ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-11-0256 & CV-12-0082
DATE: 2014-09-29

IN THE MATTER OF: The Estate of John Paul Gauthier, Deceased.

B E T W E E N:

COURT FILE NO.: CV-11-0256

Derek David Sitko,
Plaintiff

Robert Stead, for the Plaintiff

• and –

Albert James Gauthier, in his capacity as Attorney for Property of the Late John Paul Gauthier, deceased, and in his Capacity as Estate Trustee,

Morris J. Holervich, for the Estate Trustee

Defendant

A N D B E T W E E N:

Derek David Sitko,
Applicant

COURT FILE NO.: CV-12-0082

Robert Stead, for the Applicant

• and -

Albert James Gauthier,

Respondent

Morris J. Holervich, for the Respondent

HEARD: January 27, 28, 29, 30 and July 14, 2014, at Thunder Bay, Ontario

Mr. Justice F. B. Fitzpatrick

Reasons For Judgment on Passing of Accounts

[1] These are the reasons for judgment on the trial of an application to require a passing of accounts under a power of attorney for property. The attorney who now seeks to have his accounts passed is Albert Gauthier (“Albert”).

[2] Albert was acting under a power of attorney for property (the “P.O.A.”) granted by his father, John Paul Gauthier (“John Paul”), in February 2005. Albert acted under this P.O.A. from June 1, 2007, until April 20, 2011. John Paul died on that date. Albert also sought to have his accounts passed for a period of time that he acted as John Paul’s Estate Trustee. I declined to hear this portion of the application. It involved a relatively modest claim for compensation in the order of $1,313.44. The application (which proceeded as a trial pursuant to the order of Pierce J. dated September 6, 2013) was confined to those issues arising from Albert’s claim for compensation for the period where he was acting under the P.O.A. The trial regarding the passing of the accounts of the estate shall be scheduled before me at a date to be set by the trial coordinator at Thunder Bay.

Background

[3] John Paul lived in Schreiber, Ontario, at the end of his life. He worked for the Canadian Pacific Railroad. He served Canada in the Canadian Armed Forces. He had four children. Albert is the youngest. He has three older sisters, Myrna Lynne Doig, Joyce Anne Gauthier, and Paula Dee Sitko (“Paula”). In 2005, John Paul decided that in the event he became incapable of managing his affairs, he would divide responsibility for personal care and for property between two persons, Paula and Albert respectively.

[4] I observe at the outset that after hearing the evidence in this case, this matter may be a lesson for people who are thinking about dividing the responsibilities for personal care and property between two adult children who dislike each other. This case may also be a cautionary tale for those who take on the role of attorney in the face of hostile family members who are still actively involved in the care of the grantor.

[5] There are occasions where the animosity between two attorneys with different mandates can act as a kind of check and balance to the benefit of the grantor of the power of attorney. There are also occasions where this animosity can lead to conflict, and then litigation, and then the waste of a considerable amount of court time on petty squabbles over insignificant amounts of money where the well being of the grantor of the power of attorney is unaffected. This matter was of the latter type.

The Statutory Framework

[6] Several sections of the Substitute Decisions Act, S.O. 1992, c. 30 (the “Act”), are applicable to this case. First and foremost, s. 66 of the Act required that Albert exercised his duties diligently and in good faith. Further, s. 32 provides a number of express directions for a person who is acting as a guardian of property:

32. (1) A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.

(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.

(8) A guardian who receives compensation for managing the property shall exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise.

[7] Albert was required by Accounts of Records of Attorneys and Guardians, O. Reg. 100/96 (“Account and Records Regulations”), regulations pursuant to the Act, to keep records. The statutory requirements for record keeping is specific as in s. 2(1) of the Account and Records Regulations, it provides that;

2. (1) The accounts maintained by an attorney under a continuing power of attorney and a guardian of property shall include,

(a) a list of all the incapable person’s assets as of the date of the first transaction by the attorney or guardian on the incapable person’s behalf, including real property, money, securities, investments, motor vehicles and other personal property;

