Ontario Court of Appeal Looks at the Test for Leave to Obtain an Order to Pass Accounts
Lewis v Lewis 2020 ONCA 56 http://canlii.ca/t/j4xnz
This case reflects an increasingly common occurrence in estate and elder law litigation: a falling-out amongst siblings appointed as their parents’ attorneys under power of attorney documents and those not appointed as attorneys. Those without authority to act, are often suspicious of their siblings’ management of the property under attorneyship.
In Lewis v Lewis, 2020 ONCA 56, elderly parents appointed two of their six children as their attorneys for property. The other four children brought an application under ss 42(1) and (4) of the Substitute Decisions Act, 1992, SO 1992, c 30 (the “SDA”) seeking leave to bring an application to require the attorneys to pass their accounts.
While the parents were alive for the hearing of the application, sadly, they died about seven weeks apart shortly after the application was heard.
Section 42(1) of the SDA provides that a court may order that all or part of the accounts of an attorney be passed. Section 42(4) partially sets out who may make an application under section 42(1) seeking the passing of accounts. This list includes specified persons (including a dependant, the Public Guardian and Trustee, a judgement creditor…..) and “any other person, with leave of the court.”
The test for leave was defined in Ali v Fruci (2006), 22 ETR (3d) 187 (Ont SC) at para 3. The court must be convinced that:
- the person or persons seeking leave have a genuine interest in the grantor’s welfare; and,
- it is reasonable to believe that a court hearing the application under 42(1) may order the passing of accounts.
A court has discretion to order, or not order, a passing of accounts under s. 42(1), as confirmed by the Court of Appeal in Dzelme v Dzelme, 2018 ONCA 1018. Dzelme also set out the facts a court must consider in exercising its discretion. These factors include, the extent of the attorney’s involvement in the grantor’s financial affairs and whether the applicant has raised a significant concern in respect of the management of the grantor’s affairs so as to warrant an accounting.
In the current case, the first prong of the Ali v Fruci test was not in issue since the attorney siblings conceded that the non-attorney siblings had a genuine interest in their parents’ welfare. However, the application judge found that the second prong of the test was not met since the “record fell far short,” and lacked “evidentiary stamina” so as to suggest that there was “any direct allegation of misfeasance or wrongdoing.” The court was not persuaded that it should exercise its discretion to grant leave to the non-attorney siblings and to order an accounting.
On appeal, the appellant siblings argued that the judge erred in finding that there was a lack of evidence and erred in principle in the exercise of discretion. The Court of Appeal was not persuaded by this argument.
The uncontested evidence showed that the father remained capable of managing his and his wife’s “intertwined affairs” and continued to receive all bank statements until both parents moved into a long-term care facility. The attorneys helped their father manage their parents’ finances, such as in paying their bills, but kept the father apprised of all actions they took. The attorneys also responded to the appellant siblings’ requests for documentation. Further, the parents’ investment portfolio increased between the time that the attorneys were appointed and the time when the appellant siblings brought the application.
The father (who was represented by his own counsel) gave evidence that he had no concerns with the attorneys’ management of his and his wife’s affairs and “wanted the litigation to come to an end.”
The Court of Appeal agreed with the appellants that an attorney can be ordered to pass accounts and leave may be granted under s 42(4) in the absence of significant concerns about misfeasance or wrongdoing. Importantly, however, such relief must be considered in the context of the record. The appellants made veiled allegations of misfeasance and/or wrongdoing and the application judge focused on the lack of evidence of misfeasance and/or wrongdoing in support of their allegations. The appeal was dismissed.
Often older adults find it easiest, or more comfortable to appoint one or more of their adult children as their attorneys under a power of attorney document. Many make this decision without thinking through the possible familial consequences of this action. Some questions to consider: Is there currently a rift between the siblings? Will the appointment exacerbate any existing ill-will? Are the siblings aware of who will be appointed before the appointment takes place? Communication is often the key to acceptance. Is there a trustworthy friend, or someone other than the adult children who could act as an attorney? Lastly, it is unfortunate that some parents, late in life are involved in contentious litigation as between their children. Litigants should be aware of the presumption of capacity, respecting the choices of the grantor, and ensure that the motives in procuring an accounting are pure and not motivated by jealousy, greed, or the desire for control!
 Lewis v Lewis, 2020 ONCA 56 at para 5, citing Ali v Fruci (2006), 22 ETR (3d) 187 (Ont SC), 2006 OJ No 1093 (SCJ) at para 3.
 Lewis v Lewis, 2020 ONCA 56 at para 8.
 Lewis v Lewis, 2020 ONCA 56 at para 13.