Power of Attorney Has to Account

This article is about forcing a power of attorney who subsequently becomes the executor and trustee of an estate to account to the estate for monies handled during the course of acting as power of attorney.

The problem arises in  a common scenario when the power of attorney is the same person as the executor trustee.

The courts have held that there cannot be a true accounting as between the attorney and the estate trustee, as they are one and the same person.

In Brown v. Brown , 2011 BCSC 649 at paragraphs 114 – 116 sets out the following:

114) . In Harris v. Rudolph 2004 OJ No.2754 at paragraph 33 summarize the attorney’s duty to account as follows:

Following the grant of a power of attorney, the attorney has a duty to account for all transactions which he or she undertakes for the grantor. The attorney is the one who has the information. An estate trustee stands in the shoes of the grantor for the enforcement of the duty owed by the attorney as agent to the deceased as principal. There is a duty on the attorney to keep accounts and be ready upon request to produce those accounts. It is an ongoing obligation and should not be considered an imposition on the attorney if he or she has failed in that duty over a long period of time.

Also see Roger Estate v . Leung 2001 0J No. 2171 at paragraph 10.

In Ontario, there is a line of jurisprudence, holding that following the death of the grantor, and were the attorney in the estate trustee are one of the same person, there can be no true accounting as between the attorney in the estate trustee. As a result, courts in Ontario have permitted beneficiaries and others in the circumstances to seek leave as any other person under their rules, to apply to the court for a passing of the attorneys accounts for the period the attorney acted prior to the grantor’s death. De Zorzi Estate v Read 2008 ETR (3d) 318 Ont. S.C.

Executors/Trustees Must Care For Estate Assets

Executors/Trustees Must Care For Estate Assets

The law is clear that a personal representative (executors, trustees, and administrators)  has a duty to care for the assets of the estate: Stanger v. Royal Trust Co., [1947] 1 W.W.R. 538, [1947] 2 D.L.R. 534 (Sask. C.A.).

Personal representatives undertake their duties in furtherance of their fiduciary relationship to the beneficiaries of the estate: Montreal Trust Co. v. Sproule, [1979] 6 W.W.R. 372, 103 D.L.R. (3d) 368 (Alta. Q.B.); Gibson Estate, Re, [1930] 2 W.W.R. 400 (Man. C.A.); Low v. Gemley (1890), 18 S.C.R. 685 (S.C.C.) held that persons who accept the office of executors or trustees must be supposed to accept it with the responsibility at all events for the possession of ordinary care and prudence.

Executors or trustees must undertake their responsibilities with ordinary care and prudence:

Low v Gemley was cited in Melito Estate v. Melanson, 2012 ONSC 2584 (Ont. S.C.J.) at para 81, 2012 CarswellOnt 5318 (Ont. S.C.J.)

Equity Protects Unpaid Vendor’s Liens

Unpaid Vendor's Liens

Unpaid Vendor’s Liens

Hall v Hall 2015 BCCA 96 reviews the law of equitable vendor’s liens, which is similar to the law of resulting trusts, in that if you receive a significant benefit or gift, equity intervenes to scrutinize the transaction, based on the presumption in equity that one should pay for one’s benefits.

 

A great number of cases on the topic are incorporated into Chu v Chen 2004 BCCA 209

 

In Chu v. Chen, 2004 BCCA 209, Southin J.A., at paras. 46-66, traced and analyzed the law of equitable vendor’s liens. She quoted at length from Storeys Equity Jurisprudence, which she described as one of the great legal texts of all time. As set out in that text, the origin of the doctrine can, with high probability, be traced back to Roman law, from which it was imported into the equity jurisprudence of England. The leading English authorities begin with Hearn v. Botelers (1604) Cary 25, 21 E.R. 14 and include subsequent decisions such as Hughes v. Kearney (1803), 1 Sch. & Lef 132, Mackreth v. Symmons (1808), 15 Ves. Jun 329, 33 E.R. 778, Rice v. Rice, 2 Drewry 73, 61 E.R. 646, In re Albert Life Assur. Co. (1870), L.R. 11 Eq. 164at 178; Lysaght v. Edwards (1876), 2 Ch.D. 499, at 506, 45 L.J. Ch. 554; Kettlewell v. Watson (1882) 21 Ch.D. 685, 51 L.J. Ch. 281, at 283, aff’d 26 Ch.D. 501, 53 L.J. Ch. 717, and Allen v. Inland Revenue Commrs., [1914] 2 K.B. 327, 83 L.J.K.B. 649.

 

29      The foundation of the equitable vendor’s lien is that a person who has received the estate of another ought not, in conscience as between them, be allowed to keep it and not to pay the full consideration. The equitable lien secures the sum for which the property was sold rather than capturing any interest in the property. Unlike the situation of a resulting trust, the lien holder does not receive the benefit of any appreciation in the value of the property after it is sold.

 

From Chu v Chen aforesaid, Southin stated: 47] The short point is that yes, a vendor’s lien arises by operation of law, but the ultimate issue is whether in all the circumstances the Court will exercise its equitable jurisdiction and enforce such a lien: Freeborn et al v. Goodman, 6 D.L.R. (3d) 384 (S.C.C. 1969) at 409-410.

 

 

What Evidence Courts Examine to Determine Gift or Not

What Evidence Courts Examine to Determine Gift or Not

Schouten Estate v Swagerman-Schouten 2014 BCSC 2320 examines the range of evidence and its significance when attempting to determine the intention of the donor when he transferred title to his farm to himself and one of his 6 children as joint tenants in 1995.

In the will of the deceased 14 years later, he showed an intention to gift the same property to the same child.

