What duties does a notary (or lawyer) have when witnessing a signature on a document, such as a land transfer document, to ensure that the person signing the document understands that document and is voluntarily signing it? What if you are only retaining this person for the limited purpose of witnessing your signature because the document must be notarized?

In Engman v. Canfield 2023 BCCA 56, a notary witnessed a signature on a Form A Transfer document, which transferred her 20-acre property to a third party. The notary only witnessed the signature (and was paid $50 for his services). It turned out that the transfer was part of an unconscionable purchase and sale agreement, and the transferor was “situationally vulnerable” when she signed the document. She was elderly, had health problems, and was feeling pressure to sell. She was also deprived of important information when she agreed to the sale, and the agreement was the product of unequal bargaining power and was an improvident bargain. However, the notary was not aware of any of this.

When the transferor was not paid for her property, she brought a claim against various defendants, including the notary (who she sued for negligence). At trial, the notary was held liable for $465,000 in damages, which was the fair market value of the property at the time of the transfer.

At trial, the Court found that the notary owed the transferor a duty to act with reasonable care when he witnessed her signature, and he breached that duty by not inquiring into the transferor’s capacity, her understanding of the form, the voluntariness of the transfer, or that she received independent legal advice.

The B.C. Court of Appeal allowed the appeal, and dismissed the action in negligence against the notary.

The notary argued that he was merely an “officer” witnessing a signature on a Land Title transfer form, and so he had very narrow responsibilities to confirm the identity of the person signing the form and confirm this was the person named in the form, and witness that person’s signature on the document.

The Court of Appeal did not accept this. The notary was acting in his role as a notary public, and there are standards established for his profession, including urging unrepresented persons to obtain independent legal advice, and if they fail to do so taking care to make sure the person is not under the impression that their interests would be protected by the notary. The Court of Appeal held that the Land Title Act and the notary’s professional guidelines required him to go beyond confirming the identity of the signatory and the fact that the signature on the document belongs to that person. For example, the guidelines provide that notaries should make sure the signature is given voluntarily, and the signatory is aware of the significance of the transaction.

The Court of Appeal upheld the finding of the trial judge that the notary breached his standard of care. However, the Court of Appeal allowed the appeal of the finding of causation. The trial judge found that had the notary insisted that the transferor receive legal advice before he witnessed the form (which he was supposed to do), she would have avoided the loss. The notary argued that this was conjecture, and that the loss would have been suffered in any event.

A defendant is not liable in negligence unless their breach caused the plaintiff’s loss. In some cases, causation can be established by inference, but it cannot be guesswork or conjecture. The Court of Appeal held that there were too many unknowns about what would have happened if the notary had met the standard of care, and that the transferor failed to establish on a balance of probabilities that had the notary made in proper inquiries and declined to witness the Form A because of the responses, the transferor would have acted in a different manner. The other evidence in the case showed that the transferor had capacity, and was not interested in seeking legal advice about the inherent risks.

The appeal was allowed that the claim in negligence against the notary was dismissed.

If there are suspicions transfers during the deceased’s lifetime, these can be scrutinized and investigated after the death of the deceased. A personal representative ought to consider whether any large transfers should to be challenged, on the basis that a gift was not intended, or that the transfer is otherwise invalid (i.e. due to undue influence, lack of capacity).

In Schwab Estate v. Warriner 2023 BCSC 220, the deceased died from a fentanyl overdose at the age of 47. He had two children, aged 11 and 9. The deceased did not leave a will.

There was a dispute as to whether the defendant was living in a marriage-like relationship such that she was a “spouse” of the deceased. If she was a spouse, she would get a share of the estate under an intestacy. If she was not a spouse, then the children would get the entirety of the estate. It was held that the defendant was not a spouse. This is a highly fact-specific inquiry. I discuss the issue of consideration of spousal status in other posts, for example here.

The second issue in Schwab Estate related to a transfer of $350,000 from the deceased to the defendant four days before his death. The deceased sold his home five weeks before he died, received $800,000 from the sale, and provided a $350,000 bank draft to the defendant.

The defendant argued that the deceased owed her money, and the $350,000 draft was to pay her back. She said that the deceased owed her money for being the primary bread-winner for the years they were together. She gave evidence that there was an agreement between her and the deceased about the approximate amount of the debt and what he was to repay to her.

The court rejected this claim. The Court did not accept the defendant’s testimony, and the documents (in particular bank records) did not assist with her position. There was no evidence of an agreement to pay, and there was no evidence that the amount that would have been payable was $350,000. The Court relied upon the testimony of a witness who described a conversation which suggested that the deceased did not consider that he owed the defendant any money. The bank records also showed that the deceased attended to payment of other debts that he discussed with other parties (including a debt to his drug dealer).

As a result, the transfer was gratuitous and the presumption of resulting trust applied. The defendant failed to establish that the deceased intended to gift her the funds. The evidence was that the deceased intended to gift the funds, potentially with the deceased’s brother. There was also evidence that the deceased intended to shield the monies from the mother of his children.

The Court also held that the transfer was procured by undue influence. The deceased did not transfer the $350,000 of his own full, free and informed thought. The deceased was vulnerable as a result of his ongoing drug addiction, health condition, and paranoia about the mother of his children.

The funds had been spent without an accounting, and so they could not be simply returned. Instead, the court awarded the deceased’s estate damages in the amount of $350,000. The Court also awarded punitive damages in the amount of $50,000, for using her position for her own profit, and spending all of the money with no accounting.