Undue Influence and Legal Advice

Undue Influence and Legal Advice | Disinherited Estate Litigation

Davy v Davy 2019 BCSC 1826 reviewed the law relating to claims of undue influence and the implications of legal advice both  given or not  provided.

The deceased suffered from dementia and was living with one caretaker son and ultimate joint tenant with his mother of her major asset, her home.

The son sat in on meetings with the lawyer and was treated as a client- the lawyers file was opened in both the son and the mother’s name and the lawyer wrote both of them and rendered her account to both of them  for the property transfer and a bill to just the mother for her will.

The court concluded that the legal advice provided to the deceased by the lawyer did not offer an assurance that the transfer of the home into joint tenancy was intended by the deceased as a result of her own full, free and informed thought.

There was no independent legal advice and she likely lacked the mental capacity to enter into the transactions.

The court held that the son held the joint tenancy property in trust for the estate and under her will the estate was divided equally amongst the four children.

There was a potential for domination by the son over the deceased which gave rise to a presumption of undue influence in inter vivos transfers.

The Law

The fact that a transfer or received legal advice is always relevant to an assessment of the transfers intentions, but the significance of the advice depends on various considerations.

In Cowper-Smith 2016 BCCA 200 at para 51 , the court approved the following list of considerations for evaluating the significance of legal advice received in assessing the claim of undue influence:

 

  1. Whether the party benefiting from the transaction is also present at the time the advice is given and/or at the time the documents are executed;
  2. Whether, though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;
  3. In a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact, and discuss the financial implications with the grantor;
  4. Whether the lawyer enquired as to whether the donor or discuss the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place; and
  5. Whether the solicitor discussed other options, whereby he or she could achieve his or her objective with less risk to him or her.

 

The case law establishes that where there is a possibility of undue influence, effective independent legal advice requires that the lawyer must not confine himself or herself to confirming the clients understanding of the legal mechanics and voluntary assent to the transaction,

In Cowper-Smith held that these cases in which an independent legal advisor should be “ satisfied that the gift is one that is right and proper, and all of the circumstances of the case, and if he or she cannot so satisfy himself or herself, then he or she should advise his or her client not to proceed”

Assessing the adequacy of the legal advice given is a fact specific inquiry. It does not reduce to any precise test. In some circumstances, it may require advice on only the nature and consequences of the transaction.

However, where concerns are allegations of undue influence arise, generally, there will be a need to give informed advice and the merits of the transaction.

The jurisprudence emphasizes that the lawyer’s duty to ensure that his or her client understands and freely assents to the transaction at hand, sometimes requires the lawyer to go well beyond an explanation of the narrow legalities to an assessment of the clients understanding of the substance of the transaction and its implications. This broader duty is engaged where it should appear to the lawyer, on the facts presented to him or her, that there is a real possibility of undue influence.

Undue Influence in Short

Undue Influence in Short | Disinherited Estate Litigation

The essential legal framework for the assessment of claims of undue influence was established in Allcard v Skinner (1887) 36 CH. D. 145(CA) and in Geffen V Goodman (1991) to SCR 353.

This legal framework is regularly applied in British Columbia – Porter Estate v Porter, Burkett v Burkett Estate 2018  BCSC 320 at paras. 187-217, and Modonese v Delac estate 2011 BCSC 82 at paras. 96-129

Undue influence is an equitable doctrine to save people from being victimized by other people. A transaction induced by undue influence may be set aside. There are two classes of case.

The first-class arises where the party seeking to set aside the transaction proves that the defendant engaged in improper conduct that dominated the will of the convict them to the point of coercion.

The second class of case arises where the defendant, and the supposedly victim were in a relationship of dependency involving a potential for domination of the victim by the defendant. In these cases, if the transaction involved a gift or bequest, as opposed to a commercial transaction.

Undue influence is presumed and the burden lies in the defendant to show that the victim entered into the transaction as a result of his or her own full, free and informed thought. In the case of a commercial transaction there is a further requirement: the plaintiff must also show that the contract in question worked unfairness by conferring undue disadvantage on the victim or undue advantage on the defendant.