The Court reviewed the type of evidence it will consider when determining whether the defendant has rebutted the presumption that he held the property as a resulting trustee for the estate:

5. “What type of evidence may be considered to determine the transferor’s intention? Once the court has determined the proper presumption to apply, all of the relevant evidence should be weighed, depending on the facts of the case (Pecore at para. 55). The type of evidence that may be considered was discussed in Pecore at paras. 56-70. The Supreme Court of Canada at para. 59 expanded the traditional rule that evidence of intention ought to be contemporaneous with the transaction and said that evidence of intention subsequent to a transfer that is relevant to intention at the time of transfer should be assessed for reliability and weighed. Generally, the types of evidence germane to ascertaining intention include declarations and conduct contemporaneous with the transfer, evidence subsequent to the transfer, the documentary record as it relates to the asset, subsequent control and use of the property, other legal instruments, and tax treatment (Pecore at paras. 56-70; Doucette v. Doucette Estate, 2009 BCCA 393 (B.C. C.A.) at paras. 56-64; Fuller at paras. 48-50, 66-67; Chung at para. 49; Anderson v. Anderson, 2010 BCSC 911 (B.C. S.C.) at para. 161 [Anderson]). The grant of a power of attorney at the same time as a grant of joint ownership may indicate that the transferor intended to give more than management control of property (Pecore at para. 67). A Property Transfer Tax Return filed in relation to a transfer is a factor to consider in relation to intention and may suggest the intention of gift if the presumption of advancement was the applicable presumption at the time of transfer (Chung at paras. 52-54). Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of transfer (Pecore at para. 59; Turner v. Turner, 2010 BCSC 49 (B.C. S.C.) at para. 57). Continuing control and use of property after the transfer by the transferor may not be conclusive because it may not be inconsistent with a gift (Pecore at paras. 62-66; Fuller at paras. 66-67; Zukanovic v. Malkoc Estate, 2011 BCSC 625 (B.C. S.C.) at paras. 134-135).

6      Care must be taken to guard against after the fact evidence that may be self-serving (Pecore at para. 59; Fuller at para. 49; Chung at para. 51; Anderson at para. 164). The credibility of a witness should be gauged by its harmony with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions (Faryna v. Chorny (1951), [1952] 2 D.L.R. 354 (B.C. C.A.), at 357, Aujla at para. 36). Care must also be taken not to treat any single type of evidence as determinative but to weigh all of the evidence (Pecore at paras. 55, 68-69). D. Smith J.A. for the court in Fuller at para. 49 put it in a nutshell: “In short, the court must consider if the transferor had any rational purpose for the transfer other than a gift”.

Credibility in Gift vs Resulting Trust Actions

credibility

Credibility in Gift vs Resulting Trust Actions

One of the most common types of estate litigation is the conflicting stories of one party testifying that the asset was gifted to him or her, while others in the family argue resulting trust, and the Judge must decide who to believe.

Examples of such findings and determination of the case are found in the following examples:

It is clear that many cases where a transferee seeks to persuade a court that a gratuitous transfer was intended to be a gift turn on questions of credibility;

. Madsen Estate v. Saylor, 2007 SCC 18at para. 18,

Aujla v. Kaila, 2010 BCSC 1739at paras. 42, 62, 104, aff’d 2013 BCCA 158;

Modonese v. Delac Estate, 2011 BCSC 82at para. 69, aff’d 2011 BCCA 501;

Bakken Estate v. Bakken, 2014 BCSC 1540at paras. 33-35.

Deceased Beneficiary May Claim Wills Variation (WESA)

 

A Wills Variation Action  ( S. 60 WESA) may Be commenced even after death of Disappointed Beneficiary by his or her personal representative as per Currie Estate v Bowen ( 1989) 35 BCLR (2d) 46.

In that case the husband died six weeks before his wife and his will made no provision for his wife.

The court held that the wife’s right of action under the wills variation act vested at the date of the husband’s death, and that the wife’s personal representative had the right to bring a wills variation action after her death.

They had been married 25 years and there were no children of the marriage. That husbands will made no provision for his wife and his estate was valued at $517,000`, and hers at $130,000.

The plaintiffs were the children of the wife from an early marriage, and the administrators of her estate.

The defendants were the husband’s executor and the children of the husband’s first marriage. The plaintiffs commenced an action under the wills variation act and the defendants applied to dismiss the action.

The court dismissed the application holding that the wills variation act gave the wife the right to claim and equitable share in her husband’s estate, a right which vested at the time of his death. Because the right to advance the claim was granted by statute, and was not founded in tort, and was broader than a claim for mere support or maintenance, the cause of action therefore survived death. Although the statute did not explicitly authorize the claim to be made by the personal representative of the deceased, that right was implied.

In Barker v. Westminster Trust Co., 57 B.C.R. 21, [1941] 3 W.W.R. 473, 614 [1941] 4 D.L.R. 514 (C.A.), the Court of Appeal wrestled with this issue in an inconclusive way. O’Halloran J.A. held that an action under the Testator’s Family Maintenance Act survived the death of the claimant. He said at p. 478:

In the language of Lord Mansfield, cited supra, the appellant’s cause of action is founded in a duty which the testatrix owed him.
That duty was imposed by the statute when it provided the Court should intervene on the application of a wife, husband or child who claimed to have been deprived of “proper maintenance” in the will of the testator. It must follow therefore that the appellant’s right to apply under the statute passes to his executors. That being so, and the maxim actio personalis moritur cum persona being excluded, the objections to the motion to add the executors of the appellant as parties must fail.
And he concluded by saying, at p. 495:
In the circumstances I see no grounds for depriving the husband of that share in the estate of his wife which the policy of our law has indicated to be adequate, just and equitable if she had not made a will.
He went on to rely on s. 13 of the statute to which reference has been made above. McDonald J.A. came to the opposite conclusion. His opinion is summarized at p. 496:
It seems however advisable to consider the question on broader lines as well. The long title of the Act shows that it is an Act to secure adequate and proper maintenance for the persons entitled to apply and under sec. 3 the Court is to give for that purpose what is “adequate, just, and equitable in the circumstances.”
The peculiar nature of these powers if fairly obvious; though the terms “just” and “equitable” are used they cannot be used in the technical sense, for no standard is provided, and “justice” and “equity” in the legal sense presuppose some standard. Obviously the statute uses these terms in a popular and looser sense; the Court is to apply moral or ethical standards. The Court is to be governed by the applicant’s needs and moral claims and not by anything resembling legal rights.
Sloan J.A. gave the third decision, and while he aligned himself with O’Halloran J.A. in the result, he found it unnecessary to come to a conclusion at this point.

