Sunday, January 30, 2022

Unconscionable Procurement: Pinsonneault v. Courtney


The doctrine of unconscionable procurement is a helpful tool in challenging gratuitous transfers if the person benefiting has been actively involved in procuring property from the transferor. When it applies, the person who receives the benefit has the burden of demonstrating that the transferor had a sufficient level of understanding of the nature and effect of the transfer for it to be upheld. To succeed in a claim of unconscionable procurement, it is not necessary to show that the transferor did not have the mental capacity to make the transfer, or that she was subject to undue influence. This doctrine is not new, but many of the cases are older, and the concept appears to be enjoying a renaissance in Canada. There is heightened awareness among lawyers, which I suspect is largely due to John Poyser’s insightful discussion of unconscionable procurement in his text, Capacity and Undue Influence (now in its second edition; I reviewed the first edition here). If there were any doubt about whether the doctrine still applies in British Columbia—and there shouldn’t have been—the recent decision in Pinsonneault v.Courtney, 2022 BCSC 120, confirms it is alive and well.

Marie Reine Denise Pinsonneault moved to British Columbia in 2010 following a breakdown of her marriage. She has six children, one of whom she believed would try to take whatever he could from her. She settled in the Kootenays, and had a small business. At the time of trial in 2020 and 2021 she was 87. She had very poor eyesight, no longer had a drivers license and was “not physically robust.” On the other hand, Mr. Justice Williams, who heard the trial, described her as a “feisty, active individual.” It is apparent from the decision that her mental functioning was fine.

She became good friends with a contractor she had hired to do some work, Terry Courtney, and also became friends with his wife, Charlene Courtney, and their daughter. Mr. Courtney was 63 at the time of trial, and he characterized their relationship as like mother and son. She disagreed with his characterization of their relationship.

She purchased a lot (“Lot 3”) with a cabin on Kootenay Lake for $150,000 in 2015.

According to Ms. Pinsonneault, in early 2017, Mr. Courtney told her that he and his wife found a way to protect Lot 3, in reference to her concerns that her family and particularly her youngest son might try to take it from her. This was through a power of attorney. He took her to a notary public, where she signed four documents, including a letter explaining that she wanted to add Mr. and Mrs. Courtney to the title of Lot 3, a “Deed of Gift” of Lot 3 to them, pursuant to which she was gifting the property to them, while she would continue to be responsible for the property expenses, a transfer to title into their names and a power of attorney. In the documents, Mr. Courtney was described as Ms. Pinsonneault’s “step-son,” which was, of course, not accurate.

Ms. Pinsonneault’s evidence of what happened at the Notary’s office is set out in the decision as follows:

[129]     The plaintiff testified that when they arrived, initially Mr. Courtney went and spoke privately with the notary, that is, not in Ms. Pinsonneault’s presence. She said that she then met privately with the notary. There were papers present, evidently already prepared. Her recollection is that the notary asked her if she had read the “paper I sign”; she replied that she “cannot read”. “The notary then asked “do you know what you are signing?” and she answered to the effect yes, that “Terry had explained it to her”. Ms. Pinsonneault said she then signed the papers that were presented to her; she paid the bill and left with Mr. Courtney. When they left the notary’s office, she said she had the papers in her hand. Mr. Courtney told her to give them to him, saying “I will put them in your file at my place”, but she refused to do so. She said she took them home and put them in her desk. She did not examine them at that time or until some considerable time later.

The notary gave evidence, but Mr. Justice Williams found that “her testimony was disappointing and inadequate. Her responses were a litany of claims that she did not remember any details or specifics of the transaction, sometimes falling back on her ‘general practice’.” Her “notes and file are of no value to her in providing clear and reliable answers.”

Ms. Pinsonneault and Mr. Courtney later had a falling out over a dispute about the removal trees from Lot 3. She testified that it was after this disagreement that she read the documents and found out that she had transferred Lot 3 to the Courtneys.

She sued to recover Lot 3.

