Wait, I didn’t mean to gift that! The Doctrine of Unconscionable Procurement

By Merovitz Potechin on Monday June 8, 2020.

What happens if the person you are providing a gift to tricks you or misleads you into giving it? What happens if you are forced into giving a gift? What happens if you did not understand the implications of gifting something to someone? All these scenarios can fall under the doctrine of unconscionable procurement.

The doctrine of unconscionable procurement involves setting aside or voiding a gift or wealth transfer where the gift maker did not understand what he or she was doing. For this doctrine to apply, two elements must be present:

1. There must be a significant benefit obtained by the person receiving the gift; and
2. The person receiving the gift must be actively involved in obtaining the benefit of that gift from the gift maker.

The act of procurement can take many forms, including: writing up a document for the gift maker to sign, arranging for a lawyer for the gift maker and providing them with instruction and/or driving the gift maker to their lawyer’s office/bank or elsewhere to facilitate the gift.

Recently, in Gefen v. Gaertner, 2019 ONSC 6015, the doctrine of unconscionable procurement was argued for the first time in over 100 years. This case involved a litigious family. The father had passed away leaving behind his wife, three sons, and a significant estate. The wife favoured one of her sons over the other two and decided to dispose of half of the estate to the favoured son through transfers of property and other wealth transfers. Among other things, the other two sons brought a claim against their mother and the favoured brother for unconscionable procurement.

The favoured son played an active role in the arrangement for and documentation of the gifts he received from his mother that resulted in him significantly benefitting. He had a hand in all the transactions and conveyances, whether it be through his handwritten or typed documents prepared for his mother to sign or his communications on his mother’s behalf with the lawyers who effected these gifts. Through these transactions, the mother divested herself of at least half of her significant net worth. The court found that in these circumstances, the mother did not truly appreciate the nature, effect, and consequences of these transactions to render them fair and reasonable. The court reasoned that the mother did not have a conscionable understanding of what she was doing. As such, the court overturned some of the gifts that the favoured son received and ordered that they be returned to his mother.

In deciding whether unconscionable procurement will apply, the court will look to its moral obligations. The court has stated that allowing improper gifts, without sufficient rationalization or justification on the part of the gift maker is morally repugnant and unconscionable.

This doctrine will not apply in every circumstance. It will be used by the courts to protect people who are forced, tricked, or misled into giving up their property. A gift maker must understand the nature and effect of the gift they are giving. However, the court will not protect people who are foolish, imprudent and show a lack of foresight when giving a gift.

If you have questions about the validity of a gift and question whether it was unconscionably procured, please contact our Estate Litigation team at Merovitz Potechin LLP.