Burby v Ball, 2017 ABQB 300

Court of Queen’s Bench of Alberta Citation: Burby v Ball, 2017 ABQB 300 Date: 20170512 Docket: 1201 15450 Registry: Calgary Between: Brian Burby As Litigation Representative of John Burby Pursuant To Rule 2.11 of the Rules of Court Plaintiff - and - Luke Ball, Laura Ball Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.A. Tilleman _______________________________________________________ I. Introduction [ 1 ] This case involves a land transaction west of Calgary in the foothills of the mountains.

The seller is an 86 year old man who was a bachelor most of his life. The buyer is a young couple who leased the land for a number of years before purchasing it. The young man’s parents and grandparents knew the seller as they had all lived and ranched in the same community for many decades. The old man is still alive but resides in a care facility in Calgary.

He is represented in this action by his youngest brother. [ 2 ] The claim is that the young couple took advantage of the older man, and his mental decline, by buying his land for $600,000 when it was later appraised at between $1.67 and $3.9 million dollars. The Plaintiff seeks to reverse the sale and relies on the grounds of (1) undue influence or (2) unconscionable transaction.

[ 3 ] A related third issue is to what extent the Court can accept the psychiatric evidence of expert witnesses, one on each side, neither of whom interviewed the seller at the operative time and both of whom relied on collateral reports to form their opinion about his capacity and dementia. II. Agreed Facts [ 4 ] The Plaintiff and seller of the lands is John Burby. He is presently 93 years of age, and resides in the Beverly Care Centre in the community of Midnapore in Calgary. He is represented in this action by his brother, Brian Burby. [ 5 ] The Defendants and buyers of the land are Luke and Laura Ball.

Luke is currently 36 years old, and Laura is currently 34 years old. [ 6 ] The Ball and Burby families ranch more or less as neighbours in the foothills of Alberta near Millarville and Bragg Creek. The families have known each other for almost 100 years. Luke Ball has lived in the Millarville area since his birth and continues the Ball family ranching tradition with his wife Laura and their children. [ 7 ] Apart from getting married later in life, John Burby lived and ranched alone. He had no children, but he did stay active in the community by being a fire guardian.

John married Val in 1992 and they lived together until her death on June 4, 2010. [ 8 ] The parties have agreed to several facts relating to the land transaction. [ 9 ] In 1999 Luke began leasing a few quarter sections of land from John for grazing his cattle. He would see John once or twice a week during the spring, the start of haying season, and when moving cattle, all of which generally occurred between May and October. [ 10 ] In 2009, the Balls and John amended their lease agreement.

For the first time the agreement included a right of first refusal on four quarter sections of land in favour of Luke and Laura Ball, so that the lands could be “kept as a working ranch.” [ 11 ] In the spring of 2010, the parties entered into a purchase agreement for two of the quarter sections of land. Luke wrote the land purchase agreement on a 3” x 5” slip of paper, and both Luke and John signed the paper. The agreement read: John Burby has agreed to sell the NW

Section 18 township 22 Range Four west of the fifth meridian and the S.W.

section nineteen township 22 Range Four west of the fifth meridian to Luke on March 23, 2010, for the sum of six hundred thousand dollars.

John will receive 10% down payment on March 23, 2010 then an annual payment of $54,000 dollars for ten years, till the total six hundred thousand is paid for in full. [ 12 ] At the time of entering into the sale in question: John was 86 years old; John’s wife, Val was 56 years old; Luke was 30 years old; and Laura was 27 years old. [ 13 ] Following the purchase of the lands, the Balls applied for a land use agreement and subdivision of portions of the lands with the Municipal District. As a part of the subdivision, a 43 acre property and 79 acre property were created.

The lands were classified by the MD as agricultural. During this process there were also easements and rights of way granted to the Balls to facilitate their building of roads and access to their property. [ 14 ] The Balls then performed, or hired or others to perform, certain work on the lands, including building a road to gain access to the lands. [ 15 ] In November 2012 the Balls listed the 43 acre parcel and the 79 acre parcel for sale with a realtor.

The 43 acre parcel was listed at $835,000 and the 79 acre parcel was listed at $1.38 million dollars. [ 16 ] On December 4, 2012, John, through his litigation representative Brian Burby, filed the Statement of Claim against the Balls. By this point in time John had been living in the Beverly Care Centre for close to a year. III. Issues [ 17 ] The Plaintiff seeks to set aside the land transaction on the basis of either undue influence or unconscionable transaction. Undue influence considers whether a person truly consented to a transaction, or whether they were somehow unfairly persuaded or pushed into the deal.

Relief from an unconscionable transaction asks whether one party knowingly gained an unfair advantage over another due to an imbalance in bargaining power, leading to a grossly unfair or improvident transaction. [ 18 ] Both of these doctrines are fact-driven analyses which overlap in their consideration of the circumstances leading up to the transaction and the transaction itself. However, they remain separate legal doctrines which focus on different aspects of the transaction and will be dealt with separately.

IV. Undue Influence [19] Canadian law recognizes two branches of undue influence, actual undue influence and presumed undue influence: Hittinger v Turgeon, 2005 ABQB 257, 45 Alta LR (4th) 170, at para 49. The core principle behind the two branches is the same, which is “toprotect people from being forced, tricked or misled in any way by others into parting with their property”: Allcard v Skinner (1887), LR36 Ch D 145 (Eng CA, Ch Div) at pp 182-183.

Undue influence is not meant to save people from the consequences of their own “folly”or “imprudence”: Allcard at pp 182-183. [20] In cases of actual undue influence, courts will set aside a transaction where there is evidence of overt coercion or impropermanipulation which results in the sale or gifting of a property.

These cases require evidence that a sale or gift was the result of express influence or conduct which was improper: Geffen v Goodman Estate, (SCC), [1991] 2 SCR 353, 81 DLR (4th) 211. [21] In cases of presumed undue influence, courts are concerned with the relationship between the two parties to a transaction. Ifthe parties are in a relationship where there is a potential for domination or influence the court will imply a presumption of undueinfluence.

The burden then shifts to the defendant to show that there was no exercise of undue influence in the transaction: Geffen. [22] It is this second branch of undue influence which is asserted by the Plaintiff here, so deserves further comment. [23] The Supreme Court discussed how the presumption should apply in Canada in Geffen. Wilson J, with Cory J concurring,noted that the presumption originally applied to persons in certain relationships where influence could be presumed - such as trustee andbeneficiary, solicitor and client, and parent and child.

Over time the presumption expanded so that it was not confined to fixed categories,instead requiring proof of a special relationship, Geffen at para 29. After that point in time, the cases developed in different directions. Itwas not clear what elements were necessary to show a special relationship. Thus in Geffen the Court sought to clarify when thepresumption should apply. [24] Wilson J found that a flexible approach should be adopted as the presumption can apply to a wide variety of transactionsranging from gifts to contracts.

She noted that in the case of gifts, courts are interested in scrutinizing the process leading up to the gift asa court will not enforce a gift obtained through coercion or fraudulently induced generosity. In the case of a contract however, courtshave always sought to protect the sanctity of bargains unless they are “patently unfair,” at para 39: ...With respect to contractual relations, however, it has long been the view of the courts that the sanctity of bargains should be protectedunless they are patently unfair.

I cannot think of any situation in which a contract has been rescinded on the sole basis that the processleading up to the bargain was somehow tainted. Something more, such as detrimental reliance, must be shown. It seems to me, therefore,that whatever the measure of undue influence this Court adopts, it must be sufficiently flexible to account for a wide variety oftransactions. [25] Wilson J then outlined the requirements to establish a presumption of undue influence.

The first step is to examine therelationship between the parties to determine whether the potential for domination is present in the nature of the relationship itself. Shenoted that “when one speaks of ‘influence’ one is really referring to the ability of one person to dominate the will of another, whetherthrough manipulation, coercion, or outright but subtle abuse of power,” at para 40.