Undue Influence Check List of Red Flags

Undue Influence Check List of Red Flags

A good place to start when understanding the law of undue influence are situation and things that might appear to be “suspicious”.

The doctrine of suspicious circumstances may arise in circumstances in which the background concerning the making of a will gives rise or should give rise to some suspicion.

The doctrine is intended to ensure that there is no doubt that the making of the will was the free and voluntary act of the testator.

A seemingly in exhaustive list of the innumerable circumstances which might be suspicious includes the following:

(a) where a gift is made to a person with whom the testator had a close relationship but which was not known or recognized by the testator’s family;

(b) where a gift is made to a person who is in a position to influence the testator, such as a caregiver or, the worst example, the party preparing the will;

(c) where an apparently unwarranted, undeserving or unpopular gift is made to a beneficiary who, in the minds of the those left behind, should not receive the gift;

(d) where a gift is made to a beneficiary to whom the testator has had no close relationship, such as a charity;

(e) where the division of assets among the children of the testator is substantially unequal, or a certain child or children are harshly treated;

(f) where the will substantially deviates from previous wills;

(g) where a gift is made to a person standing in a fiduciary relationship;

(h) where the beneficiary accompanies the testator on each trip to the will-drafter’s office during the process to complete the will;

(i) where the will-drafter receives the testator’s instructions from someone other than the testator;

(j) where the testator has had a recent serious illness or hospitalization;

(k) where there is any question about the testator’s testamentary capacity;

(l) where there are indications that the testator abuses alcohol or uses medications that are potentially mind-altering;

(m) where there testator has entered into a hasty or unwise marriage or common-law relationship;

(n) where there is evidence that the testator is depressed;

(o) where there is a language/cultural disability or illiteracy on the testator’s part;

(p) where the situation fits the “recent widower and the young woman to inherit everything” scenario.

 

How to Identify Undue Influence

1. Explore whether will-maker is in a relationship of dependency, domination or special confidence or trust.

Sample questions to consider:

• Do you live alone? With family? A caregiver? A friend?
• Has anything changed in your living arrangements recently?
• Are you able to go wherever and whenever you wish?
• Does anyone help you more than others? Who arranged/suggested this meeting?
• Does anyone help you make decisions? Who does your banking?
• Has anyone asked you for money? A gift?

2. Explore whether will-maker is a victim of abuse or neglect in other contexts.

Sample questions to consider (note need for tact, discretion and awareness for client’s physical safety; refer to community resources if and when appropriate):
• Has anyone ever hurt you? Has anyone taken anything that was yours without asking?
• Has anyone scolded or threatened you? Are you alone a lot?
• Has anyone ever failed to help you take care of yourself when you needed help?
• Are there people you like to see? Have you seen these people or done things recently with them?
• Has anyone ever threatened to take you out of your home and put you in a care facility?

3. Obtain relevant information from third parties when possible and if the will-maker consents.

4. Obtain medical assessment if mental capacity is also in question, but remember that mental capacity to make a will is ultimately a legal test.

5. Compile list of events or circumstances indicating undue influence.

 

Red Flags to Watch For

This list is not necessarily complete or definitive. It is an aid to practitioners to identify potential undue influence and provide an “index of suspicion” so that they will be alerted to carry out the necessary inquiries before preparing a will for execution.

(a) Will-maker invests significant trust and confidence in a person who is a beneficiary or is connected to a beneficiary (e.g. lawyer, doctor, clergy, financial advisor, accountant, formal or informal caregiver, new “suitor” or partner).

(b) Isolation of will-maker resulting in dependence on another for physical, emotional, financial or other needs.

(c) Physical, psychological and behavioural characteristics of will-maker.

Examples:

• Dependence on beneficiary for sight, hearing, mobility, speech, illness, illiteracy.
• Signs of neglect/self-neglect (emaciation, inappropriate clothing, bruising, untreated injuries).
• In state of shock after stressful situation (e.g. bad news, death of close person).

(d) Non-specific factors (e.g. loneliness, sexual bargaining, end-of-life issues).

