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LAW REVIEW: CASES AND OTHER LEGAL REVIEWS
1. McMaster v. McMaster, 2013 ONSC 1115 (CanLII)
In this February 28, 2013 judgment, the court addressed the issue of whether or not an attorney under a joint continuing power of attorney for property should be removed for breach of his fiduciary duty as a co-attorney of the property of Mary, his mother. The collateral issue before the court addressed whether or not there has to be a formal finding by the court of mental incapacity or mental incapability as a condition precedent to such a determination.
I will focus only on the issue of the removal of an attorney. The judgment at paragraphs 19-28 address the removal of an attorney and the common law and parens patriaejurisdiction of the court.
The legislative framework of the Substitute Decisions Act, S.O. 1992, c.30 ("SDA") at section 29, provides that a court has a discretion "to give directions on any question arising in connection with ... a power of attorney."
The court moreover may order a passing of accounts on a motion or its own initiative pursuant to section 42 of the SDA. The section its entirety reads:
Passing of accounts
42. (1) The court may, on application, order that all or a specified part of the accounts of an attorney or guardian of property be passed. 1992, c. 30, s. 42 (1).
Attorney's accounts
(2) An attorney, the grantor or any of the persons listed in subsection (4) may apply to pass the attorney's accounts. 1992, c. 30, s. 42 (2).
Guardian's accounts
(3) A guardian of property, the incapable person or any of the persons listed in subsection (4) may apply to pass the accounts of the guardian of property. 1992, c. 30, s. 42 (3).
Others entitled to apply
(4) The following persons may also apply:
1. The grantor's or incapable person's guardian of the person or attorney for personal care.
2. A dependant of the grantor or incapable person.
3. The Public Guardian and Trustee.
4. The Children's Lawyer.
5. A judgment creditor of the grantor or incapable person.
6. Any other person, with leave of the court. 1992, c. 30, s. 42 (4); 1994, c. 27, s. 43 (2).
P.G.T. a party
(5) If the Public Guardian and Trustee is the applicant or the respondent, the court shall grant the application, unless it is satisfied that the application is frivolous or vexatious. 1992, c. 30, s. 42 (5).
Filing of accounts
(6) The accounts shall be filed in the court office and the procedure in the passing of the accounts is the same and has the same effect as in the passing of executors' and administrators' accounts. 1992, c. 30, s. 42 (6).
Powers of court
(7) In an application for the passing of an attorney's accounts the court may, on motion or on its own initiative,
(a) direct the Public Guardian and Trustee to bring an application for guardianship of property;
(b) suspend the power of attorney pending the determination of the application;
(c) appoint the Public Guardian and Trustee or another person to act as guardian of property pending the determination of the application;
(d) order an assessment of the grantor of the power of attorney under section 79 to determine his or her capacity; or
(e) order that the power of attorney be terminated. 1992, c. 30, s. 42 (7).
Same
(8) In an application for the passing of the accounts of a guardian of property the court may, on motion or on its own initiative,
(a) adjust the guardian's compensation in accordance with the value of the services performed;
(b) suspend the guardianship pending the determination of the application;
(c) appoint the Public Guardian and Trustee or another person to act as guardian of property pending the determination of the application; or
(d) order that the guardianship be terminated.
In this regard (referencing section 42), the court referenced the case of Teffer v. Schaefers , where it reviewed the jurisprudence and concluded:
"This last option is quite dramatic, as in a way it is an interference with the expressed will of the grantor. Justice Fragomeni in Teffer v. Schaefers [2008] O.J. No. 3618 reviewed the jurisprudence and concluded at paras. 24-25:
[...](F)irst, there must be strong and compelling evidence of misconduct or neglect on the part of the attorney before a court could ignore the clear wishes of the donor[...] The second issue relates to whether the court is of the opinion that the best interests of the incapable person are being served by the attorney. (ref. paras. 24 and 25) [1]"
The court then referenced examples of attorney misconduct referenced in the Teffer case which included: failure to provide a monthly accounting; failure to voluntarily pass accounts; failure to provide missing information or documentation with respect to missing funds; and an inability to follow court orders. Notably at paragraph 25 of the judgment, the court states as follows:
[25] It is of interest that Justice Fragomeni observed in Teffer with respect to the second issue that there was medical evidence to suggest that it was unlikely that the grantor knew what kind of property she had, or its approximate value. Her short term memory impairment[...]"would have prevented her from keeping recent information about her complex and substantial properties in mind." His Honour was satisfied the grantor did not have the capacity to manage property.