This type of relationship can arise through thetraditional categories of relationships as well as other “relationships of dependency,” at para 42: What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with anexamination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for dominationinheres in the nature of the relationship itself.

This test embraces those relationships which equity has already recognized as giving rise tothe presumption, such as solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency whichdefy easy categorization. [26] Once the requisite type of relationship is established, the next phase is to look at the nature of the transaction. If thetransaction is commercial, the plaintiff must also show that the contract worked an unfairness, either because the plaintiff was undulydisadvantaged or the defendant was unduly advantaged.

The degree of advantage or disadvantage must be significant as it is assumed incommercial transactions that parties are acting in their own self-interest and bargains are not always fair, at para 44: Having established the requisite type of relationship to support the presumption, the next phase of the inquiry involves an examination ofthe nature of the transaction.

When dealing with commercial transactions, I believe that the plaintiff should be obliged to show, inaddition to the required relationship between the parties, that the contract worked unfairness either in the sense that he or she was undulydisadvantaged by it or that the defendant was unduly benefited by it. ... a court of equity, even while tempering the harshness of thecommon law, must accord some degree of deference to the principle of freedom of contract and the inviolability of bargains.

Moreover, itcan be assumed in the vast majority of commercial transactions that parties act in pursuance of their own self-interest. The mere fact,therefore, that the plaintiff seems to be giving more than he is getting is insufficient to trigger the presumption. [27] If the plaintiff can establish the necessary requirements, a presumption of undue influence will apply. The onus then shifts tothe defendant to rebut the presumption by showing that the plaintiff entered into the transaction as a result of his own “full, free andinformed thought,” at para 45.

This may entail showing that no actual influence was exerted in the transaction. At this stage themagnitude of the disadvantage or benefit is “cogent evidence” going to the issue of whether influence was exercised or not, at para 45. A. Finding of Facts [28] In order to determine whether the presumption of undue influence applies in this case and if so, whether it was rebutted, it isnow necessary to comprehensively review the facts relating to John Burby, his dealings with his land, the Balls, and the transaction.

[ 29 ] Over the course of the two-week trial, I heard from many witnesses on both sides regarding John’s history in his dealings with his land, his health, his relationship with the Balls, and the sale transaction and subsequent events. The witnesses included family and neighbours of John Burby, John Burby’s physician, Luke and Laura Ball, Luke’s father David Ball, one of the lawyers involved in the transaction, and the Foothills MD employee who assisted with the subdivision approval. [ 30 ] I note that I found the testimony of Luke and Laura Ball to be honest, straight-forward, and credible.

Neither of their evidence was shaken on cross-examination. I note there were a few instances where the Plaintiff’s allegations relating to the Balls acting improperly were not born out in the evidence as confirmed by independent witnesses. One example was the suggestion that Luke surreptitiously took John to a lawyer’s office without notice. However, the lawyer’s assistant provided evidence that John was dressed up in his town clothes for the meeting. This supported Luke’s evidence that the meeting was booked in advance based on John’s schedule.

Another was the suggestion that the Balls moved to subdivide the land immediately in order to profit from selling the land. However the Foothills MD representative confirmed the Balls’ testimony that significant changes were coming to the MD’s policies on subdivision in 2010, which prompted the timing of the Balls’ application in June 2010. [ 31 ] From the whole of the evidence, I have come to the following findings of fact. John Burby and his Lands [ 32 ] John Burby was born in 1924 and was the eldest of six children in his family.

He was born, raised and lived on the Home Quarter his whole life, until his deteriorating health required him to be moved to a care centre in Calgary in 2012. His life was dedicated to ranching. He had a great love of the land and ranching life. He was described as witty and sharp by his friends and family. [ 33 ] John liked to work with his hands and was mechanically inclined. He was a tinkerer who was often busy with one thing or another outside in his yard. In the late 1990’s he learned machining from a neighbour and built his own horizontal milling machine.

He would weld and build pulleys and bearings and was considered almost genius by the neighbour who mentored him. He built his own sawmill and used it to cut lumber into firewood for himself and others. He also had a wood shop and used trees from his property to build Adirondack chairs and birdhouses which he sold in the community. [ 34 ] John lived alone on the Home Quarter until he married Val in 1992, when he was in his late 60’s. Val was 30 years younger than John. She had been previously married and had children of her own.

Val moved onto the Home Quarter and lived there with John until she passed away on June 4, 2010. [ 35 ] Around 2005, Val’s sister Linda Girouard, and her husband Harold MacIvor, began living in a trailer on a portion of the Home Quarter. Harold assisted John with chores on the property such as cutting lumber, cutting and bailing hay, and other tasks that needed doing. [ 36 ] John was known in the community as the fire guardian for the MD.

Local residents needed to obtain permission from John in order to conduct burns on their land. [ 37 ] Over the years, John entered into various transactions relating to his land prior to the sale to the Balls. From the nature of these transactions, I find that John was community minded and generous in nature. In two of the transactions, John gifted land for the benefit of his local community. He donated approximately eight acres of land for a fire hall around the year 2000, and a similar amount of land was donated for the Aspen Creek Recreation Centre.

He undertook the subdivision of his lands as necessary so the land could be passed on to the community. [ 38 ] In the late 1980’s, John was receiving some help with farming from his neighbour Doug Weston. He also started leasing some of his lands to Doug Weston around this time. [1] John gifted a Crown grazing lease on a forestry reserve that bordered his property to Doug Weston, as he no longer wished to use it. Doug used this land for grazing his cattle.

It appears that John gifted Doug the lease due to their relationship as neighbours and the lease, and because such leases weren’t necessarily sold at the time. [ 39 ] In 1999, John started leasing lands to Luke for grazing purposes, including the ones that had formerly been leased to Doug Weston. Doug sold the Crown grazing lease to Luke for over $100,000 in 2002. [ 40 ] Around 2001, John agreed to sell a 6.52 acre parcel of land from one of his quarter sections to Robert Klos and Linda Klos. Robert Klos had gotten to know John through hunting on his property from 1994 onwards.

They became close and John allowed Robert to erect a long-term tent on his land for hunting. Robert Klos was interested in having a piece of land for himself and asked John about the possibility of doing so. John was not interested as he made his living from haying on the land. A few years later, Robert Klos asked about purchasing an area that could not be farmed because it was rocky.

They discussed the idea for a couple of years as “John wasn’t the kind of guy you could pressure into doing anything.” From the trial evidence I agree with this characterization. [ 41 ] Eventually during one of their visits John suggested that Robert talk to a realtor to get an idea on the value of the parcel of land. Robert did so and was advised the land was worth $120,000, which he conveyed to John. John replied that he would never charge that kind of money for the land. A couple of weeks later John asked if Robert would pay $80,000 for the land and a deal was struck.

The Kloses commenced paying $500 per month with no interest charged sometime in 2001. I find this was an example of John’s generosity. [ 42 ] Robert Klos described the initial agreement as a “gentleman’s agreement” that was unwritten. He and his wife took care of the subdivision application and approval. When the Kloses decided to move to Colorado they formalized the agreement through a purchase contract in December 2002.

The agreement stated that it was subject to the seller’s lawyer’s approval with the seller’s lawyer (John’s lawyer) listed as Charles Dixon. [ 43 ] In 2004 John entered into another transaction to sell a portion of his land. John sold 100 acres to a company owned by Doug Weston. The land was made up of 10 acres from the Home Quarter and 90 acres from a different quarter

section of land. The sale agreement was for the sum of $460,000 to be paid over five years with no interest charged. Charging no interest was John’s style.

