Facts[]
Tzina Goodman was a woman who had been diagnosed with bipolar affective disorder and immature personality disorder. Tzina's mother, Annie Sanofsky, knowing that Tzina would require assistance after Annie's death, executed a will in 1968 providing for a life estate to her daughter Tzina, and directing that on Tzina’s death her estate should be distributed to all of her (Annie’s) grandchildren. When Annie died, it was discovered that she had written a new will in 1975, which left the property which had been her home outright to her Tzina, and directed that the residue of her estate be held in trust for Tzina during her lifetime and pass on Tzina’s death to Tzina’s children.
Tzina's brothers, worried that Tzina might not take care of the property responsibly given her condition (and upset that their children had now been cut out of the will) suggested they seek counsel. Tzina went to see a lawyer recommended by her brothers who suggested they set up a trust with her brothers as trustees, and that upon Tzina’s death the property would be divided amongst Tzina’s children, as well as her nieces and nephews.
After Tzina's death, Tzina’s son was not happy with the trust and tried to have it set aside, arguing that his mother was unduly influenced by either her brothers or the lawyer. Tzina's will had left the entire estate to her children only, in conflict with the trust.
Issue[]
- Does the presumption of undue influence in special relationships require a "manifestly disadvantageous" contract?
Decision[]
Appeal allowed, trust upheld.
Reasons[]
Wilson (with Cory concurring), held that a presumption of undue influence can arise in certain relationships, but each relationship must be looked at individually. While she held that in commercial transactions, an undue disadvantage/benefit must be shown, this was not true of non-commercial transactions. A gift is ipso facto disadvantageous and only a dominant relationship must be shown. At that point the onus shifts to the alleged dominant party to show with evidence that the transaction was entered into "as a result of [his/her] own full, free and informed thought".
In the case at bar, Wilson found that a trust relationship was akin to a gift and triggered the presumption, however there was sufficient evidence adduced (very little contact with the brothers, independent legal advice given to Tzina) to show there was no undue influence.
La Forest (with McLachlin concurring) agreed in the result, but held that any discussion of manifest disadvantage or commercial relationships was obiter. He made sure to reject, however, Wilson's comments that there is "nothing per se reprehensible about persons in a relationship of trust . . . exerting influence, even undue influence, over their beneficiaries" as well as the proposition that the law will never interfere in a contract that does not lead to a material disadvantage.
Sopinka similarly agrees in the result, but felt the case should have been restricted to the evidentiary finding that there was no undue influence and that any other analysis was unnecessary and obiter.
Ratio[]
For there to be a finding of undue influence:
- nature of the relationship - there must be dominance, manipulation, and coercive abuse of power;
- nature of the transaction:
- in commercial transactions - must be undue disadvantage or benefit
- in gift or similar transactions - requires only evidence of a dominant relationship