Importantly, Justice Whitten also set out the common law and parens patriae jurisdiction of the court as follows:
[26]The exercise of parens patriae is part of the inherent power of a superior court. This power exists by virtue of the common law. As Justice Cory held in Rawluk v. Rawluk 1990 CanLII 152 (SCC), [1990] 1 S.C.R. 70 at para. 36, "it is trite but true to state that as a general rule a legislature is presumed not to depart from the prevailing law without expressing its intentions to do so with irresistible clearness." (Goodyear Tire and Rubber Co. of Canada v. T. Eaton Co. 1956 CanLII 2 (SCC), [1956] S.C.R. 610 at p. 614. Justice Kent reiterated this need for a clear expressed departure from the common law within the statute, twelve years later in Kosanovic v. WawaneesaMutual Insurance Co. 2002 CanLII 13113 (ON SC), (2002) 62 O.R. (3d) 160 (Ont.S.C.J.) at paras. 10 and 11: "A presumption exists that legislation is not meant to interfere with common law rights or to oust the jurisdiction of the common law courts nor generally to change the common law. See Driedger on the Construction of Statutes, 3rd ed. (Toronto Butterworths, 1994) at page 298."
[27]Justice LaForest clarified the nature of parens patriae jurisdiction in E.(Mrs.) v. Eve 1986 CanLII 36 (SCC), (1986) 2 S.C.R. 388 (S.C.C.) at paras. 72 and 74. He wrote:
72. From the earliest time, the sovereign as parens patriae was vested with the care of the mentally incompetent. This right and duty as Lord Eldon noted in Wellesley v. Duke of Beaufort, supra at 2 Russ at p. 20, 38 E.R. at p. 243 is founded on the obvious necessity that the law should place somewhere the care of persons who are not able to take care of themselves. In early (page 426) England, the jurisdiction was confined to mental incompetence.... The parens patriae jurisdiction was later vested in the provincial superior courts of this county.
73. The parens patriae jurisdiction is...founded on necessity, namely the need to act for the protection of those who cannot care for themselves. The courts have frequently stated that it is to be exercised in the "best interest of the protected persons, or again, for his or her"benefit" or "welfare".
[28] This jurisdiction of the superior courts has been for the most part exercised on behalf of children. However, as the references to the judgment of Justice LaForest demonstrate, it originated with a concern for the interests of vulnerable persons who generally lacked the capacity to make decisions for themselves. That aspect of parens patriae exists today. (see: Gray v. Ontario [2006] O.J. No. 266 (Ont. Div. Ct.) That is especially so when there are legislative gaps. Assume for a moment there is a gap between protecting the interests of a person incapable of managing their financial affairs, (i.e. fiscal capacity) versus general overall capacity as defined by medical evidence and precedent.
In the court's analysis at paragraph 55, it is stated as follows:
[55] The difference between Mary being incapable generally - which the court could determine by requesting an assessment pursuant to the Statute, and her being fiscally incapable pursuant to Section 6, is practically speaking academic. The medical reports paint a picture of an individual with at least "fiscal incapacity." Mary would not have had the capability in the last 12 years to understand the financial "management" by Malcolm. Furthermore, there is absolutely no evidence from Malcolm that he informed his mother of what he was doing, let alone encouraging her to participate in the fiscal decisions he was making with respect to her money.
