Landmark Supreme Court of Canada Decision: Undue Influence

Google | Generative AI
Generated on August 28th, 2025

Landmark Supreme Court of Canada decision, from 1991, established principles for proving undue influence in trust cases: Geffen v. Goodman Estate

The case found that the presumption of undue influence can apply in relationships where one party has the potential to dominate another, such as family relationships involving someone with mental illness. In such cases, the burden shifts to the person receiving the benefit to prove the transaction was a product of the donor’s independent, free, and informed will.

The decision clarified that this presumption applies to transactions akin to gifts, not just commercial ones, and established factors for examining the adequacy of independent legal advice.

Background of the Geffen v. Goodman Estate Case 

• The Family and the Trust:
  Annie Sanofsky’s mentally ill daughter, Tzina Goodman, inherited significant real property. Fearing Tzina would mismanage the property, her brothers, Sam and Ted Geffen, and a nephew, Jack Geffen, arranged for her to transfer the property in trust to two brothers and the nephew. The trust allowed Tzina to retain a life interest, with the remainder going to her mother’s grandchildren (all her siblings’ children).
• The Dispute:
  After Tzina Goodman’s death, her children sued, arguing she had been unduly influenced to enter the trust agreement.

Key Principles Established by the Court

• Presumption of Undue Influence:
  The Court confirmed that a presumption of undue influence can arise when a potential for domination is inherent in the relationship, particularly in family relationships or fiduciary ones. 
• Burden of Proof:
  In situations where the presumption applies, the onus shifts to the party who benefits from the transaction to prove that it was entered into freely and with an informed mind. 
• Gifts vs. Commercial Transactions:
  The Court clarified that the presumption of undue influence applies not only to commercial transactions but also to transactions that are more like a gift, such as the creation of a trust. 
• Independent Legal Advice:
  The Court detailed the factors to be considered when assessing whether independent legal advice was sufficient to rebut the presumption of undue influence. These include:
  1. Who the lawyer received instructions from,
  2. Whether the benefitting party was present during the transaction,
  3. Whether the lawyer explained the financial implications,
  4. Whether the lawyer discussed the matter with those who would benefit from the transfer, and
  5. Whether the lawyer had a prior relationship with the person exerting influence. 

Geffen v. Goodman Estate remains a foundational case for understanding undue influence in trust and estate law in Canada— emphasizing the need to protect vulnerable individuals from exploitation, by those in positions of power. 

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Google | Generative AI | Prompt: “Geffen v. Goodman undue influence trust case explained”