Halloween is not celebrated in all countries and regions of the world, but it is in Canada. Often in Canada, we find houses decorated with humourous tombstones replicating a burial ground of sorts.  The thrill and horror of haunted houses and frightening venues is part of the fun of Halloween.  Halloween is not technically a holiday, yet it is one of those evenings, where if you have children, you'd better not be in Court late! Trick-or-treating, costume parties, carving pumpkins, eating candied apples, and telling scary stories is what you are meant to be doing on Halloween night.

 

Here is how Wikipedia, a free encyclopedia, describes Halloween: http://en.wikipedia.org/wiki/Wikipedia

Almost every day we hear about some sort of Power of Attorney abuse, or dispute. Whether that news be conveyed by social media, or other, what is clear is that our society continues to be burdened with the consequences of the abuse of both power of attorney documents and the inappropriate actions and transactions taken by attorneys, including fraud, and other actionable conduct, and this quite apart from the impact on family relations.

Amy Cull, our associate recently blogged about the cases of Re Coupland Estate, and, Ekelschot-Kumelj v. Bradley, which is reproduced here. 

 

EKELSCHOT-KUMELJ V. BRADLEY, Amy Cull

 

In Ekelschot-Kumelj v. Bradley,[1] three of the four daughters of the late Rozalija Kumelj (the "Deceased") brought an amended Statement of Claim, followed by a Notice of Application. The Respondent in the proceedings was also a daughter of the Deceased. The Respondent had been appointed the Deceased's attorney pursuant to a Power of Attorney signed by the mother in 1994 (the "POA") and the estate trustee of the Deceased's estate.

 

The Applicants essentially alleged that the Respondent improperly exercised the powers bestowed upon her pursuant to the Deceased's POA. The primary issue in the Application, as noted by Justice Edwards, was whether an order should issue directing the Respondent to account in her capacity as the attorney of the Deceased's property for the period from January 2005 to October 28, 2008, the date of the Deceased's death.

 

Prior to her death, the Deceased had been living by herself until she sold her home in June of 2006 and used a large portion of the $420,000.00 realized on the property to construct an apartment at the Respondent's home, where she could live and be taken care of by the Respondent. The total cost of constructing the apartment was approximately $260,000.00. The Applicants alleged that the Respondent appropriated the mother's money that had been realized on the sale of her home.

 

Two points were uncontested. First, the Respondent acknowledged that the Deceased's estate had an interest in the Respondent's home valued at $164,250.00, representing the increase in value to the Respondent's home as a result of the construction of the apartment. As well, the evidence was clear that the mother's health was failing in the last few years of her life. Despite these admissions, however, the Respondent denied acting as her mother's attorney for property. In addition, she provided considerable evidence supporting her position that the Deceased was not lacking in mental capacity and that she was capable of instructing the Respondent to effect her instructions.[2]

 

Referring to section 42 of the Substitute Decisions Act, (the "SDA"), his Honour noted that the court does have jurisdiction to order that all or specified parts of an attorney's accounts be passed. However, his Honour noted that unless the party requesting the passing is the grantor of the power of attorney, the right to make such a request is not automatic; leave of the Court is required. The Court further noted that section 38 of the SDA contemplates that there are "different duties to account"[3] and that the obligations which are imposed by section 32 to keep accounts "apply only if the 'grantor is incapable of managing property or if the attorney has reasonable grounds to believe that the grantor is incapable of managing the property.''[4]

 

The fatal flaw in the Applicants' case was their failure to provide any evidence that the Deceased lacked the requisite mental capacity to manage her financial affairs. It was not enough, as noted by his Honour, to merely submit without evidentiary support, as the Applicants did, that "the mother was in a 'dependent and unequal position' to the Respondent who 'controlled and influenced the mother.''[5] It was likewise not enough to argue that because a substantial amount of money was spent on the construction of an apartment at the Respondent's home, "that this in of itself is sufficient evidence of the Respondent preferring her position over that of the mother."[6] As stated by his Honour:

 