In finding in favour of Ms. Pinsonneault, and awarding her the property back, Mr. Justice Williams applied the presumption of resulting trust, which is a presumption that applies when one person makes a gratuitous transfer to another, there is a presumption that the transferor did not intend to make a gift. If the presumption is applied, the transferee is said to hold the property transferred on a “resulting trust,” for the transferor.

The presumption of resulting trust is just that: a presumption. It may be rebutted by evidence that the transferor did intend to make a gift. The issue boils down to whether the transferor intended to make a gift when at the time of the transfer. The documents Ms. Pinsonneault signed, particularly the Deed of Gift, would on their face lend support for the view that she intended a gift when she signed the transfer. Mr. and Mrs. Courtney argued that she intended to make a gift at the time she signed the transfer, but she changed her mind later.

Mr. Justice Williams found that the Courtneys had not rebutted the presumption of resulting trust. Ms. Pinsonneault did not intend to make a gift nor did she even know she was transferring her property. He wrote:

[207]     That said, the presumption to which I make reference is rebuttable: it is open to the defendants to adduce evidence to displace the presumption. To do so, they must show on a balance of probabilities that the transferor (the plaintiff) intended to make a gift.

[208]     In the matter at hand, as I have explained in my discussion of the evidence, I find that, at the time of the transfer, there is no viable basis to believe that the plaintiff had the intention to gift title to Lot 3 to the defendants. In fact, the evidence provides a strong reason to conclude that the plaintiff did not know that by signing the documents, she had in fact transferred title.

[209]     This is not a situation where it can be argued that, when the plaintiff executed the documents, she understood the consequences of doing so.

[210]     Furthermore, I am satisfied that the plaintiff was unaware that title had been transferred until many months later and, when she realized, she immediately set up a hue and cry, expressing that. In the time that followed, she steadfastly persisted in that position.

[211]     In short, there is no evidence before this Court that can assist the defendants in rebutting the presumption of resulting trust.

Mr. Justice Williams also considered unconscionable procurement. He provides an excellent summary of the doctrine:

[187]     The doctrine of wrongful (or unconscionable) procurement is derived from the principle that where a donee obtains a benefit from a donor that in turn disadvantages that donor, the donee must prove that the donor had the “necessary level of understanding to make a transaction conscionable”: John E.S. Poyser, Capacity and Undue Influence 2nd ed (Toronto: Carswell, 2019) at 629 in Gefen v. Gaertner, 2019 ONSC 6015 at para.158. It is an equitable principle: Poyser at 628. A finding of wrongful procurement renders a transfer voidable by the court: Gefen at para. 158.

[188]     The Court in Gefen provided that the onus is on the party attacking the transaction to prove on a balance of probabilities that: (1) a significant benefit was provided; and (2) active involvement by the person obtaining the benefit of the procurement: at para. 159. Once these two elements are established, it is presumed that the donor “did not truly understand what they were doing when they made the transaction.” Gefen at para. 159.

[189]     Once the presumption is established, the transaction is voidable and the Court must determine whether it would be unconscionable to let the transaction stand. As stated in Gefen at para. 161, at this stage,

[161]    …Both parties must adduce evidence about the donor's actual understanding of what she was doing. If the evidence does not come down on either side, the attacker will have failed to meet the onus and the transaction will stand: Poyser, at p. 570.

[162]    The attacker must ensure that there is enough evidence before the court in the final weighing to allow the court to conclude, as a finding of fact, that the donor failed to have a conscionable understanding of what she was doing when completing the transaction. This issue turns on whether the donor appreciated the effect, nature, and consequence of the transaction in a manner sufficient to render it fair, just, and reasonable: Poyser, at p. 574.

[190]     The question the court must ask is whether the donor “fully appreciate[d] [the] effect, nature and, and consequence” of providing gift: Kinsella v. Pask, 28 O.L.R. 393 at 400, 12 D.L.R. 522.

Mr. Justice Williams found (at paragraph 217) that “… the doctrine of wrongful procurement is, to my mind, met by the circumstances at hand.”

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