Sufficiency of Independent Legal Advice
Yesterday we discussed Modonese v. Delac Estate, 2011 BCSC 82 (CanLII), which considered when there is a presumption of undue influence and the factors that tend to rebut that presumption.
One important factor is the presence of independent legal advice. But what are the considerations that come into play in assessing the kind of legal advice required to rebut the presumption?
The function of independent legal advice is to remove a taint that, if not removed, might invalidate a transaction. There are two types of independent legal advice (See Cope v. Hill, 2005 ABQB 625):
a) Advice as to understanding and voluntariness; and
b) Advice as to the merits of a transaction.
Some of the factors to be considered in determining whether legal advice given to the granting party is sufficient to rebut the presumption include:
a) Whether the person benefiting is present at the time the advice is given and/or at the time the documents are executed;
b) Whether the lawyer was engaged by and took instructions from the person alleged to be exercising the influence;
c) 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 discussed the financial implications with the grantor;
d) Whether the lawyer enquired as to whether the donor discussed the proposed transaction with other family members who might otherwise have benefited if the transaction did not take place; and
e) Whether the solicitor discussed with the grantor other options whereby she could achieve her objective with less risk to her.
Ultimately, the adequacy of independent legal advice will always be a situation-specific inquiry and so it is important to consider all the surrounding circumstances in relation to one another.
Sharon Davis – Click here for more information on Sharon Davis.