There is little evidence to support this conclusion other than the actual construction of the apartment and the money spent. The flaw in the Applicants' argument is that they assume that the mother did not want to spend the money on the apartment. The evidence in this regard I find wanting, and in fact the evidence put before me by the Respondent would suggest otherwise.[7]

 

In the result, the Court found that there was no basis to the Applicants' motion seeking an order requiring the Respondent to account as the attorney for the Deceased's property. The Respondent was, however, ordered to account in her capacity as estate trustee and, in making this order, the Court acknowledged that "[i]t may well be when the Respondent passes her accounts as the estate trustee, that she may have to provide some of the information requested by the Applicants to provide a proper passing of accounts."[8]

 

Importantly, in a separate decision on costs[9], the Court noted that the Applicants' application was "misguided," noting that "[e]ven in their submissions with respect to costs, [the Applicants] [...] failed to come to grips with the fact that their mother was an independent minded individual whose financial affairs were not being guided by the powers provided to the Respondent under her power of attorney."[10] Consequently, as the Respondent was largely successful with respect to the litigation, his Honour found that there was no reason why costs should not follow the success of the Respondent, and awarded the Respondent costs fixed in the amount of $20,000.00 plus HST, plus disbursements of $1,390.77-an amount representing $2,159.23 less than the partial indemnity costs sought by the Respondent.

 

The Applicants (Appellants) appealed the Trial Judge's decision, challenging the finding of the Judge that the Respondent "simply effected the mother's instruction."[11] The basis for their argument was that "the mother's physical disability and the amounts of money involved require the inference that the respondent was not simply implementing the mother's instructions."[12]

 

The Ontario Court of Appeal did not agree with the Applicants' (Appellants') argument and upheld Justice Edwards' decision, finding, instead, that "[t]here was ample evidence from the records and the evidence of others with whom the mother dealt to sustain the Trial Judge's conclusion" and that Applicants' (Appellants') speculation was no basis for the Court to interfere with the finding of the Trial Judge.[13] In consequence, the Appeal was dismissed. The Court likewise saw no basis to interfere with the Trial Judge's discretion in awarding costs. The costs of the Appeal were ordered to be paid jointly and severally by the Applicants (Appellants) alone in the amount of $15,000.00 inclusive of disbursements and taxes.

 

Ekelschot-Kumelj v. Bradley sends a strong message to would-be litigants to think twice before engaging the legal system in order to challenge the dealings of purported attorneys, particularly in situations where suspicion is the driving force, but evidence of the mental incapacity of the grantor of the attorney is sorely lacking. Corroborative evidence demonstrating breach of fiduciary duty and, if applicable, the Deceased's lack of capacity to manage their financial affairs is crucial, so much so that lack thereof could result in a hefty cost award being granted against such litigants-as was the outcome in this case.

 

Kim's further comments:

 

In this case, the Respondent was ordered to pass accounts in its capacity as Estate Trustee. This was not the fundamental relief sought by the Applicants in this matter.

 

Often families who find themselves in the midst of a Power of Attorney dispute, do not comprehend the actions of the grantor of the power of attorney document. It is important to remember that an individual, as long as mentally competent, is free to spend or otherwise deal with his/her assets as the individual sees fit, whether or not the way in which they choose to deal with their assets seems foolish, frivolous, or otherwise imprudent. It is important to be guided by the provisions of the SDA when approaching matters concerning attorney accountings. 

 

Section 42 of the SDA sets out the leave requirements in respect of the passing of attorney accounts. Whereas the grantor of a Continuing Power of Attorney for Property has the right to force an attorney to pass accounts, this right is not necessarily available to any other category of persons.  Moreover, depending on the capacity of the grantor, the SDA recognizes that there are different duties to account.  The obligations imposed by Section 32 and 38 may apply only if the grantor is incapable of managing property, or if the attorney has reasonable grounds to believe that the grantor is incapable of managing property.