[ 44 ] The transaction had come about when John approached Doug’s partner Sue Windsor with an offer he had received from a third party. Sue was a realtor in the area. Sue discussed the offer with John and Val and advised the offer was very low. John asked if Doug would be interested in the land instead. Doug, who was indeed interested, offered a higher price than the third party. Sue Windsor drafted the sales offer and John’s lawyer, Charles Dixon, drafted the rest of the paperwork. As a part of the agreement, John also granted a right of first refusal over a different quarter

section to Doug Weston’s company. [ 45 ] In order for the sale to proceed, John needed to subdivide the land on his Home Quarter. He took care of this process with the assistance of Charles Dixon. The subdivision process took approximately eight months and was finalized in 2005. [ 46 ] This was the last land transaction John was involved in prior to the sale to the Balls in spring 2010. Luke and Laura Ball and the Sale Transaction [ 47 ] Luke Ball was raised in a ranching family that had been in the Millarville area since the 1930’s.

The Burby family ranched in the same area and the families intersected over time in many ways. Luke helped his father on the ranch from a young age and purchased his first cow when he was 12 years old. Luke loved the ranching life and was determined to carry on the family tradition. [ 48 ] Luke first met John in 1999, when he was 19 years old. He stopped in at John’s house to see if John had any pasture to rent. Luke had approximately 35 head of cows at the time. The land he was renting to the north of John’s land was dry and Luke was looking for grass for his cattle.

John agreed to rent the pasture after he and Luke spoke a few more times. John asked Luke to repair the fences on his land and agreed to a rental rate of $12 per cow/calf pair. This was less than the going rate of $20 per cow/calf pair, which was generous, but also reflected the work that was required on the fencing. Luke worked full days for two weeks to repair the fencing before moving his cattle onto the pasture. [ 49 ] The parties came to a rental agreement in 2000 for John’s pasture land and hayland. The lease was renewed a number of times. Val signed the first agreement and John signed alone after that.

As a part of the land rental, Luke continued to do work on John’s land such as discing the land to improve hay production. He also did flood repair on John’s land and rebuilt a dam after the 2005 floods. [ 50 ] Luke and John developed a friendship over time. They would see each other once or twice a week from spring through to fall annually. In order to access the lands he was renting, Luke needed to drive into John’s yard, past two old barns and past John’s sawmill. Luke would often see John in his sawmill or shop and stop to talk to him.

He also visited with Val though not as much. [ 51 ] Laura started dating Luke in 2002 and they married in 2005. She worked as an education assistant prior to having children. Laura recalled meeting John for the first time in 2002. Laura helped Luke with haying and moving cattle in the evenings and weekends, and during the summer. After they were married Laura took on the role of doing the farm’s books, drawing up contracts and agreements, and paying rentals. John rented land from a few people in the area.

Laura recalled that when she wrote out cheques to the families they leased land from, Luke would ask her not to mail John’s cheque as he liked to deliver it in person and have a visit. [ 52 ] Luke and John first discussed the possibility of Luke purchasing some land in 2006. Luke recalled showing the rebuilt dam to John while they drank Diet Cokes and asking John to keep him and Laura in mind if he wished to sell more land. John agreed to do so. [ 53 ] In December 2007, Laura received a call from Val asking them to come over to discuss buying some land.

They went to John’s house with their son who was not quite a year old at the time. John wanted to know if they were interested in purchasing the two west quarters. Luke indicated that he was interested. There was some discussion about access to the land. Luke asked John what he wanted for the land and John suggested calling a realtor for a price and cutting that in half as a starting point. [ 54 ] The parties next discussed a sale of the land in February 2008. Again Val called Laura asking them to come up to discuss purchasing the land.

They continued discussing access to the lands as there was no independent roadway to the two west quarters. John was fine with the Balls accessing the lands through the Burby’s yard but Val preferred they build a new road off the end of the driveway. Val suggested building the “Ball overpass” from their driveway to the lands. The parties were still unsure as to pricing. Luke asked John to come up with a price and John suggested they ask for a realtor’s appraisal and cut it in half.

The meeting was interrupted by a visitor. [ 55 ] There were no further discussions about a sale until May 2009 when Luke and Laura were checking the cattle and stopped in at John’s wood shop for a visit. They had their son and a new baby by this time. Luke asked if John was still thinking about selling the land but John told them no, not at this time. Luke and Laura looked at the Adirondack chairs that John was building. He mentioned that the chairs sold for $80 to $100 in the stores and that his sold for $50. Laura put in an order for two of the chairs.

She also asked whether John would be able to make a child-sized chair. A few weeks later Luke came home with two adult sized chairs and one smaller chair. [ 56 ] Although John was not interested in selling the lands at that time he agreed to provide a right of first refusal to the Balls as a part of their 2009 land rental agreement.

The agreement stated that “John Burby has agreed to give Luke Ball and family (Laura, Samuel and Bethany) first right of refusal on the above listed quarters so that this land will be kept as a working ranch.” This reflected their discussions to date and John’s interest in keeping the land together. John was of the opinion that the best conservancy was a young rancher. John also mentioned at the time that he hoped to preserve his home quarter, either through a conservancy or easement, so that it could not be subdivided into residential housing.

The agreement was signed by Luke, Laura and John. [ 57 ] The next meeting relating to a sale of the lands occurred in February 2010. Luke stopped in to visit John after clearing some trees on the land. John mentioned that he was ready to talk about selling the lands again and suggested Luke come over sometime. Luke returned the next day with his father who he wanted to have at the meeting. They noticed a number of vehicles parked on the property, however, and John asked them to come back another time as he had company show up unexpectedly. [ 58 ] The parties finally came to an agreement on March 23, 2010.

Val called that day asking Luke to come to their place to discuss a third trailer they were putting on their property for Val’s mother. John wanted help pulling the trailer up behind their house and clearing the trees in that spot. After agreeing to help, Luke asked about the land. John said that he would sell Luke the two west quarters. Luke

asked what John wanted for them and John asked Luke’s opinion of what the land was worth. Luke responded that he did not know what it was worth but that he knew what he could afford, which was $600,000. This amount was based on Luke and Laura’s discussions about what they could afford if they were to get a mortgage for the land. John and Luke agreed to the $600,000. [ 59 ] Luke and John wrote their agreement on a piece of paper. They discussed financing options and John told Luke he could pay for it over time like Bob Klos had.

Luke wrote their agreement on the paper showing that he would give John 10% or $60,000 as a down payment and pay the rest over five years at $108,000 per year. John felt that five years would be too difficult so the figure of $108,000 was scratched out and substituted with $54,000 per year for ten years. Luke and John both wrote their names and signatures at the bottom of the page. They also agreed verbally that an easement would be provided for access. John retrieved a cheque from his truck and provided the down payment that day.

When Val came home with groceries John told her there was good news as they were going to have new neighbours. [ 60 ] Luke was aware that in paying $600,000 he was receiving a discount on the land. He saw this as an amazing gift, as he would be able to keep ranching and provide agricultural land to his children so they could continue the ranching tradition one day. Luke told Laura the good news when he got home. [ 61 ] A few days after the agreement was made, Laura passed it on to the Balls’ lawyer Stan Church to prepare the formal documents.

The Balls also sent an email outlining the details that were needed for creating the documents. The email stated that “John doesn’t have an accountant at this time, he said he will talk to his lawyer but that you can write up the agreement and we can review when it is ready together.” The Balls also ensured a caveat was registered at land titles with notice of the agreement. [ 62 ] Despite the email noting that John would speak to his lawyer, in the end, it was Luke who found a lawyer for John for the transaction. John asked Luke to call around for a lawyer and noted he did not want a big bill.

Luke found that lawyer George Dearing offered the best price and set up a date with him for executing the documents. When Luke provided the date to Val she informed him it would not work. Luke arranged for a different date, April 21, 2010. John agreed to this date on the phone and asked Luke to pick him up. [ 63 ] The Balls and Burbys continued to discuss access to the property and what type of an easement would work the best considering the increased traffic. They decided west of the driveway would be best. [ 64 ] On April 21, 2010, Luke took John to George Dearing’s office in High River to sign the documents.