(e) Cultural influences/conditioned responses (e.g. subservience to traditional authority in extended family; yielding to pressure for fear of revealing family conflicts leading to loss of face in community).

(f) Impaired mental function from a psychiatric condition or a non-psychiatric cause (e.g. trauma or stroke).

Examples:

• Sudden onset of confusion.
• Short term memory problems, disorientation, difficulty with finances.
• Signs of depression (e.g. irritable, agitated, difficulty making decisions, sad face, bowed head, general lethargy).
• Delusions.
• Extreme sense of well-being, continuous speech, inability to concentrate, poor judgment.
• Apprehensive or appearance of being worried, distressed, overwhelmed.
• Client is intoxicated/signs of substance abuse.
• Down’s syndrome, autism or other developmental disorder.
• Inability to answer open-ended questions.

(g) Circumstances related to making of the will and/or the terms.

Examples:

• Unusual gifts; sudden change for no apparent reason; frequent changes.
• Marked change in instructions from prior wills.
• 3rd party initiates instructions which also benefit 3rd party; beneficiary speaks for will-maker; beneficiary offers to pay for new will; will-maker relies exclusively/unusually on notes to give instructions.
• Spouses: joint retainer but one spouse provides instructions while other remains silent.
• Recent death of a family member and other family appear to influence changing existing will.

(h) Characteristics of influencer in will-maker’s family or circle of acquaintance.

Examples:

• Overly helpful.
• Insists on being present during interview with practitioner.
• Contacts practitioner persistently after instructions are taken.
• Person is known to practitioner to have history of abuse, including violence.
• Practitioner observes negative and/or controlling attitude to will-maker.
• Practitioner is aware that influencer is in difficult financial circumstances and/or engages in substance abuse.

(i) Practitioner’s “gut feeling”.

Examples:

• Body language of will-maker indicates fear, anxiety, insecurity, embarrassment, etc.
• “Influencer” is off-putting or difficult to deal with at appointment.
• “Influencer” is rude to staff in office or on telephone, or is overly solicitous.

Undue Influence and Independent Legal Advice

Legal Advice and Undue Influence

Davy v Davy 2019 BCSC 3128 reviewed inter alia the law relating to independent legal advice and situations where undue influence may arise.

Undue influence is an equitable doctrine to save people from being victimized by other people.

There are two classes of cases:

1) The first arises where the party seeking to set aside the transaction proves that the defendant engaged in improper conduct that dominated the will of the victim to the point of coercion;

2) The second class of cases arise where the defendant and the supposedly victim were in a relationship of dependency involving a potential for domination of the victim by the defendant. In these cases, if the transaction involved a gift or bequest, as opposed to a commercial transaction, undue influence is presumed in the burden lies in the defendant to show that the victim entered into the transaction as a result of his or her own full, free will and informed thought. In the case of a commercial transaction, there is a for the requirement that the plaintiff must also show that the contract in question worked unfairness by conferring undue disadvantage on the victim or undue advantage on the defendant..

The case law establishes that where there is the possibility of undue influence, effective independent legal advice requires that the lawyer must not confine himself or herself to confirming the clients and understanding of the legal mechanics and voluntarily assent to the transaction.

In the BC Court of Appeal decision of Cowper-Smith 2016 BCCA 200 at paragraph 52, the court held that these are cases in which an independent advisor should be satisfied that “ the gift is one that is right and proper, and all the circumstances of the case, and if he or she cannot so satisfy himself or herself then he or she should advise his or her client not to proceed.

The jurisprudence emphasizes that the lawyer’s duties to ensure that his or her client understands and freely assents to the transaction at hand, and sometimes this requires the lawyer to go well beyond an explanation of the narrow legalities to an assessment of the client’s understanding of the substance of the transaction and its implications.

The court found in the Davy decision that the legal advice provided to Mrs. Davy did not offer an assurance that the transfer of the home and in joint tenancy with her son was intended by Mrs. Davy as a result of her own full, free and informed thought.

