M I L L E R T H O M S O N L L P Enduring Powers of Attorney

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M I L L E R T H O M S O N L L P Enduring Powers of Attorney

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M I L L E R T H O M S O N L L P

Barristers & Solicitors, Patent & Trade-Mark Agents

TORONTO VANCOUVER CALGARY EDMONTON WATERLOO-WELLINGTON MARKHAM WHITEHORSE MONTRÉAL

Enduring Powers of

Attorney

Dragana Sanchez Glowicki

2005

This article is provided as an information service only and is not meant as legal advise. Readers are cautioned not to act on the

information provided without seeking specific legal advise with respect to their unique circumstances.

© Miller Thomson LLP 1998-2005


ENDURING POWERS OF ATTORNEY 1

TABLE OF CONTENTS

1. Introduction to Enduring Powers of Attorney............................2

2. Alberta Power of Attorney Legislation........................................3

3. Attorney's Duties............................................................................7

4. Attorney's Duty to Account...........................................................8

5. Potential Areas of Abuse by Attorneys ......................................11

6. Case Law Regarding Abuses of Powers of Attorney ................13

7. Capacity a Donor Requires to Ask for an Accounting and

Counsel’s Ability to Represent Persons Who Lack Mental

Capacity ........................................................................................18

8. Examples of Accounting Clauses that may be included in

Enduring Powers of Attorney.....................................................20

1 Portions of this paper were originally prepared by Dragana Sanchez Glowicki and

presented to the Canadian Bar Association, Wills and Estates Section – North in February

2004. This is the second version of the paper, which is made possible by the extensive

assistance of Andrea E. Beckwith:

Dragana Sanchez Glowicki

MILLER THOMSON LLP, 2700, 10155 – 102 Street, Edmonton, AB T5J 4G8

Phone: 780.429.9703, Fax: 780.424.5866, E-mail: dsanchezglowicki@millerthomson.ca

with assistance from:

Andrea E. Beckwith

MILLER THOMSON LLP, 3000, 700 – 9 Avenue SW, Calgary, AB T2P 3V4

Phone: 403.298.2405, Fax: 403.262.0007, E-mail: abeckwith@millerthomson.ca


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1. Introduction to Enduring Powers of Attorney

The enduring power of attorney (“EPA”) has been permitted in Alberta

since 1991 when the Powers of Attorney Act was enacted. 2 Fourteen years

have passed since EPAs were first introduced in Alberta and enough time

has elapsed that we are now seeing problems occur with them. In

particular, under the law as it currently exists in Alberta, attorneys usually

have unlimited power over the donor’s estate after the donor has lost

capacity (however, see footnote 13), yet, attorneys are accountable to

nobody other than the donor and the risks of abuse are prevalent. 3

EPAs are typically “immediate” or “springing”. An “immediate” EPA

takes effect upon signing and continues notwithstanding any mental

incapacity or infirmity of the donor that occurs after the signing of the

EPA, whereas a “springing” EPA refers to an EPA that takes effect upon

the mental incapacity of infirmity of the donor.

In the spirit of harmonizing legislation among the western provinces, in

June 2004 the Western Canada Law Reform Agencies published Enduring

Powers of Attorney: Areas for Reform, Consultation Paper #1. 4 The goals

of this project are to:

(a)

(b)

facilitate the recognition of EPAs both within and across

provinces;

clarify the duties of attorneys; and

2 Before 1991 in Alberta, powers of attorney only remained in force while the donor had

the mental capacity to manage his or her own legal and financial affairs. Further, if an

attorney acted after his or her authority, the attorney was personally liable for any losses

suffered by the donor as a result of the attorney’s impugned actions - Yonge v. Toynbee

[1910] 1 K.B. 215 (C.A.).

3 Enduring Powers of Attorney, Issue Paper No. 5 (Edmonton; Alberta Law Reform

Institute, 2002) is an excellent resource regarding what has occurred in the years since

EPAs were implemented in Alberta and the problems EPAs pose, even though their

advantages are realized in the majority of the cases.

4 Available at http://www.law.ualberta.ca/alr .


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(c)

clarify the proper approach for third parties, such as banks,

to use when dealing with attorneys. 5

2. Alberta Power of Attorney Legislation

In Alberta, EPAs are governed by the Powers of Attorney Act, R.S.A.

