Category: Guardianship

12 Sep

Section 2(4) of the Substitute Decisions Act: Releases and Reverse Onuses

Sydney Osmar Capacity, Guardianship Tags: 0 Comments

Under the Substitute Decisions Act, 1992 (“SDA”), if a person is eighteen years of age or more, there is a presumption of capacity. However, pursuant to section 2(4) of the SDA, if a gift, or contract is made by a person either while the person’s property is under guardianship, or within one year before the guardianship is established, the onus shifts to the other person to prove that they did not have reasonable grounds to believe the person incapable.

In the recent decision of the Ontario Superior Court of Justice (Divisional Court), Foisey v Green, the Court provides clarification on the correct test to be applied under section 2(4).

In Foisey v Green, Ms. Foisey and Ms. Green were the co-beneficiaries of their brother’s estate, who had died intestate. Ms. Foisey and Ms. Green had been estranged for many years, however, through the use of a private investigator, Ms. Green was able to locate her sister at a retirement residence in Ontario. Ms. Green then met with her sister and arranged for legal representation. Ms. Foisey ultimately renounced her right to act as estate trustee of her brother’s estate and when the time came to distribute the assets of the estate, Ms. Foisey provided Ms. Green with a release.

Shortly after having provided the release, Ms. Foisey was found to be incapable of managing her own property, and the Public Guardian and Trustee (“PGT”) was appointed as her guardian of property. The PGT became concerned that Ms. Foisey had received significantly less than what was supposed to be a 50% share in the estate. The PGT made repeated inquiries for more information from Ms. Green and her counsel, but received little to no response. In result, the PGT brought an application seeking to compel Ms. Green to pass her accounts.

In applying section 2(4) of the SDA, the application judge concluded that because of the existence of red flags, Ms. Green had not satisfied that she did not have reasonable grounds to believe Ms. Foisey was incapable when she signed the release. The red flags identified by the application judge included the fact that Ms. Foisey had a long-standing mental illness, that Ms. Foisey lived in a retirement residence, that Ms. Foisey was part of a trusteeship program and that Ms. Green and her lawyer had failed to provide the PGT with any information to satisfy their concerns. For these reasons, the application judge ordered Ms. Foisey to pass her accounts.

On appeal, the Divisional Court held that the “red flags” test applied by the application judge was the incorrect test to apply, because in doing so, the judge failed to consider the extent to which each red flag was known by Ms. Green, and whether Ms. Green had reasonable grounds to believe that Ms. Foisey was incapable of providing the release.

The Divisional Court examined the meaning of “reasonable grounds to believe” looking to jurisprudence and dictionary definitions, concluding that it means a reasonable probability, or that there be an objective basis for the belief which is based on compelling and credible information.

The Divisional Court went on to hold that when assessing whether a person has capacity to enter into a contract, at the time of entering into the contract, they must understand the information relevant to deciding whether or not to enter into the contract. If they can do this, you must further ask if the person can appreciate the reasonably foreseeable consequences of entering into the contract.

After laying out the framework of section 2(4), the Divisional Court went on to consider the red flags identified by the application judge, holding that:

  • there was no evidence to suggest Ms. Green knew of her sister’s mental illness,
  • no one from the retirement residence suggested that Ms. Foisey was incapable,
  • Green had spoken with the case manager of the trusteeship program and had not been told that Ms. Foisey had severe mental health difficulties,
  • There was evidence from Ms. Green’s lawyer that Ms. Foisey had legal representation, and appeared to be lucid and understood the release that was properly explained to her by counsel. The Court further acknowledged that a person who suffers from a cognitive impairment is competent with respect to a specific act as long as the act in question takes pace during a lucid interval.

On balance, the Divisional Court concluded that the application judge erred in pointing to “red flags” without addressing what was actually known by Ms. Green, and whether or not that knowledge would lead to reasonable grounds to believe that Ms. Foisey lacked capacity to enter into the release. The Court noted that the most alarming of red flags was the failure of Ms. Green and her lawyer to provide the PGT with information to address his concerns. However, the Court found that the lack of cooperation of Ms. Green and her counsel was not relevant to whether or not Ms. Green had reasonable grounds to believe Ms. Foisey incapable, and, it occurred many months after the execution of the release.

In reaching this conclusion, the Court noted that there is nothing inherently unusual or sinister about an estate trustee requesting a release from a beneficiary – such releases have been commonly used by estate trustees for decades.

Thanks for reading!