Val did not accompany them. John was dressed up in his town clothes, which was confirmed by George Dearing’s assistant Darlie MacRae. George Dearing met with John for approximately one hour to go over the documents including the transfer of land, the mortgage, a Dower Act acknowledgement, an Affidavit on the Value of the land of $600,000, and the Easement and Right-of-Way Agreement. Luke sat in a corner of the room. [ 65 ] George Dearing is an experienced real estate lawyer who also does wills and estates work. Mr.

Dearing testified that his general practice in meetings for the execution of documents is to go over the documents involved and make sure the person understands what they are signing and approves of what they are signing. He explains the nature and effect of the document. [ 66 ] Although Mr. Dearing did not recall the specific meeting with John and Luke, he made notes about the meeting, including that John acknowledged the basis of the handwritten document dated March 23, 2010 and the transfer and easement. They also reviewed the vendor takeback mortgage for $540,000 without interest and John approved the terms.

Mr. Dearing wrote in his notes that day that John “appeared to be rational and lucid in our conversations, and based on this, I believed he was competent to sign the documents.” I accept his evidence. [ 67 ] Mr. Dearing confirmed that he has had occasion in the past where he was concerned about an individual’s capacity or ability to understand documents and that in such cases he refused to proceed. [ 68 ] The topic of whether the price paid for the land was at market value was not discussed at the meeting, nor raised as an issue. Mr. Dearing was not aware that the land was being sold at a discount.

The meeting was for the purposes of executing the documents. [ 69 ] There is no indication that John regretted the sale to the Balls and in fact it appears overall he was quite happy with the sale. The Balls visited the Burbys in May 2010 after the birth of their third child. Val’s other sister was also visiting at the time. Luke and Laura recalled this was a happy visit as the Burbys were happy to see the baby and John was bragging about getting his driveway paved. They were excited that the Balls would be their future neighbours and asked when they would be building a house.

Val showed Laura their above ground pool and hot tub and invited her to come with the kids to use it. [ 70 ] John also spoke about the sale to his former neighbour Robert Klos and a current neighbour David Hill. Both men heard about the sale and came to talk to John in his woodshop. They were interested in buying the property themselves for an archery hunting company and had mentioned the idea to John before. They asked John if he would consider selling the land to them for a higher offer. John replied that the deal was done as it had been time to sell the land.

He stated he was happy to see the land remain in a ranching family. He had considered and decided against a conservancy, as it would prevent him from cutting trees on his land for his Adirondack chairs. John stated that selling the land to Luke was the next best thing as it would keep the land agricultural. John was impressed with Luke as a hard working young man and was glad to see that he was going to be a rancher like his uncles and dad had been. [ 71 ] John also appeared happy when he told his brother Brian that he had sold the two west quarters.

Brian said that he hoped John made out all right and got what the land was worth. John replied, to his own brother, that he was content. [ 72 ] Brian Burby testified that he did not know anything about the financial arrangements relating to the sale and did not know of any pressure or inducements placed on his brother to sell the land. Brian did know that John wanted the two quarters that were sold to remain as a farm.

Prior to the sale, Brian recalled that he and John and discussed the fact that the land was worth more than you could get out of it farming, and that a farmer would not be able to purchase land at the going rate for country residential land. Brian had offered to help sell the land but John had refused.

[ 73 ] A couple of months after the sale, the Balls looked into subdividing the land as they were aware changes were coming to their Municipal District’s policies on subdivision. The MD was promoting country residential development which sees land subdivided into small parcels in cluster developments and disallows bigger subdivisions of land. The Balls were concerned that they would not be able to subdivide their land into large parcels to pass on to their children to ranch.

There was also a possibility that they would subdivide and sell a portion of their land for income to fund building a home as they were still renting from Luke’s family. [ 74 ] The Balls created a plan for dividing their land and sought approval for it amongst neighbours on the basis of future ranch planning for their children. They also received a letter from John approving their plan on that basis in late June 2010. (Val had passed away shortly before this time.) [ 75 ] The Balls proposed dividing one quarter

section into two eighty acre parcels and dividing the other quarter

section into a 100 acre parcel and a 52 acre parcel (which later changed to a 43 acre parcel). The Balls presented their plan to the MD and received approval to change the land use to the smaller parcels in September 2010. They then applied for the actual subdivision in January of 2011 and received approval from the MD in June 2011. John was involved as a third party as his approval of the easement for access was required as a part of the subdivision approval.

The land zoning remained agricultural throughout the various applications. [ 76 ] After the sale, the Balls performed work on the land including building a driveway, a gate, a dugout, clearing fence lines and installing fencing, and levelling an area on the land for a building site. They also hired a company to construct a road.

Their out-of- pocket cost for this work was close to $100,000, without considering costs for time and labour other than for the road building crew. [ 77 ] In November 2012, approximately a year and a half later after the subdivision approval, the Balls listed two of the subdivided parcels of land for sale: one eighty acre parcel and one 43 acre parcel. Luke stated that they wished to sell the 43 acre parcel as it was heavily treed and on a steep slope so was not good for grazing.

However they were advised by a realtor that the 43 acre parcel would be hard to sell so they listed the 80 acre parcel as well, with the intention of only selling one parcel. The purpose of the sale was to raise money to fund their dream of building a home on their ranch. The 80 acre parcel was listed for $1.38 million dollars and the 43 acre parcel was listed for $835,000. John’s Health [ 78 ] John saw his physician Dr. Dowdall a few times a year during the 2006-2010 timeframe. The visits were related to physical issues such as shingles, cataracts, knee and leg pain, and osteoarthritis.

He was hospitalized with shingles in January 2006 and soon after discharge was admitted again because of delirium secondary to a urinary tract infection. The delirium resolved quickly. Significantly, Dr. Dowdall did not have any concerns about John’s mental capacity or cognitive ability during the 2006 – 2010 timeframe. He stated that John was often accompanied to appointments by his wife. Dr. Dowdall would make a note if a family member raised a concern about a patient and there were no such notes in the 2006-2010 timeframe.

He recalled that John’s complaints during this time period related mostly to mobility issues. [ 79 ] Friends and family started to notice some deterioration in John the late 2000’s, mostly in the form of John telling stories that were unlikely - such as catching a bear with roast beef or believing that missiles had flown over his property, or that he was being watched by his sister from the nearby hills. These stories were occasional and were brushed off as a part of his aging for the most part. Neighbours such as Sue Windsor noticed that John was not thinking as clearly as he had in the past.

He needed things explained more explicitly to him and sometimes did not understand what you were saying. John also began to make some clerical errors on fire permits.

By 2008, John had given up his driver’s license and Val was assisting with paying bills and depositing cheques, though it was still John who wrote the cheques. [ 80 ] The witnesses were often unable to provide exact timeframes relating to their observations, but it was evident that John’s behaviour began to change before Val died in June 2010, which was a couple months after the sale to the Balls. [ 81 ] Val’s sister Linda Girourd and Brian Burby both testified that before Val passed away she was concerned that John was becoming harder to handle and was not taking care of his personal hygiene like bathing or shaving.

Linda recalled that when she and Val went shopping in town John would call worried that something had happened to them and wanted them to come home right away. There were also a couple of occasions where Linda and Val returned home to find John holding a shotgun worried they were intruders until Val explained who they were. Linda stated that Val was unhappy because John was different and was losing his mind. [ 82 ] Naturally John was upset and grieving after Val passed away. John continued to live on his own on the Home Quarter after Val’s death.

Linda and Harold checked in on him and provided him with meals or had him over. The Balls also visited and brought over meals. [ 83 ] Shortly after Val’s death John’s niece Carol Storey called to see how he was doing and was told a delusional story by John. John said a murder had taken place on his property, there was blood throughout one of the trailers on site and police and ambulances had come. Carol rushed out to the property only to find the story was a product of John’s imagination and everything was okay. [ 84 ] John only saw Dr.

