Tag: Undue Influence
Notoriously tough to prove is the allegation of a testator being unduly influenced to make a will. The burden of proof lies with the objector, and corroborating evidence is required to discharge the evidentiary obligation.
Notwithstanding the difficulty one faces to establish undue influence, it is frequently a ground of attack in will challenge cases, often coupled with an allegation of lack of testamentary capacity. In Kozak Estate (Re), it was rather unusually the sole ground of attack, and it was successful.
The facts in brief are that late in life the testator met and fell in love with a much younger woman, and soon after made real property transactions and two wills favoring her, with the latter will made in contemplation of marriage (which marriage never happened). The testator’s sister and beneficiary under a prior will challenged the wills on the ground of undue influence.
The Court reviewed the law on the question, and in so doing highlighted that circumstantial evidence can be used to establish undue influence, with the types of relevant circumstances including:
- the increasing isolation of the testator including a move from his home to a new city which increased the respondent’s control over him;
- the testator’s dependence on the respondent;
- substantial pre-death transfer of wealth from the testator to the respondent;
- the testator’s expressed yet apparently unfounded concerns that he was running out of money;
- the testator’s failure to provide a reason or an explanation for leaving his entire estate to the respondent and excluding family members who would expect to inherit; and
- documented statements that the testator was afraid of the respondent.
The Court viewed the evidence of the propounder as having many inconsistencies, contradictions and unbelievable elements. In consequence, it did not rely on her testimony at all. No such credibility problems arose respecting the evidence of the objector’s witnesses.
The Court went on to assess and conclude that the objector had established undue influence. Among the critical supportive findings was that the propounder used the promise of marriage to control and manipulate the testator into providing economic benefits to her. Further essential indicia of manipulation were the isolation of the testator from friends and family and a change in the testator’s personality.
Pursuing this avenue to invalidate a will is no easy feat, particularly without direct evidence. What does not come as a surprise to me, however, is that the outcome in this case largely hinged on the credibility findings of the witnesses.
Thanks for reading and have a great day,
Natalia R. Angelini
Some other blogs on the issue that may be of interest are:
I recently read this article from the New York Times, which discusses the Will of Harper Lee, author of “To Kill a Mockingbird”, as well as some of the events that occurred several years prior to Harper Lee’s death. Harper Lee died in 2016, at the age of 89. In the years leading up to her death, there was some question as to her capacity, and possible vulnerability to coercion or undue influence.
The New York Times article states that Ms. Lee had had a stroke in 2007 and also had severe vision and hearing problems. Ms. Lee resided in an assisted living facility before her death. The article also describes the position taken by counsel for Ms. Lee as part of a copyright dispute in 2013, where counsel stated that Ms. Lee had been taken advantage of and coerced into signing away her copyright because she was “an elderly woman with physical infirmities that made it difficult for her to read and see.”
A couple of years ago, in 2015, Ms. Lee published her second novel, “Go Set a Watchman”. It turned out that this novel had been an earlier draft of her extremely popular book, “To Kill a Mockingbird”, which is purported to have been discovered by Ms. Lee’s lawyer, Tonja Carter, in 2014. There was some controversy surrounding the publication of “Go Set a Watchman” on the basis that Ms. Lee had not actually consented to the manuscript being published, and may have been manipulated into doing so. The publication of a new book was particularly remarkable given that Ms. Lee had only ever published one book prior to “Go Set a Watchman”—namely, “To Kill a Mockingbird”, which was published in 1960. However, an investigation was performed, and a determination made that there had been no elder abuse of Ms. Lee.
After Ms. Lee’s death, her Will had not been made a matter of public record, as a result of the successful efforts by Ms. Carter (named in the Will as executor) to have the Will sealed on the basis that Ms. Lee, who was a very private person, would have wanted her Will to remain private. It was only unsealed recently after litigation by the New York Times, and after Ms. Lee’s estate withdrew its opposition to the Will being unsealed.
The Will was signed only 8 days before Ms. Lee’s death, and apparently directs that the bulk of her assets be transferred into a trust formed by Ms. Lee in 2011. Ms. Carter is one of the trustees of this trust. Further documents relating to the trust are not public, and accordingly, very few details are known about it.