Resulting Trust Presumption Applies to Real Property

Presumtion and ignoranceResulting Trust Presumption

 

The decision Schouten Estate v Swagerman- Schouten  2014 BCSC 2320 confirmed the case law that the law relating to resulting trust presumption law also apply to real property (land).

 

There had been some issue in law at one time due to the provisions of the Land Title Act.

 

3) in gratuitous transfer situations, the actual intention of the transferor is the governing consideration (Pecore at paras. 43-44; Kerr v. Baranow, 2011 SCC 10 at para. 18; Bergen at para. 38). In the case of an interest in land as joint tenants, it does not follow as a matter of law that an immediate irrevocable gift was given: the transferee must still rebut the presumption of resulting trust by bringing evidence of intention (Bergen at para. 22).

[4]             It appears settled now in British Columbia that the equitable presumptions established in Pecore apply to real property transfers (Fuller at paras. 41-45; Chung v. La, 2011 BCSC 1547, at paras. 45-46, 55 [Chung]; Aujla v. Kaila, 2010 BCSC 1739 at paras. 31-37 [Aujla]; Modonese v. Delac Estate, 2011 BCSC 82 at paras. 141-142; Suen v. Suen, 2013 BCCA 313 at paras. 35-38). Thus, the presumption of title in s. 23(2) of the Land Title Act, R.S.B.C. 1996, c. 250 as conclusive proof of title may be displaced by equitable presumptions that take into account the equitable interests between the parties in certain circumstances (Chung at para. 47; Aujla at para. 32). This is so even though title to the property in question may have been settled before 2007 when Pecore was decided (Kuo v. Kuo, 2014 BCSC 519 at paras. 225-227).

Transferor’s Intention Is Key to “Right of Survivorship”

Intention

The Transferor’s Intention when the “gift” in dispute was created is the key indicator as to whether a right of survivorship is valid or not as 2013 BCCA 492 Bergen v. Bergen reviews leading case law confirms.

the case involved a dispute between respondents and their son (‘R’) regarding proceeds of sale of property purchased by respondents for their retirement home.

The son R constructed a house on the property (for which the parents paid) and expected they intended for him to own it. At one point, they made him a one-third owner as joint tenant, but later severed the joint tenancy.

The trial judge accepted the evidence of the mother (the father having died by the time of trial) that the parents had put the property into joint tenancy thinking it would become R ‘s “eventually”, but that they had not intended to give him a beneficial interest in the property during their lifetimes. The property was sold pursuant to court order prior to trial.

Trial judge found that the parents have not intended to “gift ” the property to R and thus that the presumption of resulting trust had not been rebutted. The Court did not refer to Pecore v. Pecore 2007 SCC17.

The  BC appeal Court dismissed the appeal and found that the “gift” was not valid

CA did not agree with R ‘s submission that once the right of survivorship  is conferred (through the setting up of a joint account, or placing a party of title as a joint tenant) a “complete and perfect” inter vivos gift has been made both with respect to the legal title as well as immediate beneficial interest.

Leading authorities, including Pecore, indicate that the transferor’s intention is the key factor. Discussion of right of survivorship  in respect of bank accounts, contrasted with joint tenancy in personalty or realty. In the latter context, any joint tenant may sever the joint tenancy at any time – a fact that undermined R ‘s argument that as a matter of law, a joint tenant receives a “full and perfect” inter vivos gift of the survivorship as well as the property itself. When severance occurs, nothing remains of the right of survivorship.

The presumption of resulting trust not having been rebutted, the respondents had not made an immediate gift of the beneficial interest in the property itself and the mother was entitled to the entire proceeds of sale.

The trial judge had not erred in fact in finding that no gift was intended.

The Appeal Court determined that Pecore SCC would not have changed the decision of the trial Judge despite the fact that it was not argued at the trial level and quoted inter alia:

7]       It is the third major holding in Pecore, however, with which we are concerned in the case at bar. Under the heading “How Should Courts Treat Survivorship in the Context of a Joint Account?”, Rothstein J. considered the operation of the presumption of resulting trust in the context of joint bank accounts. He began as follows:

In cases where the transferor’s proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor’s death.

In certain cases, however, courts have found that the transferor gratuitously placed his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death, at which time the transferee alone would take the balance through survivorship. …

There may be a number of reasons why an individual would gratuitously transfer assets into a joint account having this intention. A typical reason is that the transferor wishes to have the assistance of the transferee with the management of his or her financial affairs, often because the transferor is ageing or disabled. At the same time, the transferor may wish to avoid probate fees and/or make after-death disposition to the transferee less cumbersome and time consuming. [At paras. 45-7.]

Winning an Undue Influence Case

Winning an Undue Influence Case

A review of case law makes clear the majority of such allegations are dismissed at trial due to insufficient proof. Frequently the court simply finds the testator had sufficient mental capacity and therefore allows the will to be propounded.

The loss of an undue influence case at trial can have devastating effects on both the client and the lawyer. This is especially true for the lawyer handling such a case on a contingency fee basis. An undue influence trial usually requires many days of examinations for discovery. Such a trial often takes a minimum of two weeks. Disbursements can be substantial including fees for medical expert witnesses and private investigators..

