Tag: Guardian of Property

10 May

POA Self-Dealing Transaction was Set Aside: the Reasonably Necessary Test

Doreen So Capacity, Continuing Legal Education, Elder Law, Estate & Trust, Ethical Issues, Executors and Trustees, General Interest, Guardianship, Litigation, Power of Attorney Tags: , , , 0 Comments

Previously on our blog and podcast, we discussed Tarantino v. Galvano, 2017 ONSC 3535 (S.C.J.)  in the context of the counterclaim for quantum meruit and the costs decision of the Hon. Justice Kristjanson.

Tarantino v. Galvano arose from a lawsuit that was commenced by two out of three Estate Trustees against the third Estate Trustee, Nellie, with respect to her actions as attorney for property for the Deceased, Rosa (i.e. Nellie’s actions while the Deceased was still alive but incapable of managing her own property).

Rosa had two daughters, Nellie and Giuseppina.  Giuseppina died before Rosa.  Guiseppina’s daughters were the other two Estate Trustees and they are beneficiaries of the Rosa’s Estate along with Nellie.  For the better part of her life, Nellie lived with Rosa.  She took care of her mother after her father’s death.  Nellie and her son were also Rosa’s caregivers as Rosa’s health declined until Rosa’s death in 2012.

Rosa and Nellie owned the home that they lived in together.  Rosa held an 80.3% interest and Nellie held an 19.62% interest.  Pursuant to Rosa’s 2005 Will, Nellie had a right of first refusal to purchase the home from Rosa’s Estate.  In 2008, on the advice of counsel while Rosa was incapable, Nellie entered into an agreement between herself and Rosa.  The agreement provided for a transfer of Rosa’s interest in the home and 75% of Rosa’s pension income to Nellie in exchange for Nellie’s caregiving services.  The agreement was in writing and it was signed by Nellie.  Nellie signed for herself and for Rosa, in her capacity as Rosa’s attorney for property.

Even though the Court found that Nellie was a good daughter who held up her end of the bargain by caring for Rosa, the agreement was set aside because it was a self-dealing transaction that did not meet the requirements of the Substitute Decisions Act, 1992:

“[46]    Under the Substitute Decisions Act, Nellie could only enter into the agreement to transfer the house and pension income if it was “reasonably necessary” to provide for Rosa’s care, which I find it was not. As a fiduciary, an attorney for property is “obliged to act only for the benefit of [the donor], putting her own interests aside”: Richardson Estate v. Mew, 2009 ONCA 403 (CanLII), 96 O.R. (3d) 65, at para. 49. An attorney is prohibited from using the power for their own benefit unless “it is done with the full knowledge and consent of the donor”: Richardson Estate, at paras. 49-50. Rosa lacked capacity at the time of the Agreement, and the transfer of the house and pension income therefore were not done with Rosa’s full knowledge and consent.”

The “reasonably necessary” test was assessed, as of the time of the transfer, rather than from hindsight and it was determined that the decision to transfer 80.3% of a home and 80% of Rosa’s pension income at the outset of care was “an imprudent agreement which benefitted Nellie beyond that ‘reasonably necessary’ to provide adequately for Rosa’s care” (see paragraphs 34-49 for the Court’s analysis of this issue).

As a set off, Nellie’s quantum meruit claim was successful and you can click here for Ian Hull and Noah Weisberg’s podcast on this particular issue.  While there was blended success to all parties involved, none of the three Estate Trustees were entitled to indemnification.  Our discussion of the denial of costs can be found here and the Endorsement can be found here.

Thanks for reading!

Doreen So 

02 Apr

Alberta or British Columbia? Conflicts of Law Issues in a Guardianship Case

Kira Domratchev Capacity, Guardianship, Litigation Tags: , , , , , , , , , , , , , , , , , , , 0 Comments

The Court of Appeal of British Columbia (the “BCCA”) recently dealt with an appeal from an Order of the British Columbia Supreme Court which declined to exercise jurisdiction by staying a petition for guardianship of an incapable person. This Order also included various terms relating to the person’s care and property.

This appeal dealt with the guardianship of Ms. Dingwall, the mother of both the Appellant and the Respondent.

At all material times, Ms. Dingwall and the Appellant lived in Alberta and the Respondent resided in British Columbia. Between 2010 and 2014, Ms. Dingwall resided for various periods in both Alberta and British Columbia. At the time of this appeal, Ms. Dingwall lived in a care home in British Columbia. She suffered from advanced dementia.

The Alberta Proceedings

On February 5, 2015, the Appellant sought an Order from the Alberta Court of Queen’s Bench appointing him as Ms. Dingwall’s guardian and trustee. The Respondent opposed this Order and in September, 2015 filed an Application to move the proceedings to British Columbia. This Application was never heard and the matter continued to be heard in Alberta.

