Tag: Guardian of Property
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:
“ 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.
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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
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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
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:
- The grantor’s or incapable persons’ guardian of the person or attorney for personal care;
- A dependant of the grantor or incapable person;
- The Public Guardian and Trustee;
- The Children’s Lawyer;
- A judgment creditor of the grantor or incapable person; and
- 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
Section 31 of the Substitute Decisions Act (“SDA”) states that an attorney for property “has 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.” An attorney for property also has the power to make gifts and loans to the grantor’s family and friends, as well as charitable gifts (SDA s37(3)).
There are strict limits, however, to how generous an attorney may be. The SDA includes guiding principles with respect to making gifts: the attorney cannot deplete the grantor’s property to the extent that there may not be enough to satisfy the needs of the grantor him or herself, during the grantor’s lifetime. The gifts or loans must also only be made if the attorney has a reason to believe, based on any expression the grantor might have made while capable, that the grantor would have made these gifts or loans if capable. Charitable gifts have further restrictions.
In addition to the prohibition against making a will, an attorney for property has an obligation to find and read the grantor’s will (SDA s33.1). Unless necessary to perform one’s duties to the incapable person, the attorney must not dispose of property subject to a specific testamentary gift, although this prohibition does not apply to a testamentary gift of money (SDA s35.1). The court highlighted the importance of the will in Weinstein v. Weinstein (Litigation Guardian of), stating obiter that s 33.1 of the SDA is “indicative of the importance the legislators attach, appropriately, to the will of an incapable person, in view of the permanent character of the will if the incapable person does not regain capacity.” Taken together, these provisions can be read to support the proposition that an attorney does not have the authority to dispose of assets in a way that undermines the grantor’s estates plan.
The case law on the subject of an attorney’s ability to make gifts is limited. Moreover, the cases largely deal with relatively small gifts. While not directly related to the issue of gifts made by an attorney on behalf of a grantor, the court in Banton v Banton held that it is improper for an attorney to deprive the grantor of his or her testamentary freedom by making inter vivos transfers. The attorneys in this case made a large transfer to a trust to protect the grantor from a predatory marriage, which is both allowed and an appropriate action for an attorney to take. However, the secondary beneficiaries of the trust were the grantor’s children, which the court held functioned as a will substitute, which is an inappropriate use of the power of attorney.
In summary, gifting must be done carefully and in a manner that would survive judicial scrutiny. An attorney should not make gifts if they represent so large a proportion of the estate that the attorney has substituted the testamentary intentions of the grantor with their own discretion. An attorney should also not make any gifts if the grantor was not in the habit of making gifts to friends and family or had expressed a contrary intention while capable.
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Many people will remember the issues which played out very publicly for Britney Spears in 2007. Nine years have passed since these incidents, and, to the outside world, it appears that Britney has turned things around, recently extending her residence in Las Vegas for an additional two years and $35 million. While Britney may have put the worst of these issues behind her, one legal consequence of such a time still has a daily impact upon her life.
In the midst of Britney’s issues playing out in the tabloids, Britney’s father, Jamie Spears, applied for court-appointed conservatorship over Britney’s affairs. Such a conservatorship was ultimately granted, giving Britney’s father complete control over Britney’s financial decision making. As reported in the National Post this week, even though nine years have passed since the initial court Order, such a conservatorship is still in effect. As a result, every aspect of Britney’s financial affairs are governed through her conservatorship, with as mundane of purchases as coffees from Starbucks, and songs from iTunes, being tracked by the court.
In Ontario, the closest equivalent we have to court-appointed conservatorship is court-appointed guardianship, which is governed by Part I of the Substitute Decisions Act. Such an Application may be brought on behalf of a person who “is incapable of managing property”, allowing for an alternate individual to be appointed as their guardian of property, administering their assets in accordance with a court approved “management plan”. As granting guardianship has a major impact upon an individual’s life, removing much of their autonomy, the court only does so when absolutely necessary. Indeed, in accordance with section 22(3) of the Substitute Decisions Act, the court shall not appoint a guardian if it is satisfied that there is an alternative course of action that does not require the court to find the person to be incapable of managing their property, and is less restrictive of the person’s decision-making rights.
In light of Britney’s apparent recovery, a natural question which would follow is whether the conservatorship is still necessary. In Ontario, if it is believed that a guardianship is no longer necessary, a Motion may be brought under section 28 of the Substitute Decisions Act to terminate the guardianship. If the court agrees, and the guardianship is terminated, the individual on whose behalf the guardian was appointed would regain control over their financial affairs and decision making.
A recent decision of the Ontario Superior Court of Justice highlights the real or perceived conflicts of interest that can arise when a guardian for property wears more than one fiduciary hat.
In Taticek v Zeisig, 2016 ONSC 772, Ronald and Peter were appointed as joint guardians for property and personal care for Annemarie in 2012. Annemarie, Ronald and Peter, along with Annemarie’s daughter Sonya, owned a farm property in joint tenancy (the “Farm”). The Honourable Justice Annis had approved the original guardianship order, which included a plan for the management of the Farm.
Ronald and Peter brought an Application to pass their accounts in March 2014, in accordance with Justice Annis’s Order. The Public Guardian and Trustee (“PGT”) objected to the accounts, but subsequently withdrew the objections and initially supported the sale of the Farm.
Ronald passed away on April 23, 2014, with his interest in the Farm passing by right of survivorship to the other joint tenants. The other guardian, Peter, was the sole Estate Trustee for Ronald’s Estate. Peter was also the sole trustee of a family trust (the “Family Trust”), which was settled for the benefit of Ronald’s children.