 

I recall, the decision in Fair v Campbell Estate[14] where the court concluded in the circumstances it was presented with in that case, that the role of the attorney was limited to the "execution" of the decisions of the grantor as opposed to making the decisions. It is important to take extra caution when approaching these matters absent evidence of incapacity, when asserting principles such as dependence or a relationship of unequals, or control and influence. You must stay on side of the evidentiary expectations of proving your case on a balance of probabilities and be cognizant of the cost penalties available where allegations are made of the nature of undue influence and not proven.  

 

The particular facts of this case are very similar to many of the cases that we see in our offices. As a result of the repeated occurrence of these sorts of cases, it remains imperative that careful estate planning take place, taking into consideration family dynamics, risks and probable consequences of planning or not planning around unique family relations. Many litigious situations could be avoided by prudent planning, family meetings, and open dialogue and communications.

 

POWER OF ATTORNEY PLANNING TIPS AND TRAPS

• Do consult a lawyer. Learn exactly what powers are conferred or granted in granting a Continuing Power of Attorney for Property. Often grantors give little thought to the document itself, and are unaware of the wide scope of powers conferred under the SDA. Often grantors do not even know that their appointed attorney can do anything with their property except make a Will. 
• Do give careful consideration to the chosen attorney.   
• Do give careful thought to your estate plan and how your property may be managed by the attorney relative to your testamentary intents.  
• Make sure your plan makes sense and that which you wish to have happen makes sense.  
• Give thought to the fact that the Attorney(s) for Property, and Attorney(s) for Personal Care must work together.  
• Do not use Internet forms without seeking legal advice.  
• We often see multiple Powers of Attorney being done in later years of life within a short period of time, and this is concerning because it demonstrates in many situations, a lack of certainty with respect to the provisions of the Power of Attorney document being granted.  A lack of certainty may be indicative of influence, pressure or alternatively raise suspicion with respect to the granting of the power and capacity concerns.   
• In my view it would be most helpful if when a grantor is seeking advice on executing a Power of Attorney document, that the chosen attorney be provided with a letter of advice from the lawyer for the grantor, setting out what the provisions of the SDA are, the accounting requirements, and seeking the potential grantee's consent to act.
• It makes sense to instill from the outset an understanding of the fiduciary relationship created and the expectations that go with such an appointment.   
• The most important characteristics that should be attributed to a chosen Attorney(s) should be honesty, integrity, and accountability.  
• Part of avoiding Power of Attorney conflicts and litigation is anticipating family dynamics and implementing safeguards to protect against abuse.  Tailoring the POA document to the grantor's needs necessarily includes consideration of the family circumstances of a grantor; the age of the proposed attorney(s); possible substitute attorneys; and whether it is appropriate that there be more than one attorney.  Should one or more of the attorneys be a trust company or professional? What exactly does the grantor want?  Who can be trusted to act as the grantor's attorney? What compensation will the attorney receive? How is compensation to be calculated?  Is the grantor familiar with the SDA legislation?  Is the attorney sufficiently familiar with the SDA legislation?

Attorney liability

• The standard of care that an attorney for Property must exercise in managing the grantor's property to an extent depends on whether or not compensation is being taken or received.  Where no compensation is taken the Attorney is required to exercise the degree of care, diligence and skill that a person of ordinary prudence would exercise in the conduct of his or her own affairs.  The standard of care increases where the attorney receives compensation.  An Attorney in this case would be required to exercise a degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.  
• Generally speaking, an Attorney for Property is liable for damages resulting from a breach of duty. The Attorney for Property may be relieved from all or part of this liability from breach if the court is satisfied that the Attorney nevertheless acted honestly, reasonably and diligently.  
• Where there is non-compliance with the legislated duties of an attorney pursuant to the SDA, the attorney may incur personal liability.  In the 2005 case of Fareed[15] The Court held that where a grantor is capable, an attorney who assumes any decision-making undertakes full responsibility for all actions with respect to the grantor's property irrespective of whether the actions were taken by the attorney or the grantor.  
• The Court imposed liability on an attorney for transactions undertaken by the grantor without the knowledge of the attorney.  Even more concerning is the 2006 decision in McMullen Estate[16]  that suggests that an attorney may be held liable for losses including legal fees respecting actions taken to protect the grantor's property if the actions are taken without the grantor's consent.  Failing to obtain the grantor's consent amounts to a breach of duty to account and to act in accordance with the grantor's intentions and wishes.

