COURT OF APPEAL FOR ONTARIO
Hoy A.C.J.O., Doherty J.A. and Marrocco A.C.J. (ad hoc)
BETWEEN
Sheldon Lewis, Marilyn Lewis, Donna Buckley and Marlene Lewis
Applicants (Appellants)
and
Donald Lewis, Douglas Lewis, the Estate of Emerson Walker Lewis, and the Estate of Marie Theresa Lewis
Respondents (Respondents)
Patrick J. Kraemer, for the appellants
Carol Craig, for the respondents
Heard: January 17, 2020
On appeal from the order of Justice Hugh K. O’Connell of the Superior Court of Justice, dated July 31, 2019, with reasons reported at 2019 ONSC 4595.
REASONS FOR DECISION
1On April 16, 2013, Emerson and Marie Lewis appointed the respondents, two of their six adult children, as their attorneys for property. The appellants – the remaining four children – appeal the order of the application judge, dismissing their application under ss. 42(1) and (4) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30, (the “SDA”) for leave to require the respondents to pass their accounts. The court was advised that Emerson and Marie Lewis died about seven weeks apart, shortly after the application was heard.
2The appellants had also unsuccessfully challenged Marie Lewis’s appointment of the respondents as her attorneys for personal care and property. Their further appeal was also dismissed.
3We dismissed this appeal, for reasons to follow. These are our reasons.
4Section 42(1) of the SDA provides that “[t]he court may, on application, order that all or a specified part of the accounts of an attorney or guardian of property be passed”. In turn, s. 42(4) partially sets out who may make an application under s. 42(1). The list includes specified persons and “any other person, with leave of the court”. The jurisprudence suggests that “any other person” will not often be granted leave to bring an application under s. 41(1): see e.g., Groh v. Steele, 2017 ONSC 3625, 29 E.T.R. (4th) 121, at para. 53
5The parties agree that the test to be applied in determining whether a person should be granted “leave of the court” under s. 42(4) to make an application under s. 42(1) is that set out in Ali v. Fruci (2006), 22 E.T.R. (3d) 187 (Ont. S.C.), at para. 3: the court must be convinced that (1) the person or persons seeking leave have a genuine interest in the grantor’s welfare; and, (2) a court hearing the application under s. 42(1) may order the attorney or guardian to pass his or her accounts.
6Even where a person has standing to apply under s. 42(4), it remains in the discretion of the court to order a passing of accounts under s. 42(1): Dzelme v. Dzelme, 2018 ONCA 1018, 46 E.T.R. (4th) 43, at para. 7; see also McAllister Estate v. Hudgin (2008), 42 E.T.R. (3d) 313 (Ont. S.C.), at paras. 9, 13. In Dzelme, at para. 7, this court stated that factors a court considers in exercising its discretion under s. 42(1) include the extent of the attorney’s involvement in the grantor’s financial affairs and whether the applicant has raised a significant concern in respect of the management of the grantor’s affairs to warrant an accounting.
7On appeal, the first prong of the test in Ali v. Fruci is not at issue: the respondents concede that the appellants had a genuine interest in their parents’ welfare. The question is whether the appellants have established any basis for this court to interfere with the application judge’s conclusion that the second prong of the test was not met. That requires consideration of the applications judge’s reasons in light of Dzelme.
8The application judge found that the “record falls far short and lacks evidentiary stamina to suggest that there is any direct allegation of misfeasance or wrongdoing”. Considering “what the attorneys have done and are willing to do”, he was not persuaded that he should exercise his discretion to grant leave to the appellants and order an accounting. He concluded that there was no “reason to believe that a court hearing the matter may order an accounting by the attorneys”.
9The appellants argue that the application judge erred in finding that there was a lack of evidence relating to misfeasance or wrongdoing, erred in principle in the exercise of his discretion by focusing on whether there is a concern about misfeasance or wrongdoing, and improperly considered that Marie Lewis had capacity when she appointed the respondents as her attorney for property as a factor in his analysis.
10We are not persuaded that there is a basis for this court to interfere with the application judge’s order dismissing the appellants’ application under s. 42(4).
11Some brief background about the extent of the respondents’ involvement in their parents’ financial affairs and “what the attorneys have done” is helpful.
12The uncontested evidence was that Emerson Lewis remained capable of managing his and his wife’s intertwined affairs. He continued to receive all bank statements until he and his wife moved into a long-term care facility in October 2016. The respondents helped their father manage his and their mother’s finances, such as paying his bills for him, but kept him apprised of all actions taken on their behalf. Before the appellants commenced their application, the respondents responded to their request to provide copies of documentation and continued to provide documentation in the course of the application. In his reasons, the application judge repeated – and, in our view, reasonably accepted – the respondents’ counsel’s characterization of the respondents as acting either at their father’s request, or with his knowledge and consent.
13Moreover, Emerson Lewis, who was represented by counsel and participated fully in the application, gave evidence that he had no concerns with the respondents’ involvement in the management of his and his wife’s affairs and wanted the litigation to come to an end.
14We agree with the application judge’s finding that the “record falls far short and lacks evidentiary stamina to suggest that there is any direct allegation of misfeasance or wrongdoing”.
15We agree with the appellants that an attorney can be ordered to pass accounts, and accordingly leave can be granted under s. 42(4), in the absence of significant concerns about misfeasance or wrongdoing. Dzelme frames this part of the inquiry more broadly: whether the applicant has raised a significant concern in respect of the management of the grantor’s affairs to warrant an accounting: at para. 7. Other matters, such as a significant erosion of the grantor’s financial position, could raise a significant concern in respect of the management of the grantor’s affairs: see e.g., McAllister Estate, at paras. 15-16.
16However, the application judge’s reasons must be considered in the context of the record and the appellants’ submissions. Emerson and Marie Lewis’s investment portfolios increased between the time that the respondents were appointed their attorneys for property and the time the appellants brought this application. The appellants made veiled allegations of misfeasance or wrongdoing. The application judge’s focus on the lack of evidence of misfeasance or wrongdoing was responsive to their allegations. We are not persuaded that the application judge imposed a narrower test requiring proof of misfeasance or wrongdoing and thereby erred in principle in the exercise of his discretion.
17Nor, in our view, did the application judge consider that the fact that Marie Lewis had capacity when she appointed the respondents as her attorneys for property was a reason to deny the appellants leave under s. 42(4). To the contrary, he specifically stated that whether she had capacity was not germane to the application.
18Accordingly, the appeal was dismissed, and the appellants were ordered to pay the respondents their costs of the appeal, fixed in the amount of $13,500, inclusive of costs and disbursements.
“Alexandra Hoy A.C.J.O.”
“Doherty J.A.”
“Marrocco A.C.J.S.C. (ad hoc)”
