Grosseth Estate v. Grosseth: Balancing the Protection of Older Adults and Adult Autonomy – 2017 BCSC 2055 (CanLII), http://canlii.ca/t/hnrpt
“The law seeks to protect elderly citizens from predatory and exploitative conduct at the hands of unscrupulous relatives and caregivers. The presumption of undue influence formalises an expression of skepticism about voluntary transfers such as the ones under consideration here. On the other hand, there is the matter of adult autonomy and the individual freedom to dispose of property as one sees fit.”
These competing interests were addressed by Justice Baird, in Grosseth Estate v. Grosseth 2017 BCSC 2055. The Deceased had prepared a Will, long before his death, equally dividing his estate amongst his nieces and nephews. In the years before his death, he transferred the “lion’s share” of his money, around $157,000, to one of his nephews and that nephew’s wife (the Plaintiff’s brother and sister-in-law). At the time of his death, approximately $60,000 remained to be distributed.
The Plaintiff brought an action as against his brother and sister-in-law, in his capacity as the Deceased’s executor, seeking the return of cash to the estate. He relied upon the presumptions of resulting trust and undue influence. The Defendants maintained that the amounts advanced were gifts. They denied unduly influencing the Deceased in any way.
During the last years of his life, the Deceased lived with the Defendants. According to the evidence presented, the Defendants treated the Deceased well and welcomed him into every aspect of their family life. Initially, the Deceased contributed towards household expenses. The payments stopped in 2003 when the Deceased volunteered to pay $100,000.00 towards the Defendants’ purchase of a business property.
A couple of years later, the Defendants’ mortgage loan on their principal residence became due. The Deceased offered to pay off the balance of the mortgage ($57,000.00) with no strings attached. He allegedly told the Defendants that if the money remained in the estate it would end up going to people he barely knew. The evidence suggested that the Deceased’s other nieces and nephews were not in contact with him in the years before his death.
The Plaintiff, who was the Deceased’s attorney under a power of attorney and executor, had only visited his uncle once in the time that he lived with the Defendants, although he maintained that they had a close relationship.
The Defendants’ evidence was that they never asked the Deceased for financial assistance and that they were capable of managing the expenses associated with the purchase of the property and their mortgage. They did not influence the Deceased’s actions in any way. He gifted the funds to them without wanting anything in return.
The only other beneficiary who testified at the hearing was the Plaintiff’s sister. She testified that the Deceased was well treated by the Defendants and that he remained independent and fully capable of managing his own affairs long after he made the second transfer to the Defendants. This evidence was corroborated by other witnesses.
Justice Baird acknowledged that certain statements attributed to the Deceased indicating his intentions at the time of the subject transfers were hearsay. However, he found the evidence admissible, relying on prior authorities that dealt with analogous circumstances.
Gratuitous transfers of wealth between adults come with a rebuttable presumption of resulting trust in favour of the transferor. The monies advanced in the case at bar are captured by that presumption. The onus is on the Defendants to prove that a gift was intended because equity presumes bargains, not gifts. If a conclusion about the Deceased’s actual intention is not reached, then the presumption of resulting trust must be applied to “tip the scales” in favour of money being repaid to the estate.
Furthermore, the nature of the relationship between the Deceased and the Defendants gave rise to the presumption of undue influence. The Deceased was of advanced age, and he was living in a situation of some dependency with the Defendants: “They were surely in a position, had they wished, to dominate him into acting to their advantage and to his own detriment.” It is the potential of domination that triggers the presumption. That presumption can be rebutted by evidence establishing that the donor entered into the transaction of his own full, free and informed. Factors to consider in rebutting the presumption include:
- the lack of actual influence or opportunity to influence the donor;
- receipt of or opportunity to obtain independent legal advice;
- the donor’s ability to resist any such influence; and
- the donor’s knowledge and appreciation about what he or she was doing.
Justice Baird indicated that the totality of the evidence makes it clear that the Deceased was fully capable of managing his own affairs throughout, despite his dependence on the defendants, and found that “the transfers were gifts freely given by a man who was fully capable of making his own decisions uninfluenced by anyone.”
There was no evidence to suggest that either of the Defendants prevailed on the Deceased in any way to advance the funds and no evidence to suggest that the Deceased was incapable of resisting such influence. Neither of the Defendants had any control over the Deceased’s accounts or finances. The absence of legal advice is a factor to consider but not determinative on its own.
Ultimately, Justice Baird was satisfied that the deceased gifted the funds to the defendants. “…these gestures were freely made by a man of sound mind who, in all likelihood, wished to make a proper contribution to the household economy in which he lived and thrived for nearly ten years. The presumptions of resulting trust and undue influence have been rebutted.”