The Ontario Court of Appeal recently addressed undue influence, and emphasized that a different test applies to establish undue influence in inter vivos transfers versus testamentary transfers.

What Happened?

The father had left his wife and three children in 1981, and the family remained estranged until 2002.

In the meantime, the father met a woman in 1994, and they lived together in a common law relationship from 1995 until 2002, before breaking up and ultimately resuming their relationship in 2006. The common law wife was the father’s caregiver until he passed away in December 2011.

In a will dated March 11, 2011, the father made specific bequests to his three children, but left the common law wife with the bulk of his property, including his home.

The three children applied to court to invalidate the father’s will, and to set aside an inter vivos transfer of his house into joint tenancy with the common law wife.

Trial Decision

At trial, the judge rejected the childrens’ argument that the father’s disposition to his common law wife was the result of undue influence, and concluded that the children had failed to prove that the common law wife had “exerted dominance” over the father’s will.

The Childrens’ Position on Appeal

The children appealed on the basis that the trial judge had erred in finding that the common law wife had not exercised undue influence over the father. Specifically, they argued that the relationship between the father and the common law wife gave rise to a presumption of undue influence, which the common law wife had failed to rebut.

Undue Influence

The Court of Appeal rejected the arguments of the children on a number of grounds, including the fact that they had mischaracterized the test for undue influence in the context of testamentary gifts.

The Court of Appeal noted that the rebuttable presumption of undue influence only arises in the context of inter vivos transactions that take place during a grantor’s lifetime.

In the case of wills, testamentary undue influence, amounting to “outright and overpowering coercion” of the testator must be considered. The party or parties who are questioning the will have the onus (i.e. responsibility) of proving this undue influence on a balance of probabilities.

The Court of Appeal went on to say that:

We agree that the trial judge erred in his articulation of the test for undue influence applicable to testamentary gifts. When determining the validity of [the father’s] March 11, 2011 will, the trial judge appears to have erroneously conflated the test for undue influence that applies to inter vivos transfers with the relevant test in relation to testamentary gifts.

In our view, this error did not affect the reasonableness of his conclusions that [the common law wife] exercised no undue influence over [the father], and that [the father] independently decided to make the impugned wills and the transfer of property in favour of [the common law wife].

The trial judge’s finding that there was no undue influence using the inter vivos standard would necessarily be the same had the trial judge applied the correct standard applicable to testamentary dispositions.

The Court of Appeal noted that, under either test, the trial judge would have been required to examine all the relevant circumstances. The decision, therefore, had turned on findings of fact which were rooted in the evidence (including evidence of the father’s state of mind, overall health, nature and length of his relationships with both the children and the common law wife, and instructions to his lawyer).

In analyzing these circumstances, the trial judge found it particularly significant that the father’s will was not the result of “rash or emotional decisions”, but rather, was the result of several months of deliberate reflection and advice received from two separate and experienced practitioners.

The childrens’ appeal was dismissed.

What Does This Decision Mean Going Forward?

The Court of Appeal emphasized an important difference between undue influence in the context of an inter vivos transfer versus a testamentary disposition (i.e. will). In both situations, coercion is required in order to establish undue influence, however, an inter vivos transfer will trigger a presumption in some instances that will shift the onus onto the receiving party to prove an absence of coercion.

How Can an Estate Lawyer Help?

For advice on your estate dispute, including disputes over alleged undue influence or coercion, contact the estate litigators at Derfel Estate Law. We will work tirelessly to achieve the best possible resolution to your will, estate, or trust matter. Call us at416-847-3580 or contact us online to schedule a consultation.