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Abel v. Abel: Trial Required for Power of Attorney Dispute

Abel v. Abel2017 ONSC 7637 (CanLII), http://canlii.ca/t/hpgzs 

A motion was brought to address a power of attorney dispute between two brothers. The applicant sought to have his brother removed as the attorney under power of attorney documents for both personal care and property granted by their mother.  He also sought an order requiring his brother to pay back over $400,000.00 that was purportedly transferred to the attorney brother by their parents.  The Court found that there was insufficient evidence on the record to decide these issues on a motion but enough questions were raised to justify a trial of the issues.

Background Facts:

The respondent brother was appointed as an attorney by both of his parents in January of 2015.  The father died in March of 2016.  Four days prior to his death, the father executed a new Will in which he appointed the respondent brother his executor and the beneficiary of the remainder interest in his estate.

The father’s new Will contained a provision which said that the parents had, during their lifetime, made certain gifts to the respondent brother and such “funds belong absolutely and beneficially” to him.

During cross-examinations on the affidavits, it came to light that at various times throughout 2015, the parents had transferred $435,236.83 to the respondent.  There was also a suggestion that the respondent had used monies from his mother’s assets for personal expenditures.

A number of undertakings regarding financial disclosure were given by the respondent brother during his cross-examination.  Those undertakings remained unanswered and became the subject of two court orders.  The applicant brother argued that the respondent’s failure to provide the requested documents was further proof of his inability to comply with his obligations under the power of attorney and to serve their mother’s best interests.

The respondent argued that the delay in producing the documents was attributable to his counsel (there was an Affidavit filed by his counsel on this issue) and that he had made the required best efforts to comply with his undertakings.  He admitted that he had made some questionable expenditures, from his mother’s assets, but nothing of significant value.

Power of Attorney:

The applicant brother sought to remove the respondent brother as attorney under the power of attorney for property and personal care for failing to comply with undertakings and Court orders, using funds from their mother’s assets towards personal expenses and neglecting their mother’s personal care and hygiene.

The respondent’s counsel proposed that there should be a full hearing in relation to these issues.  He questioned whether there was adequate information before the Court to make a decision with respect to the issues raised.

Justice Leitch noted that while powers of attorney can be terminated, and guardians appointed to replace an attorney under the Substitute Decisions Act[1], the law is clear that the courts should be wary of terminating a power of attorney that was granted by a donor when having had capacity to grant it.

Referencing Justice Fargomeni’s words in Teffer v. Schaefers[2], Justice Leitch noted that the test for removal of a power of attorney is as follows:

  • There must be strong and compelling evidence of misconduct or neglect on the part of the attorney before a court should ignore the clear wishes of the donor; and
  • The court must be of the opinion that the best interests of an incapable person are not being served by the attorney.

Examples of attorney misconduct under the first step of the test include failure to provide a monthly accounting; failure to voluntarily pass accounts; failure to provide missing information or documentation with respect to missing funds; and an inability to follow court orders. Justice Leitch was satisfied that the first part of the test was met.

The second part of the test, however, required the Court to determine whether the respondent was serving his mother’s best interests. The answer to this question required further evidence which was not available to the Court on this motion. There was insufficient evidence regarding the respondent’s behaviour to justify a trial on the issue, though.

Repayment of funds:

Justice Leitch noted that since the respondent was an adult when he received the money transfers, the presumption of resulting trust would be applicable as per Pecore and he faced the onus of rebutting that presumption.  To do so, he had to produce corroborating evidence, beyond his own affidavit, either direct or circumstantial, to show on a balance of probabilities that the transfer was a gift. The respondent was not barred from relying on the statement added to his father’s Will subsequent to the transfers, however, the reliability of the provision and the weight that it should be given would need to be assessed.

The respondent also faced the onus of proving lack of undue influence, given the nature of his relationship with the donors.   There may also be an issue of undue influence with respect to the new Will and the provision pertaining to the inter vivos transfers.

Justice Leitch found that the record before her was not sufficient to assist in determining these issues and concluded that no order could be made in relation to the relief sought.  However, a trial was required in relation to the other issues identified, i.e. removal of power to act as attorney, reimbursement of funds spent on personal expenditures and the funds transferred to the respondent by his parents.

Takeaways:

Removal of an attorney under a power of attorney document requires strong and compelling evidence of misconduct.  A court must be convinced prima facie that the incapable person’s interests are not being met before interfering with the wishes of the grantor. Before seeking such relief on a motion, it is important for counsel to consider whether relevant and sufficient evidence is before the Court or whether a trial of an issue will be required.

 

[1] Substitute Decisions Act, 1992, S.O. 1992, c. 30, s.12(1)(c) and s.22(1).

[2] Teffer v. Schaefers (2008), 93 OR (3d) 447

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