Accounting Caution: When Looking Back on the Attorneyship
Ontario Superior Court finds attorneys for property have 2 years from the grantor’s date of death to claim compensation
In the recent case of Armitage v. Salvation Army, 2016 ONSC 2043, the Superior Court was asked to determine when the limitation period on an attorney for property’s claim for compensation begins to run, and found that it does so upon the death of the grantor.
Facts
The applicant in this case was the attorney for property of the deceased, and, upon the deceased’s death on February 5, 2013, she became the executor under his will. She had begun acting as attorney in early 2006, following the deceased’s admission to a nursing home. After that point she made most purchases for him and completed his income tax returns. In 2007, she arranged the sale of his home to free up cash for his care expenses, and dealt with the sale and distribution of its contents.
The deceased’s continuing power of attorney for property specifically authorized his attorney to take annual compensation in accordance with the fee scale prescribed in the regulations under the Substitute Decisions Act (“SDA”). Despite this, the applicant did not make any claim for compensation between 2006 and the deceased’s death in 2013. She commenced her claim for compensation as attorney for property for the years 2006-2013 on September 5, 2013, seven months after the deceased’s death. The respondent, who was the sole beneficiary under the deceased’s will, disputed the availability of any claim for attorney compensation.
Positions of the Parties
Section 40(1) SDA, which creates the right to compensation for attorneys, states that “A guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with the prescribed fee scale.” It is silent with respect to limitation periods. The two-year limitation period from the date of discovery, as established by the Limitations Act, 2002, applies to all claims unless that Act specifies otherwise.
The parties agreed that a two year limitation period applies to claims for attorney compensation, but disagreed on when that period begins to run. The applicant submitted that the claim must be commenced within two years of the date of death of the grantor of the power of attorney, while the respondent submitted the attorney has a right to compensation each year, but the two year limitation period begins running at the end of each year, which means that the limitation period is triggered annually with respect to each individual year. In the respondent’s view, the permissive “may” in s. 40(1) of the SDA creates a right that expires if not exercised within two years.
The respondent further argued that the applicant had “slept on” her rights to claim compensation, and that by waiting until his death, she deprived him of the right to comment on her claims for compensation. Accordingly, she should be prevented from bringing such a claim after his death.
Holding
The court found in favour of the applicant’s interpretation of the limitation period. The death of the deceased, which terminates the continuing power of attorney, serves as the triggering event for the commencement of the limitation period. As a matter of statutory interpretation, the court found that if the legislature had intended to create an annual limitation period, as suggested by the respondent, it would have been very simple to insert language to that effect. The legislature did not do so.
Further, the court was sympathetic to the applicant’s explanation for waiting until after death: the deceased was of modest means, and she was not sure how long he would live or what his future financial needs might be. She therefore could not determine whether or not she should make a claim for compensation until after his death.
Analysis
This case clarifies that the often-followed practice, which is for attorneys to pass their accounts and claim compensation after the grantor’s death, is in fact an appropriate way to proceed, and does not expose the attorney to a risk of their claim being statute barred.
Further, the applicant’s rationale in this case for waiting seems in keeping with the role of an attorney to act in the grantor’s best interests. Taking annual compensation which might jeopardize the financial resources of the grantor would require the attorney to place his or her own interests ahead of the grantor. A limitation period which forced the attorney to do so or forever lose the right to claim compensation would not be in either party’s best interests.
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Written by: WEL Partners
Posted on: April 15, 2016
Categories: Commentary
Ontario Superior Court finds attorneys for property have 2 years from the grantor’s date of death to claim compensation
In the recent case of Armitage v. Salvation Army, 2016 ONSC 2043, the Superior Court was asked to determine when the limitation period on an attorney for property’s claim for compensation begins to run, and found that it does so upon the death of the grantor.
Facts
The applicant in this case was the attorney for property of the deceased, and, upon the deceased’s death on February 5, 2013, she became the executor under his will. She had begun acting as attorney in early 2006, following the deceased’s admission to a nursing home. After that point she made most purchases for him and completed his income tax returns. In 2007, she arranged the sale of his home to free up cash for his care expenses, and dealt with the sale and distribution of its contents.
The deceased’s continuing power of attorney for property specifically authorized his attorney to take annual compensation in accordance with the fee scale prescribed in the regulations under the Substitute Decisions Act (“SDA”). Despite this, the applicant did not make any claim for compensation between 2006 and the deceased’s death in 2013. She commenced her claim for compensation as attorney for property for the years 2006-2013 on September 5, 2013, seven months after the deceased’s death. The respondent, who was the sole beneficiary under the deceased’s will, disputed the availability of any claim for attorney compensation.
Positions of the Parties
Section 40(1) SDA, which creates the right to compensation for attorneys, states that “A guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with the prescribed fee scale.” It is silent with respect to limitation periods. The two-year limitation period from the date of discovery, as established by the Limitations Act, 2002, applies to all claims unless that Act specifies otherwise.
The parties agreed that a two year limitation period applies to claims for attorney compensation, but disagreed on when that period begins to run. The applicant submitted that the claim must be commenced within two years of the date of death of the grantor of the power of attorney, while the respondent submitted the attorney has a right to compensation each year, but the two year limitation period begins running at the end of each year, which means that the limitation period is triggered annually with respect to each individual year. In the respondent’s view, the permissive “may” in s. 40(1) of the SDA creates a right that expires if not exercised within two years.
The respondent further argued that the applicant had “slept on” her rights to claim compensation, and that by waiting until his death, she deprived him of the right to comment on her claims for compensation. Accordingly, she should be prevented from bringing such a claim after his death.
Holding
The court found in favour of the applicant’s interpretation of the limitation period. The death of the deceased, which terminates the continuing power of attorney, serves as the triggering event for the commencement of the limitation period. As a matter of statutory interpretation, the court found that if the legislature had intended to create an annual limitation period, as suggested by the respondent, it would have been very simple to insert language to that effect. The legislature did not do so.
Further, the court was sympathetic to the applicant’s explanation for waiting until after death: the deceased was of modest means, and she was not sure how long he would live or what his future financial needs might be. She therefore could not determine whether or not she should make a claim for compensation until after his death.
Analysis
This case clarifies that the often-followed practice, which is for attorneys to pass their accounts and claim compensation after the grantor’s death, is in fact an appropriate way to proceed, and does not expose the attorney to a risk of their claim being statute barred.
Further, the applicant’s rationale in this case for waiting seems in keeping with the role of an attorney to act in the grantor’s best interests. Taking annual compensation which might jeopardize the financial resources of the grantor would require the attorney to place his or her own interests ahead of the grantor. A limitation period which forced the attorney to do so or forever lose the right to claim compensation would not be in either party’s best interests.
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