Sydney Osmar

 

20 Aug

Parties to Bear Their Own Costs of a Contested Guardianship

Doreen So Capacity, Continuing Legal Education, Elder Law, General Interest, Guardianship, In the News Tags: , , , , 0 Comments

There was a recent decision of the Ontario Superior Court of Justice on the issue of costs in a contested guardianship proceeding.  Rather unusually, the endorsement in Howard Johnson v. Howard, 2019 ONSC 4643, dealt with the issue of costs after the parties have resolved the main dispute on consent.

In this case, there were two competing guardianship applications over Elizabeth.  The applicants on the one hand were Elizabeth’s daughter and son, Marjorie and Griffin, and on the other hand, Elizabeth’s other son, Jon.  All three of Elizabeth’s children were of the view that their mother was in need of a substitute decision maker for both the management of her property and for personal care.

While the endorsement does not specify who the competing applicants were seeking to appoint as Elizabeth’s guardian, the parties eventually settled on the appointment of CIBC Trust Corporation as Elizabeth’s guardian of property and all three children as Elizabeth’s guardians of personal care.  On the issue of costs, Marjorie and Griffin sought full indemnity costs from Jon while Jon sought substantial indemnity costs from Majorie and Griffin or, in any event, that he be indemnified by Elizabeth for any amounts not recovered from his siblings.

Pursuant to section 3 of the Substitute Decisions Act, 1992, Elizabeth was represented by counsel throughout the proceeding and on the issue of costs.  Submissions were made on Elizabeth’s behalf that she should not have to pay costs of the other parties or the outstanding balance of an invoice that was purportedly incurred by Elizabeth in a joint retainer with Jon.

The Court in this instance considered the modern approach to costs in estate litigation as set out in McDougald Estate v. Gooderham,  2005 CanLII 21091 (ON CA), with respect to Jon’s claim that Elizabeth ought to be responsible, at least in part, for his costs.  The court relied on D.M. Brown J.’s (as he was then) comments that the discipline imposed by the “loser-pays” approach to estate litigation applies with equal force to matters involving incapable persons citing Fiacco v. Lombardi, 2009 CanLII 46170 (ON SC).  Only costs incurred for the best interests of the incapable person could be justified as costs payable from the incapable’s assets.

In this case, the competing applications of the siblings were found to contain a number of ancillary issues beyond that of the appointment of a substitute decision maker for Elizabeth.  The Court was ultimately unable to see how Elizabeth would have derived any benefit from her children’s disputes.  Therefore, the children were all ordered to bear their own costs.  There was also no clear benefit to Elizabeth from the invoice that was issued to her prior to the appointment of section 3 counsel and Jon was ultimately left to pay that balance.

At the end of the day, the only costs borne by Elizabeth, as the incapable person subject to two competing guardianship applications, were the costs of section 3 counsel pursuant to the section 3(2) of the SDA.

Here is a Bon Appetit recipe for a frozen margarita pie that we could all benefit from.

Doreen So

02 Jul

Attorney for Personal Care Denied Request for Accounting

Noah Weisberg Guardianship, Passing of Accounts, Power of Attorney Tags: , , , , , , , , , , , 0 Comments

The recent Ontario Court of Appeal decision in Dzelme v Dzelme acts as a helpful reminder that even if an attorney has standing to seek a passing of accounts, the Court may still refuse to grant the passing.

John was named as the attorney for personal care for his father, Ritvers, and sought an accounting of Ritver’s financial affairs from his brother Arnis (Ritvers’ other son) who was the attorney for property.  Both John and Arnis agreed that John, given that he was an attorney for personal care, could apply under section 42(4)(1) of the Substitute Decisions Act for a passing of accounts without leave.  Nonetheless, the Court of Appeal identified that even if a person has standing to apply for an accounting, it remains the discretion of the Court to order a passing of accounts.

In deciding whether to order the passing, the superior court judge made the following findings of fact: (i) both the father and mother were capable when they executed written instructions to Arnis not to produce any financial information about his affairs to John; (ii) the mother maintained this position in response to John’s motion; (iii) a capacity assessment found that the mother was capable of making her own decisions; (iv) a third brother corroborated Arnis’ evidence that he was abiding by his parent’s wishes; (v) the application judge did not doubt that Arnis was following his mother’s wishes; and, (vi) there was no reason to suspect that Arnis was acting improperly with respect to certain transactions.

On this basis, the Court of Appeal upheld the application judge’s dismissal of John’s request for an order that Arnis pass his accounts of Ritver’s property.