2000, c. P-20. 6 Some of the more notable provisions from the Alberta

legislation are listed below:

• Section 8 – Duty to act

An attorney is not required to act or accept his or her

appointment, however, once an attorney has commences

acting under an EPA, he or she must continue in that role.

• Section 9 - Application to Court for advice

An attorney can apply to the Court for directions with

respect to how the attorney should act regarding the

administration of the donor’s estate. An attorney will be

free of liability if he or she acts in accordance with the

Court’s directions, unless the attorney commits fraud or

conceals or misrepresents the facts to the Court.

5 Comments regarding this initiative may be directed to:

Peter J.M. Lown, Q.C, Director

Alberta Law Reform Institute

402 Law Centre

University of Alberta

Edmonton, Alberta

T6G 2H5

Phone: 780.492.5291, Fax: 780.492.1790, Email: reform@alri.ualberta.ca

6 EPAs are governed in other common law provinces by the Power of Attorney Act,

R.S.B.C., c. 370; Powers of Attorney Act, 2002 S.S. 2002, c. P-20.3; Power of Attorney

Act, C.C.S.M., c. P97; Substitute Decisions Act, 1992, S.O. 1992; Property Act, S.N.B., c.

P-19 and Trustees Act, S.N.B., c. T015. S-30; Powers of Attorney Act, R.S.N.S. 1989, c.

352; Powers of Attorney Act, R.S.P.E.I. c. P-16; Enduring Powers of Attorney Act,

R.S.N.L. 1990, c. E-11 – and in the territories: Enduring Powers of Attorney Act,

R.S.Y.T. 2002, c. 73; and Powers of Attorney Act, S.N.W.T. 2001, c. 15.


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• Section 10(1) – Application for accounting

An application may be made by originating notice to the

Court of Queen’s Bench of Alberta for an order directing

an attorney to pass his or her accounts regarding all or

specific transactions entered into under the EPA.

• Section 10(2) – Who may bring application for

accounting

An application for an order directing the passing of an

attorney’s accounts may be made by the donor, if the donor

has mental capacity, or by any an interested person 7 if the

donor is unable to make reasonable judgments regarding

his or her estate.

• Section 10(4) – Court’s discretion regarding relief in

accounting applications

Upon hearing an application for an order directing an

attorney to pass his or her accounts, the Court may also

grant other relief it considers appropriate under the

circumstances. 8

7 “Interested person” is not defined in the Powers of Attorney Act but is defined in section

1(l) of the Dependent Adults Act, R.S.A. 2000, c. D-11 as the Public Trustee, the Public

Guardian or “any other adult person who is concerned for the welfare of the person in

respect of whom a guardianship order or trusteeship order is sought or has been

obtained.”

8 For example, the Court may make an order that a guardianship and/or trusteeship

application be made pursuant to the Dependent Adults Act in relation to the donor.

Further, the Court may order the appointment of an interim or temporary guardian and/or

trustee without the need for the standard Form 1 (Physician/psychologist) report

evidencing the need for such an order, if the court determines that some or all of the

property or estate of the donor is in immediate danger or if it is impractical or impossible

to obtain such a report on short notice - such an appointment will usually have

implications on the authority and duties of the trustee. (see section 4 of the Dependent

Adults Act).


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• Section 10(5) – Waiver of duty to account

This section implicitly allows for an attorney’s duty to

account to be avoided by an agreement or waiver.

However, the Court can set this agreement aside at any

time and require the attorney to account.

• Section 11 – Termination order

Any interested person may apply to the Court to terminate

an EPA if he or she is concerned for the donor’s financial

affairs and believes that the donor is in serious harm and

that it is necessary for the harm to be prevented (see

footnote 8 for an example of the type of relief the Court

may grant if it deems it appropriate to terminate the

Enduring Power of Attorney).

• Section 12(1) – Renunciation

Once an Attorney has accepted his or her appointment in an

EPA and has commenced acting in that role, the attorney

cannot renounce his or her appointment without leave of

the Court. 9

• Sections 12(2) and 12(3) – Process for effecting

renunciation

If an attorney wants to renounce his or her appointment, he

or she must apply to the Court of Queen’s Bench of Alberta

for that relief by way of originating notice.

