Real Property – Gift of Farmland – Fiduciary Duty
Real Property – Gift of Farmland – Independent Legal Advice
Real Property – Gift of Farmland – Right of Survivorship
Real Property – Gift of Farmland – Severance
Real Property – Gift of Farmland – Undue Influence
Real Property – Land Titles Act, 2000, Section 152
The issue on appeal was the validity of a deed of gift signed by the testator during her lifetime. The deed transferred nine parcels of farmland into the names of the testator and the respondent, as joint tenants with right of survivorship. The testator commenced an action against the respondent while she was still alive, requesting that the transfers be set aside on the basis of resulting trust, undue influence, and breach of fiduciary duty. Alternatively, she sought severance of the joint tenancy and an accounting from the respondent regarding his use and occupation of the land. The testator’s estate continued the action after her death. The trial judge upheld the gift and dismissed the action. The estate appealed. The testator did not have any children and was widowed at a young age. She was the nanny to the respondent. The respondent and his father moved a mobile home onto the testator’s land in 1995 after his father had a stroke. The respondent continued to live there with the testator after his father died. In 2000, the testator and respondent signed the deed of gift with a lawyer witnessing. The testator also signed the transfers to transfer the land into joint tenancies. In September 2000, the respondent married and he and his wife moved into the farmhouse and the testator moved into a care home. A month later the lawyer that witnessed the deed of gift sent a letter to the respondent indicating that the testator wanted to move back to the farm. The issues on appeal were: 1) the nature of the transaction (gift or resulting trust); 2) undue influence; 3) necessity of independent legal advice; 4) breach of fiduciary duty; 5) severance of the joint tenancy; and 6) action for accounting.
HELD: The appeal was dismissed. The issues were dealt with as follows: 1) there was significant evidence to support the trial judge’s conclusion that the transfer was gratuitous. The appeal court did not agree with the appellant that the respondent had an exceptionally heavy burden of proof or onus to rebut the presumption of resulting trust. The burden was clearly set out in Pecore as being a balance of probabilities; 2) the trial judge was correct in concluding that the relationship between the testator and respondent was not one that the courts of equity automatically applied the presumption and thus she needed to examine the relationship itself to determine whether the presumption arose. The appeal court concluded that the presumption of undue influence arose because the respondent had the potential to dominate the testator because of her age, physical condition and her reliance on the respondent. The presumption was clearly rebutted so the appeal court said the trial judge’s finding that the presumption did not exist had no consequence; 3) the appeal court did not agree with the appellant’s position that independent legal advice was required to rebut the presumption. The trial judge found that the lawyer was acting only for the testator and that she understood the nature of the transaction she was entering into. The lawyer did fail to discuss some details with the testator, but imperfections in the advice should not generally negatively impact the donee; 4) there was no error in the trial judge’s conclusion that the respondent was not in a fiduciary relationship with the testator at the time the land was transferred; 5) the trial judge erred by concluding that s. 152 of The Land Titles Act, 2000 does not apply to joint tenants. By virtue of s. 152, on the testator’s death, her personal representative stepped into her shoes and obtained all her legal rights and assumed all of her legal obligations. The trial judge should have taken the application for severance into consideration, but the trial judge’s conclusion that the testator gifted the land with joint ownership with a right of survivorship determined the severance application; and 6) the appeal court found that the trial judge identified the applicable law with respect to the issue of accounting. The evidence did not support a finding that any exceptions existed to the common law rule that a joint tenant is not liable to his co-tenant for occupational rent.