The BC Court of Appeal decision in Cowper-Smith approved the following list of considerations for evaluating the significance of legal advice received in assessing the claim of undue influence:

1. Whether the party benefiting from the transaction is also present at the time, the advice is given, and were at the time the documents are executed;

2. whether though technically acting for the grantor, the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;

3. in a situation where the proposed transaction involves the transfer of all or substantially all of a person’s assets, whether the lawyer was aware of that fact and discuss the financial implications with the grantor;

4. Whether the lawyer inquired as to whether the donor or discuss the proposed transaction with other family members who might otherwise have benefit of the transaction did not take place; and

5. whether the solicitor discussed other options, whereby she or he could achieve his or her object, and with less risk to him or her.

In the Davy case, the lawyer treated both the son and Mrs. Davy as her client, the proposed transaction involve the transfer of ownership of Mrs. Davies most significant asset. There was no discussion of the financial implications for Mrs. Davy if she and her son had a falling out; Mrs. Davy believed that her son needed to be on title, so as to qualify for a mortgage when that was not true; Mrs. Davy was unsophisticated and somewhat mentally compromised, the transaction was kept secret from others, and Mrs. Davy relied upon her son for financial advice.

Mrs. Davy believed the transfer was necessary in order to keep the home “safe” and several other factors that existed in a situation where David was in a position of domination over Mrs. Davy, who in turn was in a position of reliance upon her son David.

Due to their relationship of potential domination and reliance, there was a presumption of undue influence, and the son David was required to rebut that presumption of both resulting trust and undue influence, both of which he was unable to do.

Identifying Undue Influence

A checklist for identifying a relationship of domination and dependence that might involve a situation of undue influence is:

1. Explore whether will-maker is in a relationship of dependency, domination or special confidence or trust.

Sample questions to consider:
• Do you live alone? With family? A caregiver? A friend?
• Has anything changed in your living arrangements recently?
• Are you able to go wherever and whenever you wish?
• Does anyone help you more than others? Who arranged/suggested this meeting?
• Does anyone help you make decisions? Who does your banking?
• Has anyone asked you for money? A gift?

2. Explore whether will-maker is a victim of abuse or neglect in other contexts.

Sample questions to consider (note need for tact, discretion and awareness for client’s physical safety; refer to community resources if and when appropriate):
• Has anyone ever hurt you? Has anyone taken anything that was yours without asking?
• Has anyone scolded or threatened you? Are you alone a lot?
• Has anyone ever failed to help you take care of yourself when you needed help?
• Are there people you like to see? Have you seen these people or done things recently with them?
• Has anyone ever threatened to take you out of your home and put you in a care facility?

3. Obtain relevant information from third parties when possible and if the will-maker consents.

4. Obtain medical assessment if mental capacity is also in question, but remember that mental capacity to make a will is ultimately a legal test.

5. Compile list of events or circumstances indicating undue influence.

Undue influence: Red flags to watch for

This list is not necessarily complete or definitive. It is an aid to practitioners to identify potential undue influence and provide an “index of suspicion” so that they will be alerted to carry out the necessary inquiries before preparing a will for execution.

(a) Will-maker invests significant trust and confidence in a person who is a beneficiary or is connected to a beneficiary (e.g. lawyer, doctor, clergy, financial advisor, accountant, formal or informal caregiver, new “suitor” or partner).

(b) Isolation of will-maker resulting in dependence on another for physical, emotional, financial or other needs.

(c) Physical, psychological and behavioural characteristics of will-maker.

Examples:
• Dependence on beneficiary for sight, hearing, mobility, speech, illness, illiteracy.
• Signs of neglect/self-neglect (emaciation, inappropriate clothing, bruising, untreated injuries).
• In state of shock after stressful situation (e.g. bad news, death of close person).

(d) Non-specific factors (e.g. loneliness, sexual bargaining, end-of-life issues).

(e) Cultural influences/conditioned responses (e.g. subservience to traditional authority in extended family; yielding to pressure for fear of revealing family conflicts leading to loss of face in community).

(f) Impaired mental function from a psychiatric condition or a non-psychiatric cause (e.g. trauma or stroke).

