I was invited to speak at a Law Society of Ontario CLE seminar that took place on October 30, 2012. It featured many people who I consider some of the best practioners in this area. My paper1 analyzed whether Justice Cullity, in Banton v. Banton,2 expanded the test on insane delusions. At the actual presentation, Jordan Atin, the Chair of the program, asked Ian Hull and me to address a potpourri of issues. My topics included capacity, undue influence, managing client expectations, and evidence in the context of estate disputes. Ian Hull spoke on strategy in estate litigation among other topics. At the conclusion of the seminar I received a number of requests to provide my notes or something more formal to those who enjoyed the presentation. They felt the time was short and wanted specifics of some of the source material I referred to for use in their practice. This blog is, in part, a response to those requests and provides a review and sources for my comments on capacity and undue influence.
When challenging a will, testamentary capacity is often the key issue. Let’s first review the seminal English case Banks v. Goodfellow3 which has been adopted in Ontario4. This case stands for the proposition that the testator has testamentary capacity if:
- the testator understands the nature of making a will and its effects;
- the testator understands the extent of the property being disposed of;
- the testator understands the nature of the act and its effects;
- the testator appreciates the claims to which he or she ought to give effect; and
- finally, no insane delusion influences his or her will in disposing of the property and brings about a disposal of which, if the mind had been sound, would not have been made.
In the authoritative text of Feeney’s Canadian Law of Wills5 the learned author answers the question “what is testamentary capacity” as follows, “To use the time-honoured phrase, a person must be “of sound mind, memory and understanding” to be able to make a valid will. When a will is contested on the ground of mental incapacity, the propounder must prove that the testator understood what he or she was doing: that the testator understood the “nature and quality of the act.” The testator must be able to comprehend and recollect what property he or she possessed, the persons that ordinarily might be expected to benefit, the extent of what is being given to each beneficiary and, finally, the nature of the claims of others who are being excluded.”
For the purpose of this blog I prefer not to revisit in detail the issue of delusions. I have addressed that topic extensively in the paper I delivered at the CLE event which is available online for the reader at this link Insane Delusions – Has The Test Been Expanded? Suffice to say that the test for delusions is two pronged. Firstly for a testamentary document to be set aside there must be a delusion. For it to be a delusion the belief held must be one that no one could reasonably believe. Secondly, mental disease is not enough. For the will to be set aside the decision by the testator to disinherit a person must be rooted in the delusion. It behooves us to remember that in Banks v. Goodfellow6 the testator believed that he was molested by evil spirits, but the will was upheld because there was no connection between the delusions and the dispositions made by the testator.
A very important question regarding the issue of testamentary capacity is at what time in the process is the capacity of the testator relevant? The rule is set out in Parker v. Felgate – the key moment is the time the testator provides instructions.7 What is also important is that at the time of execution the testator needs a sufficient level of capacity to comply with the formalities of execution.8 A will may be set aside for failure to comply with the formalities of execution9.
A foundation point in these sorts of discussions is that the testamentary document should genuinely reflect the decisions of the testator10. Was there coercion? Did the testator know and approve of what was set out in the will? These two issues are referred to as undue influence and “knowledge and approval”. To be clear it may very well be that a person has testamentary capacity but the testamentary document can be set aside for other reasons. For example, it may be set aside because of coercion and/or fraud (i.e. undue influence). The testamentary document may be set aside because the testator did not understand the wording or there perhaps it will be rectified because there was an error when drafting the will such that the testator’s intentions were not set down accurately. In that sort of case it is arguable that the testator did not know or approve of the testamentary document. This topic of rectification is one that is beyond the scope of this blog, but merits careful review. As a starting point, I refer the reader to Rectification – the Equitable Remedy to Fix Errors in a Will.
