Goodman Estate v. Geffen, (1991) 127 N.R. 241 (SCC)

• Judge: Cory and McLachlin, JJ.
• Court: Supreme Court (Canada)
• Case Date: June 27, 1991
• Jurisdiction: Canada (Federal)
• Citations: (1991), 127 N.R. 241 (SCC);[1991] ACS no 53;[1991] CarswellAlta 91;81 DLR (4th) 211;14 WAC 81;1991 CanLII 69 (SCC);42 ETR 97;[1991] 2 SCR 353;[1991] SCJ No 53 (QL);[1991] 5 WWR 389;80 Alta LR (2d) 293;127 NR 241;125 AR 81

Goodman Estate v. Geffen (1991), 127 N.R. 241 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Ted M. Geffen, Sam E. Geffen and William A. Geffen (appellants) v. Stacy Randall Goodman, Executor of the Estate of Tzina Burnette Goodman (otherwise known as Zinna Burnette Goodman) and the said Stacy Randall Goodman (respondents)

(21613)

Indexed As: Goodman Estate v. Geffen

Supreme Court of Canada

Wilson, La Forest, Sopinka,

Cory and McLachlin, JJ.

June 27, 1991.

Summary:

Prior to her death Mrs. Goodman executed a trust agreement respecting a house, where­in she provided that she would have the use of the house until her death and thereafter the house would be distributed equally between her children, nieces and nephews. After Mrs. Goodman's death the executor of her estate commenced an action to determine the validity of the trust agreement, alleging that it was executed under undue influence and in any event was not a valid inter vivos trust.

The Alberta Court of Queen's Bench, in a judgment reported 80 A.R. 47, dismissed the action. The court found that a valid trust existed and there was no undue influence. The executor appealed.

The Alberta Court of Appeal, Hethering­ton, J.A., dissenting, in a judgment reported 98 A.R. 321, allowed the appeal, set aside the trust agreement and ordered that the property be restored to the executor. The court applied the presumption of undue influence.

In a supplementary decision on costs, reported 104 A.R. 333, the Alberta Court of Appeal, Hetherington, J.A., dissenting, held that the trustees were not entitled to their costs out of the trust property. The trustees appealed both decisions.

The Supreme Court of Canada allowed the appeal. Wilson and Cory, JJ., held that the presumption of undue influence applied but was rebutted. La Forest and McLachlin, JJ., held that the presumption did not apply on the facts. Sopinka, J., held that there was no undue influence, therefore whether the pre­sumption applied was immaterial and unnec­essary to resolve.

Evidence - Topic 4245.2

Witnesses - Privilege - Lawyer-client communications - Extent of privilege - Wills and trusts - The Supreme Court of Canada stated that the exception to solici­tor-client privilege in cases where the succession of property turns on the validity of a will applied to a case where there was an allegation of undue influence in the execution of a trust by a settlor who had since died - There was no privilege to waive until the true intention of the settlor was known, which required that the solici­tor's evidence be received - See para­graphs 49 to 64.

Evidence - Topic 4255

Witnesses - Privilege - Lawyer-client communications - Waiver - By offer of evidence at trial - At a trial concerning the validity of a trust agreement, one party called the settlor's lawyer as a witness and the other party extensively cross-examined him - The trial judge ruled that the evi­dence was admissible on the ground that the parties had waived their solicitor-client privilege by their conduct - The Supreme Court of Canada found the evidence ad­missible without having to decide whether there was any waiver - See paragraphs 49 to 64.

Fraud and Misrepresentation - Topic 601

Undue influence - Equitable principles - The Supreme Court of Canada stated that the equitable doctrine of undue influence developed "not to save people from the consequences of their own folly but to save them from being victimized by other people ... In the context of gifts and other transactions, equity will intervene and set aside such arrangement if procured by undue influence" - See paragraph 22.

Fraud and Misrepresentation - Topic 627

Undue influence - Conditions precedent - Disadvantage to person influenced - Three brothers were concerned that their mentally ill sister would improperly dispose of real property left to her in a will by their mother and that their children would not share in the property - The brothers ini­tiated a meeting with a lawyer and even­tually the sister conveyed the property in trust to two of the brothers and a nephew - The sister retained only a life interest, with the remainder going to hers and her brothers' children - The Supreme Court of Canada held that the Court of Appeal erred in setting aside the trial judge's fact finding that there was no undue influence - Wilson and Cory, JJ., stated that the pre­sumption of undue influence applied but was rebutted - La Forest and McLachlin, JJ., stated that the presumption did not apply - Sopinka, J., stated that whether the presumption applied was immaterial where there was no undue influence.