Duty of an attorney to account

• Generally speaking, when exercising a Power of Attorney for Property, there is no strict legal requirement for an attorney to account to anyone other than the grantor.    
• A number of more recent cases, however, suggest in all likelihood that an attorney will be called upon to account during the attorneyship, if not to the grantor, then to those who would have a financial interest in the grantor's estate after death.  In McAllister Estate v. Hudgeon,  the Court ordered that the deceased's daughter who was the estate trustee and who had also been the attorney during the deceased's lifetime, was obliged to account to her brother, a beneficiary of the estate, for the period of the Power of Attorney.  The Court ruled that where the grantor is deceased and the attorney and the estate trustee are the same person, the Court can exercise discretion to require an accounting after considering two main questions: the extent of the attorney's involvement in the grantor's financial affairs; and whether the applicant has raised a significant concern in respect of the management of the grantor's affairs that warrants an accounting.    
• Similarly, in Bigelow Estate[17]  the estate trustee, who was the former attorney, had to account to a beneficiary for the period the Power of Attorney was exercised. In the Dezorzi v. Read[18]again an estate trustee was ordered to account to a beneficiary for the period of time that the estate trustee had previously acted as attorney under Power of Attorney.  
• While an Attorney is required to keep accounts, an Attorney is not required to court pass the accounts maintained.   The court may, however, order that all or a specified part of the accounts of an Attorney be passed.  Attorneys for Property are statutorily entitled to compensation pursuant to the SDA. 
• Section 40 of the SDA specifies the Attorney compensation entitlement.   Where the POA itself is silent on the question of Attorney compensation, the Regulations to the SDA, s. 40(1) provide as follows:

An attorney may take annual compensation from the property of:

• 3% of capital and income receipts,
• 3% on capital and income disbursements, and
• 3/5 of 1% on the annual average value of the assets as a care and  management fee.

• Notwithstanding the SDA provisions, the Attorney can have compensation increased or reduced by the court when passing accounts.

Guidelines on Power of Attorney usage in real estate transaction

• As a result of the decision in Reviczky v. Meleknia, 2007 CanLII 56494 (On.SC) the Law Society of Upper Canada has instituted several guidelines for advisors to assist in exercising professional judgment in the context of real estate transactions.  
• The guidelines include where a Power of Attorney is required for a transaction that use of the Power of Attorney document should be an exception and not a rule.   Where possible if there is no pre-existing Power of Attorney, a new Power of Attorney should be prepared and diligently reviewed.  Where a Power of Attorney is being used and relied upon, a review of the Power of Attorney should be undertaken to ensure compliance with the governing legislation, the SDA.

Judicial approval

• Attorneys should always consider judicial approval when taking estate planning initiatives including the setting up of alter ego trusts, tax planning, estate freezes and protection of dependants, as well as gifting.

A JUDICIAL CRY FOR CHANGE: RE BARANEK ESTATE[19] 

• In Re Baranek Estate, a case that involved "intense litigation" that ensued between a prior and subsequent attorney for property, Justice D. Brown made the following remarks which, in our view, truly epitomize the problems associated with powers of attorney today and emphasize the need for legislative reform in this area:

The so-called "battle of competing powers of attorney" is emerging as a growing area of litigation. This is a most unhealthy development. I suspect that when the Legislature passed the Substitute Decisions Act back in 1992 it intended to put in place a legal framework which would protect the affairs of the vulnerable elderly, not spawn a new breed of litigation which would see the hard-earned money of the vulnerable being exposed to claims for the payment of legal fees incurred by those whom they had appointed to protect their interests. I am signalling that the inter-attorney litigation which erupted in this case is symptomatic of a much larger problem which, as Ontario's population ages, risks turning into a very serious social issue. Indeed, I think the time may have arrived for the Legislature of this province to look into this problem of litigation involving competing powers of attorney, especially involving subsequent powers of attorney made during the latter periods of a person's life when they are vulnerable to pressure, in order to see whether new protections are required to ensure that the assets of the vulnerable are used for one purpose only - the satisfaction of the needs of the vulnerable elderly while they are alive.