Such influence is most often exerted in private aware from other friends, family members of potential beneficiaries. There are rarely eyewitnesses who observe blatant undue influence being exerted. It sometimes seems therefore, the only way to prove such a case is with a written confession from the person who exerted the influence.

It is a real challenge for counsel to successfully convince the court to set aside the will or inter vivos gift, on the basis of undue influence.

Outline

winning an undue influence case

In this paper I will examine briefly the case law surrounding undue influence and then set out twenty practice tips that will hopefully assist a plaintiff’s counsel in winning his or her undue influence trial.

What is Undue Influence?

Undue influence is an equitable doctrine. It is a category of constructive fraud. A very fine line separates legitimate influence from undue influence. These cases are understandably very much fact driven. Success in such cases usually requires a meticulous examination of the facts, particularly those that appear suspicious.

The following oft cited passage sets out the test for undue influence at law:

A-It is settled law that undue influence sufficient to invalidate a will extends a considerable distance beyond an exercise of significant influence – or persuasion – on a testator. It is also clear that the possibility of its existence is not excluded by a finding of knowledge and approval. To be undue influence in the eye of the law there must be – to sum it up in a word – coercion. It must not be a case in which a person has been induced by [strong relationships] to come to a conclusion that he or she will make a will in a particular person’s favour, because if the testator has only been persuaded or induced by considerations which you may condemn, really and truly to intend to give his property to another, though you may disapprove of the act, yet it is strictly legitimate in the sense of its being legal. It is only when the will of the person who becomes a testator is coerced into doing that which he or she does not desire to do, that it is undue influence. (Wingrove v. Wingrove (1885), 11 P.D. 81 (Eng. Prob. Ct.), at page 82.)

This passage is cited with approval in Williams and Mortimer, Executors, Administrators and Probate, (17th edition, 1993), at page 184. The authors continue as follows;

A-Thus undue influence is not bad influence but coercion. Persuasion and advice do not amount to undue influence so long as the free volition of the testator to accept or reject them is not invaded. Appeals to the affections or ties of kindred, to the sentiment of gratitude for past services, or pity for future destitution or the like may fairly be pressed on the testator. The testator may be led but not driven and his will must be the offspring of his own volition, not the record of someone else’s. There is no undue influence unless the testator if he could speak his wishes would say Athis is not my wish but I must do it.

2 Kinds of Undue Influence: Actual and Presumed

1) Actual: In cases of actual undue influence, the recipient must be shown to have coerced the transferor to make will or inter vivos gift. The conduct must be such that the court finds that the transfer or disposition was not the true will or free intention of the victim. Proof may be shown indirectly by circumstantial evidence, and sometimes by direct evidence such as threats, lies, and promises that the recipient had no intention to keep.

2) Presumed: Here a relationship of trust and confidence between the transferor and transferee raises a rebuttable presumption that the transfer was made by undue influence. Once the relationship of trust and confidence is shown, the onus of proof shifts to the transferee to prove that the transferor made the transferor after full, free, and informed thought. The policy of preserving public confidence in relationships of trust and confidence allows otherwise valid transfers to be voided. Generally speaking, the courts will be more inclined to interfere to set aside a substantial gift or transfer, as opposed to gifts of a minor nature.

Any presumption of undue influence is rebuttable by showing that the transfer was made after full, free and informed thought. This is often done by showing that the transfer or obtained proper independent advice.

N.B. This doctrine of presumed undue influence does not apply to testamentary dispositions

Differing Burdens Of Proof– Wills versus Inter vivos Gifts or Transfers

A key point is the distinction made between gifts or transfers inter vivos as opposed to those made by will. As noted above, in the case of special “trust” relationships where a transfer is made during life, a presumption of undue influence will arise. Where the gift or transfer is made by will however, no such presumption arises and the plaintiff has the daunting task of proving actual undue influence.

In the recent case of Araujo v. Neto, 2001 BCSC 935, Justice Sigurdson does an exhaustive review of the case law.

Justice Sigurdson initially deals with the issue of onus of proof. He states:

A-The onus for proving undue influence for inter vivos gifts differs depending on the nature of the relationship between the parties. In the absence of a fiduciary or special relationship, the onus rests on the party alleging undue influence to prove it. However undue influence is presumed to apply to certain relationships or in certain circumstances and the onus shifts to the recipient of the gift to rebut it.

The Judge continues as follows:

Feeney in The Canadian Law of Wills, 3rd ed., Vol. 1 (Vancouver: Butterworths, 1987) draws a distinction between the burden of proof when alleging undue influence in the making of a will and in the case of an inter vivos gift made to a person in a special relationship, at page 42:

In the case of gifts inter vivos to persons standing in a fiduciary relationship, or some other relationship whereby the donee was in a position to overbear the donor, such persons must show that they did not influence the donor in making the gift. There is, so to speak, a presumption of undue influence. There is no such presumption in the case of wills. A person in a position to overbear a testator may exercise persuasion to obtain a will or legacy in his favour and it will stand in the absence of positive proof of undue influence by those who assert it.

Undue Influence in Gifts or Transfers

Lord Justice Cotton in Allcard v. Skinner (1887), 36 Ch. D. 145 (Eng. C.A.), at 171 spoke of undue influence in connection with two classes of voluntary gifts:

“First, where the Court has been satisfied that the gift was the result of influence expressly used by the donee for that purpose; second, where the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor. In such a case the Court sets aside the voluntary gift, unless it is proved that in fact the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in holding that the gift was the result of a free exercise of the donor’s will.”