Dowdall once in 2010, which was in the fall and was in relation to his ongoing knee pain. Others reported that John was still active outside during the summer and fall of 2010, tinkering and helping with baling hay. [ 85 ] John’s ability to care for himself deteriorated over time and the evidence convinces me it was age-related. In February 2011, Dr. Dowdall was told by a colleague that a patient had raised concerns about how John was looking after himself. Dr.

Dowdall passed on the concerns to a team of home care nurses. [ 86 ] In March 2011 there was an incident where John “burnt up” the microwave so Linda and Harold decided to move into his home with him. They had noticed other incidents prior to this where he had left on the gas on the stove. They found him stubborn and had trouble getting him to bathe or go to the doctor.

[ 87 ] That said, John’s brother Brian said that when he visited John in the summer of 2011 he did not believe John’s condition required him to be moved out of his home. [ 88 ] Acquaintances noticed John was not outside very often by the summer of 2011. [ 89 ] In October 2011 Linda took John to see Dr. Dowdall. John was concerned about his knee pain and Linda raised her concerns about John’s hygiene. John agreed to have a home care assessment and to bathe at the hospital. Dr. Dowdall noted that John seemed well, alert, oriented and “not unkempt” at the appointment.

In the home care assessment Linda reported that John was not bathing and was showing signs of Alzheimer’s. The home care worker also spoke to John. John believed he was doing fine with help of those living on his property. [ 90 ] In December 2011, John executed a personal directive relating to his health, however he maintained control over his financial arrangements. [ 91 ] In January 2012 John’s family and care givers attended with Dr. Dowdall with concerns about his living conditions. Dr. Dowdall recommended a capacity assessment. [ 92 ] In February 2012 an occupational therapist visited John, Linda and Harold.

She reported to Dr. Dowdall that John scored the lowest score in five categories on an Independent Living Scale Test. The OT believed that the next best step was to encourage John to do an Enduring Power of Attorney. The OT believed John may lack capacity but did not do a capacity assessment. [ 93 ] In March 2012 John was admitted to hospital after a fall. By this point in time Harold and Linda were finding it very difficult to care for John as he would not stay in bed, would not clean himself, and was belligerent.

It was noted on the hospital intake form that he had worsening dementia and increasing inability to take care of himself. John stayed in hospital until the end of May when he was transferred to a long term care facility in Calgary. [2] [ 94 ] Brian Burby became John’s co-guardian and co-trustee in October 2012, along with George Merryfield, who was John’s nephew. This Action [ 95 ] It appears that when the two parcels of land went up for sale at $1.38 million and $835,000 in November 2012 it was upsetting to John’s family.

The two parcels were listed for one month before the Balls were sued by the Plaintiff, at which time they were taken off the market. B. Does the Presumption of Undue Influence Apply in this Case? [ 96 ] I now turn to a discussion of whether a presumption of undue influence arises based on the foregoing facts, and if so, whether that presumption is rebutted. Positions of the Parties [ 97 ] The Plaintiff argues that the “amazing gift” to Luke Ball in this case was a grossly improvident transaction for John Burby and a betrayal of trust.

John was an elderly and vulnerable man who was showing signs of dementia at the time of sale to the Balls in 2010. The Plaintiff submits that the emotional bond between the two men and their shared values led to a relationship whereby John had the potential to be easily influenced by Luke. This vulnerability resulted in him being susceptible to persuasion by Luke to sell his land at a grossly improvident price. [ 98 ] The Plaintiff argues that due to Luke’s influence, John entered into an agreement that was out of character for him.

The Plaintiff submits that Luke Ball persuaded John by increments in the following ways: 1) Convincing John to sell him the property for half the appraised value; 2) Convincing John to sell the property to Luke for what he could afford; 3) Proceeding with the transaction by way of a handwritten note; 4) Excluding Val and his regular lawyer Charles Dixon from involvement; 5) Obtaining a lawyer who was a stranger to John to witness the execution of the documents; 6) Revealing only a portion of the deal to the lawyer so that he was not informed as to the crucial fact that the price was so improvident it was regarded by the purchaser as an “amazing gift”. [ 99 ] The Plaintiff concedes that although this was not a traditional relationship of confidence or dependence as Luke did not manage John’s affairs, Luke did act improperly in asserting himself into John’s legal affairs by finding him a lawyer, driving him to the appointment, and sitting in on the meeting. [ 100 ] Additionally, the Plaintiff submits that the size of the transactional disadvantage in this case means that the Court can infer a relationship of influence existed.

The Plaintiff submits the size of a transactional imbalance itself can be used as cogent evidence going to the establishment of a relationship with a potential for influence/domination, relying on the following: It is sufficient for the complainant to prove facts from which the existence of a relationship of influence could be inferred. And the fact

that the transaction complained of is substantially to the disadvantage of the complainant is a relevant fact from which a relationship of influence could be inferred. This will be the case especially where there are other circumstances pointing in that direction. One such circumstance is where the relationship is one which is easily capable of developing into a relationship of trust and confidence.

Thus, where a transaction which is substantially disadvantageous to the complainant has been obtained by a person with whom the complainant stands in such a relationship, the substantial disadvantage may be sufficient to justify the inference that the relationship had developed into one of influence, and ‘where the transaction is so extravagantly improvident that it is virtually inexplicable on any other basis, the inference will be really drawn’.

Enonchong Nelson. “Duress, Undue Influence and Unconscionable Dealing”, 2 nd edition, 2012, Sweet & Maxwell, U.K., Pages 245-246 [ 101 ] According to the Plaintiff there is support for such an inference in Geffen . [ 102 ] The Plaintiff submits that the transaction was grossly improvident in this case. The Plaintiff introduced evidence from an appraiser that the market value of the lands was $3.9 million as of April 2010. Based on this valuation, the sale to the Balls was only 15.38% of the market value of the lands.

The Plaintiff submits that the transaction is therefore virtually inexplicable on any other basis than there being a relationship with a potential for domination/influence. [ 103 ] The Defendants disagree with the Plaintiff’s characterization of the relationship and with their formulation of the law. [ 104 ] The Defendants argue that the relationship between John Burby and the Balls does not raise a presumption of undue influence.

There was no inherent potential for domination, as the Balls were friends and neighbours, but had no role in assisting or advising John in his affairs. [ 105 ] The Defendants also take issue with the Plaintiff’s focus on John’s vulnerability and the purported improvidence of the transaction as grounds to support the presumption. These are not factors which can ground a presumption of undue influence.

They submit the source of the presumption must be grounded in the relationship itself. [ 106 ] The Defendants argue that the improvidence of the transaction is not a factor in determining whether a presumption of undue influence exits. They note the Plaintiff has improperly relied on a United Kingdom text for this proposition, not on Canadian law.

The Defendants assert that Geffen is binding law on the test for the presumption of undue influence in Canada. [ 107 ] Nevertheless, in addressing the improvidence of the transaction, the Defendants argue that the sale was consistent with John’s values, beliefs and wishes and did not work a significant disadvantage to him. The Defendant’s appraiser found that the market value for the land was much lower - $1.67 million dollars - as of March 2010. Based on this valuation, the sale to the Balls was at 35.93 % of the market value of the lands.

Although this is under market value, John did not enter into the transaction to maximize price. John valued ranching life, hard work and ranching families and was willing to give the Balls a good deal on the land. Analysis [ 108 ] To begin, in terms of the applicable law, I agree that Geffen sets out the applicable test for determining whether to impose a presumption of undue influence. The test is whether the potential for domination exists in the nature of the relationship itself.

It is only after this relationship is proven that one goes on to look at the improvidence of the transaction (and only if the transaction was commercial in nature). This is evident from the following quote from Wilson J in Geffen , at paras 42-43 : What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself.

