Geffen v Goodman Estates
Tzina Goodman, a sufferer of mental illness and now deceased, had inherited from her mother the family home and a life interest in her mother’s residual estate. Upon death, this interest was to pass to Tzina’s children. Under her mothers will, Tzina’s brothers each received bequests of $1000. Prior to the creation of this will, the mother had initially given Tzina a life estate. The estate was to be divided among the mother’s grandchildren equally, upon Tzina’s death.
Due to Tzina's history with mental illness, the brothers were concerned that she would sell the family home and be left with nothing. Tzina and her brothers sought legal advice, however they came to no collective agreement on how to remedy the situation and their relationship fell apart.
Tzina continued to consult with the lawyer, Mr. Pearce, who advised her to put the family home into a trust where Tzina would have a life estate in the home, the trustees would sell the home upon Tzina’s request if it was in her best interest. The trust stipulated that upon Tzina’s death the trust property would be divided equally among her mother’s surviving grandchildren.
Tzina agreed to these terms and Mr. Pearce drafted the trust agreement in which Tzina’s two brothers and one nephew were the trustees.
Tzina died with her last will and testament leaving the entire estate to her children.
Was presumption of undue hardship properly applied by the Alberta Court of Appeal?
At the trial level, the plaintiff (Stacy - Tzina’s son) claimed Tzina entered trust agreement as a result of undue influence by the defendants (Sam, Will & Ted - Tzina’s brother and nephew) and other brother Jack. Based on Mr. Pearce testimony and other witnesses it was found brothers did not influence her to signing the agreement. The trial judge based this on the fact there was minimal contact between the brothers and Tzina and she did not rely on them in making the decision.
At the Alberta Court of Appeal respondents (Stacy) claimed that the trial court failed to recognize and address presumption of undue influence. The Court of Appeal agreed and determined the first step for the presumption of undue influence was triggered, because the nature of the relationship was one in which dominance or influence could be exerted over one party by the other. The Court of Appeal determined the nature of the transaction was that of a gift, and all that was needed for the presumption to stand was the potential for dominance in the relationship. Also noted was that the life estate put her at a disadvantage. The appellants failed to rebut this presumption and the Court ruled in favour of the respondent.
The Supreme Court of Canada stated that the trial court erred in failing to look to the nature of the relationship to determine if it gave rise to the presumption of undue influence. They concluded the nature of the transaction was that of a gift, and therefore the presumption of undue influence stands.
However, contrary to the Court of Appeal, it was found that the appellants were successful in rebutting the presumption on the basis there was little contact between the brother and sister during the relevant time, Tzina was not relying on her brothers to advise her and the prime motivation of the brothers was their sisters welfare.
The appeal was allowed.
Inquiry for Undue Influence
Step One: The Nature of the Relationship
Must assess the relationship if there is a potential for domination or dependency in the relationship.
Step Two: The Nature of the Transaction
Commercial relationships (where consideration is at play) must show that the contract was unfair - simply giving more than getting does not suffice. If an individual privy to the transaction is unduly disadvantaged or unduly benefits, this will be evidence towards the existence of undue influence. When dealing with gifts or bequests situations (no consideration), establishing step one is all that is required for the presumption to exist.
The Presumption of Undue influence
The presumption of undue influence is an equitable doctrine developed in the case, Allcard v Skinner, (1887) 36 Ch D 145. The courts have been reluctant to define undue influence, but generally if there is unfair and improper conduct and a degree of personal advantage obtained by the wrongdoer then a presumption of undue influence may arise. The reason for retaining the ability to set aside such contracts is that consent is vitiated and and to prevent the abuse of influence to the detriment of the plaintiff. In order to trigger the presumption of undue influence there must be a relationship which has the potential for domination or dependency.
Traditional Natural Law
The traditional theory of natural law is grounded in the idea that legitimate and valid laws come from a higher, non-human source. This higher power is immutable and does not change over time. Humanity’s role is to exercise their power of reason to ascertain the true laws and to implement them into societies. Natural law is deeply connected with the idea of morality. In order for a law to be legitimate, it must be implemented by humans in a way which is aimed at establishing morality in society. Since natural law is seen as coming from a higher source, everyone who follows and complies with the implementation of such law is equal in the eyes of said law.