On July 7, 2016, the Court granted the Order sought by the Appellant which appointed him as Ms. Dingwall’s guardian and provided him with the authority to make decisions with respect to Ms. Dingwall’s health care, the carrying on of any legal proceeding not related primarily to Ms. Dingwall’s financial matters and Ms. Dingwall’s personal and real property in Alberta.

The British Columbia Proceedings

A few weeks prior to the Alberta hearing, the Respondent filed a petition with the Supreme Court of British Columbia seeking a declaration that Ms. Dingwall was incapable of managing herself or her affairs due to mental infirmity and an Order appointing her as committee of Ms. Dingwall’s person and Estate. The Appellant opposed the Respondent’s petition by arguing that the Supreme Court of British Columbia lacked jurisdiction.

The Supreme Court of British Columbia asserted jurisdiction because Ms. Dingwall was at the time of the decision, ordinarily resident in British Columbia and because there was a “real and substantial” connection to British Columbia. The Court found that, in this case, both Alberta and British Columbia had jurisdiction.

Despite British Columbia having jurisdiction in this case, the Court found that the Alberta forum was nonetheless more appropriate and cited the following factors in favour of its decision:

  • The similarity of the proceedings;
  • Alberta having issued a final order; and
  • The Respondent having attorned to Alberta’s jurisdiction by opposing the Appellant’s petition.

As a result, the Court stayed the Respondent’s petition but also made several Orders respecting Ms. Dingwall’s care and property. The parties’ costs on a “solicitor client basis” were to be payable by Ms. Dingwall’s Estate.

The Appellant appealed the following Orders made by the Court, other than the stay of the Respondent’s proceedings:

  • issuing an Order on the matter after declining to exercise jurisdiction respecting it;
  • finding the Court had territorial competence over the matter; and
  • awarding solicitor-client costs payable from Ms. Dingwall’s Estate.

The BCCA Decision

The BCCA allowed the appeal and found that the lower Court erred in making Orders concerning the very matter over which it had declined to exercise jurisdiction. The Court noted that a decision to decline jurisdiction over a particular matter renders a judge incapable of deciding issues or making orders as to the substance of that matter.

As a result, the Court set aside the Orders respecting Ms. Dingwall’s care and property. In light of that finding, the Court of Appeal found it unnecessary to deal with the issue of whether British Columbia had territorial competence over this matter, given that the lower Court declined to exercise jurisdiction, in any event.

The Court of Appeal found that the Appellant was entitled to special costs payable by Ms. Dingwall’s Estate and that the Respondent was not entitled to costs.

The full decision can be found here: Pellerin v. Dingwall, 2018 BCCA 110

Thanks for reading.

Kira Domratchev

01 Aug

“Special Parties” and Litigation Guardians in Family Law Proceedings

Umair Estate & Trust, Estate Planning, Guardianship, Litigation, Power of Attorney Tags: , , , , , , , 0 Comments

Where an incapable person is named as a party in a legal proceeding, the appointment of a representative is necessary to ensure that the person’s interests are adequately represented in the litigation.

Litigation Guardians in Civil Proceedings

Rule 7.01(1) of the Rules of Civil Procedure states that, unless the Court orders or a statute provides otherwise, a litigation guardian shall commence, continue or defend a proceeding on behalf of a “party under disability.” The Rules define “disability” to include a person who is mentally incapable within the meaning of sections 6 or 45 of the Substitute Decisions Act, 1992.

Rule 7 of the Rules of Civil Procedure provides additional guidance regarding litigation guardians in civil proceedings, including the powers and duties of a litigation guardian.

But what about parties who are under an incapacity and who are named as parties in a family law proceeding in Ontario?

“Special Parties” Under the Family Law Rules

In Ontario, the Family Law Rules apply to family law cases in the Superior Court of Justice’s Family Court, the Superior Court of Justice and the Ontario Court of Justice. The Family Law Rules provide guidance on the appointment of representatives for incapable persons in family law matters.

Rule 2 of the Family Law Rules defines a “special party” as a party who is a child or who is or appears to be mentally incapable for the purposes of the Substitute Decisions Act, 1992 in respect of an issue in the proceeding.

Pursuant to Rule 4(2), the Court may authorize a person to represent a special party if the person is appropriate for the task and willing to act as representative. If there is no appropriate person willing to act, the Court may authorize the Children’s Lawyer or the Public Guardian and Trustee to act as the representative.

Mancino v Killoran – More Than One Potential Representative

A recent decision illustrates the conflicts that may arise when more than one person believes that they are the most appropriate person to act as an incapable person’s representative in a family law proceeding.