At page 181 Lord Justice Lindley said:

“The second group consists of cases in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him. In such cases the Court throws upon the donee the burden of proving that he has not abused his position, and of proving that the gift made to him has not been brought about by any undue influence on his part. In this class of cases it has been considered necessary to show that the donor had independent advice, and was removed from the influence of the donee when the gift to him was made.

This remains an accurate statement of the law, although the courts have taken a more flexible approach to the second class of case and it is not always necessary to show that the donor had independent advice in order to rebut the presumption of undue influence.”

In Goodman Estate v. Geffen (1991), 81 D.L.R. (4th) 211 (S.C.C.) at 221 Wilson J. asked:

What are the factors that go to establishing a presumption of undue influence? This question has been the focus of much debate in recent years. Equity has recognized that transactions between persons standing in certain relationships with one another will be presumed to be relationships of influence until the contrary is shown.

She noted that these included the relationship between trustee and beneficiary, doctor and patient, solicitor and client, parent and child, guardian and ward and future husband and fiance.

Wilson J. in Geffen then said at pages 221 and 227:

“Beginning, however, with Zamet v. Hyman, [1961] 3 All E.R. 933, it came to be accepted that the relationships in which undue influence will be presumed are not confined to fixed categories and that each case must be considered on its own facts. Since then it has been generally agreed that the existence of some Aspecial@ relationship must be shown in order to support the presumption although what constitutes such a Aspecial@ relationship is a matter of some doubt.

It seems to me rather that when one speaks of Ainfluence@ one is really referring to the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power. … To dominate the will of another simply means to exercise a persuasive influence over him or her. The ability to exercise such influence may arise from a relationship of trust or confidence but it may arise from other relationships as well.

What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself.”

In Ogilvie v. Ogilvie Estate (1998), 49 B.C.L.R. (3d) 277 (B.C. C.A.) at 295, the Court of Appeal, in the context of discussing the various judgments in Geffen, stated that:

The task to be undertaken by the court is to determine whether there existed in the relationship between donor and donee the potential for influence.@ In that case, the trial judge had stated the following at para. 41 of her reasons (reported at (1996), 26 B.C.L.R. (3d) 262 (B.C. S.C.):

A-In my opinion, the case before me is a classic case of the second category of undue influence, not the first. I agree that the Plaintiffs fall short of proving any unfair or improper conduct on the part of the Defendants. The rule of evidence applicable to the doctrine of undue influence doesn’t require the Plaintiffs to do so. They only have to show the Aspecial relationship of influence@ between the Grahams and Hugh Ogilvie in the sense that they managed his affairs or gave him advice and, therefore, had a duty to ensure he received independent advice before making substantial gifts in their favour. Then the burden shifts to the Grahams to show that Hugh Ogilvie had independent advice, or was free of their influence when making the subject gifts.

The Court of Appeal in Ogilvie, supra, concluded that the trial judge undertook the correct scrutiny of the relationship between the donor and the donee and the questioned transactions, and upheld her decision that a special relationship existed and that the presumption of undue influence had not been rebutted by the defendants.

Undue Influence in Wills

The decision of Scott vs Cousins 37 E.T.R. (2d) 113 summarizes the leading Canadian case on undue influence re wills, namely Vout v. Hay (1995), 7 E.T.R. (2d) 209 (S.C.C.)

A-The principles that I believe are established by the decision of the Supreme Court, and that are relevant here, can be stated as follows:

1. The person propounding the will has the legal burden of proof with respect to due execution, knowledge and approval and testamentary capacity.

2. A person opposing probate has the legal burden of proving undue influence.

3. The standard of proof on each of the above issues is the civil standard of proof on a balance of probabilities.

4. In attempting to discharge the burden of proof of knowledge and approval and testamentary capacity, the propounder of the will is aided by a rebuttable presumption.

Upon proof that the will was duly executed with the requisite formalities, after having been read over to or by a testator who appeared to understand it, it will generally be presumed that the testator knew and approved of the contents and had the necessary testamentary capacity. (at page 227)

5. This presumption simply casts an evidential burden on those attacking the will

6. The evidential burden can be satisfied by introducing evidence of suspicious circumstances – namely, Evidence which, if accepted, would tend to negative knowledge and approval or testamentary capacity. In this event, the legal burden reverts to the propounder

7. The existence of suspicious circumstances does not impose a higher standard of proof on the propounder of the will than the civil standard of proof on a balance of probabilities. However, the extent of the proof required is proportionate to the gravity of the suspicion.

8. A well-grounded suspicion of undue influence will not, per se, discharge the burden of proving undue influence on those challenging the will:

It has been authoritatively established that suspicious circumstances, even though they may raise a suspicion concerning the presence of fraud or undue influence, do no more than rebut the presumption to which I have referred. This requires the propounder of the will to prove knowledge and approval and testamentary capacity. The burden of proof with respect and fraud and undue influence remains with those attacking the will. (ibid.)

Suspicious Circumstances

Suspicious circumstances or are simply circumstances that arouse the suspicion of the court. In the leading case, Barry v. Butlin (1838) 2 Moo. P.C. 480, it was held that the court ought not to pronounce in favor of the will unless the suspicion is removed. That role has been extended to include all cases in which a will is prepared under circumstances which raise a well grounded suspicion that it does not express the mind of the testator. ( Clark v. Nash (1989) 34 E.T.R. 174 (B.C.C.A.)

Undue influence can be established on the balance of probabilities through circumstantial evidence. In Scott v. Cousins, 37 E.T.R. (2d) 113, the Court describes circumstantial evidence that may be considered in undue influence cases:

In determining whether undue influence has been established by circumstantial evidence, courts have traditionally looked to such matters as the willingness or disposition of the person alleged to have exercised it, whether an opportunity to do so existed and the vulnerability of the testator or testatrix. … The testatrix does not have to be threatened or terrorized: effective domination of her will by that of another is sufficient. … This, I believe, is a consideration of no little importance in the present case as well as in the increasing number of those involving wills made by persons of advanced age. Other matters that have been regarded as relevant, within limits, are the absence of moral claims of the beneficiaries under the will or of other reasons why the deceased should have chosen to benefit them. The fact that the will departs radically from the dispositive pattern of previous wills has also been regarded as having some probative force.

