The equitable doctrine of undue influence is one way in which inter vivos transfers or the terms of a testator’s Will can be challenged. The Court has the ability to set aside a gift or transfer if it concludes that influence was being exerted on the grantor. Undue influence can be difficult to prove, and the onus is on the challenger of the transaction to prove that the grantor or testator was unduly influenced.
However, in certain circumstances, the Court may conclude that a presumption of undue influence arises. In the recent decision of Morreale v Romanino, 2017 ONCA 359, the Ontario Court of Appeal further clarified the test to be met in order to trigger the presumption of undue influence.
But First, Some Background
Mr. and Mrs. Ruccia had two children, Giustina (the “Appellant”) and Elisabeth (the “Respondent”). The Appellant’s husband had a falling out with Mr. Ruccia, and they remained estranged until Mr. Ruccia’s death. In contrast, the Respondent lived with her parents for her entire life and contributed to their care as they became older.
Upon their deaths in 2009, the Appellant discovered that her parents had made an inter vivos gift of their most significant capital asset to the Respondent, being the equity in the home that they had lived in with the Respondent and her husband. The evidence showed that the same solicitor acted on the sale of the parents’ property and subsequently acted for the Respondent and her husband with respect to the purchase of a new home.
The Appellant commenced a legal proceeding, alleging that the parents were unduly influenced into gifting their equity in the home to the Respondent. At trial, the Appellant’s action was dismissed.
After reviewing the relevant legal principles, the trial judge concluded that the Respondent’s relationship with her parents did have the capacity to create undue influence, but found that the presumption of undue influence did not arise because it was impossible to find “any specific act of coercion or domination.” In any event, the trial judge concluded that if the presumption did arise, the presumption was rebutted.
The Presumption of Undue Influence
In Geffen v Goodman, the Supreme Court of Canada set out the test to be met in order for a plaintiff to establish a presumption of undue influence. The first enquiry is “whether the potential for domination inheres in the nature of the relationship itself.” If such a relationship exists, the next enquiry is an examination of the nature of the transaction.
On appeal, the Appellant submitted that the trial judge erred in law by concluding that the presumption did not arise because there was no “specific act of domination or coercion.” Justice Gillese, writing for a unanimous Court of Appeal, agreed with this submission and distinguished between the presumption of undue influence and actual undue influence.
Justice Gillese held that the test “requires the trial judge to consider the whole of the relationship between the parties to see if there is the potential for domination, rather than looking for a specific act of coercion or domination.”
However, the Court of Appeal concluded that the trial judge had carefully examined the family dynamic, including Mr. Ruccia’s strong-willed personality, his relationship with the Appellant and her husband, and his control over financial decisions.
In the circumstances, although the Ruccias and the Respondent were in a relationship of dependence, the Court of Appeal held that the trial judge had not erred in concluding the presumption of undue influence did not arise.
Thank you for reading,
Umair Abdul Qadir
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A couple of weeks ago, Jonathon Kappy and I podcasted on a recent decision of the Manitoba Court of Queen’s Bench, which raises the issues of knowledge and approval and suspicious circumstances, and which provides an effective overview of the shifting evidentiary burdens within the context of a will challenge.
As many of our readers may already be aware, if a last will and testament or other testamentary document is executed in compliance with the formal requirements (that is, it is executed by the testator, duly witnessed, and testamentary in nature), it is presumed to be valid. However, if a party challenges the validity of a will and is able to establish that its execution was surrounded by suspicious circumstances, the presumption that the will is valid not longer applies, and the burden of proving the will shifts to the person asserting the validity of the document (its propounder). Even if suspicious circumstances cannot be established, the challenger may seek to have a will proved in solemn form by the propounder. In order to prove a will in solemn form, the propounder need only provide basic evidence in support of the due execution of the will and the testamentary capacity of the testator. If the Court accepts that suspicious circumstances existed at the time of the execution of the will, the evidentiary burden on the propounder can become relatively onerous.
In the recent Manitoba case of Garwood v. Garwood Estate, 2016 MBQB 113, 2016 CarswellMan 198, after the will had been proved in solemn form, Justice Bond reviewed the circumstances at hand in determining that they were suspicious and that the will, accordingly, needed to be proved by the propounder to be valid on a balance of probabilities. However, the Court considered the suspiciousness of the circumstances in determining the strength of the evidence in support of the validity of the will that would be required. Justice Bond found that, although the test for suspicious circumstances had been met (the drafting solicitor’s notes were sparse and his testimony was not found to be credible, the testator had been legally blind and incapable of reading the will herself, suggesting that she may not have had knowledge of and approved of the contents of the will, etc.), the circumstances were not so suspicious as to require the propounder to provide compelling evidence in support of the validity of the will. The Court was satisfied that the will was valid simply on the basis of the fact that the will had been prepared by a lawyer in accordance with the testator’s instructions, none of the major beneficiaries were involved in the testator’s estate planning, and the lack of evidence supporting the allegations that the will was procured by undue influence and/or that the testator was mentally incapable at the relevant time.
Thank you for reading.