Every once in a while, we are lucky enough to have a judgement come out that refreshes our knowledge and affirms the legal tests on some of the most common issues we come across in estate litigation.

The recent decision in Doherty v. Doherty, 2023 ONSC 1536 (unreported at the time of this blog), which was released on March 20, 2023, is an excellent example of one of those cases.

Doherty contains simple enough facts but valuable commentary on the five key issues below.

1. The requirements for an inter vivos gift

The donee must show (1) an intention to make a gift on the part of the donor, without consideration or expectation of remuneration; (2) acceptance of the gift by the donee; and (3) a sufficient act of delivery or transfer of the property to complete the transaction. In this case, Justice Dietrich determined that the documentary evidence (including the respondent’s affidavit evidence) was not sufficient to prove a gift. There was no evidence that the Deceased herself, or on her authority, made the transfers. 

2. The standard for an attorney acting under a POA for a capable person versus a POA acting for an incapable person

An attorney for a donor who has mental capacity to deal with their property is merely an agent. Notwithstanding the fact that the power may be conferred in general terms, the attorney’s primary responsibility in such a case is to carry out the instructions of the donor as principal. As an agent, such an attorney owes fiduciary duties to the donor, but these pale in comparison to those of an attorney holding a continuing power where the donor has lost capacity to manage property. 

However, in cases in which an abuse of a power of attorney is alleged, this distinction is less significant because the named attorney will have an assumed fiduciary duty to the donor regardless. The agent-principal relationship is one that is recognized as being fiduciary in nature because the agent can exercise power over the principal: An attorney for property acting as such is under a strict fiduciary duty to act in the donor’s best interest. This obligation flows from the breadth of the agent’s powers.  

An agent is prohibited from competing with the principal or taking unfair advantage of his or her position in using things acquired because of the agency relationship or because of the opportunities afforded by the position

3. Joint and several liability for damages from wrongful removal from the accounts

A stranger to a fiduciary relationship may be liable under the doctrine of “knowing receipt” if the stranger receives trust property in his or her own personal capacity with constructive knowledge of a breach of trust or fiduciary duty. This is a recipient-based claim arising out of the law of restitution.

In this case, the wife and child of the attorney were found to have been aware that the respondent was an attorney for the Deceased and that it was the respondent who was facilitating the transaction and that, for the respondent to be able to do so, he would have had to rely on a power of attorney. 

4. The relevance of police reports in civil proceedings

Justice Dietrich noted that the differing civil (on a balance of probabilities) and criminal (beyond a reasonable doubt) standards of evaluating evidence meant that no conclusion could be drawn from the fact that charges were ultimately not laid against the respondent. 

5. Costs

Although cost judgments are often quite reserved, Justice Dietrich found in this instance that the “reprehensible, scandalous and especially egregious” nature of the respondent’s conduct warranted the serious sanction of full indemnity costs. 

Check out our other blog posts for more information on these individual issues by searching our website under “Knowledge”.

Have a great day,

Ian Hull and Marie Kazmer