This test embraces those relationships which equity has already recognized as giving rise to the presumption, such as solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency which defy easy categorization. Having established the requisite type of relationship to support the presumption, the next phase of the inquiry involves an examination of the nature of the transaction.

When dealing with commercial transactions, I believe that the plaintiff should be obliged to show, in addition to the required relationship between the parties, that the contract worked unfairness either in the sense that he or she was unduly disadvantaged by it or that the defendant was unduly benefited by it. ... [Emphasis added] [ 109 ] The Plaintiff’s reliance on the UK text to assert that an improvident transaction is evidence to establish a relationship of dependency is therefore respectfully misplaced. Canadian law has not yet developed in this fashion.

It was noted in Geffen that “[t]he mere fact... that the plaintiff seems to be giving more than he is getting is insufficient to trigger the presumption”, at para 43; see also Hittinger , at para 63 . [ 110 ] Nor was this the intent of Wilson J when she discussed the effect of evidence on the magnitude of the disadvantage or benefit.

It is clear from her quote that consideration of this evidence only arises after the presumption is triggered, Geffen at para 45 : Once the plaintiff has established that the circumstances are such as to trigger the application of the presumption, i.e., that apart from the details of the particular impugned transaction the nature of the relationship between the plaintiff and defendant was such that the potential for influence existed, the onus moves to the defendant to rebut it. As Lord Evershed M.R. stated in Zamet v.

Hyman, supra, at p. 938, the plaintiff must be shown to have entered into the transaction as a result of his own "full, free and informed thought". Substantively, this may entail a showing that no actual influence was deployed in the particular transaction, that the plaintiff had independent advice, and so on. Additionally, I agree with those authors who suggest that the magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether influence was exercised . [Emphasis added]

[ 111 ] Turning now to the facts of this case, I wish to make it clear that I find there was no potential for domination in the nature of the relationship between John Burby and the Balls. [ 112 ] Instead, I find John Burby and the Balls relationship was (1) one of lessor and lessee that (2) developed into a friendship over time due to their shared values as fellow ranchers. They visited with one another when Luke or the family were on the land during the spring to fall season and occasionally at other times such as Christmas.

They were close neighbours who clearly admired one another, but their relationship did not evolve into one where John depended on the Balls for his day to day needs, whether emotional, financial, legal or otherwise. The Balls were not akin to family or in a position of trust.

Nor did I hear any evidence to suggest that John was in a position where he needed to sell his land for financial reasons such that he could be vulnerable to influence from the Balls. [ 113 ] On the evidence, I also do not find that John was so vulnerable due to old age that this caused the nature of his relationship with the Balls to have a potential for domination. [ 114 ] I find that John was still functioning fairly independently in the years leading up to the sale and the year of the sale itself.

He was not a man that was easily persuaded into doing things and it appears that this characteristic only increased as he aged. Although there were signs that he was aging physically and mentally, John continued to pursue his hobbies independently and continued to act as a fire guardian for the community. He entered into leases and other agreements with the Balls on his own. The only person that John was dependent on to some degree was Val, partly because he did not have a driver’s license anymore.

John’s vulnerabilities from old age were affecting his relationship with Val by 2010, but there is no evidence that they were apparent to or affecting his relationship with the Balls. [ 115 ] The fact of a close relationship between neighbours or even family members is not enough on its own to raise a presumption of undue influence: Van De Geer Estate v Penner , 2006 SKCA 12 , 275 Sask R 202; Hittinger v Turgeon , 2005 ABQB 257 .

There must be more, such as instances where the plaintiff has placed their trust in the defendant such as asking for advice or help in managing their affairs: Geffen; Van De Geer Estate; Hittinger . Those facts do not exist here in relation to the Balls. John and the Balls were not in a relationship of dependency. [ 116 ] Finally, I must address the Plaintiff’s suggestion that Luke surreptitiously set up the appointment with George Dearing to keep John away from receiving advice from his regular lawyer.

The Plaintiff submitted that this was an example of Luke’s potential influence over John. [ 117 ] I find this was mere speculation and is without foundation. I believe that John asked Luke to find a reasonably priced lawyer to help paper the transaction and Luke obliged. Luke set up the appointment with Val’s knowledge and did not know if Val was going to attend the meeting. Luke took John to the appointment and sat quietly in a corner during the meeting. This was not a circumstance where Luke had the potential to influence or manipulate John through the choice of an unfamiliar lawyer.

They had already decided on the terms of their deal and were merely seeking assistance to execute the agreement. [ 118 ] Nor was there any evidence to support the Plaintiff’s suggestion that John would normally seek legal advice on the merits of a land transaction before agreeing to the deal. The Plaintiff did not call John’s regular lawyer at trial to substantiate the claim that he would have advised John on the merits of the deal or had done so in the past. In fact, the evidence suggests otherwise.

In John’s prior land transactions with Robert Klos and Doug Weston, John’s lawyer was involved in papering the deal after the fact, but it does not appear that he advised John on the merits or structure of the deal itself. This is especially clear in the agreement with Robert Klos as it started out as a “gentlemen’s agreement” which was only formalized when the Kloses decided to move out of the country.

I find there is no merit to the suggestion that Luke’s actions in helping John to find a lawyer lead to a presumption of undue influence. [ 119 ] Based on these findings, the Plaintiff has failed to establish the requisite relationship to support a presumption of undue influence. As I stated earlier, I do not accept the Plaintiff’s argument that the presumption can be established based on an improvident transaction alone.

Absent the establishment of the requisite relationship, the improvidence of the transaction is not a factor that must be considered. [ 120 ] I also find that if the presumption had been established, it would have been rebutted as there was no actual undue influence exerted in this case. [ 121 ] Robert Klos described John as a man that you could not pressure into doing anything. I find that to be true from all of the evidence in this case. This was a sale that moved at John’s pace. Luke first indicated he was interested in buying John’s lands in 2006 and the sale did not occur until 2010.

There were at least five conversations about the sale and access to the lands before the parties came to an agreement. And it was John, not the Balls, who initiated a number of the conversations by getting Val to call and ask the Balls to attend his home. [ 122 ] In 2009, when the Balls inquired about buying the land, John indicated he was not interested at that time. Another year passed before John indicated in February 2010 that he was considering selling again. The Balls waited in the interim.

There is therefore nothing to suggest that this was a hasty sale or one where the Balls were exerting pressure on John to sell. The Balls respected John’s wishes and were ready to buy when he was ready to sell and on terms he wanted. That is my finding. [ 123 ] I find that this was a transaction that John wanted to enter into; he was not coerced into selling his land. John was in his eighties and had no children of his own. Nor did he have family who wanted to purchase or farm his land. John knew it was time to sell the land and he wanted it to stay in agriculture.

John witnessed Luke as a lessee on his land for a number of years and was impressed with Luke’s hard work and dedication to raising his own family in the ranching tradition. John saw in Luke someone with similar values who would maintain the land as a working farm and ranch and pass it on to the next generation. John had considered options such as a conservancy on the land but felt that the best type of conservancy was a young rancher such as Luke. [ 124 ] It is clear that the price paid for the land was at a significant discount.

As noted the appraisals for the market value of the land at trial were $1.67 million from the Defendants’ appraiser and $3.9 million from the Plaintiff’s appraiser, meaning that the Balls purchased the land at 15.38% to 35.93 % percent of market value.

[ 125 ] However, I find that John’s motivation for the sale had little to do with financial gain or maximizing price. John’s primary concern was keeping the lands agricultural and continuing the ranching tradition. In their multiple discussions prior to the sale, John indicated he was willing to sell the lands at half their worth. He knew that if the lands were to remain agricultural a buyer would not be able to pay market value.

