Earlier this year, our colleague Doreen So, blogged in two parts (here and here) on the matter of PGT v Cherneyko. It is a blog that discusses a litany of failures by an attorney for property. While Doreen covered the facts in full, they are worth repeating here in part:
“Jean Cherneyko is a 90-year-old woman. Jean did not have any children of her own. Her closest known relative was a niece in the US. By the time of the PGT application, Jean was in a long-term care home. Prior to that, Jean lived alone in the same home that she had lived in since 1969. Jean had a friend named Tina who she had known for about five years. On August 15, 2019, Jean and Tina went to a lawyer’s office. Jean named Tina as her attorney for property and personal care. Jean also made a new Will which named Tina as the estate trustee and sole beneficiary of her estate. A week or so later on August 27th, Jean and Tina went to Jean’s bank where $250,000.00 was transferred to Tina […]”
The PGT applied to take over as guardian for property and, among other things, to set aside the gift to Tina. The court agreed and ordered the $250,000 returned to Jean on the basis of resulting trust.
In a novel approach to the law of gifts, the court in Cherneyko relied on Pecore to establish that the gift ought to be returned, saying: “The leading Canadian case on the law of gifts, the Supreme Court of Canada in Pecore v Pecore, 2007 SCC 17 (CanLII) at paras. 24-26 established that where a gratuitous transfer of property is found, there is a presumption of a resulting trust. The onus falls to the recipient to rebut the presumption.” In the court’s view, Tina failed to rebut the presumption.
But this represents a new application of the Supreme Court’s analysis and it’s worth revisiting Pecore.
In 2007, Justice Rothstein, writing for a unanimous court (Justice Abella concurring) looked closely at gratuitous gifts of joint bank accounts, between parents and children, and whether the presumption of resulting trust and advancement applied in modern times:
“The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.”
The decision in Cherneyko represents a significant expansion of the principles of Pecore by applying them to inter vivos gifts between unrelated adults. Traditionally, if the courts determine that a transferor lacked the requisite capacity, the gift is void as the transferor lacked the capacity to form the proper intention to gift. Ball v. Mannin, an almost 200-year-old UK case established the original test for granting a gift and held that a person had capacity if the person was “capable of understanding what he did by executing the deed in question, when its general purport was fully explained to him.” The Supreme Court has previously outlined a separate test in Geffen v Goodman Estate in 1991, examining the nature of the relationship itself, and applying a presumption of undue influence where there is the presence of a dominant relationship. While the failed gift in Cherneyko was ultimately returned under a resulting trust, it will be fascinating to see if other courts also continue this expansion of Pecore. We’ll keep you posted.
Thanks for reading!
Ian Hull and Daniel Enright
As estates practitioners know well, the medication that an individual takes could reflect underlying conditions that affect mental capacity. High doses of pain medications or other medication prescribed to treat serious physical ailments may also impact a person’s cognition.
A recent article on Considerable highlights the impact that certain common medications may have on mental capacity. An estimated 25% of seniors take “anticholinergic” drugs to treat a variety of common issues, including allergies, insomnia, and asthma. These medications are known to target acetylcholine, a chemical messenger that plays an important role in concentration, cognition, and memory. Some drugs (including over-the-counter medications as well as those for which a prescription is required) impact acetylcholine levels more than others and, when they are taken together, can have a cumulative effect. As a result, high doses of anticholinergic drugs, which are often believed to have only inconsequential side effects, can interfere with brain messaging and result in symptoms consistent with dementia.
The article refers to a patient whose score on a Mini-Mental Status Examination increasing from 11 to 28 out of 30 after a readjustment of her medication, which included common antihistamines and medication for mood and gastrointestinal issues. Further research is being conducted on the short-term and long-term effects of anticholinergic use, as there is concern that prolonged use may cause irreversible cognitive decline.
As our readers know, due to the nature of capacity standards and importance of reviewing capacity on a case-by-case basis at the time of the relevant decision or instructions, it may be worthwhile to consider whether medication, even that commonly prescribed to seniors, may be a contributing factor.
