Pursuant to section 3 of the Substitute Decisions Act, 1992 (the “SDA”), if there is a proceeding under the SDA where a person’s capacity is in issue, but they do not have legal representation, the court may direct that the Public Guardian and Trustee (the “PGT”) arrange for legal representation for the person. The person will be deemed to have capacity to instruct counsel. This legal representation is often referred to as “section 3 counsel”.
We have previously blogged about the role of section 3 counsel (for instance, here and here). Section 3 counsel has been described as a safeguard that protects the dignity, privacy, and legal rights of a person who is alleged to be incapable.
Section 3 counsel plays a very important role in proceedings dealing with a person’s capacity, as they allow the person whose capacity, and possibly their rights and liberties, are at issue, to have a voice before the court.
In Singh v Tolton, 2021 ONSC 2528, there was a proceeding relating to the validity of powers of attorney executed by Rajinder Kaur Singh. The PGT proposed that the court consider appointing section 3 counsel for Rajinder. One of Rajinder’s children also requested that section 3 counsel be appointed. One of her other children, Anney, took the position that section 3 counsel was not necessary and raised a concern with the expense of appointing counsel, which cost would be borne by Rajinder.
The court concluded that this was an appropriate situation for the appointment of section 3 counsel. In coming to this conclusion, the court considered the purpose of the SDA, which is to protect the vulnerable. As noted by Justice Strathy, as he then was, in Abrams v Abrams,  O.J. No. 5207, proceedings under the SDA do not seek to balance the interests of the litigants, “but the interests of the person alleged to be incapable as against the interest and duty of the state to protect the vulnerable.” Section 3 is just one of the provisions of the SDA that demonstrate the care that must be taken to protect the dignity, privacy, and legal rights of the individual.
The court in Singh v Tolton also noted that the material before it disclosed a family at odds regarding Rajinder’s personal care. In a situation such as this, there may be a concern that the wishes or best interests of the person whose capacity is in issue will be lost amidst the fighting family members. Section 3 counsel can serve a crucial function in these types of circumstances, by sharing the person’s wishes and instructions with the court.
Thanks for reading,
You may also enjoy these other blog posts:
Recent discussion of proposed amendments to the Succession Law Reform Act under Bill 245 has raised questions of whether corresponding changes will be made to the Substitute Decisions Act, 1992. In particular, some estate lawyers are wondering whether a new validation section may be added to the Substitute Decisions Act to address the issue of court validation of powers of attorney (like the new section 21.1 of the Succession Law Reform Act has been proposed to allow courts to validate improperly-executed wills) and/or whether remote execution options may soon be made permanent for powers of attorney as well as wills.
The Substitute Decisions Act already contains curative provisions that allow the court to validate incapacity planning documents in circumstances where the documents are not executed in strict compliance with formal requirements.
Subsection 10(4) of the Substitute Decisions Act reads as follows with respect to the validation of Continuing Powers of Attorney for Property:
(4) A continuing power of attorney that does not comply with subsections (1) and (2) is not effective, but the court may, on any person’s application, declare the continuing power of attorney to be effective if the court is satisfied that it is in the interests of the grantor or his or her dependants to do so.
Subsection 48(4) of the Substitute Decisions Act reads as follows with respect to the validation of Powers of Attorney for Personal Care:
(4) A power of attorney for personal care that does not comply with subsections (1) and (2) is not effective, but the court may, on any person’s application, declare the power of attorney for personal care to be effective if the court is satisfied that it is in the grantor’s interests to do so.
Remote Execution of Documents in Counterpart
While the focus of discussions among estate lawyers regarding Bill 245 may be the proposed updates to the Succession Law Reform Act and, in terms of formal will execution, the amendment of section 4 as it relates to the requirements for the witnessing of wills, Bill 245 also includes proposed changes to the Substitute Decisions Act under Schedule 8.
A new section 3.1 of the Substitute Decisions Act is being proposed to add specific references to the use of audio-visual communication technology and counterpart signing options in the execution and witnessing of Continuing Powers of Attorney for Property and Powers of Attorney for Personal Care. Accordingly, if Bill 245 is passed, the remote and counterpart execution options made available during the pandemic will be made permanent for wills and powers of attorney alike.
Thank you for reading.
The basic limitation period under section 4 of the Limitations Act, 2002 provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. However, pursuant to section 7(1) of the Act, the “clock” does not run when the person with the claim,
(a) is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and
(b) is not represented by a litigation guardian in relation to the claim.
A person is also presumed to be capable of commencing a proceeding in respect of a claim at all time unless the contrary is proved (section 7(2)), although minors are dealt with separately under section 6 of the Act.
The issue of the plaintiff’s capacity to commence a proceeding in respect of his claim was considered at length by the Court of Appeal in Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447. Carmichael is a tragic case involving the murder of the plaintiff’s 11 year old son. The plaintiff strangled his son to death in 2004 when he was suffering from mental illness and psychotic delusions. During this time, the plaintiff was also taking an anti-depressant that was manufactured by the defendant drug company. The plaintiff was charged with murder and he was found to be not criminally responsible as a result of his mental disorder. He later received an absolute discharge from the Ontario Review Board on December 2, 2009. Nearly two years after that, the plaintiff commenced his claims against the drug company on October 5, 2011.
The defendant drug company brought a motion for summary judgment to dismiss the plaintiff’s claim as statute barred. The motions judge dismissed the motion because he found that the plaintiff was incapable of commencing a proceeding because of his psychological condition until the day of his absolute discharge from the Ontario Review Board. The Court of Appeal disagreed.
