Alert to Independent Legal Advice
When providing any advice to a Decision-maker, it is critical (among other things) to probe and understand the Decision-maker’s potential dependencies in order to document risks of undue influence. Sandu v Sandu, 2023 BCSC 323 (“Sandu”) is one of the most recent examples.
A Closer look at Sandu:
Nirmal Sandu and Swaran Sandu (the “Parents”) had six (6) children, two (2) of them were estranged for many years. One of the children is Raval Sandu (“Raval”). The Parents and Raval, had a history of Raval being on the title to various properties in order for the Parents to qualify for financing. In each case, Raval eventually transferred the interest back to his Parents. However, eventually, there were a series of transactions – (a) Wills of the Parents in 2012; (b) Wills of the Parents in 2015; and (c) a transfer of a property owned by the Parents into Raval’s name solely in 2016 – wherein Raval was the beneficiary in question.
Note before the Analysis:
Readers often see these situations as being outliers and not likely to impact their life or business. However, the rise in housing costs and increased cost of living has forced more prospective purchasers or home-owners to consider a co-signer or adding a third party on the title of a property in order to afford financing. This arrangement is applicable in many contexts, such as multigenerational living, borrowers on fixed income or as recently graduated students etc.
The primary issues before the court were:
- Are the Parents barred by the limitation period because the transfer happened in 2016 and the action commenced in April 2021?
- Can the transfer be voided for undue influence? and/or
- Has Raval otherwise demonstrated that the gift was actually intended to exclude his siblings/others or to benefit exclusively him?
The judgment itself is worth a complete read in order to gather the full scope of the facts. Briefly, some of the areas where the dependencies included:
- The Parents were referred in the decision as being 91 years and 88 years old respectively at the time of the transfer in question, with both Parents receiving little education and illiterate both in their mother tongue Punjabi. Neither speak or read in English.
- Raval was the person who helped his Parents with anything involving written or spoken English: Paying bills, income tax documents, father’s pension, insurance and managing modest investments.
- The transfer in question was the major asset of the Parent’s estate.
- The Parents met with lawyers to draft the Wills and transfer and no undue influence was noted at the time.
- The siblings of Raval were unaware of the ongoings with their Parents.
- There was no evidence of Raval directly threatening, being overly persistent or otherwise manipulative in discussions with his Parents, rather a number of red flags were raised which were not addressed. I.e. Raval being the primary beneficiary of the 2012 and 2015 Wills and no rationale for the transfer.
Outcome:
Despite the absence of actual undue influence, the judge found that the presumed undue influence was not rebutted at the time of the transactions and therefore ordered that the property be transferred back into the names of the Parents.
“[The lawyer] purported to assure herself… that the transaction was free of any undue influence…[however there were no notes] it is apparent that no checklist or standard form undue influence questionnaire existed”
The Honourable Justice Kent in Sandu at para 85.
Key Takeaways!
- Identify and/or probe around any people that are either dependent on the Decision-maker or that the Decision-maker is dependent on.
- For cases where there is an undue influence claim, the statute of limitations arguably does not start until the Decision-maker “can be said to have been freed from the sphere of undue influence.” See also Ogilvie v Ogilvie Estate, 1996 CanLII 8552 at para 64.
- There are two branches of inter vivos undue influence:
- Intentional or actual undue influence; and/or
- Unintentional or presumed undue influence. See also John E.S. Poyser, Capacity and Undue Influence. (Toronto: Thomson Reuters, 2014) at 471.
- In order to rebut a claim of unintentional or presumed undue influence, it must be shown that the Decision-maker had full, free and informed thought.
- Independent legal advice does not automatically rebut the presumption of undue influence. The practitioner will typically be expected to give “informed advice on the merits of the transaction” See also Cowper-Smith v. Morgan, 2016 BCCA 200
- No expert reports were cited in reference to incapacity and/or susceptibility to undue influence.
Advising a person who is vulnerable to undue influence is not confined to a certain age bracket. There are many factors that impact the way that you think. Check out our newly launched software which can improve the recognition of factors (such as the dependencies discussed herein).
