Category: Elder Law and Commiteeships

Undue Influence may be Presumed in Certain Circumstances

August 10, 2020

The term “undue influence” often brings to mind overt acts of elder abuse, where a gift is the result of influence expressly used by the recipient (the “donee”) to obtain that gift.

However, the law recognizes a second class of transactions which may be set aside on grounds of undue influence: where the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor. There are certain relationships with the potential for dominance and dependence,  and if you receive a gift in those circumstances it is presumed that it was procured by undue influence unless proved otherwise.

This second class of undue influence does not depend upon proof of reprehensible conduct. The person receiving the gift may have acted honestly and without ulterior motive. The person may honestly say that the gift was a completely unexpected and unsolicited. However, the courts will intervene as a matter of public policy to prevent the potential for influence that exists in certain relationships from being abused.

As a result, you may receive an unsolicited gift from a vulnerable person, and find that you are placed in the unfortunate position of having to rebut a presumption that you received the gift as a result of influence that you potentially could have exercised over the donor.

The court will first examine the relationship between the donor and donee. Is the nature of the relationship such that the potential for domination exists?

This presumption as it pertains to undue influence in the drafting of a Will can now be found in the Wills, Estates and Succession Act [SBC 2009] Chapter 13. The Act provides that where a person establishes that someone was in a position where the potential for dependence or domination of a will-maker was present, the party seeking to defend the Will has the onus of establishing that the person in that position did not exercise undue influence over the will.

If a relationship of dependency exists, the court will next consider the nature of the transaction. In situations where the donee does not provide consideration (i.e. gifts or bequests), it is enough to establish the existence of a dominant relationship.

Once a plaintiff shows that the relationship between the donor and donee was such that the potential for influence exists, and the transfer is gratuitous, the onus moves to the defendant to rebut the presumption of undue influence. The donee must establish on a balance of probabilities that the donor entered into the transaction of his own “full, free and informed thought”. The defendant may show no actual influence was deployed in the particular transaction (such that the presumption is rebutted), or the donor had no independent legal advice.

A gratuitous transfer from an elderly parent to an adult child does not automatically result in a presumption of undue influence. However, if a parent is vulnerable through age, illness, cognitive decline or heavy reliance on the adult child, the presumption may arise.

A presumption of undue influence may also arise in circumstances where a where a donee is intimately involved with the management of the donor’s assets. However, as discussed in a previous post found here, simply assisting a loved one will not necessarily trigger the presumption.

Undue Influence, or Simply a Caring and Involved Loved One?

July 28, 2020

We are often contacted by clients who feel very strongly that a loved one, usually a parent or spouse, has been unduly influenced to make an estate plan that does not reflect their actual intentions.  For example, a person may be unduly influenced in the making of their will, a transfer of property into joint ownership, or a large gift made during the person’s lifetime. Undue influence is a serious allegation, and there is a high threshold to establish it.

Undue influence certainly does happen. Elder abuse unfortunately happens. However, some clients’ concerns of undue influence arise simply from the fact that the alleged influencer was heavily involved in the life of the person alleged to have been influenced.

Consider the example of a mother and her children. As the mother ages, she requires more assistance. Perhaps she is no longer able to drive or has other mobility issues or physical limitations. It is not unusual for one child to step up and provide more assistance than the other siblings. This sibling may live closer to her mother, or her work schedule and other obligations may offer more flexibility such that she is able to provide a greater level of assistance. This assistance may include taking her mother to doctors’ appointments, or to the bank (where some bank accounts are transferred into joint names?), or to meetings with lawyers (where some changes are made to the mother’s will?). It will certainly mean that this child will have more face time with her mother than her siblings.

When the more-involved child ends up receiving greater benefits during the mother’s lifetime, or a larger share of the estate after the mother’s death, the other siblings may look back at all the time that their sister spent with their mother, and in some cases they will speculate or assume that their sister was influencing their mother. It is not uncommon for disappointed beneficiaries to look for some explanation for perceived unequal treatment or favoritism.

Stewart v. McLean 2010 BCSC 64 is a case that I always keep in mind as an example of conduct that does not reach the level of undue influence. In that case, the Court observed as follows:

[108]   In general, the plaintiff’s allegations of undue influence are unfounded suspicions and are based on an unfair view of the relationship between Donald and their mother. At best, the plaintiff’s case is that Donald, by his presence in Victoria, his driving his mother to appointments, his working around her house, his visiting her frequently, and his receiving a benefit from his mother leads to the conclusion that he unduly influenced her.

