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Advising Fiduciaries

What is a fiduciary or fiduciary relationship?

A “fiduciary duty” is a duty and an obligation of trust imposed by law to act in the best interests of a person. A fiduciary duty can be recognized as a defined relationship in some instances such as, an estate trustee and a beneficiary of an estate; a trustee and a beneficiary of the trust; a solicitor/client relationship; a professional relationship with any other professional person and client; a parent and child; a guardian; an attorney under Power of Attorney; and a doctor and patient, to name but a few. A fiduciary duty however may also exist in other circumstances which are situational or circumstantial, such as where an elderly person, for example, or incapable person, is vulnerable or dependant on a particular person which establishes a defined relationship of trust.

A leading authority on the defining features of a fiduciary relationship isLac Minerals Ltd. v. International Corona Resources Ltd1 wherein Justice Sopinka determined that there are some traditional relationships, including that of principal and agent, which are generally recognized to give rise to fiduciary obligations.When dealing with one of these traditional relationships, the characteristics or criteria for a fiduciary relationship are assumed to exist unless, in special circumstances, they are shown to be absent.

This area of law encompasses issues of capacity, and capacity assessments and power of attorney litigation, trust disputes and interpretation. There is also a vast amount of case law concerning fiduciaries, their obligations and duties.

Central to the concept of fiduciaries is the obligation, on the part of the fiduciary, to prefer the interests of the person in relation to whom he or she stands as a fiduciary over her own interests.2 What is generally required in order to find a fiduciary relationship is evidence of a mutual understanding that one party has relinquished her own self-interest and agreed to act solely on behalf of the other party. Such relationships and/or interactions are often characterized as power-dependent relationships where one party gains a position of overriding power and influence over another. In Mollot v Mollot, the Alberta Court of Queen’s Bench held that the fiduciary duty associated with a power of attorney requires the fiduciary to avoid "engagements in which he has or can have a personal interest conflicting with the interests of those whom he is bound to protect" unless "the principal, with full knowledge of all the material circumstances and of the exact nature and extent of the agent's interest, consents".3

The scope of the fiduciary duty under a power of attorney was set out in Egli (Committee of) v Egli at para 82, wherein it was stated that:

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage...The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor.4

Section 32 of the Substitute Decisions Act, 1992, SO 1992, c 30, also provides that, in addition to an attorney being a fiduciary “who’s powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit”, an attorney also has the following obligations:

(1.1) If the guardian’s decision will have an effect on the incapable person’s personal comfort or well-being, the guardian shall consider that effect in determining whether the decision is for the incapable person’s benefit.

(1.2) A guardian shall manage a person’s property in a manner consistent with decisions concerning the person’s personal care that are made by the person who has authority to make those decisions.

(1.3) Subsection (1.2) does not apply in respect of a decision concerning the person’s personal care if the decision’s adverse consequences in respect of the person’s property significantly outweigh the decision’s benefits in respect of the person’s personal care.

(2) The guardian shall explain to the incapable person what the guardian’s powers and duties are.

(3) A guardian shall encourage the incapable person to participate, to the best of his or her abilities, in the guardian’s decisions about the property.

(4) The guardian shall seek to foster regular personal contact between the incapable person and supportive family members and friends of the incapable person.

(5) The guardian shall consult from time to time with,

(a) Supportive family members and friends of the incapable person who are in regular personal contact with the incapable person; and

(b) The persons from whom the incapable person receives personal care.

(6) A guardian shall, in accordance with the regulations, keep accounts of all transactions involving the property.

As Power of Attorney disasters are all too prevalent today, this area of practice is continuing to grow at an alarming rate. As advisors we are increasing aware of the far reaching consequences of this practice area, the potential minefield of things that can go wrong, as well as ensuring familiarity with the legislation and case law in order to competently advise our clients ‚ this is so whether we are solicitors addressing our client’s concern at first instance or barristers litigating after the fact.

The area of fiduciary law evolved from the jurisdiction of the Court of Chancery over trust and confidences in England a great many years ago. It pertains to the fidelity of a person in whom trust or confidence has been placed, and renders enforceable the expectations of the duty of loyalty and faithfulness arising from the relationship. Fiduciary law and litigation deals with the conduct of persons entrusted or in a position of confidence. The relation existing between a principal and its agent is of a fiduciary nature whenever the principal grants a trust or confidence in the person whom is selected as the agent.

Fiduciary law encompasses the law of trusts, the law of confidences, the law of tort, contract law, agency, and arises out of duty and breach thereof.


1. Lac Minerals Ltd. v. International Corona Resources Ltd. 1989 CarswellOnt 126, 1989 CarswellOnt 965, [1989] 2 S.C.R. 574, [1989] C.L.D. 1140, [1989] S.C.J. No. 83, 101 N.R. 239, 16 A.C.W.S. (3d) 345, 26 C.P.R. (3d) 97, 35 E.T.R. 1, 36 O.A.C. 57, 44 B.L.R. 1, 61 D.L.R. (4th) 14, 69 O.R. (2d) 287 (note), 6 R.P.R. (2d) 1, J.E. 89-1204, EYB 1989-67469

2. Hodgkinson v. Simms, [1994] 3 S.C.R. 377(S.C.C.). See alsoM. (K.) v. M. (H.), [1992] 3 S.C.R. 6(S.C.C.), paras. 73-81

3. Mollot v. Mollot 2006 CarswellAlta 1016, 2006 ABQB 249, [2007] A.W.L.D. 1008, [2007] A.W.L.D. 1036, [2007] A.W.L.D. 998, [2007] A.W.L.D. 999, [2007] W.D.F.L. 1228, [2007] W.D.F.L. 1229, [2007] W.D.F.L. 1259, 156 A.C.W.S. (3d) 153, 406 A.R. 167

4. Egli(Committeeof) v.Egli 2004 CarswellBC 843, 2004 BCSC 529, [2004] B.C.W.L.D. 691, [2004] B.C.J. No. 796, 130 A.C.W.S. (3d) 395, 28 B.C.L.R. (4th) 375, 7 E.T.R. (3d) 308



WEL Capacity Checklist for POA for Personal Care

WEL Capacity Checklist for Property

WEL Book: WEL on Fiduciary Accounting

This overview is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This information is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive. Whaley Estate Litigation Partners.

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