Given the questions surrounding Ms. Lee’s potential vulnerability in the years leading up to her death, it will be interesting to see whether anything further develops in relation to her estate, or the trust which apparently will hold most of the assets of Ms. Lee’s estate.
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In the spirit of the holidays, today I thought I would write about a recent decision related to gifting. In Grosseth Estate v Grosseth, 2017 BCSC 2055, the British Columbia Supreme Court considered whether the presumptions of resulting trust and undue influence were applicable to various inter vivos gifts made by a deceased uncle to one of his nephews. Ultimately, the court concluded that both presumptions were rebutted, and the gifts were valid.
In Grosseth Estate, the deceased, Mort, left a Will providing that the residue of his estate was to be distributed equally amongst his 11 nieces and nephews. However, most of his estate had been gifted to one particular nephew, Brian, and his wife, Helen, prior to Mort’s death. This left only about $60,000.00 to be distributed in accordance with Mort’s Will. One of Mort’s other nephews, Myles, who was the executor of Mort’s estate, brought a claim against Brian and Helen following Mort’s death, seeking to have the money that had been gifted to them by Mort, returned to the estate.
About 10 years prior to Mort’s death, he moved from Alberta, where he had lived most of his life, to British Columbia, where he moved into Brian and Helen’s basement suite. Mort became a full participant in the family; he was included on family outings, attended family dinners every night, and became like a grandfather to Brian and Helen’s children.
For the first couple of years after Mort moved in, he gave Brian and Helen money each month, on an informal basis, as contribution to household costs. Around 2 years after Mort had been living with them, Brian and Helen had decided to purchase a commercial property for Helen’s chiropractic practice. Mort insisted on gifting $100,000.00 towards the purchase price, making it clear that he did not want anything in return. Following this payment, Mort did not make further contributions to the monthly household expenses. The court concluded that there was a tacit agreement amongst Mort, Brian, and Helen that Mort’s generous gift had cancelled any notion that further payments would be required. Several years later, Mort also gifted $57,000.00 to Brian and Helen to pay off the balance of their mortgage.
The court found that the nature of the relationship between Mort, Brian, and Helen gave rise to the presumption of resulting trust as well as the presumption of undue influence. However, both of these presumptions are rebuttable.
The court acknowledged that, with respect to undue influence, Mort did depend on Brian and Helen, but based on the evidence of a number of individuals, concluded that he remained independent and capable throughout. Accordingly, the presumption of undue influence was rebutted.
The presumption of resulting trust was also rebutted as the court was satisfied that Mort intended the transfers to be gifts motivated by “a natural and understandable gratitude to Brian and Helen for the happiness and comfort of his final years.”
It is not uncommon for this type of situation to come up. Where a deceased lived with one niece or nephew (or sibling), or where the niece/nephew/sibling is the primary caregiver prior to the deceased’s death, any gifting that was done in the context of this relationship may be vulnerable to challenge on the basis of resulting trust or undue influence. Unfortunately, in some instances, the relationship dynamics involved in these kinds of arrangements can result in suspect gifts or transfers. Transfers made without clear evidence of an intention to gift can also raise questions. In this case, the court did not find that there was any improper behaviour on the part of the giftees, did find evidence of an intention to gift, and the transfers were ultimately upheld.
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In the world of estate litigation, there is a tendency to view influence askance: to see all influence as being motivated by self-interest and as inevitably carrying the seeds of coercion or “undue influence.”
Of course, this can’t be the case. A society that cares for the vulnerable and the elderly will require that strangers or distant relatives step in on occasion to help someone in need, particularly where there is no immediate family member to assist. A balance must be struck in the law as it relates to undue influence between protecting the elderly and vulnerable while, at the same time, respecting the dignity of an individual to exercise his or her own decision-making even in the face of influence or persuasion.
The law of undue influence has evolved differently as it relates to inter vivos gifts, on the one hand, and Wills, on the other. A full discussion of the reasons for this goes way beyond the scope of a blog but one observation that can be made is the acceptance that the law has shown for an individual to assert testamentary freedom, even if that means benefitting someone who exercises power over them.