And after observing that objectively viewed this was a loving and caring mother-son relationship in which the son did what most mothers would expect:

[110]    There is no evidence that Donald dominated the Deceased. In fact, all of the evidence is to the contrary. The evidence consistently establishes that the Deceased was competent, “sharp”, and independent until her death. Certainly when it came to financial matters, she exercised a mind of her own. While she may have depended somewhat on Donald and his family due to her physical limitations, given her financial and intellectual independence, she could have made alternate arrangements.

Other cases have made similar observations. Some people require assistance in being mobile, and a family member is a logical person to provide this assistance. There must be something more to establish undue influence.

Power of attorney abuse discovered after death: what can a beneficiary do about it?

May 19, 2020

We are often contacted by beneficiaries who have become aware of actions taken by the person managing the deceased’s affairs under a power of attorney which have diminished the value of the deceased’s estate. The attorney may have transferred some of the deceased’s assets into their own name (solely or jointly with the deceased) or into the names of others.  The attorney may have spent the deceased’s monies or property for their own benefit.  This has occurred without the knowledge of the beneficiaries, and only comes to light after the deceased’s death, when the deceased’s estate is much less than expected or is missing certain assets. What options are available to a beneficiary who seeks to investigate or commence an action against the attorney of a deceased person?

There is often a further complicating factor: the attorney under suspicion may also be the person named as the executor of the estate. An executor has a duty to shepherd estate property and commence appropriate claims against any third parties in possession of estate property.  If the executor was also the attorney, this would require an executor to investigate their own conduct as attorney.  This is an obvious conflict of interest.

Even if the executor is not the attorney, the executor may still refuse to take action against the attorney. The executor may believe that the claim against the attorney has no merit, or the expense to pursue the claim is unreasonable or an unnecessary risk. What happens when a beneficiary wants a claim to be pursued against the attorney, but the executor, on behalf of the estate, refuses to pursue that claim?

In Mortimer v. Bender 2020 BCSC 483, a beneficiary sought to solve this problem by arguing that an attorney of a now-deceased person owes fiduciary duties to the beneficiaries of that deceased’s person’s estate.  As a result, it was argued that the beneficiary had standing to bring her own claim against the attorney.  The court did not agree.  An attorney is obliged to account only to the donor who gave the power of attorney while they were alive.  Once the donor is dead, the attorney is obliged to account only to the donor’s estate.  A beneficiary lacks standing to allege breach of fiduciary duty by the deceased’s attorney or seek a declaration of resulting trust in favor of the estate. The court also did not agree that there was an exception to an executor’s exclusive statutory authority to commence proceedings on behalf of an estate, when the would-be defendant is the personal representative.

As a result, a beneficiary who believes that the estate has a claim against its executor (or some other person) cannot simply bring that claim in their capacity as beneficiary.  However, there are options.  A beneficiary may seek the removal and replacement of the executor if the executor is in a position of conflict or refuses to take adequate steps to pursue proper claims to recover estate assets.  Removal and replacement of executors is considered in a separate post found here.

A beneficiary may also seek leave from the court to bring proceedings to recover property or enforce a right, duty or obligation owed to the deceased person that could be brought by the personal representative, when the personal representative fails to bring that claim, under s. 151 of the Wills, Estates and Succession Act [SBC 2009] Chapter 13.  The beneficiary must show that they have made reasonable efforts to cause the personal representative to commence the proceeding, and that they are acting in good faith, and it must appear to the court that it is necessary or expedient for the protection of the estate or the interests of the beneficiary that the proceeding to be brought.

COVID-19: Court appoints interim committee who proposes to keep mother out of care facility until health emergency subsides

May 11, 2020

While the B.C. Supreme Court is starting to hear certain limited non-urgent matters, for the most part the courts are still only hearing urgent and essential matters. We discussed what elder law and estate litigation matters might be considered “urgent” or “essential” in a previous post which can be found here.

The court recently heard such an urgent application in Cho (Re) 2020 BCSC 689, which arose as a result of COVID-19.  In Cho, the petitioner sought a declaration that his mother was incapable of managing her affairs, and an order appointing him as committee to manage his mother’s affairs and person. His sister agreed that their mother should be declared incapable, but sought an order appointing her as committee instead of her brother.  The two other siblings supported her appointment as committee.

The urgency arose because the siblings disagreed as to where their mother should reside and what arrangements should be in place for her care during the COVID-19 health emergency.  The mother had been residing in a long term care home in the Vancouver area.  In light of concerns with the mother staying in the care facility and risking exposure to COVID-19, she was removed from the care facility to reside with the respondent daughter.  The daughter’s plan was for her mother to reside with her until the end of the health emergency.  The petitioner brother disagreed with that approach, and wanted to move his mother to his residence for a two week quarantine, followed by re-evaluation, which left open the possibility that his mother could return to the care facility before the health emergency subsided.