One basis for challenging the validity of a Will is the allegation of undue influence. If there are suspicious circumstances surrounding the testator then the normal presumption, that a Will is valid if properly executed, is rebutted. It is now up to the person claiming that the new testamentary document is valid to prove that there was no coercion or undue influence on the testator.11
The equitable doctrine of undue influence was developed12,not to save people from the consequences of their own folly but to save them from being victimized by other people. These cases may be subdivided into two groups. In the context of a will challenge the question is whether there was any coercion by a beneficiary on the testator. Whether the influence is “undue” is a matter of fact and there is arguably a sliding scale depending on the vulnerability of the testator and his/her dependence on the person exercising the influence. Has the person being accused of exercising undue influence exercised some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, some sort of fraud?
The second group deals with disputes surrounding gifts that took place prior to the demise of the testator. At issue is whether the person accused of undue influence has gained some personal advantage because of the reliance of the done on the recipient of the benefit. In Ontario, Canada those who are appointed as Attorney for Property are designated by statute as a fiduciary. Other parties may also be considered fiduciaries depending on the role they played in the testator’s lives13. As articulated by Professor Waters in Law of Trusts in Canada, Second Edition (Carswell: 1984, Toronto): “It is a fundamental principle of every developed legal system that one who undertakes a task on behalf of another must act exclusively for the benefit of the other, putting his own interests completely aside”. So what happens when a fiduciary gets a gift? There is a presumption of undue influence.14
Mr. Justice Cullity15 set out the following factors to consider in an undue influence claim:
- the willingness or disposition of the persons to have exercised undue influence;
- whether an opportunity existed;
- the vulnerability of the testator16;
- the degree of pressure that would be required;
- absence of moral claims of the beneficiaries;
- whether the will departs radically from the dispositive pattern of earlier wills.
When investigating if someone knew and approved of the testamentary document these are some red flags to watch for including blindness, illiteracy, inability to understand English,17 unexplained radical departure from previous wills, sequestration of testator, manipulative behavior by the main beneficiary to obtain all of the deceased’s assets, the presence of a new lawyer or the absence of independent legal advice, and whether statements or actions of the testator subsequent to the making of the alleged will were fundamentally inconsistent with its terms.
The capacity to grant or revoke powers of attorney and capacity to manage one’s property and personal care is a different test. These disputes often arise when families wrestle over control of aging parents’ assets or the responsibility for their care. Ever increasingly the behaviour of financial predators, caregivers, friends and family members lead to disputes regarding the capacity of seniors to make gifts and even the capacity to marry. The latter becomes all the more significant because marriage can involve revocation of previous wills18, entitlement to property and support rights under Part II and Part V of the Succession Law Reform Act, R.S.O. 1990, c. S.26. When discussing the different types of capacity it is important to remember that the definitions of capacity are task specific. From highest to lowest they are:
- Testamentary capacity.19
- Capacity to manage property has a lower threshold than testamentary capacity.20
- Capacity to manage personal care has a lower threshold than the capacity to make a will or manage property.21
- The threshold for capacity to appoint or revoke a power of attorney is lower than the threshold for testamentary capacity and or the capacity to manage property or personal care.22
- Capacity to make a gift or enter into a contract is a sliding scale depending on the size of the gift.23
- The threshold for the capacity to marry seems to the lowest. I caution the reader that this may be subject to change and there are several excellent papers and books written that should be reviewed when confronted with this situation24
This short blog was based on my notes, with respect to capacity, from the CLE event. It is not meant to provide anything more than an overview of the topic on capacity as well as access to some of the very excellent books and papers on the topic.
