Unconscionable Transactions

Unconscionable Transactions | Disinherited Vancouver

The Supreme Court of Canada in the decision Norberg v Wynrib (1992) 2 SCR 226 reviewed the law relating to unconscionable transactions. The Norberg decision involved a family doctor who prescribed drugs to an addict in return for sexual services.

An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties – Morrison v Coast Finance LTD (1965) 55 DLR (2d) 710 BCCA where at paragraph 713 the court outlined the factors to be considered in the claim of unconscionability:

“ A plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscious 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”

In the English decision Lloyds Bank LTD the Bundy (1975) QB 326 the English court took a wider approach and develop the general principle of “inequality of bargaining power”:

“ I would suggest that through all these circumstances ie duress of goods, unconscionable transactions, undue influence, undue pressure, salvage agreements, the runs a single thread. They rest on inequality of bargaining power. By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract on terms which are very unfair or transfers property for consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences are pressures brought to bear on him by or for the benefit of the other. When I use the word “undue”  I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage maybe move solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being dominated or overcome by the other. One who is an extreme need may knowingly consent to most improvident bargain, so it to relieve the streets in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice, but in the absence of it may be fatal.”

An inequality of bargaining power may arise in a number of ways. A person may be intellectually weaker by reason of the 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, the fact to be true than. As the last sentence of this passage suggest, the circumstances of each case must be examined to determine if there is an overwhelming imbalance of power in the relationship between the parties.

It may be argued that an unconscionable transaction does not, in fact, vitiate consent: the weaker party retains the power to give real consent that the law nevertheless provides relief on the basis of social policy. This may be more in line with the formulation of inequality of bargaining power in the Lloyds Bank LTD decision, where one takes into account his statement that it is not necessary to establish that the will of the weaker party was dominated or overcome by the other party. But whichever way one approaches the problem, the result is the same: on grounds of public policy, the legal effectiveness of certain types of contracts will be restricted or negated. In the same way, in certain situations, principles of public policy will negate the legal effectiveness of consent in the context of sexual assault. In particular, in certain circumstances, consent will be considered legally ineffective if it can be shown that there was such a disparity and the relative positions of the parties of the weaker party was not in a position to choose freely.

Witness Immunity and Republication of Judgements

Witness Immunity and Republication of Judgements

I have on occasion received letters from parties involved in litigation that I have blogged about demanding that I remove the blog because of involving their name, however the law is clear that republication of a judgment without amendment or commentary that remains in force does not afford a party aggrieved by the judgment to a civil claim.

The BC Court of Appeal recently dealt with the immunity of a witness in respect of evidence given in court, and the issue of republication of a judgment in Lefebvre v Durakovic Estate 2018 BCCA 201.

The court held that a witness enjoys absolute immunity in respect of evidence given in court, and that republication without abridgement, alteration or commentary of a judgment that remains in force does not afford a party aggrieved by the judgment to a civil claim.

The plaintiff had commenced a broad ranging action against defendant alleging various forms of abuse, defamation, breach of trust, breach of contract, extortion, intimidation, negligence and so forth, and the plaintiff appealed the judge’s decision to strike out portions of the action on of the basis of an abuse of process by giving false testimony before the registrar.

The court initially discussed the issue of witness immunity and quoted the decision McDaniel v. McDaniel 2008 BCSC 653, varied, at 2009 BCCA 53 , which held that witnesses are absolutely immune from civil liability for anything that they say in court, even if what they said is false, and even if they harboured malicious motives for giving evidence. The immunity is expensive. It applies to evidence given before quasi-judicial administrative tribunals as well as courts. It also applies to out of court statements made in the course of preparing to give testimony, and even to discussions with counsel for the purpose of determining whether or not the witness has relevant evidence to gift, or litigation that is in contemplations, statements made by a potential witness on the subject matter of the litigation will fall within this immunity.

The immunity is essential to the administration of justice in order to foster an atmosphere in which witnesses and counselor unfettered in their preparations for judicial proceedings, neither should face the possibility of a civil suit over there discussions. The needy, however, does have limits. It is not apply to everything a lawyer does in his or her professional capacity, nor does it apply simply because matters discussed between the parties might potentially at some point come before judicial or quasijudicial body. The immunity is directed at facilitating the gathering and preparation of evidence for litigation. That is not the context in which a statement is made the immunity will not apply.