Commentators such as John Poyser have observed the various rationales behind the fact that the presumption of undue influence is inapplicable in the case of Wills. While the law in this area has evolved, one of the policies underlying the law recognizes what we observed above: society requires the young to help the old. While there must be boundaries put on any conduct that would amount to an abuse of this social reality, there must at the same time be a recognition that well-meaning people should not be dissuaded from providing assistance if to do so would automatically trigger a legal presumption that their actions amounted to coercion.
Thanks for reading,
David Morgan Smith
Today on Hull on Estates, Ian Hull and Rebecca Rauws discuss the recent Court of Appeal decision in Vanier v Vanier, 2017 ONCA 561, including the different tests for undue influence and the practice of assessing undue influence by capacity assessors.
Vanier v Vanier: Power of Attorney Disputes, Undue Influence, and Losing Sight of a Donor’s Best Interests
Often in power of attorney litigation, relationship issues between past or present attorneys may take centre stage, with the unfortunate consequence that the best interests of the donor of the power of attorney may get lost amid suspicions and accusations being thrown back and forth. This can often arise in situations where siblings are involved in a dispute regarding power of attorney for a parent, and, in fact, was the situation in the recent Ontario Court of Appeal decision in Vanier v Vanier, 2017 ONCA 561.
At issue was the power of attorney for property of Rita, whose husband had predeceased her, leaving her his entire estate. She had three adult children: twin sons, Pierre and Raymond, and a daughter, Patricia. There was a power of attorney for property executed in 2011 naming Patricia. Unfortunately, Patricia allegedly took advantage of her role as Rita’s power of attorney for property, leading to litigation and a settlement. As a result, Rita executed a power of attorney for property in 2013 naming Pierre and Raymond, jointly and severally, as her attorneys for property (the “2013 POA”).
However, Pierre and Raymond became suspicious of each other, steps taken by each of them as Rita’s attorneys for property, and their relationship broke down. Issues arose in relation to Rita’s ability to access her money; in particular, Raymond had failed to cooperate in relation to unfreezing some corporate assets that had been frozen as part of the litigation with Patricia, and instructed Rita’s lawyer not to release settlement funds received from Patricia to Rita. Consequently Rita could not access funds to pay for basic living expenses, including rent at her retirement home. As a result, Pierre suggested that Rita take certain steps to facilitate access to her funds, including executing a power of attorney for property naming Pierre as her sole attorney for property, which Rita did in 2015 (the “2015 POA”).
Litigation and Appeal
Raymond brought an application seeking Pierre’s removal as attorney for property and a declaration that the 2015 POA was void. He also brought a motion seeking interim relief. The decision on the motion was appealed by Raymond, leading to this decision from the Court of Appeal. The Court considered 5 issues on appeal, but I will address only 1 of them for the purposes of this blog, being whether the motion judge erred in applying the wrong test for undue influence.
Proper Test for Undue Influence
Raymond argued that the proper test to be used was not the test for testamentary undue influence, but rather the test for inter vivos equitable undue influence, which would shift the onus of proving undue influence from Raymond, to Pierre, who would have to prove that Rita signed the 2015 POA willingly and without undue influence.
The Court of Appeal found that the application of the inter vivos test had not been argued before the motion judge, was a new issue raised on appeal, and, based on the general rule, the Appeal Court could not consider it. Moreover, there was no need for the Court to consider whether to grant leave to allow a new argument in this regard, as in any event, the inter vivos equitable undue influence test had no application on the facts.
In order to shift the burden of proof from the complainant (in this situation Raymond, arguing on behalf of Rita) to the other party (in this case, Pierre), two prerequisites must be met:
- The complainant reposed trust and confidence in the other party; and
- The transaction is not readily explicable by the parties’ relationship; the transaction is “immoderate and irrational”.
Pierre conceded that Rita did repose trust and confidence in him. However, the Court found that Rita’s decision to execute the 2015 POA was not “immoderate or irrational”. The Court noted that while the decision was emotionally difficult for Rita, it was totally rational. She knew that she was having issues accessing funds needed to pay her basic expenses. She also knew that some of Raymond’s actions had led to her inability to access those funds. The Court also found that the 2015 POA conferred little, if any, benefit on Pierre. Lastly, even if the inter vivos test applied, the Appeal Court held that the record did not support a finding of undue influence.