The court was not convinced that the finding of incapacity was necessary in the circumstances of the removal of the attorney and stated at paragraph 56 as follows:
[56] Even if it were necessary in order to declare Mary fiscally incapable, more detailed medical evidence is necessary, what evidence exists is clearly that of an elderly vulnerable person who because of her memory deficits and her "dementia", would have absolutely no ability to"understand" or "appreciate", as referenced by Wilson, J. in McDougald Estate v. Gooderham, Opus (cited). Mary is the embodiment of an individual who needs protection of the court, otherwise she is a pawn in the investment schemes of her son. The concept of parens patriae can be relied upon by the court to critically assess pursuant to section 39(1) of the Statue to assess the stewardship of Malcolm.
The court found that the co-attorney that the applicant sought to remove was not managing his mother's fortunes for her benefit and was not preserving a fund for her care. Indeed, the court found that those objectives which should be the objectives of an attorney had been "completely lost".
The court was highly critical of the manner in which the attorney chose to financially manage his mother's assets, particularly when the investments maintained were not ones that would ordinarily be recommended as suitable investments to an elderly person. The court found that the investments chosen by the attorney were high risk investments. The court went so far as to suggest that the investments chosen indicated that the attorney "was gambling with his mother's funds".
The court was critical of the lack of explanation for the whereabouts of in or about $450,000.00 and found that the co-attorney did not demonstrate the transparency required of him as a co-attorney.
In the result, the applicant was successful in having his co-attorney under a power of attorney removed for breach.
The costs of the decision are not yet known.
Interestingly, it is does not appear that a capacity assessment was ordered by the court nor, was there a finding of incapacity.
2. FRAUD
In last month's newsletter, we announced that March was Fraud Prevention Month.
In Estates and Trust matters, we often have occasion to see fraud being procured by an attorney under a Power of Attorney for Property, or a Power of Attorney for Property being procured fraudulently. We have many civil cases which address and provide remedies for such fraudulent activity. However, our criminal code also provides remedies.
Our criminal code also addresses fraud at Sections 386-388 as follows:
THE CRIMINAL CODE: FRAUD
Fraudulent registration of title
386. Every one who, as principal or agent, in a proceeding to register title to real property, or in a transaction relating to real property that is or is proposed to be registered, knowingly and with intent to deceive,
(a) makes a material false statement or representation,
(b) suppresses or conceals from a judge or registrar, or any person employed by or assisting the registrar, any material document, fact, matter or information, or
(c) is privy to anything mentioned in paragraph (a) or (b),
is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years.
R.S., c. C-34, s. 344.
Fraudulent sale of real property
387. Every one who, knowing of an unregistered prior sale or of an existing unregistered grant, mortgage, hypothec, privilege or encumbrance of or on real property, fraudulently sells the property or any part thereof is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.
R.S., c. C-34, s. 345.
Misleading receipt
388. Every one who wilfully
(a) with intent to mislead, injure or defraud any person, whether or not that person is known to him, gives to a person anything in writing that purports to be a receipt for or an acknowledgment of property that has been delivered to or received by him, before the property referred to in the purported receipt or acknowledgment has been delivered to or received by him, or
(b) accepts, transmits or uses a purported receipt or acknowledgment to which paragraph (a) applies,
is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.
FRAUD CASES - Recent
In this case, a financial advisor named Jason Yiu-Kwan Chan pleaded guilty to certain counts under the Securities Act, R.S.A. 2000, c. S-4 for fraud, trading in a security when not registered and making a false statement. Chan admitted to defrauding multiple elderly clients of over $1 million.
His victims included a 70 year old woman who was visually impaired and an 83 year old woman who lived-in a care facility.
Five victim impact statements were filed at the sentencing hearing. The statements spoke "poignantly of the victim's loss of trust in others, depression, long-lasting financial hardships endured as the result of the loss of funds set aside for retirement, and lives significantly set off course by having to deal with the aftermath of Mr. Chan's offending conduct."
