While I’m not quite old enough (thankfully) to remember the halcyon days when Frank Sinatra’s “Love and Marriage” graced the airwaves, I am certainly still young enough to remember the song being played at the beginning of every rerun of “Married… with Children”. In the enduring words of Frank Sinatra, capacity and estate litigation go very much together like a horse and carriage… or something like that.

In James (Attorney for) v. Belanger, [2023] A.J. No. 56, the Alberta Court of King’s Bench grappled with the capacity of an individual to execute an inter vivos transfer in circumstances where cognitive issues were being raised. The defendant instructed a solicitor to prepare a transfer of title on a condominium several months after he learned that his common law partner, ie. the plaintiff’s mother (“Ms. S”), was diagnosed with “dementia vascular or mixed”. The property transfer was not disclosed to the plaintiff and her family until three years later and an action was commenced. At issue was whether Ms. S had the capacity to execute the transfer thereby creating a joint tenancy with the defendant or whether Ms. S’s intentions were such that the defendant was holding the condominium in trust for Ms. S and her estate.

In first reviewing the law on capacity, the Court opined at paragraph 11 that “[t]he level of mental capacity required to give effect to an inter vivos transfer is the same as that for the execution of a will where the gift is significant relative to the donor’s overall estate”. [emphasis in original.] On that reasoning, the Banks v. Goodfellow test was instructive in the circumstances:

1. the testator must understand the nature of the act and its effect;
2. the testator must understand the extent of the property of which he/she is disposing;
3. the testator must be able to comprehend and appreciate the claims to which he or she ought to give effect;
4. the testator must not be suffering from a disorder of the mind or an insane delusion which would influence his or her Will in disposing of his or her property and bring about a disposal, which, if the mind had been sound, would not have been made.

In holding that the inter vivos transfer was void, the Belanger Court weighed two key pieces of evidence.

With regard to the retrospective capacity assessment tendered, the Court acknowledged while there were legitimate concerns about the temporality of such expert reports, these concerns were addressed by the fact that a capacity assessment at or around the time of the transfer would have been impossible as the transfer was only disclosed years later and, more importantly, there was already “significant medical information… prior to the transfer of land, as well as the results of cognitive tests administered by physicians and nurses… Furthermore, Dr. Pachet was able to review medical records and assessment results subsequent to the transfer”.

The property transfer also contradicted decades of consistent behaviour of Ms. S, who had never taken steps to add the defendant to the title of the condominium for the 16 years they had been together. Moreover, she executed a will two and a half years before the property transfer expressly excluding the defendant from her estate.

The Court accorded little weight to the evidence of the drafting solicitor, whose notes reflected the fact that the defendant had not informed him of the existing dementia diagnosis. All communications prior to the appointment had been with the Defendant and not the defendant’s mother, and the property transfer had been prepared at the instruction of the Defendant. Similarly, the Court found issues in the testimony of Defendant who was reluctant to admit the defendant’s mother’s dementia, though not necessarily for nefarious reasons.

On these bases, the Belanger Court set aside the property transfer. It was therefore unnecessary to consider whether the property was held in trust for Ms. S and her estate.

Thanks for reading.

Aaron Chan