The motions in Volk v. Volk, 2020 ONCA 256, arose from an appeal of an order to, inter alia, sell a property owned, in part, by Doris Volk, who is incapable of managing her own property, and to pay the net proceeds of sale to Doris’ husband, George. This case is instructive for how matters are currently proceeding before the Court of Appeal and in general for the scope of examinations under SDA matters.
George is not Doris’ attorney for property. The attorneys for property are Doris’ daughter, Darlene, and Doris’ sister, Lisa. George brought an application under the Substitute Decisions Act, 1992 because he claimed that the property was improperly transferred by the attorneys from Doris, as the sole owner, to Doris and Darlene’s daughter, Felicia, as tenants in common. At the time of the application, the property was registered with a 1% interest in Doris’ name and the rest was registered in Felicia’s name. Furthermore, the property was occupied by Darlene but George claimed that the carrying costs of the property were paid from Doris’ money in further breach of trust.
George’s application was granted on January 7, 2020 on the consent of Lisa. Darlene, Felicia, and the Public Guardian and Trustee did not appear or file opposing materials. The house was sold with a closing date of May 16, 2020.
Darlene and Felicia appeals the order of January 7th on ground that they were not properly served or provided with adequate notice of the application. They also brought a stay motion with a supporting affidavit from Felicia. Felicia was cross-examined on her affidavit and she refused a number of questions on the advice of her counsel. This led George to bring a refusals motion and an request for an adjournment of the motion for a stay pending appeal.
Both the refusals motion and the stay motion were scheduled to be heard before Justice Paciocco on April 14, 2020. Justice Paciocco noted that the agreement for purchase and sale gave the stay motion added urgency. The matter proceed on April 14th with counsel for Darlene and Felicia appearing by phone and counsel for George appearing by videoconference. George’s refusals motion was allowed in part. Justice Paciocco clarified that the proper scope of a cross-examination on an affidavit is governed by the issues that are relevant to motion. It includes questions that are relevant to credibility so long as it within the competence of the motions judge to determine (para. 10). He then goes on to give reasons for why certain categories of questions ought to be answered and why other categories were found to be irrelevant or unfair. Of note, questions about Doris’ state of mind were properly refused because it was unfair for Felicia to speak for Doris (para. 19).
Since counsel for George acknowledged that further examinations were not feasible as a result of COVID-19, Justice Paciocco ordered a timetable for answers and follow up questions in writing. The stay motion was adjourned to May 1st.
Thanks for reading and keep well.
It is commonly understood that an Attorney for Property can do anything that the grantor of the Power of Attorney could do other than make a Will. Indeed, s. 7(2) of the Substitute Decisions Act provides: “The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of the property that the grantor could do if capable, except make a will.”
In practice, “will” has been expanded to mean testamentary dispositions. Accordingly, as an example, beneficiary designations under RRSPs and life insurance policies cannot be changed by an attorney on behalf of the incapable grantor.
The unpredictable onset of incapacity can make for some unintended consequences. And the choice of attorney can create situations of inevitable conflict of interest that challenge the limitations of the statute.
An example would be a situation in which a separated but not divorced spouse is appointed under a Power of Attorney for Property. What if an application for divorce was jointly initiated by the grantor and his spouse and the grantor then becomes incapable before the divorce is finalized and before the Power of Attorney is revoked?
In such a situation, the Attorney for Property/separated spouse is in a curious predicament: on the one hand, the grantor would presumably (but not as a certainty) have wanted to complete the steps required to conclude the divorce. On the other hand, the separated spouse clearly has a competing interest: he or she would presumably financially benefit from the divorce not being finalized. To complicate matters further, if the grantor/incapable spouse chose to maintain his separated spouse as his attorney for property, he or she may been seen as wanting to trust that person to act in his or her best interests despite the conflict.
The reality is that there can be no certainty that the grantor would have as a matter of indisputable fact performed the additional steps required to conclude a divorce. While the surviving spouse in this scenario would have a conflict of interest which raises a question of whether there would be a motive to avoid concluding the divorce, it would seen that, in addition to not being able to make a Will, an Attorney for Property, could not necessarily conclude a divorce on behalf of an incapable Grantor.
There are surprisingly few cases on point. One such case is O.(M.K.) (Litigation Guardian of) v. C.(M.E.) in which the British Columbia Supreme Court decided against allowing a Divorce to proceed at the behest of a Committee for an incapable husband where the Court found, on a balance of probabilities, that no intention to divorce had been demonstrated before the incapacity.
Of course, it is a nice question as to whether intent to separate is the same as intent to divorce….
Thanks for reading,