In Mancino v Killoran, 2017 ONSC 4515, the Applicant asserted a claim for spousal support and for an interest in a property against the Respondent (“Michael”). Michael had been diagnosed with Alzheimer’s, and was a resident at a long-term care home. Michael’s sister (“Colleen”) and his son (“Allan”) both sought to represent Michael’s interests in the litigation, and filed affidavits in support of their positions.

Justice Gareau considered Michael’s power of attorneys and testamentary documents, which were executed at a time when Michael was still capable. Allan was named as Michael’s attorney for property and co-attorney for personal care. Allan was also named as the sole Estate Trustee of Michael’s Estate.

Justice Gareau held that “[t]he fact that Michael…, at a time when he had capacity, placed Allan… in a position of trust over his personal property and the administration of his estate indicates that he had confidence in Allan…to represent his best interests.” Michael’s sister Colleen was not named in any of Michael’s testamentary documents, which Justice Gareau found to be a “powerful and persuasive fact.”

The Court concluded that there was nothing in the evidence that would persuade the Court to depart from Michael’s express wishes regarding the management of his property. In the result, Allan was appointed to represent Michael as a special party in the family law litigation.

Thank you for reading,

Umair Abdul Qadir

22 Jun

Who Can Compel a Passing of Accounts From an Attorney for Property?

Umair Capacity, Elder Law, Estate & Trust, Executors and Trustees, Litigation, Passing of Accounts, Power of Attorney, Trustees Tags: , , , , , , , 0 Comments

 

As is often the case, a person who is concerned about a fiduciary’s management of property may wish to compel an accounting. However, it is important to remember that a person’s ability to compel such an accounting may vary depending on whether an accounting is being sought from an estate trustee of a deceased’s estate or, in the alternative, from an attorney for property during the lifetime of an incapable grantor.

The legal framework in Ontario

In Ontario, pursuant to section 50 of the Estates Act, an executor or administrator shall not be required to account by the Court “…unless at the instance or on behalf of some person interested in such property or of a creditor of the deceased….” Further, Rule 74.15(1)(h) of the Rules of Civil Procedure provides for any person who appears to have a financial interest in an estate to move for an order for assistance requiring an estate trustee to pass his or her accounts.

Conversely, the right to compel an accounting from an attorney for property or guardian of property is set out under section 42 of the Substitute Decisions Act. Pursuant to section 42, in addition to the attorney, the guardian and the incapable person, the following persons may apply for the fiduciary’s accounts to be passed:

  1. The grantor’s or incapable persons’ guardian of the person or attorney for personal care;
  2. A dependant of the grantor or incapable person;
  3. The Public Guardian and Trustee;
  4. The Children’s Lawyer;
  5. A judgment creditor of the grantor or incapable person; and
  6. Any other person, with leave of the Court.

This is an important distinction to keep in mind: although a person with a financial interest in the estate may be able to compel an accounting from an estate trustee, such a financial interest on the death of an incapable grantor may not in and of itself be sufficient to compel an accounting from an attorney for property during the lifetime of the incapable.

What is the criteria for obtaining the leave of the Court?

The recent decision of the Honourable Justice LeMay in Groh v Steele, 2017 ONSC 3625, is an important reminder of the high threshold for obtaining the leave of the Court to compel an accounting from an attorney for property under section 42.

In Groh, the Applicant, Ernest, sought a capacity assessment of his mother Gabriella under the Substitute Decisions Act. Ernest also sought an order for the suspension of Gabriella’s attorneys for property ability to act and an order for the attorneys for property to pass their accounts. Ernest’s Application was opposed by Gabriella and her attorneys for property.

On the issue of Ernest’s request that the attorneys pass their accounts, Justice LeMay reviewed section 42 of the SDA and concluded that “it is clear that the only circumstances in which Ernest could ask for a passing of accounts is if he can obtain leave of the Court.”

Justice LeMay went on to make the following statement regarding the circumstances in which leave should be granted by the Court:

In my view, such leave should be granted sparingly. The passing of accounts is a detailed review of the financial affairs of the grantor. As such, it is something that is intrusive, and will reveal private financial information about the grantor. In order to obtain leave, the party applying would have to establish both that he or she had some interest (at least indirectly) in the affairs of the grantor, and that there was at least some evidence that the Attorneys were not properly conducting the affairs of the donor. The Court should also consider the role that the Attorneys are playing in the Grantor’s affairs.

After reviewing the facts before the Court, Justice LeMay concluded that a formal passing of accounts should not be ordered, and Ernest’s Application was dismissed.

Thank you for reading,

Umair Abdul Qadir

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