The lawyer had republished the judgment on his website and the plaintiff took issue with this and the court held that the plaintiff had no cause of action in respect of the publication of the chambers judge’s reasons for judgment.

The court held that the accurate republication of a decision of the court is subject to at least qualified privilege. The materials provided by counsel in the court application included a reference to the judgment of McDougall v. Knight (1890) 25 QBD 1 (C.A) which set out the rationale for the privilege:

The judgment of a judge of the land is in itself an act of such public and distinct character as to make it in the interest of the Commonwealth that they should know it in toto, and provided it is either given verbatim correctly, or correctly summarize, it seems to me that the public policy requires that to be the law, I have no hesitation in saying that I believe that to be the lot the present day. It appears to me that it would be to put an end you fetter on the press to hold that the publication of the judgment is not privileged. Unless the judgment fairly summarize the evidence. I cannot doubt that the judgments of courts must be presumed to be fair, accurate inadequate and to make the person who report such a judgment prove that it is so, when to put on him a burden inconsistent with the interests of the Commonwealth.

In 1890, the main way of publishing judgments would’ve been through the press, and the court held that the same rationale is available today in respect to publication on the Internet.

The appeal court held that the judge was correct in finding that the plaintiff could have no claim in respect of the republication. The publication complained of in parts of the claim that were struck was of a judgment that continued in force. The judgment was not the subject of any publication ban. In publishing the judgment. The defendant did not abridge, alter, nor did he comment on it. It is not alleged in the context in which the judgment was published distorted the findings of the court

Absent special circumstances such as a publication ban, the publication of a judgment is in the public interest. A judge and is unlike other court documents, such as pleadings, arguments are affidavits. A judgment as a public declaration of an independent, impartial body vested with the authority to make decisions.

The mere fact that a person feels aggrieved by the judgment of a court does not give them a right to restrict its publication order claim, damage in respect of it. Merely alleging that a person who republishes a judgment is motivated by malice does not turn the completely lawful dissemination of a public decision of the court into an actionable tort.

The court did leave open the possibility that republication of a judgment could give rise to copyright issues or privacy legislation as same were not involved in this case.

Unjust Enrichment Disallowed For Family Workers

Unjust Enrichment Disallowed For Family Workers

The BC Appeal Court in McDonald v McDonald 2017 BCCA 255 disallowed an award for unjust enrichment for various children who worked on the family farm for years without compensation, finding that “chores” amounted to a juristic reason to refuse a claim for unjust enrichment. The appeal Court in essence said that there must be “exploitation” before there can be a valid claim for unpaid child labour in a family endeavor.

During their childhood and teen years, the plaintiffs performed unpaid work on their parents dairy farm. They continued to work on the farm (on salary) for parts of their early adulthood. Eventually, the parents transferred the farm assets into a corporation. Many years after the plaintiffs ceased to work on the farm, they learned that their parents transferred the shares in the corporation to their brother, except for redeemable preferred shares representing about 10% of the farm’s value. Their own inheritances were to be limited to those preferred shares.

The plaintiffs commenced an action for unjust enrichment in respect of work they had performed on the farm. The judge accepted that they had valid claims in unjust enrichment, but only for the unpaid work they performed as teenagers. He awarded each of the plaintiffs $350,000, less any amount they received in preferred shares. The defendants appealed.

Held: appeal allowed. The work performed by the plaintiffs was in the nature of chores. As a matter of public policy, chores performed by children in a family setting do not, absent indicia of exploitation, attract a right to compensation under the doctrine of unjust enrichment. In any event, the judge’s assessment of damages was the product of palpable and overriding error. Properly assessed, the transfer of the preferred shares would fully compensate the plaintiffs even if the judge’s unjust enrichment analysis were sustainable.


[64]         In Garland v. Consumers Gas Co., 2004 SCC 25, Iacobucci J. summarized the basic requirements for an unjust enrichment claim as follows:

[30]      As a general matter, the test for unjust enrichment is well established in Canada. The cause of action has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment (Pettkus v. Becker, [1980] 2 S.C.R. 834, at p. 848; Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at p. 784).