- C. Wagner and N. Herrmann, Insane Delusions – Has The Test Been Expanded? (Toronto: LSUC Estate Litigation Practice Essentials, 2012). ↵
- 1998 CarswellOnt 3423, 164 D.L.R. (4th) 176, 66 O.T.C. 161. ↵
- Banks v. Goodfellow (1870), All E.R. Rep. 47 (Q.B.) is the seminal case. See page 565, which sets out the test. It has been adopted by Canadian courts. See Popke v. Bolt (2005), ABQB 214 (Alta. Q.B.), and Larocque v. Landry (1922), 52 O.L.R. 479 (Ont. C.A.). I would also refer the reader to Justice Laskin’s summary of the elements of capacity in Schwartz v. Schwartz, (1970) 2 O.R. 61 (Ont. C.A.). The testator must be sufficiently clear in his understanding and memory, to know on his own and in a general way, (a) the nature and extent of his property, (b) the persons who are the natural objects of his bounty, and (c) the testamentary provisions he is making; And he must be capable of (d) appreciating these factors in relation to each other, and (e) forming an orderly desire as to the disposition of his property. ↵
- Banks v. Goodfellow has expanded on the factors that will demonstrate that a testator has the “sound and disposing” mind necessary to make a valid will. Justice Charron, of the Ontario Court of Appeal, summarized these requirements in Hall v. Bennett Estate, noting that in order to have a sound and disposing mind a testator:
• must recollect the nature and extent of his or her property; *must understand the extent of what he or she is giving under the will;
• must remember the persons that he or she might be expected to benefit under his or her will; and * where applicable, must understand the nature of the claims that may be made by persons he or she is excluding from the will. ↵
- Feeney, Thomas G. & Jim Mackenzie. Feeney’s Canadian Law of Wills, 4th ed., looseleaf (Toronto: Butterworths, 2000), paragraph 2.6 ↵
- See Footnote 3 for the citation. ↵
- Parker v Felgate (1883), 8 P.D. 171. The rule, in Parker v. Felgate provides that even if the testator lacked testamentary capacity at the time the will was executed, the will is still valid if: The testator had testamentary capacity at the time he or she gave the lawyer instructions for the will; (b) The will was prepared in compliance with those instructions; and (c) When the testator executed the will, he or she was capable of understanding that he or she was signing a will that reflected his or her own previous instructions.This, keeping in mind the requirements for due execution as set out in the Succession Law Reform Act, R.S.O. 1990, c. S.26 ↵
- Section 4.(1) of the Succession Law Reform Act, R.S.O. 1990, c. S.26 states, “Subject to sections 5 and 6, a will is not valid unless,
(a) at its end it is signed by the testator or by some other person in his or her presence and by his or her direction;
(b) the testator makes or acknowledges the signature in the presence of two or more attesting witnesses present at the same time; and
(c) two or more of the attesting witnesses subscribe the will in the presence of the testator. ↵
- Please see Have Ontario’s Courts Dispensed with Strict Compliance with the Formalities of Execution? – this is article found at http://www.hg.org/article.asp?id=27886 ↵
- I make this comment with some trepidation given the recent case law on rectification. Often disappointed beneficiaries ask the court to fix the mistake where the lawyer who drafted the will may admit that he inadvertently drafted the will contrary to the instructions of the deceased. The legal term for this request is “Rectification”. Courts use this equitable remedy very carefully. Exactly what type of evidence a judge may consider is being debated in the courts. How sure does the court have to be to fix the mistake? Is the court limited in how it can fix the mistake? In exercising the remedy is the court limited to only being able to delete certain parts of the will? Can a judge add missing words? I refer the reader to Rectification – the Equitable Remedy to Fix Errors in a Will . ↵
- See analysis of Vout v. Hay 1995 CarswellOnt 186, 7 E.T.R. (2d) 209, 125 D.L.R. (4th) 431, (1995) 2 S.C.R. 876, 183 N.R. 1, 82 O.A.C. 161 at https://www.wagnersidlofsky.com/estate-law-blogs/will-challenge/ ↵
- as was pointed out by Lindley L.J. in A/Icard v.Skinner. 36 Ch. D. 145, (1886-90) All E.R. Rep. 90 (C.A.), ↵
- I found the looseleaf text “Fiduciary Duties in Canada” By: Mark Vincent Ellis a useful reference for this issue. ↵
- For those advocating that a challenged gift is valid I refer you to section 2(4) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 which deals with onus of proof, contracts and gifts. The section provides, “In a proceeding in respect of a contract entered into or a gift made by a person while his or her property is under guardianship, or within one year before the creation of the guardianship, the onus of proof that the other person who entered into the contract or received the gift did not have reasonable grounds to believe the person incapable is on that other person.” Query whether a gift is valid if the recipient of the gift had reasonable grounds to believe the incapable person to be capable? I know of no determinative judicial review of this section. ↵