Thank you for reading.
Other blog entries that may be of interest:
Yesterday, I blogged on Public Guardian and Trustee v. Cherneyko et al, 2021 ONSC 107. Today’s blog will focus on some of the breaches of fiduciary duty that were found by the Court. For those who have not read yesterday’s blog, this is a case that involves Jean, a 90 year old woman, and Tina, the attorney for property, who was purportedly given a gift of $250,000.00 just days before Jean was hospitalized for acute delirium and progressive cognitive decline.
While the purported gift of $250,000.00 to Tina was found to be invalid, the Court went on to find that Tina was in breach of her fiduciary duty to Jean by accepting the money. Tina was in breach because she knew that Jean was exhibiting signs of cognitive decline when they went to the bank. In the Court’s view,
“a person acting in a fiduciary capacity for a person actively demonstrating moments of irrationality should be very cautious about any big financial moves that person claims they want to make in and around such periods of demonstrated incapacity. Even if Jean was clearly acting in a competent manner during the few hours she attended the CIBC with Tina on August 27, 2019, I agree with the submissions of the PGT it is no answer to an accusation of breach of duty to assert that an attorney was simply acting in accordance with the wishes of the grantor of the attorney. Tina should have proceeded with caution at that time. I find she did not exercise the appropriate degree of caution and good judgment given the circumstances about which she knew.” (para 42)
The Court also reiterated Justice Penny’s comments in Ontario (Public Guardian and Trustee) v. Harkins,  O.J. No. 3313, that a fiduciary’s first duty is to see to the best interest of the person regardless of what their stated wishes may be. The Court was very critical of how a $250,000.00 gift to Tina could possibly benefit Jean, and expressed disapproval on how there was no evidence of any effort on Tina’s part in considering whether this money would better serve Jean if it was applied towards Jean’s in-home care instead of admitting Jean to a long term care home.
Of relevance to the unique circumstances that surround the care of others during Covid-19, the Court commented that,
“since March 2020 more than at any time in the past, any genuinely concerned person charged with caring for an elderly person in long term care would have at least considered the issue of taking whatever steps could be taken to remove the person from this situation if it was in any way possible.” (para. 47)
Instead, Tina allowed her adult son to move into Jean’s home, and she was found to be actively misusing Jean’s assets for her own and her family’s benefit which were additional breaches of her duties as fiduciary. The Court also disapproved of how Tina did not take any steps to sell Jean’s house in order to maximize or preserve its value which, reading between the lines, seem to be a concern for the uncertainty in today’s markets.
Thanks for reading! Stay safe!
Right from the start, 2021 is starting to look like it will be another extraordinary year of historic significance. In the world of estates, trusts, and capacity litigation, there was a decision released on January 5th where serious breaches of fiduciary duty by an attorney for property were found and the PGT was ordered to take over. The facts in Public Guardian and Trustee v. Cherneyko et al, 2021 ONSC 107, read like a law school case study and the reasons are worth noting.
Jean Cherneyko is a 90 year old woman. Jean did not have any children of her own. Her closest known relative was a niece in the US. By the time of the PGT application, Jean was in a long term care home. Prior to that, Jean lived alone in the same home that she had lived in since 1969. Jean had a friend named Tina who she had known for about five years. On August 15, 2019, Jean and Tina went to a lawyer’s office. Jean named Tina as her attorney for property and personal care. Jean also made a new Will which named Tina as the estate trustee and sole beneficiary of her estate. A week or so later on August 27th, Jean and Tina went to Jean’s bank where $250,000.00 was transferred to Tina, and $195,329.50 was transferred to Jean’s niece. Days later on August 31st, Jean was hospitalized for acute delirium and progressive cognitive decline. During Jean’s admission, Tina noted that Jean had become increasingly confused over the prior few months and that Jean exhibited lethargic behaviour and complained of bodily soreness. On September 1, 2019, Jean was diagnosed as being cognitively impaired. Thereafter, Jean was transferred to long term care on October 1st based on Tina’s authorization as Jean’s attorney for property. Short time after that, Tina’s son moved into Jean’s home and the PGT started to investigate in March, 2020 when the bank froze Jean’s accounts.
