HomeFamily LawThe Doctrine of Unconscionable Procurement Applied in a Canadian Court after a Century of Non-Use

The Doctrine of Unconscionable Procurement Applied in a Canadian Court after a Century of Non-Use

Emily Hanberry

In Gefen v. Gaertner, 2019 ONCA 233, the Court of Appeal of Ontario considered the doctrine of “unconscionable procurement”, which was last applied by Canadian Courts more than 100 years ago.

In Gefen, the dispute involved the estate of Elias Gefen, who died in October 2011. Elias was survived by his wife, Henia, and his 3 sons, Harvey, Harry and Yehuda (Eddy). Eddy died after Elias, and his participation in the litigation was continued by his Estate. The litigation was formally started when Henia sued her 2 younger sons, Harry and Eddy, in 2013. However, Henia did not pursue her claims and the focus of the Trial was on the counterclaims and third-party claims made by Harry and Eddy’s Estate (through his estate trustee) against Henia and their older brother, Harvey.

Of note is that Henia and Elias had made “mirror wills” in 2007, in which they left everything to each other and then to each of their 3 sons, in equal shares. However, after Elias died in 2011, Henia gave a significant gift of $25 million to Harvey and his family. This gift made up more than one-half of Henia’s entire Estate. Harry and Eddy’s Estate objected and challenged the gift to Harry on the basis of the doctrine of “unconscionable procurement”, seeking to ensure that there would be an equal sharing of the residue of Henia’s Estate after she died.

The doctrine of “unconscionable procurement” can be used to challenge gifts made to a person by another person who is still alive (also known as inter vivos gifts). In other words, if there has been a significant wealth transfer in favour of a person who had an active hand in procuring it, then there is a presumption that the gift is unconscionable and should be set aside, unless it can be shown that the donor fully understood the gift’s effect, nature and consequences.

In this case, there was no doubt that the $25 million gift met the “significant” threshold. The Court also confirmed that Harvey had been “actively involved in the arrangements for and documentation of” the transactions benefiting him and his children. The presumption therefore arose that Henia had not appreciated the nature, effect and consequences of the transactions made to Harvey and his family’s benefit.

The Court concluded that the 2 pre-requisites for applying the doctrine had been met in the case; however, the presumption was ultimately rebutted on the evidence proffered by Harvey (which included an expert report and testimony of a geriatric psychiatrist), who was successful in showing that Henia’s gift had been voluntary and deliberate and that she knew what she was doing.

2020-10-23T17:31:58+00:00July 6, 2020|Family Law|
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