Examples of suspicious circumstances may include:

1) an elderly testator;

2) a testator who is unwilling to provide the solicitor with full information relating to the assets, liabilities, medical history, or family condition and circumstances;

3) a testator who has suffered significant ill health, particularly if the condition, disease, or medication could affect the mental stability or general mental outlook of the testator;

4) a disposition of the estate which seems unusual in the context of the circumstances as known to the testator.

5) a beneficiary who has been particularly involved in “assisting” the testator in the preparation of the will;

6) dispositions in the will drastically different from the terms of the former will;

7) circumstances where the testator appears dependent upon another, for example allowing the other person to speak on his or her behalf;

8) a testator with questionable testamentary capacity;

9) a testator who has had numerous wills prepared in a short period of time;

10) a testator who has recently contracted a hasty or unwise marriage; 11) a testator with a language, learning , intellectual or cultural disability;

12) a testator who has recently changed living circumstances, particularly one who moves in with the alleged perpetrator;

13) a will that makes no gifts to those seemingly appropriate;

14) a will prepared on instructions provided by the questionable beneficiary.

15) cases where the long lost beneficiary seems to arrive “out of the nowhere”

16) a testator suffering from depression/loneliness.

The existence of any one or more of these factors does not necessarily mean that the will is vulnerable to attack. However the presence of any one or more of these factors is probably the best avenue for plaintiff=s counsel to attack the will. Successful counsel will be vigilant as to these and other suspicious circumstances.

Practice tips on how to win an undue influence case

1) Before undertaking such a case, particularly on a contingency fee basis, counsel should consider being retained initially only to gather facts. This will assist both client and counsel in determining whether there is a good likelihood of success.

This may not be required if probable lack of testamentary capacity is apparent from the outset. The obvious difficulty with most undue influence cases is the absence of witnesses. Most often there are only two people involved. One is now dead and the other is not talking. Accordingly there are usually immense problems in determining the facts upon which to allege undue influence.

I simply stress that counsel should be very selective in deciding whether or not to accept such cases. Certainly the size of the estate should be considered when making this decision.

2) File a probate caveat right away, but do not commence the court action until you have sufficient proof to justify your allegations of undue influence. The defense may quickly move for a summary trial. The court may award costs or higher costs against your client if you cannot prove the allegations.

3) Consider retaining an experienced private investigator to assist in determining the facts. Undue influence cases demand a meticulous examination of the facts. The private investigator should take signed statements from any witnesses who have material evidence. I consider it necessary to interview almost every person who knew the deceased at the relevant times. Try to obtain a background report on the defendant. It may be surprising how often there may be evidence of prior undue influence allegations. Interview the witnesses to the will or transfer.

4) Get as many records as possible concerning the deceased. This would include all medical records from every doctor and medical institution for at least 10 years prior to death, together with all long-term care records, social work records, nursing home records, care facilities, work or school records (if appropriate), and the like. It would also include the lawyer=s notes, and perhaps the lawyer=s notes of previous wills. The majority of undue influence cases involve senior citizens and there is often an issue of testamentary capacity. I stress however that undue influence can occur in non senior situations such as for example, a young person joining a cult.

5) Marshall the suspicious circumstances and present them in the form of a compelling argument to prove the case (usually through circumstantial evidence). Look to stress situations showing a pattern of the defendant making the deceased more dependant ( ie isolating and limiting access)

6) Try to determine the names and addresses of the witnesses that the alleged perpetrator relies upon, and try to interview them. I have found that if the defendant appears to be flaky, (which is often the case ),then the old adage often applies Abirds of a feather flock together@ often applies. Having this information will assist you in your cross examination.

7) Recognize and benefit from the lack of sophistication of most perpetrators of undue influence. Usually perpetrators are unsophisticated in their methods. While undue influence is a form of civil fraud, the defendants are usually not particularly intelligent, skilled, or savvy.

8) Try to avoid a summary trial unless you have an overwhelming case. I have succeeded at trial, particularly through cross-examination, on cases which may well have been lost on a summary trial. On a summary trial the judge never has the opportunity to assess the credibility of the witnesses. As mentioned above, often these characters can be quite “flakey” and may contrast well with presentable and sympathetic plaintiffs.

9) In setting aside inter vivos gifts, take advantage of the presumption of undue influence where there is a special relationship situation. There often is a house keeping situation present.

10) Obtain expert opinion(s) from those such as geriatric psychiatrists(s) who never met the deceased. Have them review all of the records and tender an opinion on both testamentary capacity and the relative vulnerability of deceased to any undue influence.

11) Get on the case and take these steps as soon as possible. The family may come to see you prior to the death. Even where you cannot assist them to diminish any inappropriate influence, start to build your case as pro-actively as possible. This can involve everything from letters to doctors, banks and the Public Guardian, to obtaining an injunction or committeeship order.

12) Use demonstrative evidence such as home videos, photographs, handwriting samples and the like to try to demonstrate a “before and after” situation where there is evidence of medical or psychological decline.

13) Cross examine the handling lawyer or notary. Try and get an order to discover him or her for discovery. Even the most careful and senior lawyers may fall short in their duties. It can be highly effective to use the Law Society checklist to cross examine the lawyer. I refer you to Danchuk v. Calderwood 15 E.T.R.(2d) 193 where the Judge comments on the solicitors handling of the will:

In keeping with what I understand to be the law applicable to the duty of a solicitor, in the circumstances here, I accept the submission of counsel for the defendants that she failed with respect to that duty.