As a result of their investigation, the PGT brought an application to remove and replace Tina as Jean’s attorney for property. The PGT also sought to set aside the $250,000.00 transfer to Tina and the return of various other sums that were received by Tina, which totalled approximately $350,000.00.
First, the Court found that the transfer of $250,000.00 to Tina was not a gift. Tina failed to rebut the presumption of resulting trust for the gratuitous transfer. Tina put forth evidence that there was a bank manager who spoke to Jean at the time of the transfer, and that the banker told Jean that she would have still have enough money to live after the transfers to Tina and the her niece. This evidence was tendered through Tina’s affidavit without any direct evidence from the banker. The Court disregarded Tina’s reliance on the banker’s involvement because Tina herself had deposed that Jean was having “moments of delirium and irrationality, her condition fluctuated between lucidity and confusion” in late August, 2019 (para. 31) and there was no evidence that the banker was informed.
The Court also seriously questioned whether any of the payments to Tina were truly what “Jean wanted” because Jean’s power of attorney for property clearly stated that there was to be no compensation. The Court agreed with the PGT’s contention that Tina should not have paid herself $2,000.00 per month in compensation and on how that sum was unreasonably high given that Jean’s long term care costs were only $2,701.61 per month.
The value of the transfers, which was about a quarter of Jean’s net worth at the time, when considered in the context of Jean’s September 1st diagnosis also led the Court to find that Jean lacked capacity to gift Tina such a substantial sum.
The Court’s focus on context, timing, and proportionality as benchmarks in its analysis are very important for litigators and advisors to keep in mind.
Stayed tuned this week for Part 2 on Cherneyko: the breaches of fiduciary duty.
Thanks for reading,
When a party is incapable of instructing counsel, or his or her capacity is in question in a proceeding, there are safeguards in place in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), and the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”) to ensure that the incapable party’s interests are protected. The Rules provide for the appointment of a litigation guardian for a party under disability, while the SDA provides for the appointment of “section 3 counsel” when the capacity of a person is in issue in a proceeding under the SDA and they do not have legal representation. While a litigation guardian and section 3 counsel may have a similar purpose, their roles are quite different. Situations may arise where one or the other is required, but there are also times when it may be difficult to determine which one is necessary in the circumstances. The recent decision of Dawson v Dawson, 2020 ONSC 6001 is one such instance.
In Dawson, one of the parties, Michael, was incapable of managing property or instructing counsel, and was the subject of a proceeding under the SDA. Michael’s wife, Josephine, sought to be appointed as his litigation guardian in that proceeding. The Office of the Public Guardian and Trustee (the “PGT”) opposed the appointment of a litigation guardian, and took the position that the appointment of section 3 counsel would be appropriate in the circumstances.
Ultimately, the court appointed Josephine as litigation guardian for Michael, notwithstanding that section 3 counsel would typically be appointed in such a situation. Part of the court’s reasoning was that “[b]oth a litigation guardian and s. 3 counsel are responsible for protecting the interests of a vulnerable litigant, but they do so in significantly different ways.”
The court highlighted the limitations on section 3 counsel, being that they are counsel, not a party. If a lawyer is acting for a client with capacity issues, as may be the case with section 3 counsel, it may be difficult or impossible for the lawyer to ascertain the client’s wishes and instructions. Without instructions from his or her client, a lawyer cannot take a position in a proceeding, even if one assumes that the client would have agreed with that position, or that it is in the client’s best interests. Section 3 counsel cannot make decisions on behalf of his or her client.
A litigation guardian on the other hand, stands in the shoes of the party under disability, and is able to make decisions on behalf of the party. As stated by the court: “[a] litigation guardian therefore does precisely what s. 3 counsel cannot do, that is, make decisions on behalf of a vulnerable person.”