Fraud and Misrepresentation - Topic 627

Undue influence - Conditions precedent - Disadvantage to person influenced - The Supreme Court of Canada stated that the presumption of undue influence applied where there was a potential for domination in a relationship - In a commercial trans­action the proponent of undue influence must show unfairness or disadvantage - In the case of gifts it was sufficient to estab­lish only a relationship of dominance to raise the presumption - See paragraphs 41 to 49.

Fraud and Misrepresentation - Topic 781

Undue influence - Presumed undue influ­ence - General - The Supreme Court of Canada stated that the presumption of undue influence applied where there was a potential for domination in a relationship - In a commercial transaction the proponent of undue influence must show unfairness or disadvantage - In the case of gifts it was sufficient to establish only a relation­ship of dominance to raise the presump­tion.

Fraud and Misrepresentation - Topic 826

Undue influence - Presumed undue influ­ence - Nonparental family relationships - Brother and sister - Three brothers were concerned that their mentally ill sister would improperly dispose of real property left to her in a will by their mother and that their children would not share in the property - The brothers initiated a meeting with a lawyer and eventually the sister conveyed the property in trust to two of the brothers and a nephew - The sister retained only a life interest, with the re­mainder going to hers and her brothers' children - The Supreme Court of Canada held that the Court of Appeal erred in setting aside the trial judge's fact finding that there was no undue influence - Wilson and Cory, JJ., stated that the pre­sumption of undue influence applied but was rebutted - La Forest and McLachlin, JJ., stated that the presumption did not apply - Sopinka, J., stated that whether the presumption applied was immaterial where there was no undue influence.

Trusts - Topic 4426

Administration - Indemnity of trustee - Costs - Defence of action - The Supreme Court of Canada stated that trustees "are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred. Reasonable expenses include the costs of an action reasonably defended ..." - See paragraph 73.

Cases Noticed:

National Westminster Bank Plc. v. Morgan, [1985] 1 A.C. 686 (H.L.), refd to. [paras. 15, 80].

Allcard v. Skinner, [1886-90] All E.R. 90; 36 Ch. D. 145, refd to. [paras. 22, 96].

Ellis v. Barker (1871), 7 Ch. App. 104, refd to. [para. 27].

Wright v. Carter, [1903] 1 Ch. 27, refd to. [para. 27].

Mitchell v. Homfray (1881), 8 Q.B.D. 587, refd to. [para. 27].

Lancashire Loans Ltd. v. Black, [1934] 1 K.B. 380, refd to. [para. 27].

Hylton v. Hylton (1754), 2 Ves. Sen. 547; 28 E.R. 349, refd to. [para. 27].

In Re Lloyd's Bank Ltd., [1931] 1 Ch. 289, refd to. [para. 27].

Zamet v. Hyman, [1961] 3 All E.R. 933, refd to. [para. 27].

Lloyd's Bank Ltd. v. Bundy, [1974] 3 All E.R. 757, refd to. [para. 27].

Midland Bank Plc. v. Shephard, [1988] 3 All E.R. 17, refd to. [para. 30].

Goldsworthy v. Brickell, [1987] 2 W.L.R. 133 (C.A.), refd to. [para. 30].

Simpson v. Simpson, [1989] Fam. L. 20, refd to. [para. 30].

Bank of Credit & Commerce Interna­tional S.A. v. Aboody, [1989] 2 W.L.R. 759 (C.A.), refd to. [para. 33].

Re Brocklehurst, [1978] 1 All E.R. 767 (C.A.), refd to. [para. 34].

Huguenin v. Baseley (1807), 14 Ves. Jun. 273; 33 E.R. 526, refd to. [para. 37].

Csada v. Csada, [1985] 2 W.W.R. 265; 35 Sask.R. 301 (C.A.), refd to. [para. 37].

Johnson v. Buttress (1936), 56 C.L.R. 113 (Aust. H.C.), refd to. [para. 37].

Greenough v. Gaskell (1833), 1 My. & K. 98; 39 E.R. 618, refd to. [para. 54].

Solosky v. Canada, [1980] 1 S.C.R. 821; 30 N.R. 380, refd to. [para. 55].

Bell v. Smith, [1968] S.C.R. 664, refd to. [para. 55].

Bullivant v. Attorney General for Victoria, [1901] A.C. 196, refd to. [para. 56].

Stewart v. Walker (1903), 6 O.L.R. 495, refd to. [para. 56].

Langworthy v. McVicar (1913), 25 O.W.R. 297, refd to. [para. 56].

Re Ott, [1972] 2 O.R. 5 (Surr. Ct.), refd to. [para. 61].

Ares v. Venner, [1970] S.C.R. 608, refd to. [para. 62].