In conclusion, the Court of Appeal commented that it endorsed the words of the motion judge who had expressed the view that Raymond and Pierre had “lost sight of the fact that it is Rita’s best interests that must be served here, not their own pride, suspicions, authority or desires”, stating also that it hoped that in light of this decision, Rita’s sons would honour her wishes and end the litigation.
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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 successful application for leave to appeal to the Supreme Court of Canada (“SCC”) is an uncommon occurrence. It is therefore of considerable interest to the estates bar that leave to appeal from a decision of the British Columbia Court of Appeal (“BCCA”) has been granted in the case of Cowper-Smith v. Morgan.
The case touches on important aspects of both undue influence and proprietary estoppel. It was in respect of the BCCA’s decision finding against the availability of proprietary estoppel as a remedy that leave was granted and we will all eagerly await the pronouncement of the SCC in due course. While the issue of proprietary estoppel in the case will be the subject of next week’s blog, the analysis of the BCCA as it relates to undue influence makes for interesting reading.
Elizabeth Cowper-Smith had three children, a daughter, Gloria, and two sons, Max and Nathan.
2001 – Upon obtaining legal advice, Elizabeth transferred her home and investments into joint tenancy with Gloria and executed a Declaration of Trust providing for Gloria to receive the assets “absolutely” upon her death. This transfer left her estate devoid of any significant assets.
2002 – Notwithstanding the Declaration of Trust, Elizabeth executed a Will leaving 1/3 of her estate to each of her children.
2007 – Gloria asked Max to return home from England in order to care for Elizabeth. Gloria offered Max the right to purchase a 1/3 interest in the home as an incentive.
Gloria reassured her brothers that the property transfer into joint tenancy with her was done simply to help manage the mother’s affairs. Upon Elizabeth’s death, however, Gloria said the transferred assets were hers.
British Columbia Superior Court Decision (2015 BCSC 1170)
Max and Nathan brought an action against Gloria alleging that Gloria exerted undue influence on Elizabeth. Max also sought a declaration that, on the basis of proprietary estoppel, he was entitled to purchase Gloria’s 1/3 interest in the house. At trial, the judge found that Gloria’s true intentions were located in her 2002 will.
British Columbia Court of Appeal Decision (2016 BCCA 200)
Gloria submitted on appeal that independent legal advice provided to Elizabeth was adequate to rebut the undue influence.
The appeal was allowed in part. The legal advice given to Elizabeth was inadequate to rebut the presumption of undue influence; however, Max did not acquire a right to purchase Gloria’s 1/3 share by promissory estoppel (again, the SCC has granted leave to appeal this latter finding).
Issue 1: Undue Influence
The trial judge, upheld by the BCCA, ruled in favour of Max and Nathan, and set held that the property was impressed with a trust for the benefit of the estate: the presumption of Gloria’s undue influence was not rebutted. This is an interesting finding, as Elizabeth obtained her own legal advice prior to executing the transfers to Gloria. Independent legal advice can be used to rebut presumptions of undue influence, if the independent legal advice qualifies as “informed advice”.
In applying Geffen v Goodman Estate,  2 SCR 353, the trial judge found a potential for domination inherent in the relationship between Gloria and Elizabeth, that gave rise to the presumption of undue influence.
The test for Gloria to rebut the presumption of undue influence was established in Geffen:
- An “examination of the nature of the transaction[s]”;
- A finding of whether the donor entered into the transactions as a result of her “own full free and informed thought”; and
- A “meticulous examination of the facts.”
The BCCA agreed with the trial judge’s conclusion that, based on this test, Gloria was not able to rebut the presumption of undue influence. Despite the fact that Elizabeth went to two lawyers, the court found that Gloria and her husband had advised the lawyers that Max and Nathan were trying to take Elizabeth’s property. Moreover, Gloria was present at some of the meetings with the lawyers. Lastly, the lawyers relied on the false information from Gloria and failed to adequately provide “informed advice” and otherwise probe for the existence of undue influence.