The role of section 3 counsel is very important in the context of proceedings under the SDA, given the significant impact that, for instance, a finding of incapacity, and the appointment of a guardian can have on an individual’s liberty. However, where section 3 counsel is unable to get instructions, the appointment of a litigation guardian may be necessary in order to protect the individual.
Thanks for reading,
These other blog posts may also be of interest:
In Ontario, a Continuing Power of Attorney for Property or a Power of Attorney for Personal Care must be signed by two witnesses. As our readers also know, as a result of COVID-19, witnessing and execution requirements for Powers of Attorney in Ontario have been relaxed to facilitate access to incapacity planning during the pandemic. These provisions have recently been extended to November 21, 2020. Provided that one witness to a Continuing Power of Attorney for Property or Power of Attorney for Personal Care is a licensee under Ontario’s Law Society Act, the document may be witnessed using audiovisual communication technology and signed in counterpart. The document does not otherwise need to be witnessed by a lawyer (although, where a lawyer has assisted in the preparation of Powers of Attorney, it will often be most practical for the lawyer and one of his or her staff to witness the client’s execution of the document).
Especially in light of social distancing measures, it is important to keep in mind the restrictions on who can witness incapacity planning documents. In Ontario, neither a Continuing Power of Attorney for Property nor a Power of Attorney for Personal Care can be witnessed by:
- the attorney or the attorney’s spouse;
- the grantor’s spouse;
- a child of the grantor;
- a person whose property/personal care is under guardianship; or
- an individual of less than eighteen years old.
If the lawyer him or herself is being appointed under the document, which is not an uncommon practice, the involvement of a second lawyer or a paralegal in the virtual execution and witnessing of the document(s) may be necessary.
In the Yukon, the witnessing requirements for Powers of Attorney are somewhat different. As it currently stands, in order for a Continuing Power of Attorney for Property (there referred to as an Enduring Power of Attorney) to be effective, a Certificate of Legal Advice must be provided by a lawyer. As a result, the lawyer typically witnesses the Power of Attorney, which is not otherwise valid. While only one witness is required, the lawyer providing the Certificate cannot be the attorney or the attorney’s spouse.
A recent article from Canadian Lawyer reviews proposed changes to Yukon’s Enduring Power of Attorney Act. One of the key amendments is the replacement of the requirement that a lawyer be involved in witnessing the execution of Continuing Powers of Attorney for Property with the option of the witnessing of such documents by two other individuals. Similar to the requirements in Ontario, a witness must be an adult and cannot be the spouse of the donor, the attorney, or the spouse of the attorney.
If approved, the recent Yukon Bill will eliminate the necessity that a lawyer be involved in the witnessing of Powers of Attorney to increase access to incapacity planning throughout the territory.
Thank you for reading.
New fears and anxieties brought on by the health crisis may play a part in the uptick we are seeing in the making of wills and powers of attorney documents. Ontarians, particularly vulnerable older Ontarians, may take comfort at this time in having their estate plans laid out, as well as having individuals in place to manage their finances and personal care in the event of illness, incapacity or physical inability to manage these tasks themselves.
Once these powers are granted, disputes can arise over when an attorney can start acting in the appointed role, particularly when incapacity is required prior to the attorney commencing to act. In the management of one’s property, donors often sign power of attorney documents where the ability to commence acting takes effect from the date of the document. However, donors sometimes opt to have the authority deferred to the time of incapacity. Similarly, when it comes to the management of one’s personal care, the attorney cannot act until the grantor lacks the capacity to do so.
How incapacity is determined is often impacted by the power of attorney document itself and the varying level of protections that a donor may wish to have in place. For instance, the grantor may choose to have the power of attorney document stipulate that (i) one physician’s letter opining that the donor is incapable will suffice, or (ii) two physician’s letters are required, or (iii) incapacity be determined by a formal capacity assessment conducted by an accredited capacity assessor.
