The transfer of property into joint ownership with right of survivorship is a common estate planning tool. But can you take back the transfer after you have made it? You can make a new will changing the distribution of your estate, but can you undo the transfer of property into joint ownership?
This is what a 91 year old father tried to do (unsuccessfully) in the recent B.C. Supreme Court decision of Sandwell v. Sayers 2022 BCSC 605. The father tried to argue that the doctrine of unconscionable procurement applied.
The doctrine of unconscionable procurement provides that where there is a transfer of significant benefit that the recipient actively caused to occur, there must be proof of the donor’s full comprehension and understanding of the effects of the transfer for it to be upheld.
The onus is on the party attacking the transaction to prove, on a balance of probabilities, that it was unconscionably procured. Once the party challenging the transaction has established a significant benefit and the active involvement on the part of the person obtaining the benefit in the procurement or arrangement of the transfer, then there is a presumption that the donor of the gift did not truly understand what she was doing in making the transaction.
Turning to the facts in Sandwell, the plaintiff father had two children, a son and the defendant daughter. In December 2020, the father transferred an interest in his home in Kelowna to his daughter, making them joint tenants. He later brought legal proceedings to get the property back into his sole name.
The father lived alone at the property. The father was in good health. There was no issue with his capacity at the time of the transfer.
Back in 2008, the father had executed a transfer of his home to his son for $1.00. The transfer was never registered, and the original documents were retained by the lawyer who drafted them. The daughter discovered copies of the documents, along with a note that read “this transfer will not be used except with your consent or in the event that your health fails and there is no likelihood of your recovery.” The daughter brought this to the attention of her father. The father claimed that his daughter told him that his son could take his property and leave him broke.
The daughter and the father attended the office of a notary. The daughter claimed that the father made the appointment, because he wanted to sign over half the property to her (and she would get the rest of it when he died). The father claimed that the daughter told him that she made an appointment with a notary and that he should go with her, and when he arrived, the notary was expecting him and had prepared documents adding the daughter to the title to the property.
The notary was alive to concerns of undue influence, and he recorded these concerns in his notes. He met with the father alone and reviewed the pros and cons of transferring title into joint tenancy. He told the father to take some time to think about it (which he did).
After the initial consultation, the father called the notary and said that he did not want to proceed with the transfer. A few days later he left four voicemail messages for the notary indicating he wanted to proceed with the transfer, and the daughter also emailed the notary to say that her father wanted to proceed with the transfer. The transfer was registered.
The father now argued that the transfer into joint ownership ought to be set aside under the doctrine of unconscionable procurement – the daughter caused the transaction to occur (to her benefit) and he did not fully understand the effects of the transaction. The daughter argued that not only were the requirements of the doctrine not met, but the entire doctrine is not good law and should not be applied in B.C.
The Court went through the history of the doctrine of unconscionable procurement, noting that it was popular in the 1800s and early 1900s, but is rarely mentioned in current case law. It has been referenced in a few recent cases (and I have noticed that lately it is being pled in more claims), but there has been no detailed analysis of whether the doctrine still has any place in British Columbia. One concern is whether the courts should endorse claims brought beyond such “traditional” grounds of attack on transactions, such as undue influence, incapacity and resulting trust.
In Sandwell, the Court had “real doubt” about the place of the doctrine of unconscionable procurement in British Columbia law. However, if the doctrine of unconscionable procurement exists and has any place in B.C., it did not assist the father in this case.
First, at best the daughter arranged the appointment with the notary (although that was disputed) and caused him to fear his son might take his home. This was not enough to satisfy the requirement that there be “active involvement by the person obtaining the benefit in the procurement or arrangement of the transfer.”
Second, the father failed to present any evidence which indicated a misunderstanding of the impact of his actions. He did not provide evidence that he failed to understand the effect of transferring the property into joint ownership.
The Court also refused to set aside the transfer on the basis of unjust enrichment.
The Court expressly stated that it did not intend to make a decision that applies beyond the scope of the facts that were before it. As a result, the B.C. Courts have not stated that the doctrine of unconscionable procurement does not apply in British Columbia. However, Sandwell contains a strong analysis and argument in support of why the doctrine should not apply in British Columbia, or should only apply in very limited circumstances.