The Family Trust wanted to purchase Annemarie’s one-third interest in the Farm, and Peter brought an Application to amend the management plan to allow for the joint tenancy in the Farm to be severed. The PGT opposed the Application, and Peter brought a Motion for an Order approving the amended management plan.
On the Motion, Peter argued that he was acting in Annemarie’s best interest, and was not in a conflict of interest because her share of the Farm would be sold at fair market value and the proceeds of sale would be placed in an investment account.
In highlighting deficiencies in the amended management plan, the PGT noted three potential conflicts of interest:
- Peter had to determine whether Annemarie had to reimburse loans from Ronald, and the amended plan lacked details about Peter’s obligations to the Family Trust.
- In determining whether the Farm was to be sold to the Family Trust or to a third party, Peter would potentially continue to personally benefit if the one-third share of the Farm was purchased by the Family Trust.
- Peter’s obligation to maximize the value of Annemarie’s share of the Farm in his capacity as her guardian for property was in conflict with his duty to purchase her share at the lowest possible price on behalf of the Family Trust.
Ultimately, the Honourable Justice Patrick Smith refused to grant Orders dismissing Peter’s Application and appointing the PGT as Annemarie’s guardian for property on the Motion, holding that the PGT’s concerns could be addressed with additional information and an amended management plan. Justice Smith also held that the evidence established that Peter was acting in Annemarie’s best interest.
The Court granted leave for Peter to provide additional details and an amended management plan within 60 days of the judgment, with the matter being returnable before Justice Smith on short notice if the PGT continued to oppose the Application.
Thank you for reading.
Umair Abdul Qadir
Welcome to my week of blogs.
The Substitute Decisions Act is silent when it comes to the issue of compensation for personal care guardians. Section 40 of the SDA addresses compensation for property guardians, but there is no corresponding provision for personal care guardians (though regard can be had to section 68(4) of the SDA).
I was recently before Brown, J. in Toronto Estates Court in respect of a request for compensation by a personal care guardian (the decision is not yet reported). The property guardian, who I represented, supported the request for compensation, but the PGT questioned the amount requested and wondered whatever happened to “natural love and affection”.
In coming to his decision, Brown, J. applied the analysis set out in Cheney v. Bryrne, which he found was applicable to claims for compensation by personal care guardians. Brown, J. also applied, by analogy, the approach applied by the court to claims for compensation by property guardians. The test regarding the reasonableness of compensation claims was set out in Re: Brown (1999), 31 E.T.R. (2d) 164 (link not available).
According to Brown, J., the evidence before him clearly demonstrated that the incapable needed the services provided by the personal care guardian. He was also satisfied that the personal care guardian was providing the services to the incapable with care and devotion and that her services were of a high quality and went well beyond what was ordinarily expected. Moreover, the incapable obviously could afford to pay for the services (not an insignificant factor). In considering the level of compensation, Brown, J. was satisfied that the amount claimed was reasonable and in the best interests of the incapable. He therefore approved the compensation claimed.
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In our rapidly aging society, powers of attorney for personal care and property are now widespread and their importance is recognized by the general public. A family member or friend can also apply to the court to be appointed guardian of the person or the person’s property if powers of attorney have not been executed. However, family members often find themselves in a situation where a loved one is being legally cared for by a family member, or friend of the incapable person, who they no longer like or trust.
A common complaint that I hear is from family members or friends who feel excluded from participating in or influencing decisions regarding the incapable person, particularly when it comes to personal care.
However, under the Substitute Decisions Act, 1992, which generally governs the rights of an incapable person, any person, with leave, can seek directions from the court on any question arising under a power of attorney (the same is true regarding a court appointed guardian). Pursuant to sections 39 and 68 of the Act, the court may give such directions as it considers to be for the benefit of the incapable person and consistent with the Act.
Section 66(1) of the Act sets out the duties of an attorney for personal care (section 32 is the corresponding section for an attorney for property). In general, the attorney is required to exercise his or her duties and powers with diligence and in good faith.
Section 66(6) also states that an attorney must foster regular personal contact between the incapable person and supportive family members and friends. Moreover, section 66(7) states that the attorney shall consult with supportive family members and friends who are in regular contact with the incapable person, as well as the incapable person’s caregivers.
The requirements of section 66, coupled with the ability to seek directions from the court, offer family members and friends the means to ensure that they remain involved with their loved ones and are not simply sidelined. Proceeding to court is always expensive. However, where there is genuine concern and frustration that the incapable person is not being properly cared for and/or his or her finances are being squandered, recourse can be had to the courts.
There are numerous situations where money might become payable to a minor child. For example, the child may be the beneficiary under a Will, RRSP, or insurance policy. Alternatively, he or she may have received funds through a court Order or settlement.
You might be surprised to know that in Ontario, while a parent is automatically his or her child’s guardian of the person, he or she is not automatically the child’s guardian of property. The only way for a parent to receive this authority is by statute, court Order, or other document, such as a Will.
Although the Office of the Children’s Lawyer represents minor children in property rights cases, it does not have the authority to act as guardian of property for minors. This means that unless a parent or guardian obtains the legal authority to receive funds for a child, then money to which the child becomes entitled will have to be paid into court and held by the Accountant of the Superior Court of Justice until the minor reaches eighteen years of age.
If money has been paid into court, the parent will have to apply to be appointed the minor’s guardian of property in order to withdraw it. Alternatively, if the funds are required for the direct benefit of the child, and the parent cannot afford the expense, the Office of the Children’s Lawyer has a procedure to request payments out of court.
For more information about the guardianship of property of minor children, you will find the information on the Ministry of the Attorney General’s website to be of use.
I hope you enjoyed my blogs this week. Have a great weekend!