[65]         The parties accept the judge’s finding that the farm work performed by the plaintiffs during their teenage years conferred a benefit on the defendants. They also accept that the work constituted a corresponding deprivation to the plaintiffs. The issue with respect to unjust enrichment is whether there is a juristic reason for the enrichment.

[66]         The nature of the an absence of juristic reason test was also discussed in Garland:

[44]      [T]he proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. By closing the list of categories that the plaintiff must canvass in order to show an absence of juristic reason, [the] objection to the Canadian formulation of the test that it required proof of a negative is answered. The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter [Peter v. Beblow, [1993] 1 S.C.R. 980]), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.

[45]      The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.

[46]      As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. It may be that when these factors are considered, the court will find that a new category of juristic reason is established. In other cases, a consideration of these factors will suggest that there was a juristic reason in the particular circumstances of a case which does not give rise to a new category of juristic reason that should be applied in other factual circumstances. In a third group of cases, a consideration of these factors will yield a determination that there was no juristic reason for the enrichment. In the latter cases, recovery should be allowed. The point here is that this area is an evolving one and that further cases will add additional refinements and developments.

[67]         It is common ground that none of the established categories of juristic reason for enrichment are present in this case: the plaintiffs did not have contracts of employment with the defendants during their teen years, nor did they manifest an intent that their work on the farm constitute a gift. Their work was not performed pursuant to a statutory or equitable obligation.

[68]         The defendants contend, however, that as a matter of public policy, work done by a teenager for a family enterprise should not be accorded a remedy in unjust enrichment absent extraordinary circumstances. In their factum they express the policy as follows:

Virtually all children, particularly as they get older, are expected to contribute to the family enterprise in one fashion or another, whether it is doing chores inside the house, painting a fence, mowing the lawn or helping in the family business. It seems likely that much of the work done by teenagers will provide some economic benefit to their parents. In exchange, however, their parents provide them with the necessities of life such as food and shelter and provide them with the opportunity to learn life skills which they can take with them into adulthood. To afford teenagers the right to sue their parents for work done as teenagers simply because it is of benefit to the parents sets a dangerous precedent and ignores the substantial benefits which teenagers receive from their parents at that age.

[69]         The plaintiffs dispute the idea that there is any public policy reason why teenaged children doing work for their parents should be excluded from unjust enrichment remedies. Among other things, they point out that children (including teenaged children) are a vulnerable group. Where parents exploit their children for economic gain, it is important that the children have a civil remedy.

[70]         Despite their contrasting arguments, there is, in fact, a great deal of common ground between the parties. The plaintiffs accept that not every chore done by a teenager (even if it has some economic value to the parents) will found a claim in unjust enrichment. At some level, it is a normal societal expectation that children (particularly older children) will assume responsibility for household tasks. They do not have a legal entitlement to be paid every time they perform routine chores.

[71]         On the other hand, the defendants accept that in extraordinary circumstances, a teenager will be entitled to compensation. At some point, parental demands on teenagers to perform unpaid chores will exceed the level of societal tolerance and be properly characterized as exploitative. It is obvious that there is no public policy in favour of allowing parents to engage in the economic exploitation of their children.

[72]         The question, then, is not whether public policy and reasonable societal expectations can provide a juristic reason to deny an unjust enrichment to a teenager in respect of unpaid chores. Clearly they can. Rather, the question is the articulation of the public policy. How far does the juristic reason extend?

[73]         The parties have cited a few cases in which courts have denied unjust enrichment claims for work done by children for their parents: Strudwick v. Strudwick Estate (1996), 21 R.F.L.(4th) 185 (B.C.S.C.); Kreeft v. Kreeft (2001), 39 ETR (2d) 233 (B.C.S.C.); Oliver v. Blais (November 21, 2014), Winnipeg PR10-01-84749, (Man. Q.B. Gen. Div.), affd 2015 MBCA 99, leave to appeal refd [2015] S.C.C.A. No. 515. They also cite Antrobus v. Antrobus, 2009 BCSC 1341, rev’d on quantum only, 2010 BCCA 356, wherein an unjust enrichment claim that included compensation for unpaid labour during the plaintiff’s teenage years succeeded.