St. Thomas Aquinas Theory on Natural Law
St. Thomas Aquinas was a prominent natural law philosopher. He saw legitimate law as eternal or god-made law that had passed through human minds and properly turned into rules to govern mankind. He emphasized that humans are not passive transcribers of natural law and that the truths delivered to societies are a product of human rational and reasoning. Thomas Aquinas also believed that God made humans rational and allowed them to be inclined to want the common good, because what is good for society is good for God.
Four Elements of Natural Law and Application to Geffen v Goodman Estates
For a law to be valid according to St. Thomas Aquinas, it must possess four essential elements to achieve its main objective of morality. If all four of the elements below are not present, the law is illegitimate and must not be followed.
The Common Good
The purpose of the law must be to achieve what is beneficial for the common good. Valid laws are laws that promote a stable and moral community. If the ultimate consequence of a particular regulation would not to lead to a common good, then Aquinas would find it no law at all. Aquinas might find that the presumption of undue influence enhances the common good by limiting domination and manipulation of a weaker group, whereby apparent consent is vitiated due to the nature of the relationship. Aquinas recognizes that humans can behave irrationally, and it is the role of judges to address written law when it is unjust. Thus allowing for common law principles to address and minimize injustices is necessary for the common good to benefit. Additionally, the common good can benefit when sanctions are imposed on those for engaging in immoral behaviour, like that of undue influence. However, Aquinas may criticize the presumption of undue influence for diluting pure reason because it is very fact dependent and not generally applicable. Alternatively, a critique of this presumption may assert that it is not necessarily for the common good, and is only for the protection of a subset of individuals who are in essence a minority. Those who take others at their word based on their position may invite the consequences associated with lack of personal inclination to determine the facts.
Law Must Follow Practical Reason
The proposed law needs to be a rational step towards maximizing the common good and must clearly demonstrate how to achieve that step. The presumption of undue influence is an appropriate step in maximizing the common good because it is a simple two step process that analyzes complex human relationships based on the type of relationship and the nature of the transaction. As seen in Geffen v Goodman Estates, the courts have addressed that a commercial transaction must be assessed in a different light than that of a gift. The practical reasoning for this is that when there is a mutual exchange of consideration in a contractual relationship, the presumption (of undue influence) is more difficult to establish. Alternatively when only one party is putting forth an item of value, such as in a gift, there is a heightened potential for manipulation and dominance. Aquinas would agree that by differentiating these types of relationships and reviewing both the nature of the relationship and transaction make for a reasonable process that will benefit the common good. A counter-argument is that the presumption of undue influence seems to fail on this necessary element for valid law. There are no particularly discernible steps leading to the common good. The presumption allows for a reversing of the onus to the defendant to rebut this presumption that they exerted undue influence. In order to establish the presumption you need to demonstrate the relationship of confidence and a transaction not readily explicable by the nature of that relationship of influence. Making out these two steps does not seem to be steps that would be handed down by God and that all with reason would have the ability to devise.
Must be Made by a Valid Lawmaker
Thomas Aquinas proposed that a valid lawmaker is a ruler within a community who holds his position by reason of natural order; chosen by God for his capacity to understand, rationalize and transmit God’s law into society where it can be implemented and followed. Aquinas might criticize the presumption of undue influence because it is a common law creation, made by the ruling of judges on specific individual scenarios. Aquinas believes judges, being human, have potential to be swayed by the emotions they experience at trial. Ideally, law should be created by a centralized authority, by lawmakers that have been given their power by God. Therefore, any common law has a high potential to be no law at all because it is created based on specific facts by an invalid authority, therefore diluting pure reason. Given there is no written law in the legislative sense on undue influence, the judge is not necessarily bound to follow it. There is therefore no contradiction of the natural right, meaning there is no reason not to follow it.
Law Must be Promulgated
Lastly, for a law to be legitimate it must be written and known. The purpose of law is to compel obedience, which leads to the common good. For society to be able to demonstrate obedience to the law, they must be aware of what the laws are. While common law may not be valid law, it meets the requirement of being written. The principle of undue influence is enshrined in the common law and is available to all. The presumption of undue influence presented in Geffen v. Goodman Estates is clear and established. However, this is a common law doctrine, and therefore created via judicial decision making, the argument could be made this is not written in the sense that it is not legislated and passed into law in a democratic format akin to other legislation. Though it may be written as a decision in case law, it is not as easily accessible to those with no legal background. It is far easier to access a statute or bylaw.
- Geffen v Goodman Estate,  2 S.C.R. 353,  S.C.J. No. 53.
- Ibid at para 40.
- Ibid at para 43.