Thursday, December 10, 2015
CAN AN ELDERLY PERSON CANCEL AN OFFER TO SELL A PROPERTY ON THE GROUND OF EXPLOITATION?
This issue was discussed in Désormeaux v. R.D., 2015 QCCS 4719 (CanLII).
R.D. was an 87 year-old owner of a semi-detached duplex in the Cartierville neighbourhood of Montreal where she resided since it was built in 1966.
In the summer of 2010, Massé, a real estate broker himself 82 years old, advertised his services in a senior’s magazine. In mid-July 2010, R.D. hired Massé to sell her property at a list price of $495,000.
After having visited the property during the Christmas holidays, the Plaintiff expressed an interest to buy it.
On August 21, 2011, Plaintiff, R.D. and Massé met at R.D.’s residence and agreed on a selling price of $310,000. Massé prepared on Offer to Purchase that the parties signed and accepted shortly thereafter. The sale was to be made without legal warranty and at the sole risk and peril of the Purchaser.
On or about September 2, 2011, a lawyer claiming to represent the interests of R.D. informed the instrumenting notary that R.D. had a signed a Power of Attorney of Sale in favour of her niece, who herself was a real estate broker, and that the niece had exclusive authority to negotiate and conclude a sale of the property; that Massé knew of the situation and nevertheless, encouraged R.D. to sign the Offer to Purchase; R.D. was mentally incompetent; and the Offer to Purchase was null and void for all legal purposes.
A lawsuit followed which raised the following issues:
i. Was R.D. mentally competent to enter into a contract?
ii. Was R.D. the victim of fraudulent manoeuvers or abuse on the part of the Purchaser or the broker which would have undermined her free and unfettered consent to agree to the Offer to Purchase?
iii. Was R.D. the victim of exploitation?
I. Was R.D. mentally competent to enter into a contract?
At the date of the trial, R.D. had not been declared legally incompetent by the court. Furthermore, there was insufficient proof that R.D. was mentally incompetent at the time that she signed the Offer to Purchase. There was no evidence that R.D. was mentally incompetent at any time since the filing of the legal proceedings until the date of the trial.
According to law, the capacity to contract is appreciated at the time that the consent to the contract is given. Every person is presumed mentally capable of entering into a contract unless a court judgment exists declaring otherwise.
The party alleging an interlude of mental incapacity, i.e. at the time of the signature of the contract, has the burden of proof, which must be preponderant and not consist merely of suspicions and doubts.
In this case, the Court concluded that the proof of mental incapacity was not conclusive.
II. Was R.D. the victim of fraudulent manoeuvers or abuse on the part of the Purchaser or the broker which would have undermined her free and unfettered consent to agree to the Offer to Purchase?
Fraudulent manoeuvers usually take the form of false or misleading representations with respect to a material element of a contract.
In this case, R.D. alleged that the Purchaser exaggerated the cost of repairs and renovations that would be required for the property as a means of reducing the selling price.
The Court found that there was insufficient evidence to support this claim. The Court noted that the law makes allowance for a degree of exaggeration which is generally acceptable in the course of negotiations and each situation must be appreciated according to its own particular facts.
Moreover, the Court concluded that there was no evidence that R.D. did not or was not able to appreciate the physical condition of her property, or the necessity or need for renovations and the cost thereof. If she was willing to sell the property without legal warranty at the Purchaser’s sole risk and peril, it is likely that R.D. suspected that there could be substantial costs to be incurred by the Purchaser.
III. Was R.D. the victim of exploitation?
Article 48 of the Quebec Charter of Rights and Freedoms protects elderly persons (and persons with a handicap) from any form of exploitation. They have the right to be protected and to the security that is owed to them by their family or others in their stead.
The right not to be exploited is something more than the usual civil rights enjoyed by the general population. An elderly person who is vulnerable nevertheless retains control over his property and has the capacity to dispose of it at will and even at his own risk and peril. However, when an elderly person is the victim of exploitation, he has a right to be protected, even when he is not mentally incompetent. This legal remedy requires a preponderance of evidence of exploitation, which has been defined by case law as the result of being taken advantage of by a person of influence to the detriment of the elderly person’s personal interests. One must weigh the vulnerability of the elderly person against the degree of influence of the alleged exploiter, together with the adverse consequences to the interests of the vulnerable person.
Consequently, the actual or potential vulnerability of an elderly person is insufficient to succeed without additional evidence that he was taken advantage of by a person in a position of influence.
In this case, the Court rejected the claim of exploitation taking into account, in particular, the following evidence:
• The Purchaser did not initiate the Offer to Purchase or the selection of Massé as the listing broker.
• Apart from the fact that R.D. was an elderly person, there was no evidence that the Purchaser suspected that R.D. was of limited intellectual capacity, nor was this ever proven to be true.
• There was no evidence that R.D. was a vulnerable person, naïve, easily influenced, incapable to discern or subject to poor judgment.
• It is the essence of a contract that each party acts in his own best interests and seeks his own greatest advantage.
• The agreed sale price, taking into account the renovations and repairs envisaged, was not proven to be unreasonably low.
• The Purchaser met with R.D. on only a few occasions without seeking or receiving any gifts, or seeking to influence R.D. by any artifice, scheme or expression of false kindness or otherwise with a view to obtaining special favours.
• The Purchaser was not a “real estate shark” but rather an ordinary purchaser.
• The evidence did not reveal that the Purchaser was in a position of influence vis-à-vis R.D.
• The evidence did not reveal any collusion between the Purchaser and Massé. Although R.D. reproached Massé for not having advised her properly or acting in her best interests, that was not the responsibility of the Purchaser and therefore, not an issue properly raised in this suit. If the broker committed a fault by not properly advising R.D., the latter theoretically could file a separate lawsuit against him, which has no bearing on the outcome of the present suit.
When transacting with an elderly person, we should be aware of his right against exploitation, which supplements the usual civil rights that are enjoyed by the population at large. In such situations, it would be advisable to take additional measures to inoculate ourselves against potential claims by ensuring that the elderly person obtains or at least has a reasonable opportunity to obtain independent legal advice which is confirmed by the contract. Alternatively, it would be advisable for another family member or friend with no conflict of interest, who is a person of trust, be involved in the negotiations and also sign the contract or a letter affirming that the elderly person was treated fairly and equitably and was not the victim of any exploitation with respect to the transaction.