- See Scott v. Cousins (2001), 37 E.T.R. (2d) 113 (Ont. Sup. Ct. J.), ↵
- For an excellent article on this topic see Assessment of Testamentary Capacity and Vulnerability to Undue Influence Kenneth I. Shulman; Carole A. Cohen; Felice C. Kirsh; Ian M. Hull; Pamela R. Champine Am J Psychiatry 2007;164:722-727. ↵
- See “Testator Does Not Speak English” by Charles B. Wagner ↵
- See section 15(1) of the the Succession Law Reform Act, R.S.O. 1990, c. S.26. ↵
- The threshold for testamentary capacity is the highest. See Penny v. Bolen, 2008 CanLII 48145 (ON.S.C.) at para. 19: “There are different tests for the capacity to make a Power of Attorney for personal care and for property. A person may be incapable of managing property but capable of making a Power of Attorney for Property. With respect to Powers of Attorney for Personal Care the capacity threshold is much lower than for Power of Attorney for Property which is lower than the capacity required to execute a will.” ↵
- The test for determining the capacity to manage property is found at section 6 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 . Capacity to manage property is defined as: (a) The ability to understand the information that is relevant in making a decision in the management of one’s property; and (b) The ability to appreciate the reasonably foreseeable consequences of a decision or lack of a decision. ↵
- Under section 45 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 , the test for determining capacity required for managing personal care is: (a) The ability to understand the information that is relevant to making a decision relating to his or her own health care, nutrition, shelter, clothing, hygiene or safety; and (b) The ability to appreciate the reasonably foreseeable consequences of a decision or lack of decision. A person who is sixteen years of age or older is presumed to be capable of making personal care decisions. ↵
- Please see section 8 of the 47 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 . For property the threshold requires (a) knowledge of what kind of property he or she has and its approximate value; (b) awareness of obligations owed to his or her dependants;(c) knowledge that the attorney will be able to do on the person’s behalf anything in respect of property that the person could do if capable, except make a will,subject to the conditions and restrictions set out in the power of attorney; (d) knowledge that the attorney must account for his or her dealings with the person’s property; (e) knowledge that he or she may, if capable, revoke the continuing power of attorney; (f) appreciation that unless the attorney manages the property prudently its value may decline; and (g) appreciation of the possibility that the attorney could misuse the authority given to him or her. ↵
- The test for capacity to give a gift changes if the gift is significant in value, in relation to the donor’s estate. In such cases, the applicable capacity test changes to the test for capacity to make a will, that is , testamentary capacity. In the English case of Re. Beaney, the judge explained the difference in tests for capacity to give gifts or make gratuitous transfers as follows: At one extreme, if the subject-matter and value of a gift are trivial in relation to the donor’s other assets a low degree of understanding will suffice. But, at the other, if its effect is to dispose of the donor’s only asset of value and thus for practical purposes to pre-empt the devolution of his estate under his will or on an intestacy, then the degree of understanding required is as high as that required to make a will, and the donor must understand the claims of all potential donees and the extent of the property to be disposed of. See Kimberly Whaley, “Comparing the Various Tests of Capacity” Law Society of Ontario, 13th Annual Estates& Trusts Summit (November 18, 2010). See http://www.whaleyestatelitigation.com/ ↵
- A must read for anyone dealing with this issue is the book “Capacity to Marry and the Estate Plan” in 2010, with co-authors: Kimberly Whaley, Dr. Michel Silberfeld, Heather McGee and Helena Likwornik, the February 9, 2012 paper “The Capacity to Marry and Divorce” presented at the OBA Institute Trusts and Estates Law Seminar on February 9, 2012 and the decision of Justice Cullity in Banton v Banton. This is a case that addresses this threshold issue. Section 7 of the Ontario Marriage Act prohibits a person from issuing a license to or solemnizing “the marriage of any person who, based on what he or she knows or has reasonable grounds to believe, lacks mental capacity to marry by reason of being under the influence of intoxicating liquor or drugs or for any other reason.” Common law capacity to marry was essentially equivalent to the capacity to enter into any binding contract, and certainly at a lower threshold than testamentary capacity. ↵