The parties agreed that the court could make an interim order to deal with the urgent concerns, and deal with the dispute over who should be committee for the longer term at a later date.

The judge considered the merits of the competing committeeship applications, which is a fact specific inquiry where the court looks at a number of factors, including whether the appointment reflects the patient’s wishes (as expressed when they were capable), whether immediate family members are in agreement with the appointment or whether there is conflict between family members, and whether the proposed committee would be likely to consult with immediate family members for appropriate care of the patient.

After discussing each factor, the judge appointed the respondent daughter as interim committee.  One of the most significant factors in favor of the daughter’s appointment was whether the proposed committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out.  In effect, the court agreed with the plan to keep the mother out of the care facility until the end of the COVID-19 health emergency, and appointed the person who advocated for this plan.

It is not unusual for siblings to have disputes over the care of their elderly and incapacitated parents, and for these disputes to end up before the courts.  It is not surprising that a COVID-19 related dispute of this type has made its way before the courts.

Committees in BC – Orders Requiring Unwilling Adults Examined to Determine Capacity

April 10, 2020

In British Columbia, the Patients Property Act allows a person to apply to Court for a declaratory Order that another adult person is incapable of managing his or her affairs. Such incapacity may be due to mental infirmity arising from disease, age or otherwise, or disorder or disability of mind arising from the use of drugs. To succeed, the applicant must submit to the Court affidavits from two medical practitioners providing opinions that the person who is the subject of the application is incapable of managing his or her affairs.

If the Court is satisfied by the two affidavits and any other evidence, the applicant or someone else will be appointed “committee” to make decisions on behalf of the person, now referred to as the “patient”, concerning his or her financial and estate affairs or person or both. Also, a person   who has been subject to examination at a Provincial mental health facility or psychiatric unit may become a “patient” if the Director signs a Certificate of Incapability. For example, in Johnston Estate v. Johnston, 2019 BCSC 2149, the patient was willingly examined at a psychiatric unit and the Public Guardian and Trustee was appointed committee of his financial and legal affairs. When a committee is appointed, powers of attorney and representation agreements previously signed by the patient are suspended.

What If the Person Does Not Co-operate?

For many years it was accepted that the Patients Property Act did not give the Court jurisdiction to order a medical examination before two medical affidavits had been produced. In other words, if the proposed patient would not co-operate and agree to be examined, the applicant was out of luck. Then in 2012 the door was opened to ordering an adult person to attend for medical examinations for the purposes of the Patients Property Act in appropriate circumstances.

In Temoin v Martin, 2011 BCSC 1727, the Court addressed a situation where the elderly businessman who was the subject of the application refused to be examined by two medical practitioners and the applicant, his daughter, was unable to obtain the necessary affidavits. The daughter argued that there was an inadvertent gap in the legislative scheme, namely that there was no statutory means by which a court could compel an individual to undergo the necessary medical assessments to determine capacity. She relied on Supreme Court of Canada judgements saying the Court had inherent discretionary jurisdiction, which was not derived from a statute, to make orders to protect the interests of children and vulnerable adults.

The judge agreed that if there was prima facie proof of incompetence and a compelling need for protection the inherent jurisdiction would extend to ordering a person to attend for medical examination, but Temoin was not such a case. The Court of Appeal agreed: 2012 BCCA 250, pointing out that the starting point for such an application was the presumption of capacity of the person to be protected, the importance of the Charter values of liberty, autonomy, and equality, while emphasizing that the inherent jurisdiction must be used cautiously and only for the benefit of the person to be protected, and not for anyone else. The daughter’s motive of trying to gather evidence with which to attack her father’s recent estate planning was a relevant consideration when assessing her evidence. In cases of this kind, the applicant must present evidence establishing a serious question to be tried, both as to the capacity of the individual and his or her need for protection.

After Temoin, applications were made to compel unwilling adults to undergo mental capacity testing but none were successful until 2017 when the case of Singh (Re) became the first successful Temoin application: 2017 BCSC 984. In the Singh case, unlike in Temoin, the judge was satisfied that a medical opinion from the family doctor and evidence of questionable financial dealings raised serious questions as to both mental capacity and the need for protection, so the order was made.

So far, there have been no other reports of successful Temoin applications. Thus, while the door has opened to ordering an adult person to attend for medical examinations for the purposes of the Patients Property Act, it is not wide open. Nevertheless, Singh demonstrates that such orders are available if the applicant is able to present the right kind of evidence, even over the objections of the person to be protected and anyone else who opposes. Hopefully, this will provide helpful guidance for families struggling to deal with uncooperative or alienated loved ones who refuse the medical examinations needed so orders to protect them can be obtained.