(b) an ongoing list of assets acquired and disposed of on behalf of the incapable person, including the date of and reason for the acquisition or disposition and from or to whom the asset is acquired or disposed;

(c) an ongoing list of all money received on behalf of the incapable person, including the amount, date, from whom it was received, the reason for the payment and the particulars of the account into which it was deposited;

(d) an ongoing list of all money paid out on behalf of the incapable person, including the amount, date, purpose of the payment and to whom it was paid;

(e) an ongoing list of all investments made on behalf of the incapable person, including the amount, date, interest rate and type of investment purchased or redeemed;

(f) a list of all the incapable person’s liabilities as of the date of the first transaction by the attorney or guardian on the incapable person’s behalf;

(g) an ongoing list of liabilities incurred and discharged on behalf of the incapable person, including the date, nature of and reason for the liability being incurred or discharged;

(h) an ongoing list of all compensation taken by the attorney or guardian, if any, including the amount, date and method of calculation;

(i) a list of the assets, and value of each, used to calculate the attorney’s or guardian’s care and management fee, if any.

[8] Albert seeks to be compensated for his actions in his capacity as power of attorney. Albert’s claim for compensation relies on s. 40(1) of the Act, which states:

40. (1) A guardian of property or attorney under a continuing power of attorney may take annual compensation from the property in accordance with the prescribed fee scale.

(2) The compensation may be taken monthly, quarterly or annually.

(3) The guardian or attorney may take an amount of compensation greater than the prescribed fee scale allows,

(a) in the case where the Public Guardian and Trustee is not the guardian or attorney, if consent in writing is given by the Public Guardian and Trustee and by the incapable person’s guardian of the person or attorney under a power of attorney for personal care, if any; or

(b) in the case where the Public Guardian and Trustee is the guardian or attorney, if the court approves.

[9] Albert did not seek the consent of the P.G.T. to take excess compensation on an ongoing basis. The amount of compensation that can be claimed is set out in the regulations pursuant to the Act, General, O. Reg. 26/95, which provides:

1. For the purposes of subsection 40(1) of the Act, a guardian of property or an attorney under a continuing power of attorney shall be entitled, subject to an increase under subsection 40(3) of the Act or an adjustment pursuant to a passing of the guardian’s or attorney’s accounts under section 42 of the Act, to compensation of,

(a) 3 per cent on capital and income receipts;

(b) 3 per cent on capital and income disbursements; and

(c) three-fifths of 1 per cent on the annual average value of the assets as a care and management fee.

[10] Section 42(1) of the Act gives the court discretion to pass all or specified portions of Albert’s accounts.

Analysis

[11] Only two persons testified at this trial: Albert and Paula. The focus of the trial was the allegation by the objectors that Albert had mismanaged the affairs of his father. Accordingly, the trial evidence concentrated on a very laborious explanation of a large number of expenditures that Albert made in the course of his duties. The complaints about Albert’s handling of John Paul’s affairs can be divided into four broad areas:

1. A complaint that Albert failed to keep proper accounts and his moving of John Paul’s funds out of his accounts into a PayPal account controlled by Albert;

2. Alleged mishandling of the financial relationship between John Paul and McCausland Hospital, the long term care facility where he spent most of the period covered by this passing;

3. Alleged failure by Albert to maintain and then obtain the highest and best value for John Paul’s home in Schreiber; and,

4. Specific complaints about a variety of expenditures Albert made for himself using John Paul’s funds or debit card.

[12] In his testimony, Albert sought to address these concerns by giving a detailed explanation of his actions while acting as power of attorney. Paula’s testimony focused on the specific complaints and how this allegedly negatively impacted John Paul.

[13] Overall, I observe that I found both witnesses credible in so far as I believe events occurred largely as they described them, with an important exception regarding record keeping by Albert that I will explain later. The conclusion or inferences I draw from their evidence is another matter.

[14] There was a palpable animosity between Albert and Paula, which was amply demonstrated by the evidence at trial. This is significant, in my view, because these people were charged with a similar goal, maintaining different aspects of the well-being of their father. However, the tension between the two did not lead to some kind of healthy positive competition that benefited John Paul, but rather generated this drawn out litigation.

