In Foisey v. Green, the Divisional Court allowed an appeal of the application judge’s decision that set aside a release signed by a beneficiary who was later deemed incapable of managing property.

I previously wrote about the earlier  decision that was under appeal. The appellant, Ms. Green, was an estate trustee who administered her brother’s estate.  One of the beneficiaries of the estate was her estranged sister, Ms. Foisey. Ms. Foisey provided Ms. Green with a release when she received her share of her brother’s estate.  A lawyer met with Ms. Foisey prior to signing the release. The release was signed on August 2015.  By November 2015, Ms. Foisey was found incapable of managing her property and the Office of the Public Guardian and Trustee became Ms. Foisey’s statutory guardian of property.

The Public Guardian and Trustee reached out to Ms. Green to make enquiries about the estate’s administration but received no response. The application judge noted a number of “red flags” surrounding Ms. Foisey’s capacity appeared to indicate that Ms. Foisey lacked capacity at the time she signed the release and ordered Ms. Green to answer the Public Guardian and Trustee’s questions about the administration of the estate or she was otherwise ordered to pass her accounts in her capacity as estate trustee.

Ms. Green decided to appeal the application judge’s decision. The Divisional Court allowed the appeal.

The Divisional Court found that the application judge erred when applying the test under section 2(4) of the Substitute Decisions Act to determine if the Ms. Foisey was incapable of entering into a contract at the time she provided the release.  The onus was on Ms. Green to prove that she did not have reasonable grounds to believe that Ms. Foisey was incapable when she signed the release. The Divisional Court agreed that it was reasonable for Ms. Green to believe her sister had capacity to provide her with a release.

The Divisional Court noted that the “red flags” that application judge referred to were issues that either Ms. Green did not have knowledge of and/or did not indicate that Ms. Foisey lacked capacity to provide a release to the estate. For example, Ms. Foisey’s long history of mental health issues did not indicate she was incapable of entering into a contract and her residence in an assisted living facility was not unusual for a person of her age. Further, Ms. Foisey’s lawyer and staff at the assisted living facility did not raise issues with Ms. Green about Ms. Foisey’s lack of capacity.  Having found that Ms. Green did not have reasonable grounds to suspect Ms. Foisey lacked capacity to provide a release, the court did not have to make a decision on the enforceability of the release.

However, while the appeal was allowed, the Divisional Court ordered no costs for the application or the appeal, as the Public Guardian and Trustee were making enquiries on behalf of a vulnerable person.

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