 

AWARENESS & PREVENTION

• Solicitors, planners, legislators, health care practitioners and the public at large, must be alert to the possibility of fraudulently obtained and used POA documents and the risks to the older adult and to the cognitively impaired, the vulnerable, the dependant, and incapable. Fraudulently obtained or used documents can wreak havoc for grantors and third parties alike. To that end, we advise everyone when dealing with powers of attorney to be cautious and vigilant, to make enquiries and to be constantly aware of both the risks and benefits that attach to the preparation and use of a power of attorney.

CARESANI (LITIGATION GUARDIAN OF) V.  FOSTER

 

Another recent decision of Justice Fragomeni in Caresani (Litigation Guardian of) v. Foster,[20] heard August 12, 2011, is indicative of a common dispute often seen, which is where there are allegations of inappropriate management by an attorney which are serious, conflicting, yet untested at the outset and the relief sought is of an independent appointment. Often the appointed attorney ends up being the same person appointed as the executor of a person's estate. It may therefore be appropriate that an Estate Trustee During Litigation ("ETDL") be appointed pending the determination of the allegations made and to alleviate the conflict of the attorney accounting to the executor and those two individuals being the same entity. An independent third party estate trustee or ETDL often provides a forum to ensure that the interests of the litigants are properly and fairly dealt with.

 

When proposing an ETDL, the concept is often met with resistance presumably because such an appointment is perceived as a loss of control by the appointed executor, perhaps where the executor has acted as an attorney even more so, and other reasons also prevail.  However, in my view, and in most instances, removing the obvious conflict provides a framework within which the parties are then able to resolve the dispute in a more transparent forum.

 

CHERRY V CHERRY

 

In Cherry v Cherry,[21] Justice Brown on July 27, 2011, addressed an issue, also becoming more prevalent today, that being claims by spouses of an alleged incapable spouse for support and care payments.  We often see claims of a similar nature, made by dependant adult children. 

 

The facts of Cherry v Cherry  involve Mr. Alan Cherry, who suffers from progressive dementia, and the management of his property in the face of balancing his care requirements and costs with his spouse's requirements for support.

 

In this case an interim Guardian of Property was appointed,  as well as a trustee of Mr. Cherry's Alter Ego Trust.

 

Mr. Cherry's wife and one of his daughters acts as a personal care attorney pursuant to a power granted by Mr. Cherry.

 

Mr. Cherry also has the benefit of Section 3 counsel appointed under section 3 of the Substitute Decisions Act, in order to assist him with communicating his wishes in respect of the litigation.

 

Whereas section  37 of the Substitute Decisions Act, authorizes a guardian of property to make expenditures from the incapable person's property for dependants, for their support, education and care, the guardian must obviously be guided by the principles also set out in the Act as follows:

 

Guiding principles

 

37. (2)  The following rules apply to expenditures under subsection (1):

1. The value of the property, the accustomed standard of living of the incapable person and his or her dependants and the nature of other legal obligations shall be taken into account.

2. Expenditures under paragraph 2 may be made only if the property is and will remain sufficient to provide for expenditures under paragraph 1.

3. Expenditures under paragraph 3 may be made only if the property is and will remain sufficient to provide for expenditures under paragraphs 1 and 2.

 

The careful balance which must be achieved must include the guardian of property being able to make expenditures for the benefit of the incapable person's own support.  In this case, the decision of Justice Brown indicates that the financial affairs of Mr. Cherry are not clear. Too, the decision indicates that the personal care requirements of Mr. Cherry are largely unclear and a comprehensive health care plan is required to assist in the determination of both issues.

 

This set of circumstances is also complicated by the existence of a Domestic Agreement and its impact on the claim by Mr. Cherry's spouse for support pursuant to section 37 of the SDA. There is some indication by the decision that the Domestic Agreement may have been made on the premise that each party to the agreement agreed that they were financially independent.