[15] The animosity between Paula and Albert was evidenced by their testimony and by emails exchanged between the two in October 2009. This animosity was also shared by their sister Joyce. She did not testify at this proceeding but emails between herself and Albert from January 2011 were placed in evidence before me.

[16] Sometimes adult siblings say regrettable things to each other in the heat of the moment. Because words are spoken spontaneously, there is a social norm that permits such language to be forgiven in most cases. However, when siblings type regrettable things to each other in long emails, and then hit “send”, I view the vitriol expressed in the documents as evidencing a very special kind of focused and bitter hatred. That vitriol was present in the emails placed in evidence before me.

[17] For most of the period at issue, John Paul lived in long-term care. He suffered from dementia. He was unable, because of health reasons, to travel much beyond Terrace Bay, where the McCausland Hospital was located. His monthly needs were all covered by his pension income. He did not need the capital from his house to cover his day-to-day needs once he moved out. There were no creditors pursuing him. He had no need to generate income from what capital he did have in order to enjoy a comfortable lifestyle consistent with his medical condition.

[18] Although there was no medical evidence led at this trial, both the witnesses testified that John Paul was suffering from dementia after 2007, and was incapable or had difficulties managing his affairs, both personal and financial. Paula complained that Albert did not handle the finances properly. Albert complained that Paula did not handle his personal care properly.

[19] After considering all the evidence, I find that nothing Albert did, or didn’t do, had any negative impact on his ability to look after John Paul’s financial affairs during the time Albert was acting as power of attorney. Also, I find that John Paul’s financial situation was not negatively impacted to the extent that he suffered any hardship during the time that Albert was acting as his power of attorney for property. This is not surprising, as in my view, John Paul was of relatively modest means and had a very straightforward financial situation.

Issue No. 1: Allegation of Poor Accounting

[20] Having made the above findings, nevertheless the Court cannot condone a number of methodologies employed by Albert to carry out his duties as power of attorney for property.

[21] First and foremost, I find that Albert did not keep proper records or accounts as was required by s. 2(1) of the Account and Records Regulations. He testified that his records for his father had been lost or destroyed. He attributed this to negligence by his ex-wife who stayed in the matrimonial home following the breakdown of the marriage and allowed the property to descend into such a state of squalor that the paper records kept by Albert could not be salvaged. I do not accept this as being truthful on the issue of whether or not he kept ongoing records.

[22] I find that Albert did not keep records of ongoing dealings with his father. I find this because of the nature and quality of the first report Albert made to the objectors when they initially required an accounting. When an accounting was initially requested, Albert provided a printout of an Excel spreadsheet. This document was entered into evidence as an exhibit. If ongoing records had been kept in the proper format, recording the things required to be recorded, the information required by s. 2(1) of the Account and Records Regulations would have readily been available to be produced at first instance. This is particularly so as the relationship between Albert and Paula was so strained that Albert should have expected Paula to require an accounting at some point given her ongoing complaints about how Albert was handling John Paul’s affairs before he died.

[23] At this trial, the objectors complained Albert’s initial accounting to them was inadequate and misleading. I agree. The spreadsheet provided and exhibited at this trial was deficient in a number of respects. It did not:

1. include a list all of John Paul’s assets as of the date of the first transaction by Albert, including real property, money, securities, investments, motor vehicles, and other personal property;

2. include an ongoing list of assets acquired and disposed of on behalf John Paul, including the date of and reason for the acquisition or disposition and from or to whom the asset is acquired or disposed;

3. include a complete and ongoing list of all money received on behalf of John Paul, including the amount, date, from whom it was received, the reason for the payment, and the particulars of the account into which it was deposited;

4. include an ongoing list of all investments made on behalf of John Paul, including the amount, date, interest rate, and type of investment purchased or redeemed;

5. include a list of all John Paul’s liabilities as of the date of the first transaction by Albert on John Paul’s behalf;

6. include an ongoing list of liabilities incurred and discharged on behalf of John Paul, including the date, nature of, and reason for the liability being incurred or discharged; and,

7. include an ongoing list of all compensation taken by Albert.

