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TRUSTS - Express trusts - Requirements - Capacity

Monday, July 22, 2019 @ 9:16 AM  

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Appeal by the defendant from a judgment that declared a 2008 bare trust and agency agreement entered into by him and his elderly parents invalid and non-binding based on a lack of capacity of his father. The agreement was to effect a transfer of beneficial ownership of all the parents’ farmland to the defendant with the parents holding legal title as nominees, agent and bare trustee for and on behalf of the defendant until a mortgage was paid off and then the parents would transfer sole ownership to the defendant. The solicitor who met with the parents before they signed the agreement acknowledged he did not speak French, which was the father’s first language, and admitted the documents were difficult to explain in lay language. He was not informed that the 85-year-old father had dementia due to a stroke and Alzheimer’s disease.

HELD: Appeal dismissed. The trial judge was alive to the fact that the correct time for determining the father’s capacity was the date of execution of the agreement. There was ample evidence that, on the date of execution, the father was incapable of understanding the nature and effect of the agreement despite it purportedly being fully explained to him. The negative credibility finding against the defendant was reasonably supported by the record. The trial judge did not commit a palpable and overriding error in reaching his decision that the father lacked capacity on the date of execution of the agreement.

Gauthier v. Gauthier, [2019] M.J. No. 167, Manitoba Court of Appeal, D.M. Cameron, C.J. Mainella and J. leMaistre JJ.A., June 10, 2019. Digest No. TLD-July222019001