R. v. Khan, [1990] 2 S.C.R. 531; 113 N.R. 53; 41 O.A.C. 353, refd to. [para. 62].

Director of Public Prosecutions v. Board­man, [1975] A.C. 421 (H.L.), refd to. [para. 62].

Lensen v. Lensen, [1987] 2 S.C.R. 672; 79 N.R. 334; 64 Sask.R. 6, refd to. [para. 66].

R. v. Harper, [1982] 1 S.C.R. 2; 40 N.R. 255, refd to. [para. 66].

Schreiber Brothers Ltd. v. Currie Products Ltd. and Gulf Oil Canada Ltd., [1980] 2 S.C.R. 78; 31 N.R. 335, refd to. [para. 67].

Métivier v. Cadorette and Gourde, [1977] 1 S.C.R. 371; 8 N.R. 129, refd to. [para. 67].

Re Dingman (1915), 35 O.L.R. 51, refd to. [para. 73].

Re Dallaway, [1982] 3 All E.R. 118, refd to. [para. 73].

S. v. S., [1972] A.C. 24, refd to. [para. 92].

Circle Film Enterprises Inc. v. Canadian Broadcasting Corp., [1959] S.C.R. 602, refd to. [para. 93].

Powell v. Cockburn, [1977] 2 S.C.R. 218; 8 N.R. 215, refd to. [para. 94].

Robins v. National Trust Co., [1927] 2 D.L.R. 97, refd to. [para. 95].

Blyth v. Blyth, [1966] A.C. 643, refd to. [para. 97].

Hornal v. Neuberger Products Ltd., [1957] 1 Q.B. 247, refd to. [para. 97].

New York Life Insurance Co. v. Schlitt, [1945] S.C.R. 289, refd to. [para. 97].

Authors and Works Noticed:

Andrews, Neil, Undue Influence and Con­tracts of Loan, [1985] C.L.J. 192, gen­erally [para. 29].

Bank Securities Allegedly Obtained By Undue Influence, [1985] J. Bus. Law 191, generally [para. 29].

Canadian Encyclopedic Digest (Western), Title 67, para. 94 [para. 27].

Cope, Malcolm, Duress, Undue Influence and Unconscientious Bargains (1985), generally [para. 37].

Cope, Malcolm, Undue Influence and Alleged Manifestly Disadvantageous Transactions: National Westminster Bank Plc. v. Morgan (1986), 60 A.L.J. 87, generally [para. 29].

Dale, Brenda, Undue Influence and Mani­fest Disadvantage (1988), 52 The Con­veyancer 441, generally [para. 34].

Dale, Brenda, Undue Influence Recent Developments (1989), 53 The Con­veyancer 63, generally [para. 30].

Dixon, M.J., The Limits of Undue Influ­ence Explained, [1989] C.L.J. 359, gen­erally [para. 34].

Halsbury's Laws of England (4th Ed.), vol. 18, p. 149 [para. 45].

Ogilvie, Undue Influence in the House of Lords (1986), 11 Can. Bus. L.J. 503, generally [para. 29].

Phipson on Evidence (13th Ed. 1982), p. 300 [para. 59].

Reed, Charles P., Com­ment (1984), 18 Law Teacher 132, p. 134 [para. 36].

Reed, Charles P., Com­men­tary (1985), 19 Law Teacher 106, generally [para. 29].

Snell's Principles of Equity (1982), p. 540 [para. 27].

Sopinka and Lederman, The Law of Evi­dence in Civil Cases (1974), generally [para. 60].

Taylor, R.D., Commentary (1985), 19 Law Teacher 105, generally [para. 29].

Tiplady, David, The Limits of Undue Influence (1985), 48 Mod. L. Rev. 579, generally [para. 29].

Wigmore on Evidence (3rd Ed.), vol. 8, para. 2314 [para. 57]; para. 2491(2) [para. 93].

Counsel:

J.D. Bruce McDonald, for the appellants;

R.H. Barron, Q.C., for the respondents.

Solicitors of Record:

Bennett Jones Verchere, Calgary, Alberta, for the appellants;

Barron & Barron, Calgary, Alberta, for the respondents.

This appeal was heard on October 10, 1990, before Wilson, La Forest, Sopinka, Cory and McLachlin, JJ., of the Supreme Court of Canada.

On June 27, 1991, the judgment of the Supreme Court of Canada was delivered in both official languages and the following opinions were filed:

Wilson, J. (Cory, J., concurring) - see paragraphs 1 to 77;

La Forest, J. (McLachlin, J., concurring) - see paragraphs 78 to 88;

Sopinka, J. - see paragraphs 89 to 100.