The Court of Appeal affirmed the use of the Huang/Hengeveld indicators as a list of non-exhaustive, objectively verifiable indicators of incapacity under section 7(1)(a) of the Act (see paras. 94-96):
- a person’s ability to know or understand the minimum choices or decisions required to make them;
- an appreciation of the consequences and effects of his or her choices or decisions;
- an appreciation of the nature of the proceedings;
- a person’s ability to choose and keep counsel;
- a person’s ability to represent him or herself;
- a person’s ability to distinguish between the relevant and irrelevant issues; and,
- a person’s mistaken beliefs regarding the law or court procedures.
Moreover, the plaintiff’s physical, mental, or psychological condition must be the cause for the incapacity in order to meet section 7(1)(a). The incapacity cannot arise from other sources, such as lack of sophistication, education, or cultural differences (para. 101).
The Court of Appeal ultimately found that the plaintiff had the capacity to sue the defendant drug company prior to his absolute discharge from the Ontario Review Board. The Court disagreed with the motions judge’s view of the plaintiff’s expert evidence. The plaintiff’s expert witness was criticized for never having prepared a capacity assessment before and for making conclusions that were unsupported by the evidence. Rather,
“The evidence shows that Mr. Carmichael had several reasons for not suing GSK before December 2, 2009: he did not believe he had the necessary expert evidence until he received the genetic test from Dr. Lucire in October 2009; he was worried about repercussions if the Hospital decided that he was not taking responsibility for his actions; and he was concerned for his own and his family’s well-being. These are understandable reasons for not commencing a lawsuit. But in my view, none of these reasons, alone or together, prove that Mr. Carmichael was incapable of suing GSK until December 2, 2009 because of his psychological condition.” (para. 163)
Leave to appeal to the Supreme Court of Canada was denied last week.
Thanks for reading!
The Consolidated Practice Direction Concerning the Estates List in the Toronto Region was established for the hearing of certain proceedings involving estate, trust and capacity law, applying to matters on the Estates List in the Toronto Region.
As of March 9, 2021, Part VII (Contested Matters – Estates) of this practice direction was amended to make reference to model orders prepared by the Estate List Users’ Committee.
Generally, parties are expected to take the time and care to prepare proposed orders giving directions for consideration by the court. If the parties are unable to agree upon an order giving directions and a contested motion for directions is required, each party must file a copy of the draft order giving directions it is seeking with its motion materials.
In addition to providing requirements for what orders giving directions should address, where applicable, this practice direction now includes the following model orders:
- Order Giving Directions – Appointment of Section 3 Counsel
- Order Giving Directions – Power of Attorney/Guardianship Disputes
- Order Giving Directions – Will Challenge
- Order Giving Directions – Dependant’s Support
- Order Giving Directions – Passing of Accounts
As noted in the practice direction, the preparation of draft orders for consideration by the court will greatly expedite the issuance of orders. Where the relevant model orders have been approved by the Estate List Users’ Committee, a copy of the draft order showing all variations sought from the model order must be filed.
The addition of model orders can greatly benefit the Estates List in the Toronto Region. Among other things, these model orders provide a baseline for all parties, such that it can significantly reduce drafting time and potential disagreements on wording among parties, which in turn can increase efficiency and reduce costs.
Many thanks to the Estate List Users’ Committee for their time and efforts in preparing these model orders!
Thank you for reading.
Plan Well Guide’s Toolkit for Legal Practitioners: Helping You Help Your Clients Plan for Incapacity
Last year, my colleague Nick Esterbauer blogged about the Plan Well Guide – a free online tool to assist individuals with their advance care planning. An advance care plan sets out how a person wishes to be treated during a serious illness or health crisis. The Plan Well Guide helps users to create a ‘Dear Doctor’ Letter explaining their values and preferences with respect to their future medical care, which can then be given to their physician and substitute decision-makers to ensure that their wishes are known. For a more in-depth look at the Plan Well Guide and the process of creating a Dear Doctor letter, you can read Nick’s blog here.
Recently, the Plan Well Guide launched a new toolkit designed for legal practitioners. This free online toolkit is intended to help lawyers help their clients become better prepared for future serious illness and incapacitation. In addition to various educational resources for both lawyers and their clients, the toolkit includes:
- a sample power of attorney for personal care;
- a sample advanced health care directive;
- a sample personal directive;
- a sample ‘Dear Doctor’ letter; and
- a step-by-step guide on how lawyers can incorporate the Plan Well Guide into their practice.
Of course, the sample legal documents contained in the toolkit should be amended to reflect the client’s specific set of circumstances and the laws of the applicable jurisdiction.
What I like most about the Plan Well Guide’s new toolkit is that it highlights the importance of a multidisciplinary approach to advance care planning. An effective advance care plan – that is, a plan which facilitates medical substitute decision-making that is consistent with the incapable person’s actual values and preferences – depends on the collaborative efforts of a person’s lawyers, doctors, and substitute decision-makers. The Plan Well Guide and its new toolkit offer accessible ways for legal professionals, health care professionals, and their clients/patients to coordinate their efforts to make serious illness planning more effective. If a lawyer is interested in improving the quality of future medical decision-making and patient outcomes for their clients, the Plan Well Guide’s toolkit for legal practitioners is certainly worth looking into.
Thanks for reading!
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: