she was doing when completing the transaction. This issue turns on whether the donor appreciated the effect, nature, and consequence of the transaction in a manner sufficient to render it fair, just, and reasonable: Poyser, at p. 574.

[190] The question the court must ask is whether the donor “fully appreciate[d] [the] effect, nature and, and consequence” of providing gift: Kinsella v. Pask, 28 O.L.R. 393 at 400, 12 D.L.R. 522
The court concluded that at a minimum, if the doctrine does exist in British Columbia, there must be limits imposed on the scope of the doctrine, as failing to do so would entirely displace the law of resulting trust in many cases, when that law is an effective and reasoned approach to determine when the transaction may be set aside.

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