It is not uncommon for rural property to be sold for less than market value as I heard in evidence from both the Defendants’ appraiser and from George Dearing, both of whom are experienced in rural land transactions. [ 126 ] I find that John was satisfied with the price. $600,000 was a considerable amount for a young ranching family and John would have been aware of this fact. In fact, when John was offered a higher price by Robert Klos and David Hill for the lands, he turned them down .

John was willing to go with Luke’s assessment of what his family could afford and John, not Luke, even suggested a longer term for payment which would be more reasonable for the family. There was also a significant down payment of $60,000 that would have been of immediate benefit to John. [ 127 ] I find that this sale, to a neighbour at under market value and without interest, was not out of character for John.

It was consistent with his prior practices and generous nature. [ 128 ] Although the Balls received the land at a significant discount, I do not find that it is so out of line as to be “patently unfair”: Geffen . [ 129 ] There is also no indication that John regretted the sale after the fact or that those close to him felt he had been coerced into a bad deal. If something untoward had occurred with the deal or the lawyer, I suspect that Val would have raised a fuss or mentioned it to her sister and brother-in-law that lived on the property soon after.

Instead Val appeared happy about the deal and was welcoming of the Balls. I accept that evidence. [ 130 ] Finally, I am satisfied that John understood the transaction he was entering into and its effects. He understood he was entering into an important transaction and dressed in his town clothes for his meeting with George Dearing. Mr. Dearing spent an hour going over the terms of the agreement, the transfer of land, the mortgage and the easement. He had no concerns about John’s ability to understand the nature and effect of the documents.

John also specifically approved the terms of the mortgage and interest free nature of the deal. [ 131 ] Thus I find that John entered into this transaction voluntarily after careful consideration of the future he desired for his lands. The sale to the Balls was a result of John’s own full, free and informed thought; and was done without any manipulation or coercion on the part of the Balls. V.

Unconscionable Transaction [ 132 ] The other claim advanced by the Plaintiff is that the sale should be set aside as an unconscionable transaction. [ 133 ] The law is settled in Alberta that in order for a plaintiff to prove unconscionability he or she must establish each of the following four elements: 1. a grossly unfair and improvident transaction; 2. that the victim lacked independent legal advice or other suitable advice; 3. that there was an overwhelming imbalance in bargaining power caused by the victim's ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and 4. that the other party knowingly took advantage of this vulnerability.

Cain v Clarica Life Insurance Company , 2005 ABCA 437 , 384 AR 11, at para 32 . [ 134 ] These elements build on common law principles that have been established for over a century. Mr. Justice Story’s Commentaries on Equity Jurisprudence from 1892 notes the law’s presumption that a person is able to dispose of their property as they see fit.

Bargains are made and justified by parties due to a myriad of circumstances and a court will not intervene on the sole basis that the payment was inadequate: Of a kindred nature to the cases already considered, are cases of bargains of such an unconscionable nature, and of such gross inequality, as naturally lead to the presumption of fraud, imposition or undue influence.

This is the sort of fraud to which Lord Hardwicke alluded ... when he said, that they were such bargains that no man in his senses and not under delusion would make, on the one hand, and as no honest and fair man would accept, on the other, being inequitable and unconscientious bargains. Mere inadequacy of price, or any other inequality in the bargain, is not, however, to be understood as constituting, per se, a ground to avoid a bargain in equity.

For courts of equity, as well as courts of law, act upon the ground that every person who is not, from his peculiar condition or circumstances, under disability, is entitled to dispose of his property in such manner and upon such terms as he chooses; and whether his bargains are wise and discreet, or profitable or unprofitable, or otherwise, are considerations not for courts of justice, but for the party himself to deliberate upon. Inadequacy of consideration is not, then, of itself, a distinct principle of relief in equity. ... The consideration, be it more or less, supports the contract. ...

The value of a thing is what it will produce; and it admits of no precise standard. It must be in its nature fluctuating, and will depend upon ten thousand different circumstances. ... [Emphasis added] Hon. J. Story J, Commentaries on Equity Jurisprudence , 2 nd ed., (London, UK: Stevens and Haynes, 1892), ch VI, paras 244-245.

[135] I will discuss each of the four elements from Cain and whether they are met in turn. A. Grossly Improvident Transaction [136] In Cain the Alberta Court of Appeal commented as follows on whether a transaction is grossly improvident, at paras 34 – 35: A court cannot find unconscionability just because the price was too high or too low. Still less can it so find because the price nowappears too high or low with the benefit of later events and hindsight. Instead, the test is based on what was known at the time thebargain was made: was it far outside the proper range? Was it grossly inadequate? See Black v.

Blair Athol Farms (MB CA), [1996] 5 W.W.R. 516, 523 (paras. 15-16) (Man. C.A.); cases in Part F, supra. [137] Another formulation of the test is to ask whether the bargain shocks the conscience of the Court: Hittinger, at paras 114-115.Courts respect the integrity of contracts and are loathed to intervene unless there are exceptional circumstances: Hittinger at para 115. [138] As noted in the previous section, I find that the Balls received John’s land at a significant discount. According to the appraisers’reports the Balls paid in the range of 15% to 35% of market value for the land.

This deal was therefore even more advantageous to theBalls than the 50% of market value price they had discussed in the years leading up to the sale. It is important to note however thatneither party sought an appraisal of the land prior to making their deal or finalizing their legal agreement. This is exactly a situationwhere one is looking at the transaction in hindsight and based on valuations that were never in the contemplation of the parties. [139] Nonetheless, I find that even at the time of the sale, both the Balls and John were aware that the Balls were getting a very gooddeal on the land.

The significant discount means that this sale may have been improvident for John, but was it grossly improvident to thedegree that it shocks the conscience of the Court? [140] The case law directs us to consider more than just the financial numbers when considering the improvidence of a transaction. InHittinger, Justice Belzil emphasized that both objective and subjective components of consideration should be assessed when looking ata sale between non-strangers. [141] The facts in Hittinger share many similarities to this case.

The defendant was an elderly farmer with no children who rented hisland to his nephew to farm for a number of years. The defendant wanted the land to stay in the family and continue to be farmed, but toldthe nephew a few times prior to the sale that he was not yet ready to sell. Eventually over a family lunch the defendant agreed to sell hisland and agreed on a price of $100,000. Approximately a week later other family members suggested that the price was too low and thedefendant refused to transfer the land.

At trial, the appraisals for the land came in at $175,000 to $225,000 from the nephew’s expert andat $276,000 from the uncle’s expert. [142] While discussing whether the sale was unconscionable, Justice Belzil noted that sales between strangers are based purely oneconomic terms but that within a family context other non-monetary factors may be considered, at para 97: There is no air of reality to the proposition that a vendor of land to a stranger would describe consideration in other than pure economicterms, and optimal ones at that.

Within a family context, however, one can well imagine that non-monetary consideration may befactored in, resulting in a marked contrast to a commercial sale to a stranger. In other words, a sale within a family context may wellinvolve both subjective and objective components of consideration. [143] He concluded that “the value of this land to the Defendant must be determined in the proper context; that is, a sale within thefamily, with the goal of keeping the land in agricultural production” at para 110.

Another contextual factor was that the uncle hadpreviously sold land to other family for less than market value, which meant “the Defendant was content to sell his land forconsideration which was not equivalent to what a stranger would expect to pay, at para 110. Ultimately Justice Belzil found that thebargain was a “hard one” for the defendant but was not grossly improvident and did not shock the conscience of the Court. [144] Although John and the Balls were not family, I find that similar contextual factors were at play in this case.

This was not a salebetween strangers who were motivated purely by the economics of the deal. John wanted his land to remain agricultural in an area wherecountry residential development was becoming a frequent occurrence. He had no children and no family members interested in carryingon the farming or ranching on the land. What John did have was a young rancher, from a ranching family in the area, who had leased andimproved the lands for ten years and who wanted to purchase the lands. [145] John was also content to sell his land for consideration that was not equivalent to what a stranger would expect to pay.