Should a capacity dispute arise, it is noteworthy that the Substitute Decisions Act protects the privacy, dignity, and legal rights of the individual through the following provisions:
- there is a presumption of capacity (s. 2);
- a person whose capacity is in issue is entitled to legal representation (s. 3);
- a person alleged to be incapable is entitled to notice of court proceedings (ss. 27(4) and ss. 62(4));
- the court must not appoint a guardian if it is satisfied that the need for decisions to be made can be met by an alternative course of action that is less restrictive of the person’s decision making rights (ss. 22(3) and ss. 55(2));
- in considering the choice of guardian for property or personal care, the court is to consider the wishes of the incapable person (ss. 24(5)(b) and ss. 57(3)(b)); and
- subject to exceptions, a person has a right to refuse an assessment, other than an assessment ordered by the court (s. 78).
Giving someone the power to control our finances and personal care are some of the most important decisions we make that can impact the quality of life in our elder years. Sober and thoughtful consideration of the best person(s) for the role is essential, and may minimize discord, disputes and abuse in this area.
Thanks for reading and have a great day,
The looming threat of COVID-19 has caused some people to see their own mortality in a new and clearer light. In addition to the existential and/or religious contemplation that may arise from this reality, individuals are also turning their minds to more practical end of life planning.
An end of life plan, also referred to as an advance care plan (“ACP”), sets out how an individual would like to be cared for in the final months of their life. In Ontario, an ACP will usually include a Power of Attorney for Personal Care designating a trusted person(s) to make healthcare decisions on behalf of an individual in the event of their incapacity.
An ACP may also include an advance directive, or “living will”, which is a written statement of wishes about future care. Unlike a Power of Attorney, advance directives are not referenced in Ontario’s health care legislation and are not a legal document. However, Ontario law does recognize that wishes and preferences regarding future care choices that are expressed when mentally capable ought to be respected and followed, if possible. Thus, a Power of Attorney or other substitute decision maker is expected to abide by an advance directive to the extent possible. This makes advance directives a useful tool for anyone seeking greater control over the medical treatment they receive while incapable.
Interestingly, a COVID-19-specific advance directive has emerged in the United States. Dr. Andrea Kittrell, a head and neck surgeon practicing in Virginia, established an organization called Save Other Souls (“SOS”) whose objective is to assist individuals with their advance care planning as it pertains to COVID-19-related medical treatment. Specifically, SOS provides guidance on preparing a document that has been coined the “COVID-19 SOS Directive”. This document is a type of altruistic advance directive wherein a person expresses their wish to defer lifesaving critical care hospital placement, medication, and/or equipment to another patient in need during a declared emergency and where there are insufficient health care resources to go around.
Since the COVID-19 SOS Directive was developed for use in jurisdictions outside of Ontario, I will not opine on the effectiveness of this particular document. However, the document is a reminder of the importance of considering one’s own ACP in light of the global pandemic. For information on COVID-19-related advance care planning for Canadians, you can check out Dying With Dignity Canada’s COVID-19 ACP Toolkit. Another helpful resource is the Plan Well Guide which is discussed in Nick Esterbauer’s blog here.
Thanks for reading!
Previously, I blogged on Medical Assistance in Dying (MAID) and the changes to the Criminal Code proposed by Bill C-7, which sought to provide for assisted deaths where a natural death is not “reasonably foreseeable”. The changes would have included the potential to waive the requirement that late-stage consent be obtained immediately prior to MAID.
The proposed amendments contained in Bill C-7 sought to address the concern that people who qualified for MAID were faced with a difficult decision – ending their life earlier than they wanted so as to ensure they possessed the requisite capacity to consent to MAID, or, risking that should they wait to access MAID, they could lose capacity and therefore eligibility for MAID. This scenario was the reality of Nova Scotian, Audrey Parker, who campaigned heavily to change the late-stage consent requirement, however, ultimately accessed MAID earlier than she wanted so as to ensure that she would not lose eligibility as a result of declining capacity. Bill C-7 is now known as “Audrey’s Amendment”.