[74]         While these cases have limited precedential value, all recognize that, as a general rule, the fact that work giving rise to an enrichment, was performed by a child or teenager in the context of family chores constitutes a juristic reason to deny recovery for unjust enrichment. In Oliver v. Blais, the trial judge noted:

[21]      [C]ases demonstrate familial obligations arising between farming parents and their children have been recognized as a juristic reason for justifying enrichment. Farming parents have a legitimate expectation that their children will participate in the chores and activities necessary to make the family farm viable. To find, in the absence of special circumstances, that a child’s contribution to the maintenance of the family farm gives rise to an interest in the farm would undermine normal farm family relationships.

[75]         While the court allowed a claim for unjust enrichment in Antrobus, the trial judge observed that unjust enrichment claims will not, as a matter of course, accrue to a teenager performing a reasonable level of domestic chores:

[185]    It is part of family life that family members assist one another – perhaps pitching in to help out younger siblings or aging parents, or helping with meal preparation and household chores. Children, teenagers and young adults living with their parents are often expected to do their share in keeping the household running. Working together for the common good of the family, spending time to help other family members, without any expectation of monetary compensation, is generally part of the meaning of a family. It is not the norm, and the law does not contemplate, that family members will do a forensic accounting during their lifetimes and make sure that no one was disadvantaged in the overall exchange of services.

[76]         The court found Antrobus to be an extraordinary case, both because of the crushing burden of chores that had been assigned to the plaintiff, and because she had been promised substantial compensation for doing the chores.

[77]         In general, we see the performance of chores by children in a family as positive. Such work fosters a sense of responsibility and of family. Ideally, in doing chores, children gain valuable work experience in an environment that is not overly competitive or taxing. They can learn and experience the importance of doing tasks for others without expecting monetary compensation.

[78]         These public policy considerations mean that the performance of unpaid chores by children in a family setting will not usually raise issues of unjust enrichment. There are, however, limits that must be observed. While unjust enrichment principles should not interfere with the ability of parents to assign routine chores to their children, they will ensure that children do not fall prey to exploitation.

[79]         The parties to this appeal have not, in argument, fully explored the issue of what boundaries ought to be applied in deciding when the law will grant unjust enrichment remedies in respect of chores performed by children. In the absence of full argument, it would be unwise for the court to attempt any exhaustive enumeration of what features might make chores exploitative. I would suggest, however, that exploitation may be characterized by economic benefits to the parents that are grossly disproportionate to the benefits that the children have as members of the family, or by work by the children that is manifestly detrimental to their health or wellbeing.

[80]         In the present case, the judge specifically found that the work assigned to the plaintiffs was not so extraordinary in the context of [a] farming household where the social norm [is] that all family members pitch in and perform chores for which strangers would have expected compensation. The judge noted that the children engaged in leisure and outside social activities. While the family lived frugally, there was no suggestion of economic deprivation, nor was it suggested that the children were treated by the parents as profit centres.

Public Policy Protects Wills Variation Claims

Public Policy Protects Wills Variation Claims

If a will contains a penalty provision, known as a forfeiture clause, threatening to impose a penalty upon a beneficiary if a will is contested, then in that event,  wills variation claims are protected by public policy so that such a clause is not enforceable in wills variation actions.

Wills variation claims are now found at section 60 of WESA.

Bellinger v. Fayers, Nuytten  2003  BCSC  563 reviewed the law relating to forfeiture clauses including how they relate to wills variation claims.

The deceased’s will contained the following forfeiture provision: 

          “7.      IT IS MY FURTHER DESIRE, because of an expressed intention of one of the legatees to contest the terms of this my Will, that should any person do so then he or she shall forfeit any legacy he or she may be otherwise entitled to.”

Kent v. McKay (1982), 139 D.L.R. (3d) 318 (B.C.S.C. )

held the forfeiture clause void in so far as it purported to limit claims the Wills Variation Act.

He found the condition contrary to public policy because it attempted to penalize the legatee for bringing a successful action provided by statute

In reaching this decision Justice Lander relied on the Australian case Re Gaynor,(1960) V.R. 640 (S.C.), He then found as follows:

“It cannot be denied with respect that the intent of the Legislature in creating the Wills Variation Act, is to ensure adequate maintenance and support for specified individuals.  It is a matter of public policy that support and maintenance be provided for those defined individuals and it would be contrary to such policy to allow a Testator to circumvent the provisions of the Wills Variation Act by the creation of such as para. 9.”