[24] The initial spreadsheet did contain a partial list of monies that Albert did pay out on behalf of John Paul. It did not contain any indication to whom the payments were made. It did contain the dates of the particular transactions but I find the descriptions of the purposes of the payments were vague and incapable of comprehension by even a relative or person familiar with John Paul’s affairs.

[25] The initial spreadsheet did contain a final list of John Paul’s assets. It did cite the statutory amounts for calculating attorney compensation and included an ultimate amount. It did not, however, contain a listing of when the compensation was taken. Also, it did not show how the management fee was calculated in so far as the methodology for determining the average amount of the value of assets under management was not set out.

[26] For all of these reasons, I find that Albert did not satisfy his statutory duty to keep proper accounts on an ongoing basis.

[27] Albert also freely admitted to moving money out of John Paul’s account for purposes other than investing the funds or making purchases that benefitted John Paul. Starting in July 2008, in a series of 57 transactions of various amounts, Albert transferred $41,358.92 from John Paul’s bank account in Schreiber to an online U.S.-based service called PayPal. PayPal allows money transfers to be made through the Internet. The PayPal account, to which the funds were transferred, was in Albert’s name alone. In the accounts before the Court, there was $27,308.00 transferred back from the PayPal accounts to the estate account, once this litigation was commenced. Albert justified these transfers to PayPal on two bases.

[28] First, he testified that it was his belief that his father would be charged for his long-term care based on his net assets. To the extent these transfers made it appear that John Paul had less assets, Albert expected the long-term care facility would charge him less for his monthly care. Albert also used this justification for a $70,000.00 disbursement of John Paul’s funds to various family members in 2008. There was no evidence led as to whether or not in fact this strategy had any bearing on the amount John Paul paid for his care. In my view, this was a deceitful practice by Albert.

[29] The PayPal transfers also allowed Albert to pay for items for himself using what were originally John Paul’s monies. To the extent the account was in Albert’s name alone, any inquiry into records solely in John Paul’s affairs would only detect a PayPal transfer and not the purchases made to Albert’s benefit.

[30] Albert justified making the PayPal purchases as a manner in which he took his compensation. For example, he bought for himself, among other things, an Armani suit and paid for his sons’ annual hockey fees of some $800.00, with the Pay Pal account.

[31] Additionally, Albert justified this as an attempt to prevent John Paul’s money falling into Paula’s hands. Albert testified that Paula had “scooped” funds from an aunt’s estate. There was no evidence verifying this assertion by Albert.

[32] I find that moving the money into the PayPal account (or to any account that was not solely in the name of a beneficiary) is not representative of prudent financial management on the part of a fiduciary. As Albert had a statutory duty pursuant to s. 32(5) of the Act to consult supportive family members, Paula clearly fell into that definition. His express desire to keep John Paul’s monies from her or from her scrutiny was a breach of an aspect of the statutory duty imposed on Albert.

[33] Also, the practice of simply taking money from a beneficiaries account on an ad hoc basis, on the theory that it “is owed”, is in my view, contrary to the intent of the compensation provisions in s. 40(2) of the Act. This section speaks of an attorney taking compensation at a regular interval: be it monthly, quarterly, or annually. This does not, in my view, permit an attorney to collect compensation by utilizing a grantor’s funds to make direct purchases of goods or services for themselves “on account” of an ongoing right to take compensation.

[34] It is a practice that should be discouraged for a number of reasons. It does not permit easy tracking by third parties. It lacks transparency. It is imprecise in that the amount of statutory compensation is calculated by a specific formula, which is not easily reconciled where goods are purchased instead of monies paid directly. It has an income tax ramification for the attorney, which is more easily avoided if the payment is not taken by money. Also in my view, it just does not seem that a reasonable person would think it prudent for any adult to transfer funds to another adult’s sole control unless it was a gift or was pursuant to an express agreement or was for consideration.

[35] For these reasons, I find that Albert has breached his statutory duty both in his transferring funds out of an account owned by John Paul, a beneficiary, to his own use and by taking compensation by paying for goods with these funds rather than making regular, transparent, and easily tracked payments of money to himself for compensation, at one of the regular intervals dictated by the Act.