 

Of particular assistance, are Justice Brown's directions to the parties in the carrying out of the assessment of Mr. Cherry to determine his care needs in which His Honour stresses the importance of the impartiality and independence of the assessment.  In many disputes of this kind, there is often an attempt made by one or more parties to try to influence the findings of the assessor in some way. The impartiality of the assessment process is paramount.  Parties to this sort of litigation must also remain focused on the "best interests" of the incapable person. The court above all else, is going to be most concerned with the "best interests" of the incapable person.

 

BRITISH COLUMBIA LEGISLATIVE CHANGES AFFECTING ATTORNEYS

 

Struggles with respect to accountability in this practice area will continue and in my view increase in the future.  Greater accountability for attorneys is the goal of recent legislative considerations.  There have been recent changes in British Columbia with the Bill 29-2007, The Adult Guardianship and Planning Statutes Amendment Act, 2007: http://www.leg.bc.ca/38th3rd/1st_read/gov29-1.htm

 

It appears that the recent changes in B.C., to the Power of Attorney Act and related legislation are an attempt to address the ongoing issues we see in the context of power of attorney accountability. 

 

Professional Attorneys

 

Many of the large trust companies and other individual professionals are providing power of attorney administration services to their clients. Often, a limited way of resolving power of attorney disputes is the appointment of an agent to attorney. Be careful of the non-delegation limitations of such an option.  The benefit of appointing a Trust Company, or other, may be the comfort of knowing that there is an infrastructure put into place for accounting, record keeping with respect to transactions, and reporting, all of which may be worthwhile in certain familial situations in order to avoid conflict and consequential litigation.

 

Often, power of attorney disputes result in a guardianship appointment, where highly conflicted and contested applications issue. Many of the trust companies, and other professionals, also accept guardianship appointments for the property of incapable individuals.

 

TAUBNER ESTATE, ALBERTA

 

A fairly recent decision by Justice Graesser, of the Court of Queen's Bench of Alberta, the Taubner Estate Re 2010 ABQB 60 CanLii, provides us with some basic principles and considerations worth reviewing as applicable to the powers governing attorneys. The following excerpts are instructive.

 

"[243]  A power of attorney is a unique power that embodies the law of agency, borrows from the law of contract, and adopts the law of fiduciary obligations. M. Jasmine Sweatman, Guide to Powers of Attorney, (Aurora: Canada Law Book, 2002) states: "although the fiduciary duties of agents, attorneys, and trustees may vary in intensity, the duties are essentially the same" (at 6).

 

[244]  The Manitoba Court of Queen's Bench in Estate of Marjory Veva Louise Hartley, 2008 MBQB 202 (CanLII), 2008 MBQB 202, held at para. 27, "[t]here appears to be a higher duty on an attorney acting under an enduring power of attorney following the event of the donor's incapacity. The attorney is no longer acting strictly as agent but as trustee".

 

[245]  An attorney acting under a POA is clearly in a fiduciary relationship that imposes the obligations and duties of a trustee upon the attorney: Re Lefebvre Estate, 2007 ABQB 195 (CanLII), 2007 ABQB 195; Re Attorney of Ericksen, 2008 ABQB 587 (CanLII), 2008 ABQB 587; Re Hammond Estate reflex, (1999), 173 Nfld. & P.E.I.R. 240 (Court name); Lander v. Lyall, 2006 MBQB 170 (CanLII), 2006 MBQB 170; Leung Estate v. Leung (2001), 38 E.T.R. (2d) 226 (S.C.J.); Egli (Committee of) v. Egli, 2004 BCSC 529 (CanLII), 2004 BCSC 529; McMullen v. McMullen, 2006 BCSC 1656 (CanLII), 2006 BCSC 1656. 

 

 [246]  It is a general rule that all written powers of attorney are to receive a strict interpretation, and the attorney's authority is never extended beyond that which is expressly given, or is absolutely necessary for carrying the authority into effect: Taylor v. Wallbridge 1879 CanLII 1 (SCC), (1879), 2 S.C.R. 616 at para. 112. Under statute law, however, an enduring power of attorney may confer on the attorney the power to do anything on behalf of the donor that the donor may lawfully do by attorney: s. 7 of the Powers of Attorney Act.