Noah Weisberg

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23 Oct

Can a Guardian Settle a Trust?

Noah Weisberg Capacity, Estate Planning, Ethical Issues, Guardianship, Power of Attorney Tags: , , , , , , , , , , , 0 Comments

Does an attorney, or guardian, have the power to change a grantor’s estate plan?

According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.

The statute, however, is deceptively simple.  Can a guardian transfer property into joint tenancy?  Can a guardian sever a joint tenancy?  Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy?  Can an inter vivos trust be established or an estate freeze undertaken to save taxes?  There are numerous cases which have tested these issues.

For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.

The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys.  The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will.   However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act.  The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.

Justice Cullity stated:

“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor .  This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”

Noah Weisberg

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22 Oct

Fiduciary Accounts – Yes, Form Matters

Noah Weisberg Executors and Trustees, Guardianship, Passing of Accounts, Power of Attorney Tags: , , , , , , , , 0 Comments

In the Estate of Divina Damm the Court answers the following question – what form of accounts must a guardian of property use when filing an application to pass accounts?

The facts in Re Damm Estate are not remarkable.  A guardian of property commenced an application to pass accounts in accordance with Rule 74.18 of the Rules of Civil Procedure seeking court approval of her accounts.  No objections arose with respect to the accounts, such that the guardian proceeded to file the application ‘over the counter’ as an unopposed application to pass accounts.

Notwithstanding that there were no objections, the Court refused to approve the accounts.  The Court was concerned with the lack of detail and itemization in the entries, as well as the failure to comply with Rule 74.17.  The judge tried to “…link all numbers listed in the draft judgment with information presented in the accounts but [was] unable to do so – because the accounts are not in proper form”.

Interestingly, the judge considered whether smaller estates should be permitted to file accounts in a simple format, but noted that it was for the Legislature and the Rules Committee to consider.

Accordingly, the Court directed the guardian to re-serve and re-file the accounts prepared in compliance with Rule 74.17.

Noah Weisberg

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11 Oct

The Importance of Filing Comprehensive Management Plans

Nick Esterbauer Guardianship Tags: , , , , , , , 0 Comments

A decision released earlier this week highlights the importance of a complete Management Plan supported by evidence when seeking one’s appointment as guardian of property.

Sometimes, the necessity of filing a Management Plan is viewed as a formality without proper attention to the details of the plan.  However, the failure to file an appropriate Management Plan may prevent the appointment of a guardian of property, putting the administration of the incapable’s property in limbo.

In Connolly v Connolly and PGT, 2018 ONSC 5880 (CanLII), Justice Corthorn declined to approve of a Management Plan filed by the applicant and, accordingly, refused to appoint her as guardian of property.  The Management Plan was rejected for the following reasons (among others):

  • it did not address an anticipated increase in expenses over time (including when the applicant was no longer available to serve as the incapable’s caregiver and he may incur alternate housing costs);
  • there was no first-hand evidence from BMO Nesbitt Burns or Henderson Structured Settlement with respect to the net settlement funds in excess of $1.4M and their payout and investment in a portfolio on the incapable’s behalf;
  • the Court was concerned that stock market volatility could threaten to deplete the invested assets;
  • the Public Guardian and Trustee had strongly recommended that the applicant post security, the expense of which was reflected as a deduction from the incapable’s assets (while not suggested that this was unreasonable, Justice Corthorn took issue with the absence of any case law or statutory provision cited by the applicant in support of the payment of the expense by the incapable rather than the applicant herself); and
  • while the applicant had agreed to act as guardian without compensation, the plan did not contemplate how compensation would be funded if claimed by a potential successor guardian.

Notwithstanding that neither the incapable nor the Public Guardian and Trustee had opposed the Management Plan or the appointment of the applicant as guardian of property, Justice Corthorn found that the appointment of a guardian to manage over one million dollars in settlement funds was “contentious” and, accordingly, under Rule 39.01(5) of the Rules of Civil Procedure, direct evidence from a representative of the financial institution was required.  In short, although the applicant was accepted as being a suitable candidate for appointment as guardian of property (and it was anticipated by the Court that she would ultimately be appointed), the Court was not satisfied on the evidence available that the management of the incapable’s property in accordance with the contents of the Management Plan was consistent with the man’s best interests.

While Justice Corthorn declared the individual respondent incapable and in need of assistance by a guardian of property, Her Honour adjourned the balance of the matter, suggesting that the applicant’s appointment as guardian of property could be revisited once additional evidence was filed in support of the contents of the Management Plan and/or the plan was further revised.

