Many have heard of undue influence but it is often in the context of a will challenge. That is to say, an argument is made that a testator’s last will and testament is not valid because someone influenced the testator. The influence must be such that the testator was no longer acting with free will: coercion was exerted on the testator rendering the will invalid.
But undue influence does not arise only in the context of wills. It can also arise in inter vivos (meaning “while alive” or “between the living”) transfers. In this situation, a person (the grantor) transfers property to another person (the grantee) during the grantor’s lifetime. Sometime later the validity of the transfer is challenged. In some cases the inter vivos transfer is not discovered until after the grantor’s death. In other cases the inter vivos transfer may be discovered while the grantor is alive, but incapable.
A presumption of undue influence can arise in inter vivos transfers but not with respect to wills. This was confirmed in the Ontario Court of Appeal case of Seguin v. Porter.[1] On appeal, the court found that the trial judge conflated the test for undue influence in inter vivos transfers with the test for undue influence in wills.[2] The court in Seguin stated that a presumption of undue influence can arise “from particular relationships when the validity of inter vivos dispositions or transactions is in issue.” Or, as stated in Slover v. Rellinger, when an inter vivos transfer is “made in circumstances that have a potential for dominance”.[3] Therefore, the presumption does not automatically apply with every inter vivos transfer of property.
Once the presumption is established, the onus shifts to the grantee to rebut the presumption. This means that the grantee needs to prove, on a balance of probabilities, that undue influence did not exist when the inter vivos transfer occurred. While the court will still look at all of the evidence of surrounding circumstances, bearing the onus will likely impact the nature and extent of the evidence the grantee leads. Evidence of the grantee’s ability or opportunity to dominate and control the grantor will likely be highly relevant (physical and emotional proximity). Invariably connected will be evidence of the grantor’s capacity, particularly if it was diminished to the point at which the grantor was vulnerable and susceptible to undue influence. Establishing undue influence is difficult but not impossible. When alleging undue influence it is important to understand that a presumption may apply if the transfer of property was made while the grantor was alive.
[1] Seguin v. Porter, 2018 ONCA 355 (CanLII), at para 10.
[2] Although the trial judge conflated the tests, the court found that the error did not affect the reasonableness of the trial judge’s decision that no undue influence was exerted on the testator.
[3] Slover v. Rellinger, 2019 ONSC 6497 (CanLII), at para 44.
