Who has standing to compel a passing of accounts under the Substitute Decisions Act? Justice Faieta’s recent decision, McArthur v McArthur, 2024 ONSC 5806 examines this issue.

Under section 42(1) of the SDA, a court can order an attorney or guardian to pass their accounts. Those who have standing to apply or move for such an order are set out at section 42(4), namely:

1. The grantor’s or the 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, and
6. Any other person, with leave of the court.

Justice Faieta turned to the Ontario Court of Appeal decision, Spar Roofing & Metal Supplies Ltd. v Glynn, 2016 ONCA 296 for guidance on who can apply as “any other person”. At paragraph 52 of Spar Roofing, the court held that a “line of jurisprudence in Ontario interpreting the SDA has held that, following the grantor’s death and where the attorney and estate trustee are one and the same person, there can be no true accounting as between the attorney and estate trustee. As a result, courts have permitted beneficiaries and others in this circumstance to seek leave as “any other person” under s. 42(4), to apply to the court for a passing of the attorney’s accounts for the period the attorney acted prior to the grantor’s death.”

A person applying for leave under s. 42(4) of the SDA must show that (1) the applicant has a genuine interest in the grantor’s welfare, and (2) its is reasonable to believe that a court hearing the matter may, under s. 42(1), order the attorney to pass his or her accounts (see Lewis v Lewis, 2020 ONCA 56 at para 5).

Once the court has conducted the above analysis, it must turn its mind to the factors it will consider in determining whether to order a passing of accounts under s. 42(1):

1. The extent of the attorney’s involvement in the grantor’s financial affairs, and
2. Whether there is a significant concern in respect of the management of the grantor’s affairs that warrants an accounting.

In McArthur, the Applicant and the Respondent were surviving siblings of their deceased mother, Lydia McArthur. During Ms. McArthur’s lifetime, she at various times named her daughter, the Respondent, as her attorney for property and personal care. The continuing power of attorney indicated that it may only be used during any legal incapacity to manage Ms. McArthur’s property.

The Respondent took the position that Ms. McArthur retained capacity up to the date of her death, such that she should not have an obligation to provide a pre-death accounting.

Justice Faieta found that as the Respondent was both named as attorney for property as well as Estate Trustee for Ms. McArthur, and given certain concerns regarding the management of Ms. McArthur’s assets, the Applicant met both prongs of the test for leave as “any other person”.

Contrary to the Respondent’s position, Justice Faieta determined that the evidence reflected the Respondent had been involved in a decision-making capacity relating to Ms. McArthur’s property, and, there were concerns significant enough to justify an accounting.

However, in the interests of cost and time efficiency, Justice Faieta relied on the approach taken in McAllister Estate v Hudgin, [2008] O.J. No. 3282 and rule 75.06 of the Rules of Civil Procedure to order an informal accounting, as opposed to a formal passing of accounts.

As estate litigators, we often assist clients in accounting disputes, which can include disagreements over who was making decisions, when they began making such decisions, and the length of the accounting period. While the McArthur decision did not specifically delve into the jurisprudence on these issues, its clear the principles below, informed Justice Faieta’s finding that the Respondent was in fact acting in a substitute decision making (and thereby fiduciary) capacity.  

In MacKay Estate v MacKay, 2015 ONSC 7429 at para 33, the court confirmed that a party need not be an attorney to be a fiduciary. Further, incapacity is not precondition to a finding that a person is owed a fiduciary duty (see Wedemire v Wedemire, 2017 ONSC 6891 at para 57). The jurisprudence has established that in cases of parent-child relationships, the addition of an adult child to an elderly parent’s bank account for the purpose of assisting that elderly parent is sufficient to trigger the adult child’s role as a fiduciary, regardless of the capacity of the elderly parent and regardless of whether that adult child was acting as an attorney for property (Wedemire at para 86).

McArthur is a reminder that a grantor retaining capacity does not necessarily vitiate fiduciary obligations.

Thanks for reading!

Sydney Osmar