B.C. Case Comment: Court of Appeal Overturns Award Against Notary who Witnessed Signature to Land Transfer

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.