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When Does an Attorney’s Duty to Keep Accounts Begin?

Winkler v Thompson[1] is a helpful case on the issue when an attorney for property must keep accounts. It is certainly not the first, for there are several cases that address the issue. Some hold that the duty to keep accounts arises only when the grantor becomes incapable.[2] But others hold that the duty may begin earlier if the attorney has assumed full responsibility for all the grantor’s financial affairs, even though she is still capable.[3] Winkler v Thompson falls into the first category.

The testator, Rolf Winkler, died in 2019 at age 91. The applicant, Ilse Winkler, was his surviving spouse, but they had been separated since 2012. Rolf appointed his granddaughter, Chrystal Thompson, his attorney[4] for property in 2015. He opened a joint bank account with Chrystal and moved into a retirement home around the same time. Chrystal applied to pass her accounts on consent.

Chrystal testified that she did not exercise her powers as Rolf’s attorney, if at all, until the very end. She carried out most transaction on the joint account with Rolf’s concurrence, a practice they had agreed upon when the joint account was set up. She only took a personal benefit from the account on one occasion, and she did so at Rolf’s direction. Accordingly, she did not keep receipts for every expenditure. She bought many items for Rolf while she did her own family shopping and in some cases she could not recall what an expense was for. In the end there was an excess of reimbursement over expenditures of about $18,400 over a period of four and a half years. Ilse objected to this discrepancy and to several other expenditures.

Justice Penny rightly concluded that Rolf’s capacity was a threshold issue because it affects the duties of his attorney. He noted that under s. 32 of the Substitute Decisions Act[5] the obligation to keep accounts only applies if the grantor is incapable or if the attorney has reasonable grounds to believe that the grantor is incapable.

The evidence indicates that Rolf was physically infirm and suffered from depression on occasion. But there was very little evidence of incapacity and what evidence there was, was anecdotal and unreliable. Some evidence was given by Ilse, who saw Rolf infrequently and by Chrystal, who saw him regularly. Chrystal’s evidence was corroborated by independent witnesses, who found Rolf to be entirely capable. When Rolf was in hospital in 2015 and when he was assessed by Community Care, the tests that were administered yielded low cognitive performance scores and suggested a possible problem related to psychotropic drugs, but another test yielded a high cognitive performance score. Finally, there was a memo from a medical doctor in 2019 which recorded the doctor’s impression that Rolf was suffering from major depression. However, none of these tests were focused on his ability to manage his property.

Penny J noted that the Substitute Decisions Act presumes capacity. He concluded that Rolf did not lack capacity to manage his property until perhaps shortly before he died. But Ilse did not raise any material, impugned transactions that occurred during that time. This meant that Chrystal was not required to pass her accounts, although she did so on consent. Rolf was in fact capable of agreeing to Chrystal’s use of the joint account and did so, and he was also capable making a gift to her for bathroom renovations. Thus, Chrystal was not acting in a fiduciary capacity when she reimbursed herself from the joint account. In any event, she did nothing improper. Nor were any expenditures challenged by Ilse improper.

Justice Penny noted, rightly, in my view that there was therefore no need for a judgment approving the accounts since Rolf was capable throughout. However, he did grant judgment approving them to resolve the familial dispute and, because Chrystal had made the application. He awarded costs to Chrystal, payable by Ilse.

A particularly helpful comment by Justice Penny is contained in paragraph 9 of the reasons:

[I]f Rolf was capable, he was making the decisions, just as much as Chrystal. If Rolf was capable, imposing on Chrystal a duty to account now, long after the fact and after Rolf has died, amounts to a near impossible task. To paraphrase what Langdon J. held in Fair v. Campbell,[6] what Ilse is now demanding from Chrystal is that she put together a whole jig-saw puzzle although she does not have all of the pieces.

It is indeed unfair to require an attorney to account for expenditures when she has no duty to account, when the expenditures were made by or with the approval of the grantor, and when the attorney has not (because she was not required to do so) kept proper records. CF de Sa J made a similar comment in Estate of Ronald Alfred Craymer v Hayward.[7] In that case the grantor appointed his wife, Joan, as attorney and her daughter, Linda, as substitute attorney. Linda assumed the office of attorney and also the office of her mother’s executor when her mother died. The grantor’s eldest son brought a motion compelling the passing of accounts by Linda regarding her mother’s spending while she was attorney for her husband. Justice de Sa stated:

38      However, ordering the passing of accounts is discretionary. And in my view, to require an accounting at this point would result in a clear injustice as between the parties.

39      Linda, as Estate Trustee, is hardly in a position to account for Joan’s spending while she was alive. Yet, to require a passing of accounts at this point would subject every line of Joan’s spending (as Attorney for Property) to the court’s scrutiny. Moreover, as the Estate Trustee, the Defendant would be liable to account for any unexplained expenditures.

40      Indeed, it is unclear that the spending was spurious given the nature of the relationship between Joan and Ronald. Joan would have been spending the money as his wife as much as his Attorney for Property. The failure to keep detailed accounts is hardly suspicious given the circumstances here.

The Winkler and Cramer cases are therefore important reminders that the court will not order a passing of accounts when there is no duty to account, nor when such an order would be unfair to the attorney. It is true that in other cases[8] the court can rightly order the attorney to account when he has taken responsibility for the grantor’s financial affairs, even though the grantor is still capable. But that is not the general rule.

[1]    2021 ONCS 8187.

[2]    See, e.g., Fair v Campbell, 2002 CarswellOnt 5481, 3 ETR 3d 48 (SCJ). See also Ekelshot-Kumelj v Bradley, 2011 ONSC 83, affirmed 2011 ONCA 554; and Estate of Ronald Alfred Craymer v Hayward, 2019 ONSC 4600.

[3]    See, e.g., Fareed v Wood, 2005 CarswellOnt 2572 (SCJ); The Public Guardian and Trustee v Willis, 2020 ONSC 3660, 61 ETR 4th 142. See also McMullen v McMullen, 2006 BCSC 1656, 27 ETR 3d 304.

[4]    The reasons refer to her as Rolf’s ‘power of attorney’, but with respect, they should have identified her as ‘his attorney’. Rolf’s power of attorney was the document by which he appointed Chrystal as his attorney.

[5]    SO 1992, c 30.

[6]    Footnote 2, supra, para 29.

[7]    Footnote 2, supra.

[8]    Such as those mentioned in footnote 3, supra.

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