My colleague, Kate Stephens, and I are planning to write a series of six blog posts on how equitable remedies can be used to redress financial abuse of the elderly. Each post will comment on a case that uses one or more equitable remedies. We have previously commented on these cases in our paper, “Equitable Remedies for Elder Abuse: A Case Law Review” that we presented at the STEP Canada, Toronto Branch program Elder Abuse and Ways of Protecting the Elderly on 18 October 2017.
Elder abuse of all sorts has become a serious issue in our society and is likely to become worse as the older segment of the population increases in numbers. The elderly are possessed of significant wealth and therefore they readily become victims of predators who seek to appropriate some of that wealth by nefarious means. We call this financial abuse of the elderly.
The elderly are particularly vulnerable to this kind of abuse. They are often hampered by declining cognitive skills and memory and become reliant on others for their daily care and needs. Their financial skills have typically also deteriorated and in some cases they have limited command of the English language. In addition, while formerly they were always able to make decisions on their own, now they readily acquiesce in suggestions made by their caregivers. So they are easy prey for predators.
Equitable remedies offer much promise in combating financial abuse of the elderly, although occasionally common law remedies can be used too. Some of the equitable remedies are: constructive trust, restitution, compensation, injunctive relief, specific performance, rescission, equitable lien, accounting of profits, and declaratory relief. These remedies rely on and apply various equitable doctrines, such as unjust enrichment, breach of trust, breach of fiduciary duty, undue influence, unconscionability, and equitable fraud. They also rely on and apply equitable maxims, such as: equity will not suffer a wrong to be without a remedy, he who seeks equity must do equity, he who comes into equity must come with clean hands, and no one shall be permitted to profit by his own fraud.
The first case is Fowler Estate v. Barnes. It relies on the doctrine of undue influence and the remedy of rescission. Ms. Eliza Fowler was an older adult. In her will she directed that her home be sold and that the net proceeds, as well as the residue of her estate be distributed equally among her seven children. She named he daughter, Maxine, who lived next door, her executor. Maxine provided whatever assistance and care Ms. Fowler needed, Two other daughters, Ruby and Kathleen, also lived in Newfoundland, but some distance away. The other children lived outside the province. The house and the land on which its stood comprised the bulk of Ms. Fowler’s estate.
Ms. Fowler suffered a debilitating stroke in March 1995 and it had a major impact on her life. Before the stroke she had been active and alert and was able to take care of herself, but thereafter she needed assistance. Maxine was her primary caregiver, but Kathleen and Ruby helped too. Ruby was often assisted by her daughter, Carol Barnes, and Carols’ common law spouse, Arthur. Ruby, Carol, and Arthur alleged that on Thanksgiving 1995, Ms. Fowler asked Carol and Arthur to move in with her and she said she would give her house to Carol and Arthur. They said nothing about it to Maxine and Kathleen, but Ruby contacted her solicitor and instructed the solicitor to transfer her mother’s property to Carol and Arthur. The solicitor’s firm prepared a deed conveying the property to Carol and Arthur for one dollar. The firm also provided an agreement pursuant to which Carol and Arthur would provide living accommodation to Ms. Fowler and be responsible for maintaining the property. Carol took charge of Ms. Fowler’s finances. Ms. Fowler suffered another debilitating stroke in May 1996 and died a month later at age 80.
In her capacity as executor, Maxine brought an action for an order to set aside the deed for lack of mental capacity or undue influence. The court described the law of capacity, but held that Maxine had failed to established that her mother lacked capacity. So the court focused principally on the equitable doctrine of undue influence and gave an exhaustive and clear description of that doctrine. The court stated that there was no evidence of actual undue influence, but noted that, in the case of an inter vivos transaction, equity has jurisdiction and will raise a presumption of undue influence if one party is in a position to exercise undue influence over the other. In that case the person against whom undue influence is presumed has the onus of proving that the other person entered freely and of her will into transaction. The court found that Carol and Arthur, as well as Ruby, were in a position to exercise undue influence over Ms. Fowler, so that the presumption was raised. The court held that they failed to rebut the presumption. Moreover, the presumption was not rebutted by the provision of independent legal advice, as the solicitor who prepared the documents took instructions from Ruby and did not verify that they were correct with Ms. Fowler.
The court then stated that when undue influence is established, equity will rescind the transaction on such terms as are necessary to do practical justice between the parties. It noted that this is an example of the equitable maxim, “He who seeks equity must do equity”. The other parties cannot resist rescission on the ground that they have incurred expenses in reliance on the transaction. But the court can make the rescission on terms to ensure that the person against whom undue influence was exercised is not unjustly enriched. In the circumstances the court ordered that Carol and Arthur be repaid $8,000 for their labour in making renovations to the house.
The reasons for judgment are well-worth close study. They are detailed and examine all aspects of the remedy carefully.