• Section 12(5) – Criteria for granting renunciation

The Court may give an order granting the attorney leave to

renounce his or her appointment if:

9 Common circumstances where an attorney may wish to renounce his or her appointment

after he or she has commenced acting as an attorney include when the attorney is elderly,

ill or moving out of Canada.


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(i)

(ii)

such a renunciation is in the best interests of the

donor, and

the alternate attorney appointed in the EPA is

prepared to assume the attorney’s duties. 10

• Section 13(1)(a) – Termination of EPA by donor in

writing

A donor may revoke his or her EPA in writing to the

Attorney if the donor has the mental capacity to understand

the revocation.

• Section 13(1)(c) – Termination of EPA by interested

party

An interested party may make an application to the Court to

terminate an attorney’s rights under an EPA.

• Section 15 – Report for the Court

The Court can use this section to order the engagement of

an accountant to prepare an accounting of the donor’s

finances, or anyone else that the Court determines is

necessary to investigate and report on the transaction(s) the

attorney has entered into pursuant to an EPA. 11

10 If the court grants an order permitting the attorney leave to renounce his or her

appointment and there is no alternate attorney appointed under the EPA, the Court may

require that a dependent adult application be made under the Dependent Adults Act, or

appoint an interim trustee of the donor’s estate pursuant to Section 4 of the Dependent

Adults Act until a proper application for trusteeship of the donor’s estate can be made.

11 This section also allows the Court to order that a doctor be engaged to determine the

donor’s mental capacity.


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3. Attorney's Duties

Attorneys appointed under EPAs have many duties and they can be

broadly categorized as follows: 12

• a positive duty to act;

• duties associated with accounting (discussed more fully in

the next section); and

• duties associated with their status as fiduciaries such as:

o

o

o

o

o

to act honestly, in good faith, and in the best

interests of the donor;

to act with the standard of care of a prudent

person, and within the attorney’s experience and

expertise;

to only act within the scope of authority granted

in the EPA; 13

to refrain from mixing the property of the donor

with the property of the attorney or anyone else;

to make full disclosure to the donor of any

interests that may conflict with the attorney’s

responsibilities under the EPA, and to always

12 See M.L. MacGregor, Preparation of Wills and Powers of Attorney, 3 rd ed. (Aurora,

ON: Canada Law Book, 2004) at 253 and Enduring Powers of Attorney: Areas of

Reform, Consultation Paper #1 (Western Canada Law Reform Agencies, 2004) at 6 – 7.

13 Although some EPAs may grant limited authority for the attorney to only oversee

specific matters, such as managing a company or an investment portfolio, the majority of

the EPAs are prepared so that the attorney has very broad and general powers over all of

the donor’s property, finances and affairs and the attorney’s authority is only limited as

specifically set out the EPA.


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refrain from allowing the attorney’s personal

interest to conflict with those of the donor;

o

o

o

o

o

to provide maintenance, education or other

benefits for the donor’s spouse or legal

dependents;

to take into consideration the wishes of the

donor, to the extent possible, in carrying out the

attorney’s obligations;

to refrain from obtaining secret profits;

to refrain from making, changing, revoking or

frustrating a will on behalf of the donor; and

to refrain from delegating his or her authority to

another person unless the EPA provides

otherwise, or legislation allows for delegation.

4. The Attorney's Duty to Account

Attorneys appointed under EPAs have both a statutory and common law

duty to account.

(a)

Statutory Law Duty to Account

Section 10 of the Powers of Attorney Act states that an application may be

made to the Court by way of originating notice for an order directing an

attorney to bring in and pass accounts in respect of any or all transactions

entered into in pursuance of the EPA. It should be noted that the duty to

account is not triggered by an application to the Court to pass accounts –

rather, it is an ongoing duty during the duration of the EPA.


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(b)

Common Law Duty to Account

In Sanford v. Porter [1889] O.J. No. 43 (QL) (Ont. C.A.), Maclennan

J.A. stated for the Court at paragraphs 21 and 22:

The duty of a trustee or other accounting party is to have his accounts

always ready, to afford all reasonable facilities for inspection and

examination, and to give full information whenever required …

The true rule, as I understand it, is laid down by Mr. Lewin, Law of

Trusts, 8 th ed., p. 691, where he says: “… It is, therefore, the bounden

duty of the trustee to keep clear and distinct accounts of the property he

administers and he exposes himself to great risks by the omission. It is

the first duty of an accounting party … to be constantly ready with his

accounts.”

