Tag: financial abuse
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.
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The answer is no in Ontario. Currently, only a limited number of Canadian provinces (Quebec, New Brunswick, Nova Scotia, and Saskatchewan) will allow a policy holder to sell his/her insurance policy to a third party.
Life insurance policies are commonplace in Canada. A life insurance policy is a contract with the insurance company and it is a contract to pay out a sum of money upon the death of the life insured. While most people may be content to maintain their life insurance policy, as is, until their death, those who are in need of cash during their lives may wish to sell the policy for a present-day payout while the purchaser maintains the premiums (and any other obligations to the insurance company) in exchange for the payout on the death. The sale of a life insurance policy by the policy holder is also known in the industry as a “life settlement”.
According to Tyler Wade’s article on ratehub.ca, the practice of selling one’s own insurance policy was popularized in the U.S. when investors saw the AIDS epidemic in the 1908’s as an opportunity where they could offer those suffering from AIDS a payout during their lifetime in exchange for the death benefit in their policies believing, then, that this group of individuals had a shorter life span. The vulnerability of the individuals within this market group and the potential for financial abuse are often cited as the reasons why life settlements ought to be prohibited for public policy reasons.
In Ontario, life settlements are prohibited under section 115 of the Insurance Act, as follows:
“Trafficking in life insurance policies prohibited
115 Any person, other than an insurer or its duly authorized agent, who advertises or holds himself, herself or itself out as a purchaser of life insurance policies or of benefits thereunder, or who trafficks or trades in life insurance policies for the purpose of procuring the sale, surrender, transfer, assignment, pledge or hypothecation thereof to himself, herself or itself or any other person, is guilty of an offence.”
In 2017 and 2018, there was an attempt to legalize life settlements by amending section 115 (through Bill 162) and by amending the Act to allow third-party lenders to use life insurance policies as collateral (through Bill 20). Both Bills received opposition from non-profit groups like the Canadian Life and Health Insurance Association due to the potential for financial abuse and section 115 of the Act has remained as is in Ontario.
While it is difficult to comment on how the potential for financial abuse can be mitigated by implementing countermeasures, it is unfortunate that Ontarians have limited options once the policy is in place.
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Financial elder abuse can take many forms. We have previously blogged about elder abuse by family members, as well as the role technology plays in the increase in phone and email scams affected seniors.
This Global News article tells the story of an elderly couple who claim they were pressured into selling their house.
The couple had lived in their home in Woodbridge, Ontario, for over 20 years, and had no plans to move or sell their home. Although the house was not for sale, in February 2012, a real estate agent showed up at the couple’s door with an offer to purchase the home. There is some dispute about the subsequent interactions between the couple and the agent, but ultimately, a contract was signed for the sale of the couple’s home. After seeking advice from a lawyer, the couple refused to close on the sale of the home. The buyer brought a claim against the couple to enforce the contract, and it appears from the article that, as of October 2018, the litigation remained ongoing.
The couple say that, initially they ignored the offer to purchase that had been delivered by the real estate agent. The husband told his daughter that he had asked the agent several times to give him a few days to consult with his children before finalizing any deal. On the other hand, the agent says that negotiations occurred over a three-day period, and the couple had several days to consider the offer and consult with their children.
There is also a question of whether the couple was capable of entering into the sale transaction. The couple’s daughter says that the wife was 84 years old at the time and suffering from early onset dementia, and that the husband was not fluent in English.
The couple’s daughter believes that her parents were pressured into agreeing to sell their home by the agent. The article mentions that a similar situation could come up with any door-to-door salesperson, as elderly people are generally home during the day, and will typically open their door and talk to people. Unfortunately, there isn’t really a simple solution if an older adult is pressured into an agreement. If the other party to the agreement is intent on enforcing it, the senior may need to resort to failing to comply with the terms of the contract, which is likely to lead to litigation. That can be a stressful and time-consuming endeavour—the couple in the article are apparently still involved in litigation years after the contract was entered into.
Incidents like these are an unfortunate reminder that elder abuse continues to be an issue, and that it can take many forms. That being said, with increased attention will come increased awareness, which, I hope, will lead to the prevention or avoidance of similar issues in the future.
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Other blog posts that may be of interest:
The Retirement Homes Regulatory Authority was established in 2010 by the Ontario government under the Retirement Homes Act, 2010, S.O. 2010 Chapter 11 (the “Act”), and acts as a licensing body for retirement homes in Ontario.
The fundamental principle of the Act is to ensure that a retirement home is “operated so that it is a place where residents live with dignity, respect, privacy and autonomy, in security, safety and comfort and can make informed choices about their care options.”
Section 67 of the Act states:
- (1) Every licensee of a retirement home shall protect residents of the home from abuse by anyone.
(2) Every licensee of a retirement home shall ensure that the licensee and the staff of the home do not neglect the residents
Section 67 encompasses financial abuse as well. According to Regulation 166/11 of the Act, financial abuse is defined as “any misappropriation or misuse of a resident’s money or property.” Pursuant to the Act, a licensee must establish a trust fund if they are in charge of money from a resident; however, the Act is silent with respect to loans between a resident and the licensee.
Due to the normal process of aging, financial decision-making ability naturally declines and, as such, it is important that places of trust, such as retirement homes, avoid situations that may lead to financial abuse. Residents of a retirement home are dependent on the operator of the home for housing, safety and care. This dependency creates an expectation of trust between the staff and the residents. Moreover, many elderly individuals may lack mobility, suffer from visual impairment, or may not have family that comes and visits them, resulting in more of an increased attachment or trusting relationship with individuals at the residence.
Where a retirement home resident is competent, the issue of whether financial abuse exists will depend on the circumstances surrounding the home. For example, it is a possibility that a perfectly competent retirement home resident may have a friendship with a staff member of the residence, and desire to give them a monetary loan or gift as a sign of friendship.
It is important not to assume that every case of an elderly person in a residence providing a loan to staff is financial abuse, as assuming vulnerability in adults may lead to paternalism. Furthermore, pursuant to the Quebec case of Quebec (Commission des droits de la personne et des droits de la jeunesse) v. N. (R.), 2016 CarswellQue 13351, there is a “need to balance the protection of aged persons against exploitation, on the one hand, and the scrupulous need to respect their autonomy in exercising their legal rights on the other hand.”
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