1. Introduction

It is well-known that an attorney for property is a fiduciary and must use his powers solely for the benefit of the grantor and may not use the power for his personal benefit unless the grantor specifically instructs the attorney to use his powers for his own benefit.[1] This issue was raised again and confirmed in Falsetto v Falsetto,[2] in which the courts found the grantor did indeed permit the attorney to use his powers for his own benefit.

2. Facts

Salvatore Falsetto was an experienced businessman who renovated, developed, and rented properties. He became quite wealthy. In the course of his business, he interacted on a regular basis with lawyers and real estate agents. He and his wife had four daughters and a son, Sam, but the marriage ended in the mid-1980s, after which the children remained with their mother and became estranged from their father. However in 1998, when Sam was in his late teens, he and his father reconciled and became close. Sam worked for his father without pay but his father assured him because he would inherit all of Salvatore’s properties.

In the early 2000s, Sam started his own business, buying semi-detached houses, and renovating and selling them. His father advised him in the course of the business and gave him a large sum of money to purchase a particular property. Under a number of powers of attorney made in 2011 and 2012 Salvatore appointed Sam his attorney for property. Sam assumed that this would allow him to make end-of-life decisions for his father, but he was never told about his duties as an attorney for property. Under a bank power of attorney Salvatore granted Sam authority to effect most banking transactions on behalf of his father. Same understood that this was done so that he could pay his father’s bills. Between 2010 and 2016, Salvatore transferred other assets to Sam, including money from a settlement agreement, cheques from his personal accounts, and the title to properties. These transfers exceeded $10 million in value.

A number of years later, Salvatore sued Sam and a number of his companies. He claimed that he had transferred the moneys to Sam so that Sam could purchase properties in trust for his father, and that Sam had wrongfully misappropriated the moneys. Salvatore also argued that Sam breached his fiduciary duty as his attorney and sought damages in excess of $12 million for that breach, breach of trust, and unjust enrichment. Sam defended the action on the basis that all the assets Salvatore transferred to him, except one, were gifts, and that the exception was a loan which he repaid. Sam also claimed that before each transfer he confirmed with Salvatore that he intended them as gifts.

The trial judge accepted Sam’s evidence and the evidence of eight independent and trustworthy witnesses, and found that the transfers were gifts by Salvatore to Sam.

Salvatore appealed.

3. Analysis and Judgment

Justice Gillese wrote the judgement for the court. She agreed with the trial judge except on one point to be mentioned below and dismissed the appeal. As one expects of Justice Gillese, the judgment is a model of clarity. I have only one quibble and that is that the judgment at times refers to Sam as his father’s ‘power of attorney’, whereas at other times it refers to Sam correctly as his father’s ‘attorney’. As I have stated on a number of occasions, a ‘power of attorney’ is a document that appoints a person as ‘attorney’. Thus it is incorrect to refer to an ‘attorney’ (a person) as a ‘power of attorney’ (a document).

Her Honour reviewed the trial judgment, which noted that the transfers raised the presumption of resulting trust, as confirmed by Pecore v Pecore.[3] She agreed with the trial judge that Sam had rebutted the presumption and proved that the transfers were gifts, that they were delivered to Sam, and that Sam accepted them as gifts. Justice Gillese also agreed with the trial judge that Sam did not exercise undue influence over his father and that Sam was not unjustly enriched. However, her Honour disagreed with the trial judge’s holding that Sam did not owe his father a fiduciary duty, either as attorney for property or because he held signing authority on Salvatore’s accounts. The trial judge reached this conclusion because Sam only learnt about the power of attorney at the time of the litigation, because Sam understood that his signing authority allowed him to pay his father’s bills, and because Salvatore authorized all transfers.

Justice Gillese held that Sam was a fiduciary in respect of Salvatore’s bank accounts and as Salvatore’s attorney, and therefore owed fiduciary duties to Salvatore. However, she agreed with the trial judge’s holding that Sam did not breach his fiduciary obligations, since Salvatore authorized all the disputed transfers. Thus, when Sam, acting as attorney, transferred assets to himself, he was simply fulfilling his father’s instructions.

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[1]    Egli v Egli, 2004 BCSC 529, para 82, affirmed 2005 BCCA 627, referred to in Richardson (Estate Trustee of) v Mew, 2009 ONCA 403, para 49.

[2]    2022 ONSC 3701, affirmed 2023 ONCA 469.

[3]    2007 SCC 17.