The principle flowing from Sandford was endorsed in Whitford v.

Whitford Estate, [1941] 2 D.L.R. 701 (N.S.S.C.), rev’d on other

grounds [1942] S.C.R. 166.

Indeed, it is well established that an attorney has a duty to maintain

accurate accounts of all transactions entered into on behalf of the donor,

and to furnish these to the donor if requested. 14

Specific elements of an attorney’s duty to account under an EPA

include: 15

• an attorney must keep proper accounts of the trust estate

that are clear and accurate;

• the accounts must be kept distinct from other accounts;

14 Enduring Powers of Attorney, Report for Discussion No. 7 (Edmonton: Alberta Law

Reform Institute, 1990) at 71.

15 I.M. Hull, Power of Attorney Litigation, (Toronto: CCH Canada Limited, 2000) at 73 –

74.


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• receipts or cancelled cheques and vouchers must be

preserved to support entries on both the credit and debit

sides of the account;

• an attorney must produce the accounts to the donor, to the

Court and to any beneficiary when he or she is reasonably

requested to do so;

• an attorney must make the donor, the Court, and all

interested parties fully aware of their rights;

• an attorney must disclose any and all breaches of trust;

• an attorney must allow the donor, the Court, and all

interested parties sufficient time to investigate the accounts;

and

• an attorney must ensure that the donor, the Court, and all

beneficiaries have competent and independent advice when

they are investigating the accounts.

The Alberta Law Reform Institute has noted: 16

The existence of the duty to account, and the right to enforce it by

means of an action for accounting ensure that the donor is able to

monitor the attorney’s conduct under the Power of Attorney.

16 Enduring Powers of Attorney, Report for Discussion No. 7 (Edmonton: Alberta Law

Reform Institute, 1990) at 72.


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5. Potential Areas of Abuse by Attorneys

Current safeguards exist in Alberta against abuse of EPA powers, such

as: 17 • an EPA must be in writing and must specifically indicate

whether it is to continue notwithstanding the mental

incapacity of the donor that occurs after execution of the

EPA or, alternatively, that it is to take effect upon the

mental incapacity of the donor (i.e., immediate or

springing);

• the donor’s signature must be witnessed;

• the donor must designate a person to make a declaration

that the donor is mentally incapable or infirm, or if the

donor does not, the default set out in the Act allows two

medical practitioners to make a written declaration to that

effect;

• an attorney who has accepted an appointment has a duty to

exercise their powers to protect the donor’s interests during

any period in which the attorney knows, or reasonably

ought to know, that the donor is unable to make reasonable

judgments in respect of matters relating to all or part of the

donor’s estate; and

• the donor’s personal representative or trustee or any

interested person may apply to the Court for an order

directing the attorney under an EPA to pass accounts or for

termination of the EPA.

17 Enduring Powers of Attorney: Safeguards Against Abuse, Final Report No. 88

(Edmonton: Alberta Law Reform Institute, 2003) at ix – x.


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Notwithstanding the safeguards listed above, there are still several areas of

potential abuse where an attorney may breach one of more of his or her

duties to the donor. Instances of abuse by attorneys of EPAs typically

arise when a family member suspects that the attorney is acting

inappropriately and makes a request to review the attorney’s accounting

and is subsequently denied access to the attorney’s accounts. 18

An attorney appointed under an EPA may take advantage of the donor

and/or the donor’s assets in many ways, including:

• using the donor’s money for the attorney’s own benefit;

• transferring the donor’s money or property to the attorney;

• borrowing money or property belonging to the donor;

• preventing the spending of the donor’s money on the

donor’s maintenance;

• selling the donor’s real or personal property to the attorney

or a third party at a price below market value;

18 The Alberta Law Reform Institute reported that between 1992 and 2002 there were 5

reported decisions in law reports in Canada:

- two 1999 EPA cases in Ontario;

- one 1999 EPA case in Alberta;

- one 1999 case in Ontario, however, this case involved abuse of a power of attorney that

was not an EPA; and

- one 2001 case in British Columbia (this case was against a third party that relied on

representations made by a purported attorney under an EPA).