 

[248]  The general duties of an attorney acting under a POA have been summarized in Lander....[...] to include the following:

 

(i) putting the donor's welfare first when taking any steps with respect to the donor's property;  

(ii) taking the wishes of the donor into account;  

(iii) exercising the judgment and care that a person of "prudence, discretion and intelligence would exercise in the conduct of his or her own affairs", as required by powers of attorney legislation; and  

(iv) handling the property in an impartial and even-handed manner.

 

 

[249]  A more detailed description of the duties of an attorney is provided by M. Jasmine Sweatman ...[...]

 

In addition to any duties expressed in the instrument at common law, the attorney has the duty to:

 

(a) stay within the scope of the authority delegated;

(b) exercise reasonable care and skill in the performance of acts done on behalf of the donor (if acting gratuitously, the attorney is held to the standard of a typically prudent person managing his or her affairs; if being paid, the attorney is held to the standard applicable to a professional property or financial manager);

(c) not make secret profits;

(d) cease to exercise the authority if the power of attorney is revoked;

(e) not act contrary to the interests of the donor or in conflict;

(f)  take no compensation unless agreed on or granted by the court;

(g) account for dealings with the affairs of the donor when lawfully called on to do so;

(h) not make, change or revoke a will on behalf of the donor; and

(i) not exercise the power of attorney for personal benefit unless  authorized to do so by the document, or unless the attorney acts with the full knowledge and consent of his or her principal.

 

[250]  The general obligations of an attorney include:

 

(i)  keeping proper accounts of the trust estate;

(ii) keeping the trust accounts distinct from other accounts;

(iii)  preserving receipts or cancelled cheques;  

(iv) producing accounts to the donor or to the court and to any beneficiary;

(v)  ensuring the accounts clearly show all the monies and assets received are accounted for. See also: Ian M. Hull, Power of Attorney Litigation, (Toronto: CCH Canadian Ltd., 2000) at 17-18; and Lefebvre Estate ... [...]

 

[251]  It is settled law that attorneys are held to the same standard of care expected of trustees in general, namely, to act as the reasonable and prudent business person would act: Re Ericksen, supra; Wagner v. Van Cleeff reflex, (1991), 5 O.R. (3d) 477 (Div. Ct.); Blair v. Canada Trust Co., [1986] B.C.J. No. 1237 (S.C.); Dougall v. Dougall Estate, 1995 CarswellOnt 1664 (Westlaw) (Ont. Ct. J. (Gen. Div.)); McMullen v. McMullen Estate, supra.; Andreasen v. Daniels-Ferrie, 2001 BCSC 1503 (CanLII), 2001 BCSC 1503 (S.C.).

 

[252]  In Stein v. Van Eldik, 2005 ABQB 160 (CanLII), 2005 ABQB 160, the Court reiterated at paras. 18 and 19 that the standard of care and diligence required of a trustee is that of a person of ordinary prudence in managing his or her own affairs, and that this standard of care must be discharged with honesty, objectivity and care.

 

[253]  An attorney may be permitted to sell the assets of the donor, provided that the action taken is within the scope of the authority delegated. The Court in Re Sowa Estate, 2003 ABQB 761 (CanLII), 2003 ABQB 761, noted at para. 3: "[w]hile a private owner of property can dispose of that property however he chooses, a trustee holds for the benefit of others and must make prudent decisions concerning the property". This standard of care is equally applicable to an attorney acting under a POA.

 

[254]  An attorney acting under a POA thus has a duty to:

 

1. seriously consider the donor's welfare when taking steps to sell the donor's property; and

2. exercise a standard of care and diligence required of a trustee - namely,  the standard of care that would be exercised by a person of ordinary prudence in managing his or her own affairs.

  

[256]  "Negligence" does not appear to be a specific consideration in the various pronouncements on the duties of an attorney. Rather, prudence, discretion and intelligence are used as guide-posts.

