Independent legal advice may fail to rebut the presumption of undue influence

In a previous blog post, Emily Clough discussed the British Columbia Supreme Court decision in Cowper-Smith v. Morgan, 2015 BCSC 1170, in which the sons of the deceased successfully set aside a joint tenancy between the deceased and her daughter on the basis of undue influence despite the fact that the deceased had received independent legal advice.  The trial judge also held that one son had reasonably relied on the daughter’s representation that he would acquire the daughter’s one-third interest in the deceased’s home if he returned from abroad to care for the deceased as her cognitive functioning deteriorated. That son had returned from abroad and the trial judge held he had done so to his detriment; therefore, the doctrine of proprietary estoppel entitled the son to acquire, and obliged the daughter to sell to him, the daughter’s one-third interest in the home.

On appeal, the daughter argued that the trial judge erred in finding that (1) the legal advice the deceased had received prior to executing the joint tenancy transfers was insufficient to rebut the presumption of undue influence, and (2) the doctrine of proprietary estoppel was available in this case.

The British Columbia Court of Appeal allowed the appeal in part.

The appellate court was unanimous that the legal advice given to the deceased was inadequate to rebut the presumption of undue influence and establish that the joint tenancy transactions were made of the deceased’s own “free and informed thought”. Those assets were therefore held in trust for the estate and subject to equal division between the siblings.

The deceased received legal advice from two solicitors. However, the appellate court agreed with the trial judge that the advice received from each solicitor, independently and collectively, failed to give the deceased the type of “informed advice” that is required when there is a concern about undue influence:

  • Both the daughter and the deceased’s brother unduly influenced the deceased to believe false allegations against the sons;
  • The first solicitor relied on information from the brother and the daughter with respect to the family background and dynamics, much of which the trial judge found “patently untrue”;
  • The second solicitor was in communication with the daughter during his meeting with the deceased (that had been set up for the purpose of the deceased receiving independent legal advice) and the content of the communication was unclear;
  • Neither solicitor reviewed with the deceased: (i) any concerns she may have had in giving an equal share of her estate to her sons, (ii) her reasons for taking such drastic steps that would effectively disinherit her sons, or (iii) the merits of doing so when other options might have better alleviated the risk of future litigation if the deceased was intent to give more of her estate to the daughter; and
  • The solicitors should have advised the deceased to carefully consider whether to proceed with this course of action which, in the absence of any rational reasons, might be found after her death not to be just and fair to the sons.

A majority (Smith J.A. dissenting) held that the son had not acquired a right to the daughter’s one-third interest in the deceased’s home by proprietary estoppel, as such a right did not arise as a result of assurances given by a non-owner of the property with respect to her future intentions.

For further inquiries on this topic and advice about estate planning or estate litigation, please contact one of our lawyers in our Wills, Estates + Trusts Practice Group.