June 13, 2018
Testamentary Gifts and Inter Vivos Gifts, A Distinction: Seguin v Pearson
In its recent decision in Seguin v Pearson, 2018 ONCA 355 [Seguin], the Ontario Court of Appeal has clarified the distinction between the tests for challenging testamentary gifts versus inter vivos gifts (those made while a person is still living) on the basis of undue influence.
In Seguin, the deceased, Mr. Paterson, had left his wife and daughters in 1981 and they had been estranged until 2011. Mr. Paterson died in December 2011. The main beneficiary under the two wills was Ms. Pearson, who had been in a common law relationship with Mr. Paterson from 1995 to 2002 and again from 2006 until his death. She had also been Mr. Paterson’s primary caregiver.
At trial, the Court dismissed the daughter’s action to invalidate her father’s two most recent wills and to set aside an inter vivos transfer of his house into joint tenancy on the basis of undue influence.
On appeal, the daughter submitted that “the relationship between Mr. Paterson and Ms. Pearson gave rise to a presumption of undue influence, which the respondent failed to rebut” and that the trial judge had “failed to consider some evidence and misapprehended other relevant evidence” (para 8).
The Court of Appeal dismissed the appeal, and in doing so, noted three main principles regarding undue influence:
- “The rebuttable presumption of undue influence arises only in the context of inter vivos transactions that take place during the grantor’s lifetime.”
- “[The rebuttable presumption] arises from particular relationships when the validity of inter vivos dispositions or transactions is in issue; once the presumption is established, the onus shifts to the transferee to rebut the presumption.”
- “In the case of wills, it is testamentary undue influence, amounting to outright and overpowering coercion of the testator, which must be considered. The party attacking the will bears the onus of proving undue influence on a balance of probabilities.”
The Court of Appeal found that while the trial judge had erred in articulating the test for undue influence by combining the inter vivos and testamentary tests, his finding would have been the same regardless. “Under either test, the trial judge was required to examine all of the relevant surrounding circumstances” and he had done so (para 15).
The Court of Appeal makes it clear that undue influence in the case of testamentary gifts must be coercion, and there is no presumption of undue influence based on the nature of the relationship between the parties. Instead, the rebuttable presumption of undue influence can only arise in the case of inter vivos gifts. One lesson to be taken from this concise and strongly worded decision is that undue influence in testamentary cases must be proven on the merits, without any benefit of a presumption based on the nature of the relationship. Challenges to wills on the basis of undue influence remain an uphill battle for litigants.