He haddone so in the past and had even donated small tracts of land for the betterment of his community. Indeed, John had considered aconservancy for some of his land, rather than selling it, in order to keep it agricultural. [146] The evidence from friends and family established that John was content with the deal and happy that his lands were going to aranching family.

He refused to consider a higher offer for the lands shortly after and supported the Balls in their subdivision application. [147] Within this context, I find that although this deal was financially imprudent for John, it was a price he was willing to accept forthe intangible but important benefit he received of knowing his lands were going to a ranching family.

The transaction does not shock theconscience of the Court. [148] On this ground alone, the claim of unconscionability fails as the Plaintiff has not proven one of the essential elements to the test.However for the sake of completeness, I will consider the remaining three grounds. B. Lack of Independent Legal Advice or Other Suitable Advice [149] In cases where unconscionability is raised, independent legal advice is usually a complete defence to the claim: Cain, at para

55 . However a lack of independent legal advice does not in itself invalidate a transaction: Cope v Hill , 2005 ABQB 625 , [2005] AJ No 1413, at para 208 , aff’d 2007 ABCA 32 . [ 150 ] As Justice Rooke explained in Cope v Hill , there are generally two types of independent legal advice. The first is where advice is given to make sure the client understands the transaction and is entering into it voluntarily. The second is where advice is given as to the merits of the transaction. Whether the first or second type of advice is necessary will depend on the nature and circumstances of the situation at hand.

It appears that in cases where there is a “taint” such as a presumption of undue influence, independent legal advice on the merits of the transaction is preferable. However in other cases where there is no obvious “taint” to the transaction, ensuring that the client fully understands the nature of the transaction and the consequences of the transaction is sufficient: Cope v Hill at paras 210-216. [ 151 ] The Plaintiff submits that Luke controlled the nature of the legal advice John received by taking him to George Dearing, rather than allowing him to utilize his own lawyer.

The Plaintiff asserts that had John used his regular lawyer, he would have received independent legal advice on the merits of the transaction, which was necessary in this case, or determined that John was not capable of appreciating the transaction. [ 152 ] The Defendants admit that the independent legal advice in this case was imperfect, but submit that it was sufficient in the circumstances. They note that similarly imperfect legal advice was considered sufficient in the Geffen case even though the defendant had arranged the meeting with the lawyer, had paid the lawyer’s bill and had attended the meeting.

The lawyer had also failed to inquire into the plaintiff’s financial circumstances at the meeting. [ 153 ] I agree with the Defendants that the legal advice given by George Dearing was suitable and sufficient in this case. In the one hour meeting, George Dearing ensured that he reviewed the contents of the various documents with John and that John understood them. He also ensured that John acknowledged the basis of the agreement with reference to the parties’ hand written document.

Finally, and significantly, George Dearing assessed John’s competence before executing the documents. [ 154 ] The Plaintiff was unable to prove a presumption of undue influence or other “taint” that would require the higher standard of legal advice on the merits of a transaction. [ 155 ] Furthermore, I found earlier that that there was no evidence to support the suggestion that John’s regular lawyer was retained in the past to offer advice on the merits of a transaction. I also found nothing suspect in the fact that Luke assisted John to find a lawyer and drove him to the appointment.

It was not ideal to have Luke sit in on the meeting, even without participating. That said, the nature of the meeting was to ensure John understood the transaction and documents and I do not find this was a serious transgression. This element of the test is therefore not met. C. Overwhelming Imbalance in Bargaining Power [ 156 ] In order to set aside a transaction on the basis of unconscionability, there must be “great disparity” or “overwhelming imbalance” in the power relationship between the parties: Cope v Hill at para 297; Cain , at para 63 .

The Plaintiff argues that John was at a significant disadvantage due to his advanced age and dementia. Due to these facts, the Plaintiff did not have the decisional capacity to enter into the agreement. This vulnerability resulted in an overwhelming imbalance in bargaining power vis-à-vis Luke. On the other hand, the Defendants argue that John was still living independently and had the decisional capacity to enter into the agreement. Further, the two men entered into the arrangement with equal bargaining power. [ 157 ] Both parties tendered experts who performed retroactive capacity assessments of John Burby.

Neither party was able to assess John’s capacity in person as he was in a care centre with advanced dementia by the time of their assessments. [3] [ 158 ] Dr. Pachet was tendered as an expert in neuropsychology and capacity assessments by the Plaintiff. Dr. Pachet prepared a retroactive capacity assessment of John in November 2014. The assessment looked at whether John had the decisional capacity to enter into the land deal in April 2010. [ 159 ] Decisional capacity refers to a person’s ability to understand the basics of the decision they are entering into by weighing the pros and cons.

There is also consideration of whether the person can fully appreciate the potential ramifications or outcomes of the decision and follow through to make the decision. [ 160 ] Dr. Pachet’s assessment was based on a review of background information on John and collateral interviews done with John’s acquaintances, family members, and George Dearing. The interviews were done both by Dr. Pachet’s assistant and Dr. Pachet. Dr. Pachet noted that there was limited background information as the medical documentation was sparse around the time of the land sale.

The other documentation related to John’s mental state was from 2012 when assessments and legal documents were done due to concerns over John’s cognitive impairments at that time. [ 161 ] Dr. Pachet concluded that John did not have the capacity to enter into the deal. His opinion was based on the collateral reports from friends and family which suggested that John’s mental capacity had deteriorated to a degree that he would not have been able to fully understand the ramifications of the land deal. Dr.

Pachet found there was a consensus that in late 2008 and 2009 John’s personality and behaviour were changing in relation to his memory and judgment. He was more easily confused and telling stories that were not true. Based on Dr. Pachet’s sources, it appeared that the land deal was out of character for John as his spouse would normally be involved as would his lawyer. The sources also believed John would have struggled to weigh the pros and cons of the decision. [ 162 ] In Dr. Pachet’s opinion, John had characteristics of potentially mixed dementia.

This would make him more vulnerable to influence from others than if he was fully intact. Dr. Pachet’s evidence at trial suggested that John’s dementia at the time of the land sale was in the mild to moderate range. [ 163 ] On cross-examination, Dr. Pachet admitted that the collaterals in his report gave very different opinions than the collaterals in the Defendant’s expert’s report. He noted that it would come down to the trier of fact to determine which information is reliable. Dr.

Pachet was also led through a number of pieces of evidence at trial or questioning that differed from key information he received from his collaterals, such as dates for some of John’s “stories” being in 2011 not 2008/9; that John was not whisked away without notice to a lawyer’s office to sign the deal; and that some of the witness statements relating to John Burby were based on incorrect rumours or speculation. Dr. Pachet was also provided with information that he was unaware of in his report, such as Mr.

Burby’s decision to sell land to Robert Klos at less than market value. [ 164 ] At the end of his cross-examination, Dr. Pachet stated that with the revised information he would modify his opinion. He would no longer state that the transaction was outside of John’s normal business practices. However, he would not change his opinion on decisional capacity overall as the information from the collaterals on John’s deteriorating mental state stood ground. [ 165 ] Dr.

Pachet agreed on cross-examination that even if an individual has conditions such as Alzheimer’s or dementia they may still have decisional capacity at a particular time. He also agreed that a retrospective assessment is unable to definitively state whether a person had decisional capacity at a certain time in the past. [ 166 ] The Defendants tendered Dr. Jason as an expert in neuropsychological assessments, including in the area of capacity assessments. Dr. Jason was asked to provide his opinion on the allegation that the Balls took advantage of John Burby’s diminished capacity.

He prepared a report after reviewing John’s background medical documentation and legal documentation (similar to Dr. Pachet), reviewing Dr. Pachet’s report, and doing his own collateral interviews with John’s acquaintances, the Balls, and a representative fo

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