In my view, in the particular circumstances here, at the outset:

(A) she should have regarded the circumstances as suspicious having regard to the deceased’s advanced age and considerable seniority to that of the plaintiff as well as his apparent dependency upon her, including allowing her to speak for him;

(B) she should have undertaken an inquiry, including interviewing the plaintiff and the deceased separately with regard to the age difference and as to the independence of the deceased in giving instructions;

(C) the inquiry should have confirmed whether the deceased had a prior existing will and, if such a will existed, what were the reasons for any variations or changes there from prompting the disposition being put forward;

(D) the inquiry should have encompassed why and for what reasons the deceased had given a power of attorney to his daughter in late 1992 and, more importantly, why upon revocation of that power of attorney a new power of attorney was to be given by the deceased to the plaintiff; and,

(E) collateral to (D), supra, the inquiry should have included some investigation of the health of the deceased.

In this perspective, I understand the law to be that a solicitor does not discharge her duty in the particular circumstances here by simply taking down and giving expression to the words of the client with the inquiry being limited to asking the testator if he understands the words. Further, I understand it to be an error to suppose because a person says he understands a question put to him and gives a rational answer he is of sound mind and capable of making a will. Again, in this perspective, there must be consideration of all of the circumstances and, particularly, his state of memory.

If the solicitor had made such inquiry and had been made aware of the circumstances in a fuller sense, including the medical assessment of the ongoing progression and state of senile dementia, I am satisfied the said will would not have been prepared by her at that time.

14) Obtain medical opinions of treating physicians as to both testamentary capacity and whether the deceased may well have been more susceptible to undue influence given his or her medical condition.

15) Be bold and confident in the presentation of your case. The defense will always be skeptical and the court may be as well.

16) Be prepared to prove the relative inequality of the parties. The court should be made to understand any power differential. Age, infirmity and loneliness will likely render any person more vulnerable to inappropriate influences and this should be clearly demonstrated for the court.

17) Be prepared to prove the substantial unfairness of the will or bargain.

18) Prepare a chronology of relevant medical or factual events germane to your case.

19) Think hard and often as to how you will present your case.

20) Prepare and use a written opening at trial.

Conclusion

Undue influence case have always been difficult to prove for a variety of reasons, and probably will remain that way for some time yet into the future. I hope this paper’s outline of the law of undue influence, together with the twenty practice tips will bring success to plaintiff’s counsel in the future.

Further reading on undue influence:

Identifying Undue Influence

Undue Influence and Independent Legal Advice

23 Signs of Undue Influence in Dysfunctional Families

Wills Variation – How to Win

S 60 of WESA allows the court to exercise its discretion re the claims of spouses and children against the assets of a deceased’s estate, on the basis that they were not adequately provided for in the estate.

 

The right to bring a Wills Variation  claim is limited to common law or married spouses,and natural or adopted children, but no one else including step children,  or if the child’s DNA does not match that of the deceased.

 

The Wills Variation criteria have been accumulated over almost 90 years of litigation and can be summed up from the two following cases, as to what the court wants  to know in deciding a Wills Variation action:

In Clucas v. Clucas Estate, 25 E.T.R. (2d) 175, [1999] B.C.J. No. 436 (S.C.). Satanove, J. at para [12] says as follows:

Examples of circumstances which bring forth a moralduty on the part of a testator to recognize in his
Will the claims of adult children are:

 

1)       a disability on the part of an adult child;

2)       an assured expectation on the part of an adult child,

3)      or an implied expectation on the part of an adult child, arising
from the abundance of the estate or from the adult
child’s treatment during the testator’s life time;

4)      the present financial circumstances of the child;

5)      the probable future difficulties of the child;

6)      the size of the estate and other legitimate claims.

 

These principles were expanded upon in McBride v Voth, 2010 BCSC 443,  in which Trevor Todd was winning plaintiff’s counsel.:

 

“A number of years ago, this Court identified circumstances that might support or negate a testator’s moral duty to recognize the claim of an adult child in the decision of Clucas v. Clucas Estate, 25 E.T.R. (2d) 175, [1999] B.C.J. No. 436 (S.C.).  I would supplement that helpful summary with the following overview of six of the considerations that inform the existence and the strength of a testator’s moral duty to independent children.  Although many of these factors were developed before Tataryn, for the most part they maintain relevance for the post-Tataryn court.

1.         Contribution and expectation

[129]      Contributions by the claimant to the accumulation of a testator’s assets with little in exchange, or providing other types of contribution or care to a testator will generally serve to strengthen the moral obligation, other things being equal.  The contribution may also found a legal claim in unjust enrichment or quantum meruitTataryn; Re Sleno 78 D.L.R. (3d) 155, [1977] B.C.J. No. 140 (S.C.); Lee v. King Estate, [1975] B.C.J. No. 893 (S.C.); Harris v. Harris, [1980] B.C.J. No. 1417 (S.C.); Ryan v. Delahaye Estate, 2003 BCSC 1081 (CanLII), 2003 BCSC 1081, 2 E.T.R. (3d) 107 [Ryan].  Contributions made by a first spouse who predeceased the testator may support a moral obligation to the adult claimant children of that first marriage:  Saugestad v. Saugestad, 2008 BCCA 38 (CanLII), 2008 BCCA 38, 77 B.C.L.R. (4th) 170; Waldman v. Blumes, 2009 BCSC 1012 (CanLII), 2009 BCSC 1012, 51 E.T.R. (3d) 253.

[130]      A moral duty may arise where the testator’s conduct has created a bona fide expectation on the part of the plaintiff to receive a benefit which does not come about on death:  Marsh v. Marsh Estate 19 E.T.R. (2d) 184, [1997] B.C.J. No. 1286 (S.C.); More v. More Estate, 2002 BCSC 920 (CanLII), 2002 BCSC 920, 46 E.T.R. (2d) 96.