See Enduring Powers of Attorney, Issues Paper No. 5 (Edmonton: Alberta Law Reform

Institute, 2002) at 11.

- 8 reported cases are included in this paper. However, this is only representative of a

small fraction of the abuse which occurs. Numerous cases of abuse go unrecognized, or

are settled and are not reported, or even get ignored by family and friends.


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• distributing the donor’s property while the donor is still

alive;

• refraining from providing the donor’s family members or

other interested parties with copies of the attorney’s

accounting or a copy of the donor’s EPA; and

• failing to keep proper records. 19

The Alberta Law Reform Institute (ALRI) has recently recognized that

further safeguards need to be imposed under Alberta law to protect the

interests of donors under EPAs and the ALRI has made several

recommendations in this regard. 20

6. Case Law Regarding Abuses of Powers of Attorney

The following cases are illustrative of how the Courts will treat cases

regarding abuses of powers of attorney:

• Re: Mittelstadt Estate [2002] A.J. No. 889 (QL) (Alta.

Q.B.)

This case involved the misappropriation of funds by a son

who was granted power of attorney over his mother. The

son withdrew great sums of money from his mother's bank

account which were unaccounted for. Following the death

of the mother, the three brothers applied to the Court for

their brother with the power of attorney to account for his

mother's assets.

19 Failing to account or keep proper records is the most common cause of application to

the Court to remove an attorney.

20 See Enduring Powers of Attorney: Safeguards Against Abuse, Final Report No. 88

(Edmonton: Alberta Law Reform Institute, 2003).


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The son produced unreliable documents and admitted that

he had a drinking and gambling problem during the time

that he had power of attorney over his mother's estate. The

accounting figures were often contradictory and the Court

called his attempt to account as pathetically inadequate.

The Court held that the son stood as a fiduciary to his

mother and that he breached his duties both by using the

property personally and also by failing to account for the

funds.

The Court found that the son clearly misappropriated funds

to his own use and as such, was liable for damages in the

amount of funds he had converted to his own. The funds

were to be paid back into the estate. Further, the Court

awarded solicitor-client costs against the son personally,

since his conduct was flagrant and indefensible.

• Fraser (Guardian ad litem of) v. Fraser, [2000] B.C.J.

No. 244 (QL) (B.C.S.C.)

A son was granted power of attorney by his mother.

Without the consent or knowledge of the mother, the son

took $40,000.00 out of the mother's bank account and lost

it in a bad investment. The mother found out, along with

her other children, and applied to the Court for an

accounting of the assets and advanced a claim for wrongful

conversion, negligence and breach of fiduciary duty. The

Court found that the mother had no knowledge of the

investment and did not consent to the investment by the

son.

The son breached his fiduciary duty to the plaintiff in

conducting himself inappropriately knowing that the

plaintiff had relied on him. The investment was structured

so that neither the mother, nor any of the other siblings,

could find out of the diversion of funds.


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The son failed to exercise reasonable care in that he failed

to read or understand the investment documents, failed to

adequately protect the plaintiff's assets, failed to diversify

the investment, failed to obtain independent advice,

unreasonably relied on oral representations made at large

meetings, invested at high risk, and failed to obtain the

consent and advice of his mother and siblings.

The defendant was liable for mismanagement of the

plaintiff's assets. The mother was entitled to full restitution,

including the interest that she would have received if the

funds had remained invested in a guaranteed investment

certificate. The plaintiff was entitled to costs throughout.

• Re: E.J.B., [1999] A.J. No. 761 (QL) (Alta. Q.B.)

The plaintiff and her brother were appointed by their

mother to be her attorneys under an EPA; the mother lived

in Edmonton and was hospitalized with depression after her

husband passed away. The plaintiff’s brother pressured his

mother to move in with his family in Lethbridge. The

mother did not want to move, as her friends were in

Edmonton and the mother intended to sell her home and

move in with the plaintiff. When the mother was

discharged from the hospital, the son moved her to

Lethbridge and he prevented the plaintiff from having any

contact with their mother. Further, the son did not keep the

plaintiff informed after their mother’s condition and there

were questionable transactions involving the son’s use of

the mother’s funds (her bank account was depleted by

$100,000).

