Epiq Systems, Inc.
Estates & Wills & Trusts

Emotionally driven litigation can cost detached children

By Kristine Anderson

Well-meaning children can find themselves embroiled in costly litigation if they jump to uninformed and emotional conclusions about how their parents' assets are being managed.

That’s the lesson to take from a recent Superior Court decision, which sets out an all too familiar scenario involving the child of an elderly person who does not have much involvement in their parent’s lives but becomes suspicious about the way their assets are being handled by a third party.

The court sets a high bar for the removal of a power of attorney (POA) or for ordering a passing of accounts. Barring clear evidence of mismanagement or fraud, the court will be reluctant to interfere. 

The facts of the case are fairly straight forward: The 81-year-old mother ran a motel business, which her only son assisted with over many years. The son and his partner also shared a home with both of his parents, as well as their own child until the pair separated in 2003.

When she was in her late 70s, the mother had a fall, and her husband passed away shortly thereafter. After a period of rehabilitation and a brief stay in a retirement residence, she moved in with her son’s ex-partner and grandson. At the same time, her son stopped participating in the motel business and failed to visit his mother, claiming he was suffering from back problems and grief. 

After moving in with her, the mother named her son’s former partner as her POA for Property, jointly with her bookkeeper of 30 years. A year later, her son started the litigation, claiming his mother's assets were being mismanaged, and that the two women acting under the POA should be suspended and ordered to pass their accounts. He also started a related action against them for conversion of property he alleges was his.

Fundamental to any dispute of this nature is whether the grantor of the POA has capacity, especially in cases like these, where there is an allegation that the grantor does not understand that her attorney is mismanaging her affairs. In regard to POAs for property, the following factor into an assessment of whether or not the grantor had capacity:

  • Do they understand the value of their property;
  • Do they understand any obligation they may have to any dependants;
  • Do they understand that they are giving the power to manage their property to someone else and in doing that this person must account to them;
  • Do they understand the gravity of so doing and the potential for abuse;

As part of an Order for Directions laying out how the litigation would proceed, the son asked for a capacity assessment to be ordered for his mother.

The court is given the authority to order a capacity assessment under the Substitute Decisions Act, 1992 if there are reasonable grounds to believe the individual is incapable. In so doing, the court will balance the affected party's fundamental rights against the court's obligation to protect vulnerable people. A capacity assessment is seen as a substantial invasion of privacy. It should not be assumed that a capacity assessment will be ordered just because the individual is elderly. 

In this case, a capacity assessment had already been done and it was determined the mother had capacity. The mother's counsel had ordered one as a pre-emptive strike against the son's application. The son argued that a second one was required due to various technical and format breaches in the report’s preparation, as well as claiming the original version was out of date and did not cover all the facts raised in the application. 

The son relied on specific memory lapses his mother had in regard to financial matters to argue she did not have capacity. The court focused on the evidence of the mother herself, concluding that she had the overall ability to understand her assets and finances, and finding no reasonable grounds to suspect that she was now incapable. As a result, the court refused to order a fresh capacity assessment.

The court also rejected the son’s request for an order that the attorneys pass their accounts to show all of the transactions they had participated in on his mother's behalf.

In reaching this decision, the court relied on the evidence of the mother concerning her thoughts on how her money was being managed and the veracity of her assertion that it was her money to do with as she pleases.  

Compelling a passing of accounts in the son’s situation was not automatic. He was not a dependant, a creditor of his mother, or the POA for personal care. He could only compel a passing with leave of the court.

As a passing of accounts is a detailed review of a person's finances which then becomes public when it is filed with the court, the court will only grant leave sparingly when there is evidence of abuse.

The incidences that raised the son’s suspicions were that he felt the business was sold for less than it was worth, the manner in which title to a home where his mother and former partner lived was held, and that other assets were sold off rather than kept (such as paintings and vehicles).

The court was critical of the son's evidence on these alleged suspicious activities, leading to a conclusion that he overstated his suspicions, and that they arose primarily out of a misunderstanding of the reasons behind the decisions being made.

The court further stated: "The fact that [the son] does not agree with the manner in which the Attorneys are conducting [his mother’s] affairs does not mean that they are conducting those affairs improperly."

One should be careful before choosing to engage in litigation of this nature and check their emotions at the door. They must ensure they have done a thorough analysis and balancing of the desire to protect the elderly without inadvertently taking on a patronizing attitude as to their parent's abilities and choices.

– Toronto estate and civil litigator Kristine Anderson is a partner with Bales Beall LLP

To Read More Kristine Anderson Posts Click Here
Lawyer Directory
BICO: NEW AD TO ROTAE MONTHLY WITH BPFGToronto Lawyers AssociationMKD InternationalFeldstein Family LawLegal Print & Copy Inc.Stancer Gossin Rose Benson Percival Brown - Flat Box Ad Unit - 300x125Engel DUI