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If a fraudulent misrepresentation affects a testator’s testamentary intentions, either the provision or the entire will may be set aside. It has been settled law for centuries that fraud is sufficient grounds to set aside a will (see: Lord Donegal’s Case (1751), 2 Ves Sen 407). Despite this, there is relatively little case law on the impact of fraud on a will. Some possible reasons for this dearth might include the difficulty in establishing a case of fraud, the potential uncertainty of the consequences of the fraud, and a general preference to plead undue influence, where there is overlap.
The intent to deceive is central to making out a case of fraudulent misrepresentation. An innocent misrepresentation that affects a testator’s intentions will not be sufficient grounds to set aside a will, even if the ultimate impact is the same as if the representation had been fraudulent. In the English case of Posner, Re,  1 All ER 1123, a will was challenged on the grounds that the legatee described as “wife” of the testator had not in fact been his wife, because of alleged bigamy. However, because there was no allegation of fraud on the part of the “wife”, the bequest was upheld. This case can be contrasted with Wilkinson v Joughlin (1866), LR 2 Eq 319 (Eng Ch), which also involved a bigamous marriage. In this case, the court held that because the beneficiary had fraudulently represented herself as a widow to the testator at the time of their marriage, she could not inherit under the will. However, the court upheld the gifts to her daughter, whom the testator believed to be his step-daughter, because the daughter had not participated in the fraud.
Even where fraud is established, the provision or will might be saved, if the testator had reasons other than the fraud for making the disposition. In Posner, Re, the court held that a legacy will fall if it is induced by fraud, “which alone can be supposed to have been the motive of the bounty.” This suggests that if the testator has more than one reason to give a gift, one of which is fraudulent, the gift may still be valid. This approach was followed in Ontario in Isaacs, Re,  OR 942, in another case in which a marriage was found to be void ab initio. The court held that it could not be assumed that the deceased would have acted differently if he had known the beneficiary did not have the legal status of wife.
Alleging fraud can be risky for an objector, because an unfounded allegation of fraud can result in cost consequences against the party making the unfounded allegations. In many cases where fraud might be alleged, an allegation of undue influence may also be available.
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On September 25, 2016, 60 Minutes highlighted an interesting estate planning issue involving Pablo Picasso and inter vivos gifts. An inter vivos gift is a transfer of property from a donor to a donee, during the donor’s lifetime.
This story involved the family’s long-time electrician of 15 years and family friend, Pierre Le Guennec, who claimed he was gifted a briefcase filled with the artist’s work. The briefcase contained 271 works and 2 full sketch pads, all unsigned, that dated from 1900-1932. Many years later, Le Guennec contacted the Picasso Administration in order to get the pieces valued for his own succession planning purposes, and to have the pieces authenticated. Picasso’s son, Claude, a representative from the Picasso Administration, met Le Guennec and his wife and assumed that the pieces were stolen due to inconsistencies in the story about how the pieces came into Le Guennec’s possession. The pieces were valued at around $100 million.
In February 2015, after authorities had the artwork seized and Le Guennec and his wife had been put in custody, Le Guennec went on trial. The authorities could not prove the theft but convicted Le Guennec of possessing stolen property. He was given a two year suspended sentence, along with his wife, and is appealing.
The aformentioned raises the question of how to prove an inter vivos gift. In order to perfect a gift, and to have a valid gift, there are three necessary elements:
- intention to donate;
- acceptance by the done; and
- sufficient act of delivery and transfer
As per Johnstone v Johnstone,  OJ No 58, the onus of proving that a gift is valid is on the recipient of the gift. The recipient must show a clear and unmistakable intention by the donor to have given the gift, and that the gift was given voluntarily by the donor.
In order to challenge an inter vivos gifts, the challenger must prove undue influence, fraud, coercion, mistake, or lack of capacity. We have previously blogged, and uploaded a podcast, on undue influence.
In order to properly document an inter vivos gift, it is best for the donor to show evidence of intention. Intention is the most difficult aspect of the test to prove, and without intention, the gift cannot be perfected. It is best to have witnesses who have seen the giving of the gift, or professionals such as solicitors who may have been aware of the gift. If intention is not proven, it will be assumed that the “gift” was instead a resulting trust. If an individual can show intention of both legal and beneficial title, the exchange will be seen as a gift.
Thank you for reading,