2.         Misconduct/Poor character

[131]      Section 6(b) of the Act empowers the court to refuse variation to a person whose character or conduct, in the opinion of the court, disentitles him or her to relief.  Such misconduct is measured as at the date of death, not subsequently, and must be directed at the testator.  Generally speaking, the conduct must be relatively severe in order to justify disinheritance:  Gieni v. Richardson Estate, [1995] B.C.J. No. 1227 (S.C.); Sammon v. Stabbler, 2000 BCSC 1048 (CanLII), 2000 BCSC 1048, 77 B.C.L.R. (3d) 283.  A child who is a disappointment overall (Sawchuk v. MacKenzie Estate, 2000 BCCA 10 (CanLII), 2000 BCCA 10), is an “incompetent weakling” (Re Bailey Estate, reflex, [1972] 1 W.W.R. 99, 1971 CarswellBC 195 (S.C.)), or is unsuccessful in multiple business ventures and has a difficult time “fighting the battle of life” (Re Radcliffe, 2 B.C.L.R. 220, [1977] B.C.J. No. 1036 (S.C.)) was not considered to be sufficiently defective.

3.         Estrangement/Neglect

[132]      In the early development of the caselaw, a long period of separation, abandonment or estrangement between a child and testator was frequently, though not invariably, taken to militate against finding a moral duty to an adult child.  The modern judicial trend indicates that the court will enquire into the role played by the testator in the estrangement or relationship breakdown, and where it is seen to be largely the fault of or at the insistence of a testator, it will likely not negate a testator’s moral duty, and may even enhance it.  The weight of the authorities also indicates that the court may discern a moral duty as a means of rectifying the testator’s childhood neglect of the children: Gray v. Gray Estate, 2002 BCCA 94 (CanLII), 2002 BCCA 94, 98 B.C.L.R. (3d) 389, Doucette v. Clarke, 2007 BCSC 1021 (CanLII), 2007 BCSC 1021, 35 E.T.R. (3d) 98 [Doucette]; Tomlyn v. Kennedy, 2008 BCSC 331 (CanLII), 2008 BCSC 331, 38 E.T.R. (3d) 289; Wilson v. Watson, 2006 BCSC 53 (CanLII), 2006 BCSC 53, 21 E.T.R. (3d) 285; P.S.G. v G.G. Estate, 2005 BCSC 1855 (CanLII), 2005 BCSC 1855; Ryan.

4.         Gifts and benefits made by the testator during lifetime

[133]      Depending on the circumstances, a testator’s moral duty may be diminished or negated entirely where he or she has made inter vivos gifts to the claimant, or the claimant has received assets on the testator’s death outside the framework of the will.  This includes benefits conferred by way of an inter vivos trust, outright gift and assets passing on death by operation of law such as joint tenancies, and by way of specific beneficiary designation of insurance proceeds, RRSPs, pension benefits, RIFs, and the like.  On the same reasoning, if a testator has made pre-death gifts to individuals other than the plaintiff, or has arranged his or her affairs to facilitate a passing of assets to such individuals outside the provisions of the will, the moral duty owed to the plaintiff may be intensified.  See generally:  Ryan; Higgins v. Wojciechowski Estate, [1992] B.C.J. No. 1398 (S.C.); Inch v. Battie, 2007 BCSC 1249 (CanLII), 2007 BCSC 1249, 36 E.T.R (3d) 79 [Inch].

5.         Unequal treatment of children

[134]      That an independent child has not been given the same provision under a will as the testator’s other child or children will not, of itself, necessarily establish a moral claim:  Re Lukie et al and Helgason et al., 72 D.L.R. (3d) 395, [1976] B.C.J. No. 1393 (C.A.); Price.  On the other hand, in Vielbig v. Waterland Estate 1995 CanLII 2544 (BC CA), (1995), 1 B.C.L.R. (3d) 76, 6 E.T.R. (2d) 1 (C.A.), the Court of Appeal held that equal treatment among independent adult children is prima facie fair from a moral duty standpoint.   In Ryan, the court held that in the absence of relevant reasons for an unequal distribution, there is a reasonable expectation that adult children will share equally, even though no legal obligation requiring equal distribution exists.  (para. 67).  The emerging rule of thumb to the effect that equal apportionment among children prima facie discharges a testator’s moral duty was applied in Inch.  There, the court held that an equal distribution was prima facie fair, despite the fact that one child received significant assets by way of inter vivos transfers.  The proposition was recently revisited by the Court of Appeal in Doucette.  In that case, the Court of Appeal appeared to have no difficulty with the disinheritance of one of the preferred beneficiaries by allocating her nothing out of the estate in light of the generous gifts that she had received outside the will via jointly held assets.

6.         Testator’s reasons for disinheritance/Subordinate benefit

[135]      The approach to be taken by the court in relation to a testator’s reasons for disinheriting or providing a modest benefit only to a child starts with consideration of the Court of Appeal decision in Bell v. Roy Estate 1993 CanLII 1262 (BC CA), (1993), 75 B.C.L.R. (2d) 213, 48 E.T.R. 209 (C.A.) [Bell].  In Bell, the testator left a will under which she bequeathed a small gift to one adult son, nothing to her adult daughter, and left the lion’s share of her estate to her other adult son.  Contemporaneously with making her will, the testator wrote a separate letter purporting to explain the unequal treatment of her children, and in particular the disinheritance of her daughter.  The trial judge concluded that the reasons offered by the testator for disinheriting her daughter were accurate and sufficient to support the will.  Accordingly, variation of the will was refused.  The Court of Appeal’s dismissal of the daughter’s appeal came before the Supreme Court of Canada issued its decision in Tataryn.