The revival of the doctrine of unconscionable procurement in this matter was previously discussed in a blog on June 24, 2020. Since then, the matter ended up at the Ontario Court of Appeal. If one thing can be concluded with certainty, is that the facts serve as a cautionary tale that even when there are proper succession plans in place, things could still go wrong due to conflicting family dynamics.

Elias and Henia Gefen were married for 65 years. They were Holocaust survivors from Poland who immigrated to Canada in 1951. The couple had gradually begun investing in real estate, and overtime had built a significant portfolio. The couple had three sons: Harvey, Harry, and Yehuda.

Like many other couples, Elias and Henia had mirror wills, and when Elias died on October 28, 2011, his estate passed absolutely to Henia, who was also named as his sole executor. Henia did not feel that her two younger sons, Harry and Yehuda, should receive any of her or Elias’ money. As such, she made various inter vivos gifts to Harvey only.

Harry and Yehuda’s claims were primarily based on a document allegedly signed by Elias shortly before he died, which evidenced a mutual wills agreement that divided Elias’ estate into three equal shares for the three sons on Henia’s death. Their claim also alleged that Elias and Harvey entered into a secret trust agreement, under which all assets received by Harvey from Elias were to be held by Harvey in trust for his brothers. In the alternative, Harry and Yehuda raised the principle of unconscionable procurement to hold Harvey accountable for assets he and his children received from Henia.

The doctrine is based on the idea that it is unconscionable to allow a significant inter vivos wealth transfer to stand where the recipient was instrumental in causing it to occur and the maker did not truly understand what he or she was doing. The onus is on the party attacking the transaction to prove, on a balance of probabilities, that the gift or wealth transfer was procured without understanding on the part of the maker.

The Court of Appeal agreed with the trial judge that Harvey had unconscionably procured from Henia assets of approximately $8.66 million after Elias died. However, this was only to Henia’s benefit, as it meant that the assets would revert to her, to deal with as she pleased. The court chose not to address the merits of unconscionable procurement and whether it should be endorsed as a way to attack transactions. When it comes to this doctrine, the court concluded that this decision should not be taken as an approval or rejection of unconscionable procurement being part of the law of Ontario.

As a result of this case and the re-emergence of the doctrine, it is worth following the future application of the doctrine of unconscionable procurement in Ontario.

Thank you for reading, and have a great weekend.

Margarita Grup