Parliamentary review of the Bill was scheduled to occur in June, 2020. However, with the global impact of COVID-19 and the current proroguing of Parliament, the Bill has yet to become law.
While we wait for Parliamentary review of the Bill, a new and novel question has been raised once again out of Nova Scotia – can you prevent someone else from accessing MAID, even when they have been found eligible under the law? This question has been raised in the context of an elderly couple – called X and Y — grappling with these issues – X wants to die, and his wife of 48 years, Y, does not want to let him. Y attempted to seek an injunction, preventing X from accessing MAID, though he had already qualified for MAID. X is concerned that the delay caused by Y’s filings could risk him losing capacity and therefore eligibility to access MAID – a concern that could be addressed if late stage consent could be waived. However, as Bill C-7 has yet to become law, the proposed amended provisions cannot assist X.
As reported by The Star, in seeking the injunction, Y must make a case for “irreparable harm.” From Y’s perspective, should the injunction fail, her irreparable harm is the death of her husband. From X’s perspective, going on living would be worse. A hearing in X and Y’s case was scheduled for August 26, 2020.
Jocelyn Downie, professor and the James Palmer Chair in Public Policy and Law at the Schulich School of Law at Dalhousie University has offered her opinion: “…it’s straightforward in law and what the answer should be, which is: No, a third party doesn’t get to go to court and prevent somebody from having access to something that the Supreme Court of Canada said we have a Charter right to access.”
We will continue to watch and keep our readers updated as this case develops.
Thanks for reading!
The #FreeBritney movement is a social media movement driven by the fans of Britney Spears, and it has been trending recently this month according to Global News. Britney’s fans are concerned that Britney is being mistreated by her legal conservators. Britney Spears has been under a court-ordered conservatorship since 2008.
In the years leading up to Britney’s conservatorship, there were a multitude of public incidents that called Britney’s wellbeing into question, the most iconic of which was perhaps the viral, tabloid photograph of Britney shaving her head in 2007. In 2008, Britney was involuntarily hospitalized after police were called to her home. Thereafter, Britney was placed under an interim conservatory order, which was ultimately made permanent. Britney’s conservatorship meant that her father, James Spears, and lawyer, Andrew Wallet, had complete control of Britney’s assets, which is similar to a guardianship of property under the Ontario Substitute Decisions Act, 1992. James Spears was given control of Britney’s health like a guardianship of person.
Despite being stripped of the right to control her own property and personal care, Britney’s career has flourished in the twelve years after 2008. During the first year of her conservatorship alone, Britney appeared on television shows and even released a new album (Circus). Britney went on to release 3 more albums after that, and she was the star of a four-year concert residency in Las Vegas (which was excellent in my humble opinion). Britney was also a judge on the television competition show, X Factor, where the judges of the show mentor and critique contestants on their performances. For a list of her accomplishments, check out Britney’s extensive Wikipedia page.
In Ontario, a person is incapable of managing property if “the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision” (section 6 of the SDA).
With that in mind, Britney’s role as a judge on X Factor and her reactions on the show seem to show that she was appropriately reacting to the performances of the contestants and that she understood what was at stake in the competition. However, the lay opinion of her fans (myself included) alone would be insufficient to satisfy the statutory requirements of a motion to terminate guardianship of property and person under Part III of the SDA. If the motion is brought on a summary basis under section 73 of the Act, the moving party must include one statement from a capacity assessor and one statement by a second assessor or someone who knows the person, which indicate the following:
(a) that the maker of the statement is of the opinion that the person is capable of managing property, and set out the facts on which the opinion is based; and
(b) that the maker of the statement expects no direct or indirect pecuniary benefit as the result of the termination of the guardianship.
Similar statements are required to terminate a guardianship of person.
Earlier this year, Britney’s conservatorship was extended until at least August 22, 2020.
#FreeBritney and thanks for reading,