Thank you for reading.

Nick Esterbauer

 

Other blog entries and podcasts that may be of interest:

02 Oct

Full Indemnity through Blended Costs: The Estate of Irmgard Burgstaler

Doreen So Elder Law, Guardianship, Passing of Accounts, Trustees, Uncategorized Tags: , , , , , 0 Comments

The Estate of Irmgard Burgstaler (disability), 2018 ONSC 472, was a costs decision that arose from an application to pass attorney accounts.  Erwin  was named as the attorney for property for his mother, Irmgard.  Erwin was ordered to pass his accounts and his siblings, Barbara and Peter, objected.

A four-day hearing took place.  Erwin was self-represented and his accounts were not in court format pursuant to Rule 74.17 of the Rules of Civil Procedure.  Extensive written submissions were also filed by both sides.

Erwin was found to have breached his fiduciary duty to Irmgard when $82,000.00 was taken from Irmgard and applied towards the purchase of a home in Erwin’s name.  Erwin also took approximately $44,000.00 from his mother’s accounts to pay his legal fees in the proceeding at issue and the Court found that this expense was not for Irmgard’s benefit.  Certain other expenses were ordered to be repay to Irmgard as well as the repayment of $5,000.00 from the sale of Irmgard’s trailer.

Given their success, the Objectors sought full indemnity on a blended basis from Erwin (15%) and the Estate (85%).  In reviewing the jurisprudence on costs in estate matters, Justice Shaw found that this case fell within the public policy exemption for due administration of estates and allowed the Objectors’ claim for full indemnity.

That said, Justice Shaw disagreed with the Objectors’ proposed 15/85 split on the basis of the “losers pay” principle in general civil costs.  Justice Shaw ordered Erwin to pay the Objectors’ costs on a partial indemnity scale while the Estate was ordered pay the full remaining balance.  In this case, partial indemnity appears to be close to 70% of the total claimed based on the fixed amounts that were ordered.

Thanks for reading!

Doreen So

28 Sep

Temporary Guardians of Property

Paul Emile Trudelle Estate Planning, Guardianship, Power of Attorney Tags: , , 0 Comments

The court has the authority under the Substitute Decisions Act to appoint a guardian for property. However, does the court have the authority to appoint a temporary guardian for property? According to the decision in Ballinger v. Marshall, 2018 ONSC 3020, the answer is Yes.

In Ballinger, Ms. Marshall’s son applied for a declaration that Ms. Marshall was incapable of managing property and personal care, and for an order appointing himself as her guardian for property and personal care.Capacity Assessment

In an interim order, the court ordered that Ms. Marshall be assessed. The court also ordered that counsel be appointed by the Public Guardian and Trustee to represent Ms. Marshall (“s. 3 counsel”).

Ms. Marshall refused to be assessed. A further motion was brought to compel Ms. Marshall to be assessed, which order was granted. Still, Ms. Marshall still refused to be assessed.

The court considered s. 25 of the Substitute Decisions Act, which sets out what may be contained in an order appointing a guardian. Section 25 provides that an order appointing a guardian for a person must include a finding that the person is incapable of managing property. Further, the court may make the appointment for a limited period as the court considers appropriate, and impose such conditions as the court considers appropriate.

The court held that this gives the court jurisdiction to make a temporary order. Support for this was found in the Divisional Court decision of Bennett v. Gotlibowicz, 2009 CanLII 33031 (ON SCDC).

In Bennett, a court-ordered assessment concluded that the person was incapable. In Marshall, there was no such assessment evidence: due to Ms. Marshall’s refusal to undergo an assessment. The court was, however, able to rely on the son’s observations with respect to his mother’s behavior to come to a conclusion that, on a balance of probabilities, Ms. Marshall did not have capacity to manage her property.

The son was appointed as guardian. However, the guardianship was only a temporary one, until:

  • Ms. Marshall participates in a capacity assessment and the capacity assessment is returned to the court for consideration;
  • the matter is returned to the court for further directions; or
  • November 15, 2018.

The court also gave specific direction with respect to what the guardian could do with Ms. Marshall’ property. He was to sell her house, and pay her debts. The proceeds of the sale, after the payment of debts, was to be held in a law firm’s trust account pending the further order of the court. The son had proposed that an affordable condominium be purchased for Ms. Marshal as alternative accommodation. However, the court did not allow for this, stating that “I believe that it is best that this process proceed slowly”.