The Court terminated the EPA and the plaintiff was

appointed as the mother’s interim trustee; the Court gave

the plaintiff leave to apply to the Public Trustee for its

consent to act as the trustee of the mother’s estate and

further leave to apply for trustee ship under the Dependent


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Adults Act if the Public Trustee refused to provide its

consent to act as trustee. Solicitor-client costs of the

application were awarded to the plaintiff, payable by the

mother’s estate.

• Re: Mulville Estate, [1999] O.J. No. 386 (QL) (Ont. Gen.

Div.)

This application was brought by the attorney/husband of

the donor to pass accounts for an eight-year period; the

donor’s daughter and brother objected to the accounts. The

Court awarded $25,000 in damages against the attorney, as

the husband misappropriated funds from his wife’s estate in

contravention of his duties as her attorney and in ignorance

of his obligations. The attorney had no appreciation for the

formal accounting requirements for attorneys and kept

virtually no records; he deposited his wife’s income into

joint bank accounts from which he paid for his own living

expenses, improvements to his new home (the wife could

not reside in the home) and his business vehicles. No

separate accounts or records were kept for the wife’s assets

and property. The Public Guardian and Trustee was

appointed as the wife’s interim guardian.

• Shipp v. Tremblay, [1998] B.C.J. No. 1192 (QL)

(B.C.S.C.).

This was an action by the plaintiff to recover assets that he

transferred to the defendant. The plaintiff and defendant

were friends. As the plaintiff aged and began to fall ill, he

moved in with the defendant. The defendant took control

over the plaintiff's assets and had a power of attorney

executed in his favour.

The defendant diverted funds from the plaintiff's account

without his knowledge, isolated the plaintiff from family

members, transferred legal title of the plaintiff's vehicle to


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himself, and misrepresented to the plaintiff the state of his

affairs and the total worth of his assets.

Once the plaintiff moved in with his family, he brought an

action to recover his assets from the defendant. The

plaintiff also sought punitive and aggravated damages. The

Court was satisfied that gifts or transfers took place as a

direct result of the defendant's improper exercise of

influence for his own benefit. Further, the defendant

breached his fiduciary duty under the power of attorney.

The defendant was required to account for the assets of the

plaintiff and return any misappropriated funds to the

plaintiff. The Court also awarded punitive damages against

the defendant.

• Lau v. Lee, [1994] B.C.J. No. 1770 (QL) (B.C.S.C.)

This was an action for damages for breach of fiduciary

duty. The case involved the granting of a power of attorney

in a business relationship. The Court held that under a

power of attorney, a fiduciary duty arises and an attorney

has a duty to disclose all material information relating to

the disposal of assets to the principal. Failing that, the

agent may be liable for damages for breach of fiduciary

duty and is required to account to the Court for the assets.

Negrych Estate v Negridge, [1994] O.J. No. 912 (QL)

(Ont. Gen. Div.)

The plaintiffs sought a mareva injunction restraining the

defendants from acting under a power of attorney in

relation to assets until a proper accounting had been made

to the Court.

The application was granted. The plaintiff's were entitled to

protection of the assets because of the fiduciary relationship

which existed as a result of the power of attorney, and


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because of the large amounts of assets transferred under the

power of attorney which were unaccounted for. An

interlocutory injunction can be granted against a power of

attorney until a proper accounting has been made to the

Court.

• Re: The Estate of Taerk, [1957] O.J. No. 31 (QL) (Ont.

H.C.J.)

The son had a power of attorney granted by his father. The

son was believed to have misappropriated property of the

father during his lifetime. An application was brought to

the Court for an accounting of the deceased's assets.

The Court held that if property was misappropriated prior

to the donor's death, the Court could order that the property

was still part of the deceased's estate and would pass

through the deceased's Will.

Parties have also attempted litigation against third parties who have relied

on representations made by purported attorneys – see Gold v. Toronto

Dominion Bank, [2001] B.C.J. No. 513 (QL) (B.C.C.A.). In this case the

plaintiffs brought an action against the bank for allowing an attorney

under an EPA to transfer $120,000 from the donor’s account to the

attorney’s account. Although the original EPA had been lost and a second

one was not properly executed, the Court held that the original EPA was

still in force and the bank was held not liable.

