Section 20 says:
Every gift, grant, alienation, conveyance or transfer of property made by a person who is or becomes a patient is deemed to be fraudulent and void as against the committee if
(a) the gift, grant, alienation, conveyance or transfer is not made for full and valuable consideration actually paid or sufficiently secured to the person, or
(b) the donee, grantee, transferee or person to whom the property was alienated or conveyed had notice at the time of the gift, grant, alienation, conveyance or transfer of the mental condition of the person.
Section 20 creates a presumption, which may be rebutted by evidence of capacity at the time of the transfer.
The Supreme Court of British Columbia recently applied the presumption in section 20 in Re: Elsie Jones, 2009 BCSC 1723.
Elsie Jones has three children: Maureen Ringrose, Ronald Jones and Marvin Jones. In May 2003, Dr. Leslie Sheldon, a geriatric psychiatrist diagnosed her with vascular dementia. In June, 2004, Elsie Jones transferred her home into a joint tenancy with her daughter, Maureen Ringrose. On July 27, 2006, the Supreme Court of British Columbia declared Elsie Jones to be incapable of managing herself or her affairs.
The Canada Trust Company as committee of Elsie Jones’ estate asked the court to decide if the transfer was valid. Elsie Jones’ two sons argued it was not.
Before the transfer, Elsie Jones had made several calls to the police, saying her house had been broken into. She also accused one of her sons of stealing from her, and taking large amounts of money from her investments. The court found that there was no basis for these allegations.
Maureen Ringrose argued if her mother to have understood generally the nature and effect of the transfer, that was sufficient to prove her capacity. Elsie Jones had an experienced lawyer advise her on the transfer. The lawyer believed she had capacity.
Elsie Jones’ sons, on the other hand, argued that Maureen Ringrose needed to prove that their mother had a capacity equivalent to that necessary to make a will. One of the criteria for capacity to make a will is the absence of any delusions that affect the maker’s decisions.
Mr. Justice Savage held that Elsie Jones did not have capacity to make a transfer of her home into a joint tenancy. Maureen Ringrose failed to rebut the presumption of invalidity in section 20 of the Patients Property Act. She transferred the property under delusions that undermined her capacity.
 In my opinion, in a case such as this, it makes no sense to say that an inter vivos transfer is valid if the donor “understands” the nature and the effect of the transaction but is under an unfounded or insane delusion that influenced or precipitated the transfer. In other words, in a case where there are unfounded or insane delusions, it is not sufficient for a court to find merely that the donor understands the nature and the effect of the transaction in some abstract sense.
 The court must also be satisfied that the donor was not operating under the unfounded or insane delusion at the time. This particularly so when a donor acts late in life to dispose of a substantial amount of their estate: Re: Beaney  2 All E.R. 595 (Ch.) at 601; Halsbury’s Law of England, 4th ed., Vol. 20(1), at 10-11; see also Re Rogers, (1963) 42 W.W.R. 200, 39 D.L.R. (2d) 141,  B.C.J. No. 133 at para. 31 (C.A.).
 While I do not think it necessary for this decision, the observation of Wilson J.A., as he then was, concurred in by Davey J.A., as he then was, in Rogers seems apposite:
30 Having concluded that the testamentary test is the right one to apply, I cannot see that, so far as degree of understanding or capacity is concerned, there is any real difference. I do not think that a man requires any higher or lower degree of capacity to consider his own interest than he needs to consider the interests of other persons. Nor do I think that the degree of capacity required differs in respect to any disposition by gift or otherwise.
 In my opinion the evidence adduced falls short of meeting either standard. Firstly, there was a variety of delusions under which Elsie Jones was operating over an extended period of time, both before and after the Transfer. She was of the view that persons were breaking into her home and stealing things. At various times she accused her own children of doing this. Not only Ronald but also Maureen. There is no evidence at all to support this. At various times she called the police over these allegations who attended at her residence both before and after the Transfer.