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,
The #FreeBritney movement is a social media movement driven by the fans of Britney Spears, and it has been trending recently this month according to Global News. Britney’s fans are concerned that Britney is being mistreated by her legal conservators. Britney Spears has been under a court-ordered conservatorship since 2008.
In the years leading up to Britney’s conservatorship, there were a multitude of public incidents that called Britney’s wellbeing into question, the most iconic of which was perhaps the viral, tabloid photograph of Britney shaving her head in 2007. In 2008, Britney was involuntarily hospitalized after police were called to her home. Thereafter, Britney was placed under an interim conservatory order, which was ultimately made permanent. Britney’s conservatorship meant that her father, James Spears, and lawyer, Andrew Wallet, had complete control of Britney’s assets, which is similar to a guardianship of property under the Ontario Substitute Decisions Act, 1992. James Spears was given control of Britney’s health like a guardianship of person.
Despite being stripped of the right to control her own property and personal care, Britney’s career has flourished in the twelve years after 2008. During the first year of her conservatorship alone, Britney appeared on television shows and even released a new album (Circus). Britney went on to release 3 more albums after that, and she was the star of a four-year concert residency in Las Vegas (which was excellent in my humble opinion). Britney was also a judge on the television competition show, X Factor, where the judges of the show mentor and critique contestants on their performances. For a list of her accomplishments, check out Britney’s extensive Wikipedia page.
In Ontario, a person is incapable of managing property if “the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision” (section 6 of the SDA).
With that in mind, Britney’s role as a judge on X Factor and her reactions on the show seem to show that she was appropriately reacting to the performances of the contestants and that she understood what was at stake in the competition. However, the lay opinion of her fans (myself included) alone would be insufficient to satisfy the statutory requirements of a motion to terminate guardianship of property and person under Part III of the SDA. If the motion is brought on a summary basis under section 73 of the Act, the moving party must include one statement from a capacity assessor and one statement by a second assessor or someone who knows the person, which indicate the following:
(a) that the maker of the statement is of the opinion that the person is capable of managing property, and set out the facts on which the opinion is based; and
(b) that the maker of the statement expects no direct or indirect pecuniary benefit as the result of the termination of the guardianship.
Similar statements are required to terminate a guardianship of person.
Earlier this year, Britney’s conservatorship was extended until at least August 22, 2020.
#FreeBritney and thanks for reading,
I am not sure why, but whenever I talk to my friends about the benefits of having a Will, they seem to dismiss the advice, thinking that Wills are only meant for old people. I was thus delighted to come across this article which highlights millennial-centric reasons for having a Will, some of which are as follows:
Digital Assets – while many millennials attest to not being flush with cash, many are flush with digital assets. I have previously written about my digital presence, admitting that I have two personal e-mail addresses, four social media accounts, and so many points through reward programs such as Aeroplan, Indigo, Greenhouse Juice – the list goes on and on. These assets carry both a financial and personal value. Millennials preparing a Will should think about how they wish to transfer these assets.
Young Children – if a child is a minor, under the Children’s Law Reform Act, it is possible for a testator to appoint one or more persons to have custody of that child in a Will. It is also possible to set up a trust in the Will to ensure that the child’s inheritance is spent responsibly. I often tell people that in making a Will, do not think of it as being done to benefit oneself (i.e. the testator), but to benefit and help your loved ones. Being able to take care of minor children is a great example of this.
Pets Pets Pets – without engaging in the dog vs cat debate, it is suffice to say that many millennials have pets. In fact, millennials these days are opting for pets over parenthood – just walk through Trinity Belwoods Park on a Saturday afternoon. In Ontario, pets are considered property, and thus require specific estate planning. Some options include leaving a cash legacy to a pet guardian or setting up a trust for a pet guardian, both of which can be accomplished in a Will.
Hoping that my millennial friends now agree that Wills aren’t just for old people!
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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.
In Ontario, we are fortunate to have the ability to execute powers of attorney in respect of our property and our health care. I recently learned that Jersey, in the Channel Islands, has only lately gained the ability to execute a “Lasting Power of Attorney” to record their decisions and intentions in respect of their assets and care. On that note, I thought I would take the opportunity to provide a quick reminder of the importance of executing powers of attorney, and the possible consequences of not doing so.
Powers of attorney in Ontario are governed mainly by the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”). The SDA sets out, among other things, the requirements for powers of attorney, the requisite capacity to grant a power of attorney, and the powers and duties of attorneys. There are two types of powers of attorney: powers of attorney for personal care (dealing with your health, medical care, and other matters related to your well-being) and powers of attorney for property (dealing with your property and financial matters). Generally, powers of attorney will come into play if you become incapable of managing your property or personal care, respectively, but it is also possible to grant a power of attorney for property that is effective immediately (that is, not conditional upon later incapacity).
What Happens if I Don’t Execute Powers of Attorney?
If you do not execute powers of attorney, and you never lose capacity, you may never realize how important they are. However, as we have blogged about previously, as our population begins to live longer, there has been an increase in dementia and other aging-related conditions associated with cognitive decline, meaning that the use and activation of powers of attorney is increasing.
