What is Old is New Attacking Gift Transactions in Manitoba Unconsconcionable Procurement Good Law

Kathy SchwartzUncategorized

“What is Old is New”

Attacking Gift Transactions in Mantioba — Unconsconcionable Procurement Good Law

Stoppel v. Loesner, 1974 CarswellMan 141, 47 D.L.R. (3d) 317 (Man. Q.B.) (“Stoppel”) was decided in Manitoba by Hamilton J. in 1974.  It is an older case, but now effectively new again – dealing with the doctrine of unconscionable procurement that appears to be re-emerging in modern Canadian Courts.  Stoppel deals with a transfer of land into joint tenancy.  A woman made a will at the same time as she married her third husband.  The will left him one third of the residue while leaving the balance to her children from her earlier marriages.   She fell ill and went into hospital to die.  While she was there, the third husband contacted a lawyer and gave the lawyer instructions to add his name to the title to his wife’s house as joint tenant, thereby removing it from the estate and putting it out of the reach of her will and the children.  The lawyer prepared a transfer of land and attended at the hospital to have her sign it.  The lawyer did a terrible job.  He arrived at the hospital never having met his client.  He asked a nurse whether the dying woman had capacity and the nurse said “yes.”  The nurse had just graduated and had less than a month of experience at the hospital.  If the lawyer had asked the woman’s attending physician, which he failed to do, the doctor would have told him that the client he was about to meet was very ill with heart issues and in great pain.  She had been the victim of a series of strokes, including one three days earlier that had left her with brain damage and confusion.  The doctor in fact saw her on the same day as lawyer did and described her as very sick, weak, not responding to questions, not fully aware of what was going on around her, and not capable of making intelligent decisions.  The lawyer made no effort to engage his new client in conversation.  He read the transfer document out loud in English and in German, her mother tongue, and explained what it did.  He asked her if she understood.  She made a slight grunting sound.  The lawyer then guided her hand to make an “X” on the transfer where she was required to sign.  The husband was present throughout.  The woman died nine days later.  If there was an Olympics for doing a bad job, the lawyer would have been on the podium.  Her children challenged the transfer of land after she died.  Hamilton J. set the transfer aside.  Three grounds were considered: capacity; equitable undue influence; and the equitable doctrine of unconscionable procurement.  On the third, Hamilton J. quoted the following principle of law:

In Wiley v. Lawson (1922), 21 O.W.N. 464, Mulock, C.J.Ex., said at p. 466:

It might be true that it was at the request of the donor that the donee asked the banker to prepare the cheque; but, even so, the donee was “instrumental” in preparing it; he was not a mere messenger; and that was another reason why the onus of proving the righteousness of the transaction was upon him; and that onus he had not discharged. The principle that one who is instrumental in framing or obtaining the document evidencing the gift must assume the onus is said by the Judicial Committee to be very readily applied in cases of gifts inter vivos.

A transfer into joint tenancy or other inter vivos gift can be attacked on a variety of grounds, some new and some old, some commonplace and some exotic.  The equitable doctrine of unconscionable procurement is old and exotic.  The most authoritative expression of the doctrine in England is from Cooke v. Lamotte (1852) 15 Beav. 234, 51 E.R. 527 (Eng. Ch.). That was joined by an authoritative Canadian statement of the principle in 1922 by the Ontario Court of Appeal in Kinsella v. Pask (1913) 28 O.L.R. 393, 12 D.L.R. 522, 1913 CarswellOnt 781 (Ont. C.A.).  The doctrine is as follows in Cooke: (at pages 240-41 (cited to Beav.)):

…that in every transaction in which a person obtains, by voluntary donation, a benefit from another, it is necessary that he should be able to establish, that the person giving him that benefit did so voluntarily and deliberately, knowing what he was doing:  and if this be not done, the transaction cannot stand.

Stoppel v. Loesner was described above as “new again.”  Why?  The doctrine was recently resurrected and applied, firstly, in Ontario in Gefen v. Gaertner, 2019 CarswellOnt 17360, 2019 ONSC 6015, 148 O.R. (3d) 229, 313 A.C.W.S. (3d) 224, 52 E.T.R. (4th) 42 (Ont. S.C.J.), appealed on other grounds (2022 CarswellOnt 2348, 2022 ONCA 174), and, secondly, in BC in Pinsonneault v. Courtney, 2022 CarswellBC 169, 2022 BCSC 120 (B.C. S.C.).

Courts, it should be noted, are pumping the brakes and suggesting that a court or courts should carefully address whether the doctrine has a place in the laws of Canada (see obiter comments in the Ontario Court of Appeal in Gefen, and see Sandwell v. Sayers 2022 BCSC 605).  Cases like Stopple suggest that the doctrine may already be already here.