While Chan was charged under the Securities Act and not the Criminal Code of Canada, Justice Fradsham observed that "the sentencing objectives in this case require a period of incarceration. Regulatory offences are designed to protect the public, and a sufficiently strong and persuasive message of general deterrence is required."
Chan was sentenced to two years and nine months of incarceration and restitution was ordered.
(b) R. v. Youanna (unreported)
In this recent case that was reported in the news involved an investment advisor named Paul Yoannou who pleaded guilty to 15 counts of fraud over $5,000.00. The total amount stolen from his clients was over $1 million. At least one of his victims was an older adult suffering from dementia.
Yoannou was sentenced to six years incarceration. He is also being investigated by the Mutual Fund Dealers Association of Canada.
3. CRIMINAL CODE: Other Provisions relevant to Elder Financial Abuse
Our criminal code provides for other specific offences often relating to offences which can be described as elder abuse, or elder financial abuse. These provisions include the following:
(a) Theft by a Person Holding a Power of Attorney (s. 331)
331. Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of attorney.
(b) Theft (s. 322)
322.(1) Every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything, whether animate or inanimate, with intent
(a) to deprive, temporarily or absolutely, the owner of it, or a person who has a special property or interest in it, of the thing or of his property or interest in it;
(b) to pledge it or deposit it as security;
(c) to part with it under a condition with respect to its return that the person who parts with it may be unable to perform; or
(d) to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.
Time when theft completed
(2) A person commits theft when, with intent to steal anything, he moves it or causes it to move or to be moved, or begins to cause it to become movable.
Secrecy
(3) A taking or conversion of anything may be fraudulent notwithstanding that it is effected without secrecy or attempt at concealment.
Purpose of taking
(4) For the purposes of this Act, the question whether anything that is converted is taken for the purpose of conversion, or whether it is, at the time it is converted, in the lawful possession of the person who converts it is not material.
Wild living creature
(5) For the purposes of this section, a person who has a wild living creature in captivity shall be deemed to have a special property or interest in it while it is in captivity and after it has escaped from captivity.
(c) Criminal Breach of Trust (Conversion by Trustee) (s. 336)
Every one who, being a trustee of anything for the use or benefit, whether in whole or in part, of another person, or for a public or charitable purpose, converts, with intent to defraud and in contravention of his trust, that thing or any part of it to a use that is not authorized by the trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years
(d) Forgery (s. 366)
366.(1) Every one commits forgery who makes a false document, knowing it to be false, with intent
(a) that it should in any way be used or acted on as genuine, to the prejudice of any one whether within Canada or not; or
(b) that a person should be induced, by the belief that it is genuine, to do or to refrain from doing anything, whether within Canada or not.
Making false document
(2) Making a false document includes
(a) altering a genuine document in any material part;
(b) making a material addition to a genuine document or adding to it a false date, attestation, seal or other thing that is material; or
(c) making a material alteration in a genuine document by erasure, obliteration, removal or in any other way.
When forgery complete
(3) Forgery is complete as soon as a document is made with the knowledge and intent referred to in subsection (1), notwithstanding that the person who makes it does not intend that any particular person should use or act on it as genuine or be induced, by the belief that it is genuine, to do or refrain from doing anything.
Forgery complete though document incomplete
(4) Forgery is complete notwithstanding that the false document is incomplete or does not purport to be a document that is binding in law, if it is such as to indicate that it was intended to be acted on as genuine.
Exception
(5) No person commits forgery by reason only that the person, in good faith, makes a false document at the request of a police force, the Canadian Forces or a department or agency of the federal government or of a provincial government.
(e) Extortion (s.346)
346.(1) Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.
Extortion
(1.1) Every person who commits extortion is guilty of an indictable offence and liable
(a) if a restricted firearm or prohibited firearm is used in the commission of the offence or if any firearm is used in the commission of the offence and the offence is committed for the benefit of, at the direction of, or in association with, a criminal organization, to imprisonment for life and to a minimum punishment of imprisonment for a term of
(i) in the case of a first offence, five years, and
(ii) in the case of a second or subsequent offence, seven years;
(a.1) in any other case where a firearm is used in the commission of the offence, to imprisonment for life and to a minimum punishment of imprisonment for a term of four years; and
(b) in any other case, to imprisonment for life.