Have a great weekend.

Paul Trudelle

27 Aug

Predatory Marriages: A Growing Concern in Ontario

Kira Domratchev Capacity, Elder Law, Estate & Trust, Estate Planning, Guardianship, Litigation, Power of Attorney, Wills Tags: , , , , , , , 0 Comments

We sometimes hear about an elderly person marrying a much younger person. What we often do not consider, however, is the possibility that such a marriage is entered into by a “predatory” spouse in order to take advantage of an elderly victim with the ultimate goal of assuming control of his or her finances.

The “predator” is often a caregiver or a family friend or neighbour. In most cases, it is a person who uses a position of trust to cause an elderly victim to change a Will, a power of attorney, an insurance policy designation or other documents. It is also not uncommon for inter vivos transfers to be made while the senior is alive.

According to Ontario law, the act of marriage grants the new spouse certain property rights, specifically with respect to the matrimonial home and spousal support. The most significant effect of a marriage, however, is the fact that the Succession Law Reform Act, revokes any Will executed prior to the marriage. To make matters worse, predatory marriages often occur in private such that the senior’s family members are not aware that he or she has married.

The evidentiary burden imposed upon the elderly victim’s adult family members to prove that a marriage should be declared void as it is a marriage of a “predatory” nature is significant.

Why is it so tough to show that a marriage is void?

Capacity is a fluid concept. It means that a person could have capacity for one task and no capacity for another, as capacity is time and situation specific. Capacity to enter into a marriage, is the lowest threshold of capacity. As such, a person can be entirely capable to enter into a marriage but may be incapable of managing his or her own financial affairs.

In addition, a person likely does not just lose capacity in a day; it is a gradual process such that there is a “grey zone” between having capacity and having no capacity at all. It is in that “grey zone” that a predator will take advantage because a person may start forgetting things but is otherwise capable for all intents and purposes.

Because of that, many are of the opinion that Ontario laws make seniors an easy target for “predatory marriages”. Will there be a change in the law coming our way, in light of the growing phenomenon of such marriages? Only time will tell.

For more information regarding this growing concern and the manner in which this issue has been treated by the courts, please see a paper by Kimberly Whaley of WEL Partners on Predatory Marriages.

Thanks for reading.

Kira Domratchev

26 Jul

Who is the Ontario Children’s Lawyer?

Doreen So Continuing Legal Education, Estate & Trust, General Interest, Guardianship, Litigation Tags: , , , , , , , 0 Comments

The Ontario Court of Appeal recently considered the issue of whether the litigation files of the Office of the Children’s Lawyer are subject to a freedom of information access request in Ontario (Children’s Lawyer) v. Ontario (Information and Privacy Commissioner), 2018 ONCA 599.  This appeal arose from a father’s request for the production of the Children’s Lawyers’ records.  The Children’s Lawyer acted for the father’s children in the course of a custody and access dispute.  Accordingly, a portion of the Children’s Lawyer’s records were privileged.

Justice Bennotto, in writing for a unanimous panel, found that the issue turned on whether the records are “in the custody or under the control” of the Ministry of the Attorney General for Ontario (“MAG“) for the purposes of the Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. F. 31.

The answer was no.

 

The Children’s Lawyer’s records are not in the custody or under the control of MAG because she operates separately and distinctly from MAG and,

“[68]     [she] is an independent statutory office holder appointed by Cabinet through the Lieutenant Governor. She derives her independent powers, duties and responsibilities through statute, common law and orders of the court.

[…]

[72]      To allow a disgruntled parent to obtain confidential records belonging to the child would undermine the Children’s Lawyer’s promise of confidentiality, inhibit the information she could obtain and sabotage her in the exercise of her duties. This would, in turn, impact proceedings before the court by depriving it of the child’s voice and cause damage to the child who would no longer be meaningfully represented. Finally, disclosure to a parent could cause further trauma and stress to the child, who may have divided loyalties, exposing the child to retribution and making the child the problem in the litigation.”

For those practising in the estates and trusts context, it is important to note that the role of the Children’s Lawyer is different in family law.

In civil matters that implicate a minor’s financial interest in property, the Children’s Lawyer acts as the minor’s litigation guardian and she is represented by the lawyers of her choice.  In custody and access disputes, the Children’s Lawyer acts, at the request of the court, as the minor’s lawyer.

Bonus answer: the current Children’s Lawyer is Marian Jacko.

Thanks for reading this week!

Doreen So

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