Examples of impaired mental function:
• Sudden onset of confusion.
• Short term memory problems, disorientation, difficulty with finances.
• Signs of depression (e.g. irritable, agitated, difficulty making decisions, sad face, bowed head, general lethargy).
• Delusions.
• Extreme sense of well-being, continuous speech, inability to concentrate, poor judgment.
• Apprehensive or appearance of being worried, distressed, overwhelmed.
• Client is intoxicated/signs of substance abuse.
• Down’s syndrome, autism or other developmental disorder.
• Inability to answer open-ended questions.

(g) Circumstances related to making of the will and/or the terms.

Examples:

• Unusual gifts; sudden change for no apparent reason; frequent changes.
• Marked change in instructions from prior wills.
• 3rd party initiates instructions which also benefit 3rd party; beneficiary speaks for will-maker; beneficiary offers to pay for new will; will-maker relies exclusively/unusually on notes to give instructions.
• Spouses: joint retainer but one spouse provides instructions while other remains silent.
• Recent death of a family member and other family appear to influence changing existing will.

(h) Characteristics of influencer in will-maker’s family or circle of acquaintance.

Examples:

• Overly helpful.
• Insists on being present during interview with practitioner.
• Contacts practitioner persistently after instructions are taken.
• Person is known to practitioner to have history of abuse, including violence.
• Practitioner observes negative and/or controlling attitude to will-maker.
• Practitioner is aware that influencer is in difficult financial circumstances and/or engages in substance abuse.

(i) Practitioner’s “gut feeling”.

Examples:
• Body language of will-maker indicates fear, anxiety, insecurity, embarrassment, etc.
• “Influencer” is off-putting or difficult to deal with at appointment.
• “Influencer” is rude to staff in office or on telephone, or is overly solicitous.

S. 52 WESA: Presumption of Undue Influence Claims

S. 52 WESA: The Presumption of Undue Influence

Trudeau v Turpin Estate 2019 BCSC 150 is a recent decision dismissing a claim for undue influence and discussing in particular section 52 WESA and the presumption of undue influence that it sets out.

Section 52 of the Wills, Estates and Succession act WESA provides as follows:

52. In a proceeding, if a person claims that a will or any provision of that resulted from another person

a) Being in a position where the potential for dependents or domination of the will maker was present, and
b) using that position to unduly influence the will maker to make the will or the provision of it that is challenged, and establishes that the other person was in a position where the potential for the dependents or domination of the will maker was present, the party seeking to defend the will or the provision of it that is challenged or to uphold the gift has the onus of establishing that the person is in the position where the potential for dependents or domination of the will maker was present did not exercise undue influence over the will maker with respect to the will or the provision of it that is challenged.

Undue influence is influence which over bears the will of the person influence, so that what he or she does is not his or her own act Longmuir v Holland 2000 BCCA 538 at 71.

Rebutting the Presumption of Undue Influence

In Stewart v McLean 2010 BCSC 64 the court summarized the legal approach to the question of whether the presumption of undue influence has been rebutted, at paragraph 97:

• To rebut the presumption of undue influence, the defendant must show that the donor gave the gift as a result of her own full, free and informed thought
• a defendant could establish by showing:

a) no actual influence was used in the particular transaction or the lack of opportunity to influence the donor;
b) the donor had independent legal advice or the opportunity to obtain independent advice;
c) the donor had the ability to resist any such influence
d) the donor knew and appreciated what she was doing
e) undue delay in prosecuting the claim, acquiescence or confirmation by the deceased
f) another factor may be the magnitude of the benefit or disadvantage

The statements of law were confirmed by the BC Court of Appeal in Cowpar-Smith v Morgan 2016 BCCA 200 at paragraphs 49–53.

In the Trudeau v tTurpin Estate decision, the court found that the plaintiff failed to establish that the defendant was in a position where the potential for dependents or domination of the will maker was present.

The court found that the evidence was overwhelming that the defendant did not exercise undue influence over the will maker.

In particular the court relied upon journal entries and various notes written by the deceased about her testamentary intentions. The court found them “illuminating”.

The evidence called by the defence was typical of undue influence defence testimony-and usually persuasive to the court, to demonstrate that throughout her adult life, the deceased was a stern, strong-willed, no-nonsense and domineering woman. She had strong points of view and unrelenting opinions and philosophies and was not easily dissuaded from them. She was well able to stand up for herself, defend her beliefs, and was quite prepared to assert her views. Anyone who defied her suffered her wrath.

Suspicious Circumstances

Suspicious Circumstances | Disinherited Estate Litigation

An important aspect of challenging the validity of a will due to lack of testamentary capacity is to look for suspicious circumstances which if found have the effect of shifting the onus of proof from a presumption of mental capacity to the propounder of the will having to prove mental capacity.

In addition to testamentary capacity, the propounder of a will must establish “that the testator knew and approved of the contents thereof.” With regard to this requirement, the Supreme Court of Canada in Lidstone v McWilliams ( 1931) 3 DLR 455 SCC, noted at p. 456-7:

When it has been established that a will has been duly executed by a testator having testamentary capacity, and also established that it was read by, or read over to, the testator before execution, there arises ordinarily, in the absence of suspicious circumstances, a strong presumption that he knew and approved of its contents, but there is no inflexible rule on the subject. If, however, there are circumstances which arouse the suspicions of the Court — as, for example, if the will was prepared by a person who takes a benefit under it – the party propounding the will must remove the suspicion by proving that the testator knew and approved of the contents of the document, and it is only when this has been done that the onus of proving fraud or undue influence is thrown on the opponents of the will.

Mr. Justice Lambert referred to that passage and explained the meaning of the term “suspicious circumstances” in Clark v. Nash (1989), 61 D.L.R. (4th) 409 at 425 (B.C.C.A.):

It is important to recognize that the “suspicious circumstances” referred to in that passage, and in other authorities, are not circumstances that create a general miasma of suspicion that something unsavory may have occurred, but rather circumstances which create a specific and focused suspicion that the testator may not have known and approved of the contents of the will.

The doctrine of suspicious circumstances may arise in circumstances in which the background concerning the making of the will gives rise or should give rise to some suspicion. The doctrine is intended to ensure that there is no doubt that the making of the will was the free and voluntary act of the testator. In dealing with the will, the Supreme Court of Canada in Vout v. Hay 1995 125 D.L.R. (4th) stated that when dealing with the doctrine of suspicious circumstances and the onus of proof, the party alleging undue influence must prove it, and the question becomes which is more persuasive: the evidence calling into question the validity of the will (the suspicious circumstances) or the evidence supporting it.

It is crucial that a will practitioner look for and identify factors which might appear to be suspicious and to ensure that there is ample evidence to override those circumstances as having had an effect on the testator, prior to the execution of the will. Again there should be a detailed record made of the practitioner’s observations, and the notes preserved.

 

A short list of the innumerable circumstances in which might be suspicious is as follows:

(a) where a gift is made to a person with whom the testator had a close relationship but which was not known or recognized by the testator’s family;

(b) where a gift is made to a person who is in a position to influence the testator, such as a care-giver, or the worst example, the party preparing the will;

(c) where an apparently unwarranted, undeserving, or unpopular gift is made to a beneficiary who, in the minds of the those left behind, should not receive the gift;

(d) where a gift is made to a beneficiary to whom the testator has had no close relationship, such as a charity;

(e) where the division of assets among the children of the testator is substantially unequal, or a certain child or children are harshly treated;

(f) where the will substantially deviates from previous wills;

(g) where a gift is made to a person standing in a fiduciary relationship;

(h) where the beneficiary accompanies the testator on each trip to your office during the process to complete the will;

(i) where you receive the testator’s instructions from someone other than the testator;

(j) Where there has been a recent serious illness or hospitalization;

(k) where there is any question at all about testamentary capacity;

(l) where there are indications of substantial medications that are potentially mind altering, being used;

(m) where there is a hasty or unwise marriage or common-law relationship;

(n) where there is evidence of depression;

(o) where there is a language/cultural disability or illiteracy;

(p) if you have been asked to prepare a will for someone by which you are to inherit, then you should ensure that the testator receives independent legal advice, and preferably take no part whatsoever in the preparation of the will.

