Should the courts consider the reasons behind a person’s decision to revoke their power of attorney in determining whether that person had the capacity to make the revocation? In particular, should the courts adopt this consideration where the person’s rationale to make the revocation may be impacted by mental illness or cognitive impairment? The Alberta Court of Queen’s Bench was tasked with this legal issue in Pirie v Pirie, 2017 ABQB 104 and determined that the existing legal test to revoke a power of attorney should not be amended to factor for a donor’s rationale in revoking a power of attorney.

In 2008, Mr. Jack Piri executed an Enduring Power of Attorney (“Enduring POA”) which came into effect only when he became incapable of making property decisions due to mental incapacity or infirmity. The Enduring POA provided a condition that incapacity is proven where there is a written declaration of such from Jack’s attending physician and of the attorneys. Jack named his three children and his wife as his attorneys. Jack and his wife separated years later. In his search for a new partner, Jack employed a matchmaker and was matched with a woman named Leslie. After three weekends together, Jack proposed that Leslie live with him in the hopes of moving towards marriage, but if this arrangement did not work out, he would then pay her $100,000. Jack’s attorneys learned of this situation, viewed it as entirely out of character, and then took steps to arrange a capacity assessment.

Jack underwent a few assessments from different doctors. An initial assessment found that Jack had “medium level dementia”; however, Jack was reported to have an adequate understanding and appreciation as to the nature and purpose of an Enduring POA. A competing assessment found that Jack had a mild cognitive impairment but retained the ability to make property decisions if he utilized strategies to support his memory. Nonetheless, in 2016, the attorneys obtained a declaration from a doctor that Jack was not capable of making property decisions; the attorneys signed a declaration to this effect as well. Jack’s evidence was that the declarations were made unbeknownst to him. When he discovered this was done, he executed a Revocation of his 2008 Enduring POA and also a replacement POA in 2016.

Jack applied to court for a determination on whether he had mental capacity to revoke the 2008 Enduring POA and create the new 2016 Enduring POA. Section 3 of the Powers of Attorney Act, RSA 2000, c P-20 provides that an enduring POA is void if the donor is mentally incapable of understanding the nature and effect of the enduring POA at the date of its execution. Similarly, a donor can validly revoke an enduring POA if they are mentally capable of understanding the nature and effect of the revocation at the date of its execution, further to section 13 of the Act. The court also considered the common law test for capacity to grant an enduring POA in K (Enduring Powers of Attorney), Re (1987), a decision by the English Chancery Division. In the latter case, the court clarified that there is no requirement that the donor be capable of managing their property affairs on a regular basis; rather, capacity to execute the POA is established if the donor understood that:

• The attorney would be able to assume complete authority over the donor’s affairs;
• The attorney could do anything with the donor’s property that the donor could have done;
• That the authority would continue if the donor became mentally incapable; and
• The attorney’s authority would become irrevocable without confirmation by the court in the event that the donor became mentally incapable.

The respondent attorneys argued that the common law test should include consideration of why the donor is revoking the enduring POA, and whether the change is a rational and reasonable one or whether the donor’s reasoning is “flawed by reason of mental illness.” Some medical experts weighed in to support this consideration, as there was some question as to whether Jack’s decision to revoke his enduring POA and create a new one was influenced by dementia and/or mental infirmity.

The court held that it was not appropriate to depart from the legal test in this case. There was a recognition that a person can have the capacity to execute and revoke an enduring POA, even if, at the time, that person is not capable of managing their own property by virtue of mental infirmity. Importantly, the court recognized that it is a “slippery slope” to attempt to determine whether the donor’s decision was rational or appropriate.

This case highlights an important issue that finds its way into POA disputes generally, even in Canadian jurisdictions where the test for capacity to grant and revoke a POA is elaborated more extensively by statute, as in the case of Ontario’s Substitute Decisions Act, 1992, SO 1992, c 30. The courts are generally reluctant to lay judgment on the perceived “quality” or reasonableness of a donor’s decision to revoke or grant a POA as there is always a risk that this may overwrite the donor’s autonomy without sufficient justification. A seemingly “bad” decision may not be an incapable one. And a person with a mental infirmity does not automatically make a decision based on that infirmity.

Thanks for reading,

Ashley Naipaul