Cowper-Smith v. Morgan: Independent Legal Advice And Undue Influence

Introduction

In Cowper-Smith v. Morgan 2016 BCCA 200, the British Columbia Court of Appeal upheld a finding of undue influence by the testatrix's daughter, despite advice from two separate lawyers. The Court also dealt with issues of proprietary estoppel, which are not discussed here. The Supreme Court of Canada recently granted leave to appeal, in part on the issue of proprietary estoppel. The appeal will not address the issue of undue influence.

Background

Elizabeth Cowper-Smith died in 2010, leaving three surviving children: Gloria, Max and Nathan. Prior to her death, Elizabeth transferred legal title to her Victoria residence into joint tenancy with her daughter Gloria. Elizabeth also signed a Declaration of Trust naming Gloria as the bare trustee of the residence and her investments. The Declaration of Trust provided that upon Elizabeth's death, the residence and investments would become Gloria's property "absolutely". The effect of these transactions was to leave Elizabeth's estate devoid of any significant assets.

Elizabeth subsequently made a will in which she left one-third of her estate to each of her three children. After Elizabeth's death, Gloria maintained that the residence and investments were hers absolutely and did not form part of Elizabeth's estate.

The trial judge found that a presumption of undue influence arose from the relationship between Elizabeth and Gloria, and that Gloria had not rebutted this presumption. The judge held that Elizabeth's true intentions were reflected in her 2002 will. In the result, the trial judge concluded that Gloria held the residence and investments in trust for the estate, to be divided equally among the three siblings. On appeal, Gloria did not challenge the presumption of undue influence but argued that the legal advice Elizabeth received was adequate to rebut the presumption.

The Transactions, the Wills, and the Legal Advice

Elizabeth had a complicated relationship with her two sons, Max and Nathan. Based on advice from her brother-in-law, David Cowper-Smith (a retired lawyer) and Gloria, Elizabeth became convinced that her sons were going to take the residence away from her. In February 2001, David drafted a will for Elizabeth, which was to be temporary. That will named Gloria as executrix and left one-half of the estate to Gloria, and the other half equally to Max and Nathan. In March 2001, David contacted a lawyer, Ms. Iverson, to draft a will for Elizabeth. David provided his...