 

[443]  Attorneys and trustees are also well advised to consider the nature of the duties they are expected to perform, and the environment in which the duties are to be performed. I did not apply hindsight to inform the results of this case, but hindsight is a valuable tool for others to learn from. The seeking of advice or directions should be a common-place practice when major decisions are made by attorneys and trustees, if the attorneys and trustees want some comfort that they are doing the right thing, and that they will not be held liable later when hindsight suggests they made a mistake."

 

N.B. Alberta of course is governed by a different legislation than Ontario.

 

WEL CHECKLISTS FOR ATTORNEYS

 

A checklist of the obligations of an attorney under a Continuing Power of Attorney for Property under the Ontario Substitute Decisions Act, can be accessed at the following link on our website:

 

Power of Attorney for Property Checklist

 

Similarly, a checklist of the obligations of an attorney under a Power of Attorney for Personal Care can be accessed at:

 

Power of Attorney for Personal Care

 

 

ON WISDOM

 

I picked up a book in a shop recently, entitled: "And Never Stop Dancing: Thirty More True Things You Need to  Know Now"[22] by Gordon Livingston, M.D., also author of: "Too Soon Old, Too Late Smart".

 

Of interesting note, when applied to the message of this newsletter, is the comment by Dr. Livingston, a psychiatrist and writer, wherein he states the following:

 

"The highest rung on the ladder of cognition, above both information and knowledge, is wisdom. This desirable attribute, presumably the result of considered thought and long experience, is remarkably hard to come by.  We wish wisdom were an inevitable consequence of age, but the behavior of most of the elderly makes it clear that it is not. If we have never been able to refine and modify our views in response to new information, we are unlikely in our  old age to acquire this habit or to have any better basis for what we "know" than when we were in our younger days. The hallmark of wisdom is to have distilled from one's experience some conception of how the world works that is useful to others. Such a capacity has some integrative and predictive value that enables us to look at novel situations and judge how they fit into some schema that enables us to make good choices. For example, certain behaviors have predictable consequences. If we can discern what these outcomes are and can transmit this knowledge to those caught up in the repetition compulsion that causes them to make the same mistakes over and over, then we are worth listening to."

 

Wisdom and choice are governing principles at the core of the granting of powers of attorney which can provide effectively for planning in the event of incapacity.

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STEP Conference - October 20, 2011 -  Capacity, Financial Literacy and Planning for Long-Term Care

Kimberly A. Whaley, Chair

More info

 

CTF Seminar: Ontario Tax Conference 2011 - Keeping Tax Practitioners Informed. "Estate Planning: Litigation arising out of Estate Planning"

October  24, 2011

Kimberly A. Whaley, Speaker

More info

 

OBA Section Executive Program on Elder Abuse and the Estate Lawyer

October 26, 2011

Ameena Sultan, Chair

More info

 

LSUC: The Administration of Estates

October 31, 2011

Kimberly A. Whaley, Chair

More info

 

LSUC Summit : Solicitor and Client Assessments

November 9 and 10, 2011

Kimberly A. Whaley, Speaker

More info

 

OBA "Trusts and Estates: The Nuts and Bolts of Bonding"

November 29, 2011

Amy Cull, Case Presenter

More info

 

OBA Institute: Capacity to Marry, Divorce, and Separate

February 9, 2012,

Kimberly A. Whaley, Speaker

 

OBA Institute: Capacity and Personal Care Decisions

February 9, 2012,

Ameena Sultan, Speaker

 

LSUC, Six-Minute Lawyer: Disputes over what REMAINS

April 24, 2012

Kimberly A. Whaley, Speaker

 

NAELA: Seattle Elder Law Conference: Topics - TBA

April 26-28, 2012,

Kimberly A. Whaley, Speaker

More info

  

CLC CBA Vancouver, Blended Family Presentation: When Once is not Enough

August 12-14, 2012,

Kimberly A. Whaley, Speaker

 

LSUC: The Administration of Estates 2012

September 13, 2012

Chair, Kimberly A. Whaley