Subsequent offences
(1.2) In determining, for the purpose of paragraph (1.1)(a), whether a convicted person has committed a second or subsequent offence, if the person was earlier convicted of any of the following offences, that offence is to be considered as an earlier offence:
(a) an offence under this section;
(b) an offence under subsection 85(1) or (2) or section 244 or 244.2; or
(c) an offence under section 220, 236, 239, 272 or 273, subsection 279(1) or section 279.1 or 344 if a firearm was used in the commission of the offence.
However, an earlier offence shall not be taken into account if 10 years have elapsed between the day on which the person was convicted of the earlier offence and the day on which the person was convicted of the offence for which sentence is being imposed, not taking into account any time in custody.
Sequence of convictions only
(1.3) For the purposes of subsection (1.2), the only question to be considered is the sequence of convictions and no consideration shall be given to the sequence of commission of offences or whether any offence occurred before or after any conviction.
Saving
(2) A threat to institute civil proceedings is not a threat for the purposes of this section
(f) Neglect: Failure to Provide the Necessaries of Life (s. 215)
Duty of persons to provide necessaries
215. (1) Every one is under a legal duty
(a) as a parent, foster parent, guardian or head of a family, to provide necessaries of life for a child under the age of sixteen years;
(b) to provide necessaries of life to their spouse or common-law partner; and
(c) to provide necessaries of life to a person under his charge if that person
(i) is unable, by reason of detention, age, illness, mental disorder or other cause, to withdraw himself from that charge, and
(ii) is unable to provide himself with necessaries of life.
Offence
(2) Every one commits an offence who, being under a legal duty within the meaning of subsection (1), fails without lawful excuse, the proof of which lies on him, to perform that duty, if
(a) with respect to a duty imposed by paragraph (1)(a) or (b),
(i) the person to whom the duty is owed is in destitute or necessitous circumstances, or
(ii) the failure to perform the duty endangers the life of the person to whom the duty is owed, or causes or is likely to cause the health of that person to be endangered permanently; or
(b) with respect to a duty imposed by paragraph (1)(c), the failure to perform the duty endangers the life of the person to whom the duty is owed or causes or is likely to cause the health of that person to be injured permanently.
Punishment
(3) Every one who commits an offence under subsection (2)
(a) is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years; or
(b) is guilty of an offence punishable on summary conviction and liable to imprisonment for a term not exceeding eighteen months.
Presumptions
(4) For the purpose of proceedings under this section,
(a) [Repealed, 2000, c. 12, s. 93]
(b) evidence that a person has in any way recognized a child as being his child is, in the absence of any evidence to the contrary, proof that the child is his child;
(c) evidence that a person has failed for a period of one month to make provision for the maintenance of any child of theirs under the age of sixteen years is, in the absence of any evidence to the contrary, proof that the person has failed without lawful excuse to provide necessaries of life for the child; and
(d) the fact that a spouse or common-law partner or child is receiving or has received necessaries of life from another person who is not under a legal duty to provide them is not a defence
(g) Criminal Negligence (s. 219)
219. (1) Every one is criminally negligent who
(a) in doing anything, or
(b) in omitting to do anything that it is his duty to do,
shows wanton or reckless disregard for the lives or safety of other persons.
Definition of "duty"
(2) For the purposes of this section, "duty" means a duty imposed by law
FRAUD PREVENTION RESOURCES
4. Useful Resources and Tools found on the web for fraud prevention:
(a) Fraud Prevention - Competition Bureau
(c) Surrey RCMP - March is Fraud Prevention Month
(e) March is National Fraud Prevention Month (CIBC)
(f) Two Top Scams Highlighted During Fraud Prevention Month ...
(g) RBC Fraud Prevention Month Tips
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