7. Capacity a Donor Requires to Ask for an Accounting and

Counsel’s Ability to Represent Persons Who Lack Mental

Capacity

In order to request an accounting of one’s assets from his or her attorney, a

donor requires the mental capacity to:

(i)

make an informed decision regarding whether to

request accounts from the attorney;


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(ii)

(iii)

understand the accounts, or to seek professional

assistance in understanding them; and

revoke the power of attorney if the accounts

indicate mismanagement on the part of the

attorney. 21

If the mental capacity of a potential client comes into doubt when seeking

instructions to prepare an EPA, Personal Directive or Will or to revoke an

EPA, prudent counsel will refer the potential client to a doctor for a

capacity assessment.

Rule 7.1 of Chapter 9 – The Lawyer as Advisor in the Law Society of

Alberta’s Code of Professional Conduct reads:

7.1 When a client is unable to provide proper instructions in a

matter due to incapacity:

(a)

(b)

the lawyer must make reasonable efforts to cause the

appointment of a legal representative for the client;

and

pending such appointment, the lawyer must continue

to act in the best interests of the client to the extent

that instructions are implied or as otherwise permitted

by law.

It may be proper in some circumstances to accept instructions from a

client who appears or has been adjudged to lack capacity in certain

matters. 22

Rule 7.2 of Chapter 9 – The Lawyer as Advisor in the Law Society of

Alberta’s Code of Professional Conduct reads:

21 Enduring Powers of Attorney, Report for Discussion No. 7 (Edmonton: Alberta Law

Reform Institute, 1990) at 72.

22 Law Society of Alberta, Code of Professional Conduct, Chapter 9, Commentary to

Rule 7.1


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7.2 In an emergency where the health, safety or a financial interest

of a person lacking capacity is threatened with imminent and

irreparable harm, a lawyer may take legal action on behalf of

such a person even though the person is unable to establish a

client/lawyer relationship or to make or express considered

judgments about the matter, when the person lacking capacity

or another acting in good faith on that person’s behalf has

consulted the lawyer.

It is clear from the Law Society of Alberta’s Code of Professional

Conduct that people with diminished capacity and in vulnerable positions,

who could be subject to abuse, can retain counsel to protect their interests.

Accordingly, it does not make sense, nor is it a cogent argument, that

someone with a capacity problem and who is in a vulnerable position

cannot give counsel instructions nor retain counsel. To make such an

argument leads to the mistaken assumption that persons of diminished

capacity cannot effectively protect themselves, or their assets, and that

unless someone else with capacity retains counsel on their behalf, they

must submit to the abuse being exerted by an attorney, trustee or agent.

8. Examples of Accounting Clauses that may be included in

Enduring Powers of Attorney to Minimize Abuse

In order to ensure the accountability of an attorney appointed under an

EPA, it is useful to include an accounting clause in the EPA, for example:

(i)

In an immediate EPA

So long as I am still mentally capable of being involved in, and

understanding my financial affairs, I direct my Attorney to provide me

with a monthly report, showing in detail the assets comprising my

estate, and the increases and decreases of those assets within that

month. This shall continue until it is the medical opinion of one doctor

that I am mentally incapable of understanding such information, and at

that time, my Attorney shall not be required to provide any further

reporting to me personally.

I direct that if I am not capable of being involved in, and understanding

my financial affairs, then my Attorney shall provide my daughter with a

monthly report, showing in detail the assets comprising my estate, and


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the increases and decreases of those assets within that month. In

addition, my Attorney shall make any and all information pertaining to

my estate available to my daughter for her review and analysis at any

time, forthwith upon her request.

(ii)

In a springing EPA:

I direct that if my daughter acts as my Attorney under this Enduring

Power of Attorney, then she is to report to my son with regard to her

decisions, and to show in detail the assets comprising my estate, and

the increases and decreases of those assets, on a quarterly basis, or

forthwith upon my son’s request. In addition, my Attorney shall make

any and all information pertaining to my estate available to my son for

his review and analysis at any time, forthwith upon his request.

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