Inter Vivos Transfers, Undue Influence and Independent Legal Advice

March 31, 2016 Umair Capacity, Estate Planning, Ethical Issues, Litigation, Wills Tags: , , , , 0 Comments

The Ontario Court of Appeal’s recent decisions in Neuberger v York, 2016 ONCA 191, and Spence v BMO Trust Company, 2016 ONCA 196, have garnered a significant amount of attention. The appellate court’s recent decision in Donis v Georgopoulos, 2016 ONCA 194, would also be of interest to the estates bar.

In Donis, the Deceased made a Will distributing her Estate equally between her three children, Dimitra, Christos and Eleni. After her father passed away in 2005, Dimitra became the Deceased’s primary caregiver so that the Deceased could continue to live independently at her home (the “Home”).NHP5D6VX99

Initially, the Deceased planned to change her Will to leave the Home to Dimitra. However, she ultimately decided to sell the Home to Dimitra for the amount of $100,000.00, which she intended to bequeath to her other children in a new Will.

In 2007, Dimitra and the Deceased signed a Memorandum of Agreement (the “MOA”) drafted by the Deceased’s solicitor, Mr. Shea. Under the MOA, the Deceased transferred her interest in the Home to Dimitra upon the payment of the sum of $100,000.00 from the proceeds of sale. In return, Dimitra agreed to allow the Deceased to continue to live at the Home “for the balance of her lifetime unless she is unable for health reasons to do so.”

The Deceased was fluent in Greek and Macedonian, and her lawyer communicated with the Deceased in English with Dimitra’s assistance. Although Dimitra attended meetings with the Deceased, the lawyer would confirm the Deceased’s instructions with Dimitra out of the room. The Deceased also saw a Macedonian-speaking lawyer, Mr. Petrovski, who did not review the MOA with the Deceased but did confirm that she intended to transfer the Home to Dimitra.

Upon the Deceased’s death, the agreement to transfer the Home to Dimitra reduced the inheritance of the Deceased’s other children. The Deceased’s son Christos challenged the transfer on the basis that the Deceased lacked the capacity and understanding to sign the MOA and that the Deceased was unduly influenced by Dimitra.

At trial, the trial judge held that the Deceased was mentally capable of entering into the MOA and understood the contents of the MOA. The trial judge also concluded that the Deceased’s dependence on Dimitra gave rise to a presumption of undue influence, but that Dimitra had rebutted the presumption. Christos appealed the trial judge’s decision on a number of grounds.

On the issue of undue influence, Christos argued that the advice the Deceased received from Mr. Shea was deficient and insufficient to rebut the presumption of undue influence. He asserted that Mr. Shea was in a conflict of interest because Dimitra was present at his meetings with the Deceased, and that Mr. Petrovski did not remedy this conflict because Mr. Petrovski did not explain the MOA to the Deceased. Christos also argued that Mr. Shea did not adequately explain the risks of the MOA.

In dismissing Christos’s appeal, the Court of Appeal rejected his arguments regarding the trial judge’s findings on the issue of undue influence. The Court affirmed the trial judge’s finding that Mr. Shea was not in a conflict of interest. He had been retained by the Deceased, and had a practice of confirming her instructions in Dimitra’s absence even though Dimitra was present at meetings. The legal advice provided to the Deceased ensured that she understood the nature and the risks of the inter vivos transfer.

Thank you for reading,

Umair Abdul Qadir

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