In circumstances where the testator has a will and substantial changes are being made, it would be prudent to enquire of the testator as to the provisions of the previous will and the reasons for the changes.

Similarly if a child or children are being disinherited, you should consider preparing a detailed memorandum pursuant to the provisions of the Wills Variation Act ( now S 60 WESA) and enclosing a copy of that signed memorandum with the original will. You should try and insure the accuracy of the information, so that the testator is not subsequently viewed by the court as being vindictive, as opposed to objective.

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.

S. 52 WESA and Rebutting the Presumption of Undue Influence

S. 52 WESA and Rebutting the Presumption of Undue Influence In Wills

Ali v Walters Estate 2018 BCSC 1032 reviews the law relating to rebutting the presumption of undue influence in regard to a will as dealt with in S.52 of WESA that creates such a presumption and specifies who bears the burden of proof.

S 52 WESA states that in a proceeding, if a person claims that a will or any provision of that resulted from another person:

a) being in a position where the potential for dependents or domination of the will maker was present, and

b) using that position to unduly influence the will maker to make the will or the provision of it that is challenged,

and establishes that the other person was in a position where the potential for dependents or domination of the will maker was present, the party seeking to defend the will or the provision of it that is challenged or to uphold the gift has the onus of establishing that the person in the position where the potential for dependents or domination of the will maker was present did not exercise undue influence over the will maker with respect to the will or the provision of it that is challenged.

In Ali , the court found that the presumption was unnecessary to address because ample evidence made clear that Ali did not exercise do undue influence, and had the presumption applied, she had rebutted it.

The court followed Leung v Chan 2013 BCSC 976:

“ in order to invalidate a will on the grounds of undue influence, the asserting party must prove that the influence exerted against the will- maker mounted to coercion, such that the will did not reflect the true intentions of free will- maker and was not the product of the will- makers own act. The undue influence must constitute coercion, which could not be resisted by the will maker and which destroyed his or her free agency. It is well-established on the authorities that if the will- maker remains able to act freely, the exercise of significant advice or persuasion on the will- maker, or an attempt to appeal to the will- maker, or the mere desire of the will- maker to gratify the wishes of another, will not amount to undue influence.

In Woods v Woods 2013 BCSC 1030 aat para.37 stated that undue influence is not equivalent to coercion. To amount to undue influence, something more is required that causes the testator to express something that they do not really mean, or that does not express their own mind or free will. Sometimes this same concept is expressed as requiring that the donor acted of their own free will and informed thought in the transaction “ Geffen v Goodman (1991) 2 SCR 353 at 378-379.

In Stewart v. McLean 2010 BCSC 64 the court summarized the factors that assist in determining whether the donor or gave the gift is a result of their own free full and informed thought:

To rebut the presumption of undue influence, the defendant must show that the donor gave the gift is a result of her own full, free and informed thought. A defendant could establish this by showing:

a) no actual influence was used in the particular transaction or the lack of opportunity to influence the donor;
b) the donor had independent advice or the opportunity to obtain independent advice;
c) the donor had the ability to resist any such influence ( Calbick v Wayne 2009 BCSC 1222 at 64);
d) the donor knew and appreciated what he or she was doing Vout v Hay (1995) 2 SCR 876 AT para. 29; or
e) undue delay in prosecuting the claim, acquiescence or confirmation by the deceased.

Another relevant factor may be the magnitude of the benefit or disadvantage.

The Court of Appeal in Cowper-Smith v. Morgan 2016 BCCA 200 adopted the following, referring to the Stewart decision:

Factors to be considered in determining whether the donor acted of her own full, free and informed thought in entering the transaction include:

a) the lack of actual influence or opportunity to influence the donor;
b) the receipt of or opportunity to obtain independent legal advice;
c) the donor’s ability to resist any such influence
d) the donors knowledge and appreciation about what she was doing

Can You Prove Mental Incapacity for a Will?

Can You Prove Mental Incapacity for a Will?

Nykoryak v Anderson 2017 BCSC 1800 is a decision that in many respects is indicative of how difficult it is to succeed in having a will set aside on the basis of lack of mental capacity.

