The Presumption of Unconscionable Procurement

The Presumption of Unconscionable Procurement

The presumption of unconscionable procurement was resurrected in Gefen v Gaertner 2019 ONSC 6015 where the court ordered several agreements and financial documents declared void on the basis that the defendant Harvey failed to rebut the said presumption.

The estate litigation was extensive to say the least and the family was one of the most dysfunctional that I have ever come across. The parents were victims of the Holocaust and had three children, all of whom did not get along.

The elderly mother sued two sons whom she did not approve of and they in turn counterclaimed against their sibling Harvey.

There were over 60 pretrial motions in the related proceedings, and another 21 motions argued during the course of a long trial.

The trial canvassed events spanning decades of family history and interactions and consisted of evidence of long-held grudges and in effect, Harvey taking advantage of his mother, although not unduly so.

Many substantial gifts that had been ” given” by the mother to her son Harvey and his daughter were set aside by the court under the doctrine of unconscionable procurement.

The mother was found to be mentally competent at all times material.

The Doctrine of Unconscionable Procurement

In essence, the doctrine of unconscionable procurement awakens the moral sense of the court to circumstances that should not be permitted to stand.

The doctrine of unconscionable procurement renders a wealth transfer transition voidable, not void and normal equitable defenses apply. At issue is the donor’s necessary level of understanding to make a transaction unconscionable when it takes place in circumstances that suggest, on a prima facie basis, the contrary. It is a matter of flawed intent. John Poyser Capacity and Undue Influence at page 571.

The onus is on the party attacking the transaction to prove, on the civil standard of a balance of probabilities, that it was unconscionably procured.

Once the basic elements have been established by the attacker ( a significant benefit and the active involvement on the part of the person obtaining that 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 or he was doing in making the transaction.

The court is to look at the impugned transactions with its moral sense awakening with a view to determining whether it would be unconscionable to allow the transaction to stand.

The equitable doctrine does not require proof of incapacity or undue influence.

Unconscionable procurement requires that a person who obtains a benefit from another by voluntary donation must establish that the donor did so voluntarily and deliberately, knowing what he or she was doing.

The presumption is not determinative of the case. Both parties must adduce evidence about the donors actual understanding of what he or she was doing. If the evidence does not come down on either side, they attacker will the failed to meet the onus of proof and the transaction will stand. Poyser at p.570.

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 can unconscionable understanding of what he or she was doing when completing the transaction. This issue turns on whether the donor appreciated the effect, nature, in consequence of the transaction in a manner sufficient to render it fair, just and reasonable.

The court must be careful to differentiate between whether a gift is valid and whether it is conscience of a. In the context of a gift, the gift is valid if there was an intention by the donor to divest himself or herself of ownership of the specific item in favour of the donee, and an understanding that the act is irrevocable.

When considering unconscionable procurement, the issue is whether the gift, while valid, is voidable. If there is a significant wealth transfer made in favour of the recipient who is been active in procuring it, it is prima facie  unconscionable under this doctrine.

Poyser suggests that the conduct of the person need not be culpable for the doctrine to apply, but where the procurers conduct is culpable, it will “tighten the noose” to the point where the transaction will be nearly impossible to sustain.

Unconscionable procurement is an equitable doctrine that is intended to protect vulnerable persons from others who might procure their assets away. It is logical that, in the circumstances where an older person is still alive, their vulnerability could prevent them from advancing such a claim.