Taking the step of executing powers of attorney means that you have the chance to make your own decision regarding who will handle your affairs in the event that you are no longer capable. If you become incapable, and have not named an attorney for property or personal care, it is open (and may become necessary, depending on your circumstances) for an individual to bring an application seeking to be appointed as your guardian for property or personal care, thus allowing them to act as your substitute decision-maker. The application process requires that notice be given to certain people (including certain family members), and if someone disagrees with the appointment of the proposed guardian, they may contest the guardianship—but the key detail to remember is that the ability to make the decision is taken away from you.
A guardianship application can also be brought if a person has executed a power of attorney, but the existence of a power of attorney will be an important factor for the court’s consideration: pursuant to the SDA, if the court is satisfied that there is an alternative course of action that is less restrictive of the person’s decision-making rights, the court shall not appoint a guardian.
Naming someone to act on your behalf with respect to your property and personal care is a big decision. It is almost certain that you are in the best position to make a determination as to who you want acting for you in this regard. We should all take the opportunity to exercise our own decision-making rights, to choose the person that we want to play the important role of attorney, and not leave it up to others to make this decision for us.
Thanks for reading,
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This blog was written in collaboration with, and with thanks to Yasmin Vinograd of Merovitz Potechin LLP .
In some cases, an incapable person residing outside of Canada has assets in Canada. Can a guardian appointed outside of Canada have access to the incapable’s Canadian assets? By extension, would a Guardianship Order made outside of Canada be recognized in Ontario?
In Ontario, this scenario is dealt with in the Substitute Decisions Act, 1992 (“SDA”). Section 86 of the SDA provides a mechanism by which orders made by a court outside of Ontario to appoint a guardian of property or of the person may be recognized or “resealed” in Ontario. Subsections of s. 86 specify that:
s.86(1): a foreign order is “an order made by a court outside Ontario that appoints, for a person who is sixteen years of age or older, a person having duties comparable to those of a guardian of property or guardian of the person.”
s.86(2): “Any person may apply to the court for an order resealing a foreign order that was made in a province or territory of Canada or in a prescribed jurisdiction.”
s.86(3): an applicant seeking to have the court reseal the foreign order is required to file a copy of the foreign order, along with a certificate signed by registrar, clerk or other officer of the foreign court stating that the order is unrevoked and is of full effect.
The effect of these provisions is that a guardianship order made by a foreign court will be recognized and enforceable in Ontario.
Sounds easy enough, doesn’t it? Unfortunately, it is not.
I had previously blogged about the possibility of resealing guardianship orders made in other provinces and territories. The issue arises when trying to reseal a guardianship order made outside of Canada. The problem is that Ontario has yet to prescribe any other country as a “prescribed jurisdiction” for the purpose of section 86(2). This begs the question: can the court reseal a foreign guardianship in the absence of the list of prescribed jurisdictions?
When faced with this exact issue in Cariello v Perrella, 2013 ONSC 7605, the court refused to apply section 86 to reseal a guardianship order made in Italy. Justice Mesbur stated:
It seems to me that unless and until Ontario creates a list of “prescribed jurisdictions” there is simply no legislative basis on which I can apply s. 86. This is not a case where the statute inadvertently fails to deal with an issue. Here, the province has simply failed to take the regulatory steps necessary to create a list of prescribed jurisdictions to which s.86 would apply. I have no idea of the province’s intentions in that regard. I fail to see how I can simply assume Ontario would designate Italy as a prescribed jurisdiction when it finally creates a list of prescribed jurisdictions under the SDA. I have no basis to conclude that Ontario has any intention of having s.86 apply to any jurisdiction other than another Canadian province or territory. Section 86 cannot apply.
In light of the Cariello decision, it appears that section 86 and the mechanism it provides cannot be used to reseal an order made by a jurisdiction outside of Canada. What, then, is a guardian to do if the incapable has assets in Canada that need to be accessed?
There are two ways in which this could be addressed.
The first is to bring an application to have the guardianship order recognized as a non-monetary order, pursuant to the Supreme Court of Canada’s decisions of Morguard Investments v De Savoye,  3 SCR 1077 (SCC), Beals v Saldanha, 2003 SCC 72, and Pro Swing Inc v ELTA Golf Inc, 2006 SCC 52. As of now, there is no decision that applied the SCC’s test of real and substantial connection in the context of a guardianship order. It remains to be seen whether an Ontario court would be open to recognizing a guardianship order on that basis and what the Public Guardian and Trustee’s position will be on such an application.
The second option is to commence a new guardianship application in Ontario. The evidence of incapacity in the foreign jurisdiction may be useful in such an application, but it would probably need to be updated to reflect the current status of the incapable and to demonstrate his or her incapacity. The “new” guardianship application will need to conform to Ontario’s requirements under the SDA, including the filing of a Management and/or Guardianship Plan(s), service on required persons, and naming of specific respondents in the notice of application.
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.
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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.
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.
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.
This week on Hull on Estates, Paul Trudelle and Noah Weisberg discuss the Law Commission of Ontario’s Final Report on legal capacity, decision-making and guardianship in Ontario.