The court found that the testator who is aged 93, when he executed his last will had sufficient mental capacity to do so, despite some underlying cognitive issues. The evidence of his doctor and the lawyer who drafted the will was accepted by the court in proving that he had testamentary capacity.

The court held that the law is clear that the issue to be decided is not whether the deceased suffered from cognitive impairment when the will was executed, but rather, whether, despite the cognitive impairment, the deceased was able to:

1) Understand the nature and effect of a will understand the extent of what was being bequeathed under the will;

2) remember the persons who might be expected to benefit under the will

3) understand the nature of the claims that may be made by a person who is excluded by the will;

4) understand the extent of what was being bequeathed under the will

The lawyer who took instructions for the will had filed an affidavit at a summary trial, hearing, setting out his discussions with the testator. It was clear that the testator could not of had the discussion he had with the lawyer, if he did not meet the foregoing criteria.

In addition, the testator’s long time physician had provided an opinion in the form of an expert report that although the testator had some underlying cognitive issues at the time he executed his will, including some short-term memory loss and occasional confusion, he was nevertheless probably aware of what he was doing at the time.

 

The Law

The test for testamentary capacity was commented upon in Bull Estate v. Bull 2015 BCSC 136 at paragraphs 114 – 117:

114- the test for testamentary capacity is not overly onerous. Sufficient mental capacity to make a will may exist, despite the presence of cognitive deterioration, and the testator may have sufficient mental capacity even if his or her ability to manage other aspects of his/ her affairs is impaired.

115- simply having an imperfect or impaired memory does not in itself absent testamentary capacity unless it is so great as to leave no disposing memory. A disposing mind and memory is on able to comprehend of his own initiative and volition. The essential elements of the will making, property, objects, just claims to consideration, revoking of existing dispositions and the like. Moore v Drummond 2012 BCSC 1702 at 158

116- the testator should have an appreciation of the claims of the persons who are natural objects of his/her estate and the extent of his or her property of which he/ she is disposing Allart Estate v Allart 2014 BCSC 211 at para 30

117- Because testamentary capacity is a legal question, and not a medical question, a medical opinion, although valuable and relevant is not determinative of testamentary capacity Laszlo v. Lawton BCSC 305 at para 190

In the Ontario decision Birtzu v. McCron 2017 ONSC 1420 at para 40 the court stated:

40- the applicant notes that testamentary capacity is not the same thing is the capacity to manage one’s property and the capacity to confer a power of attorney. I agree. This does not mean the test is higher for testamentary capacity, rather, it is different. Should this point need illustration, none better can be found, then in the decision Palahnul v Palahahnuk Estate 2006 OJ 5304 were a will made by an 80-year-old testator had been found incapable of caring for her own person or her own property. The testator was cared for by a niece, under an agreement with the public Guardian and trustee, the court found:

Testator requirements for making a valid will:

The requirements for a testator to have a sound disposing mind in order to make a valid will include the following:

  • The testator must understand the nature and effect of a will
  • The testator must recollect the nature and extent of her property
  • The testator must understand the extent of what she is giving under the will
  • The testator must remember the person she might be expected to benefit under her will
  • The testator were applicable must understand the nature of the claims that may be made by a person she is excluding from the will.

Establishing a lack of testamentary capacity

Isolated memory or other cognitive deficits do not establish lack of testamentary capacity.

Such things as imperfect memory, inability to recollect names and even extreme imbecility, do not necessarily deprive a person of testamentary capacity. The real question is whether the testator’s mind and memory are sufficiently sound to enable him or her to appreciate the nature of the property was bequeathing, the manner of distributed and the objects of his or her bounty.

Care must be taken in reading the physicians clinical notes are in interpreting their diagnoses.

Diagnosing someone is having dementia does not necessarily mean the person is demented. Diagnosing someone is having Alzheimer’s dissolving the person lacks capacity, though it may foretell a loss of capacity. If the disease progresses, as expected. Delete from an initial diagnosis to a conclusion of legal incapacity is unwarranted and very dangerous reasoning.