McKenzie v. Morgan, 2023 ONSC 1457, is an insightful case on the competing interests that can surround an incapable person under a power of attorney for property and for personal care.
Raymond was 85 years old at the time of the hearing and he has been diagnosed with dementia. Raymond has five adult children (one of whom is the Applicant / POA in this proceeding). Raymond’s wife and the mother of his children died in 2003, and Wendy Morgan (the Respondent) is, by her own contention, Raymond’s common law spouse.
No formal findings of incapacity have been made pursuant to the Health Care Consent Act, 1996 or the Substitute Decisions Act, 1992 but the record shows that Raymond was assessed for eligibility in a long-term care home. In the context of this type of assessment, Raymond was found to require assistance with all activities of daily living and instrumental activities of daily living, and there were comments detailing severe cognitive performance and communication issues. By 2019, due to concerns about Raymond’s ability to manage his affairs, two of Raymond’s daughters (who happen to be twins) stepped in to take care of Raymond as Raymond’s attorneys for property and personal care.
Dawn and Lynne were unable to work together for long as Raymond’s co-attorneys. Each sister had different plans for Raymond’s care, and a first Application was brought by Dawn in 2021. The first Application as between Dawn and Lynne was settled in February, 2022, to which Lynne now say she had to capitulate and settle due to the prohibitive legal costs. A consent Order regarding Raymond’s care was made in which, inter alia,
- Dawn will continue as Raymond’s sole attorney for property and for personal care;
- Dawn will be paid $5,500 monthly as a caregiver, and that Dawn and her husband can continue to live rent-free in Raymond’s Bracebridge home; and
- Dawn be paid $110,000 in legal costs and Lynne be paid $40,000 in legal costs from Raymond’s assets.
Merely months later, in May, 2022, Dawn lists Raymond’s Springdale property for sale. This Springdale property then becomes the subject of a new application. The Springdale property is occupied by Wendy Morgan. Wendy and Raymond have a tenancy agreement whereby Wendy pays Raymond $800.00 per month in rent, which agreement is intended to survive Raymond’s death. Raymond also has corresponding provisions in his Last Will and Testament whereby Wendy is given the right to occupy the Springdale property for the rest of her life pursuant to the terms of the tenancy agreement.
Pursuant to section 35.1 of the Substitute Decisions Act, 1992, a guardian or attorney for property shall not dispose of property that the guardian or attorney knows is the subject of a specific testamentary gift in the incapable person’s will. The exception that Dawn was asking the Court to consider in selling the Springdale property, notwithstanding the testamentary gift to Wendy, is found in section 35.1(a) in which the guardian or attorney may dispose the property if the disposition of the property is necessary to comply with the guardian’s duties. I.e. the sale of this asset must to be necessary to support Raymond.
Here, the Court was critical of Dawn’s evidence of Raymond’s expenses and the value of his assets. More importantly, the Court was concerned with Dawn’s conflict of interest in the matter given the financially beneficial terms of the May, 2022 consent Order that Dawn had negotiated for herself.
In this case, the sale of Springdale property was not found to be necessary.
However, in cases where a sale of an asset subject to a testamentary gift is necessary, the beneficiary under the Will is entitled to receive from the residue, after death, an amount equal to the proceeds of sale without interest. Where the residue has insufficient funds, the beneficiary is entitled to a proportional share of the residue relative to the sale proceeds. Both of which are subject to a contrary intention in the incapable person’s Will (see section 36 of the SDA).
Tune in later this week for a further discussion of the Court’s concerns in this matter.
Thanks for reading,
Doreen So