Issue No. 2: Problems with the McCausland Hospital

[36] In the fall of 2010, the long-term care facility where John Paul was residing contacted Paula. There was a dispute about payments that were or were not being made on behalf of John Paul. Albert claimed the facility had improperly charged amounts to John Paul’s credit card for long-term care services and had cut off the facilities’ access to the card. By late November, the hospital alleged it was owed approximately $4,500.00 by John Paul.

[37] A letter was sent by the Hospital on November 23, 2010. The letter threatened that the account would be sent to collection if the dispute was not quickly resolved. Albert testified he did not view the letter as a collection letter. Also, the letter suggested that John Paul might be denied a bed in the brand new wing of the hospital if the matter was not cleared up.

[38] Ultimately, John Paul was not adversely affected by this situation. There was no evidence that the long-term care facility did anything but provide John Paul with the finest care possible. Albert paid the outstanding account himself and in this matter sought a declaration that he be reimbursed $6,315.62, in respect of fees he paid personally. While I appreciate how Paula may have been concerned about the circumstances leading to the November 10 letter, I find no adverse effect on John Paul from this specific issue. Albert may have been more forthcoming with Paula, but I find his handling of the situation did not negatively impact John Paul, and this specific complaint about Albert’s conduct had no merit based on the evidence at trial.

Issue No. 3: the Sale of John Paul’s home

[39] John Paul owned a 1,068 square foot home in Schrieber. It was quite modest. No opinion evidence was provided as to its market value or the market conditions in Schrieber. It was listed for sale for $28,900.00, and sold by Albert for $18,000.00 in June 2011.

[40] Albert had some difficulty maintaining the property over the winter of 2010 to 2011. Pipes froze and water damage was experienced on the ground floor and in the basement of the house. The heat in the house was off in the dead of a Northwestern Ontario winter. Paula testified this was because Albert had let the oil tank run dry. Albert disputed this and suggested the heat was just not sufficient in the house to prevent the accidental bursting of the water pipes.

[41] Albert did two weeks worth of work on the house in an attempt to make it saleable. He testified that his attempts to bring the property into a good state of repair were prevented by Building Code concerns and a need to obtain a new heating system for the home.

[42] Interestingly, Paula testified that if the house had not been badly managed by Albert, “we wouldn’t be here”. I took from that comment that Albert’s negligence, at least in her mind, in dealing with the house, made it incumbent on her to require a passing of accounts.

[43] The evidence at trial was vague in my view, and made it difficult to make any definitive conclusions about Albert’s conduct in regard to this issue. Based on the size of the house, its location, the fact it was transferred to an arms length party, and the lack of any market data evidence leads me to conclude that Albert was not in breach of any of his duties as attorney, at least in respect of this issue. The house was old. It needed substantial repairs. Albert had it sold for a reasonable amount.

[44] The conduct of the parties regarding this particular issue made it clear to me that this litigation was being used by both parties as a kind of proxy war for some other problems between Paula and Joyce, on the one hand, and Albert, on the other. Based on the evidence before me and the content of his testimony, Albert was particularly cavalier and unreasonable in his responses about the problems with the house. On the other hand, Paula was unreasonable and petty in her ongoing demands of Albert in the conduct of his duties. None of this was of any benefit to John Paul while he was alive.

[45] John Paul didn’t need the funds from the house to meet his ongoing needs. Difficulties in maintenance and the fact it was no longer needed by John Paul, did require it to be sold. I find Albert did not breach any of his fiduciary duties at least in handling the sale of house and the garage sale prior to dispose of its contents.

Issue No. 4: Specific Complaints about Albert’s expenditures

[46] A great deal of the cross-examination of Albert by Paula’s counsel focused on questions of specific expenditures. The vast majority of the amounts were under $500.00. Many entries Albert could not specifically explain or, in my view, his explanations were vague or incomprehensible. For example, one withdrawal of $3,000.00 in April 2008 was explained as John Paul wanting cash with which to travel to Oregon to visit Albert, despite the fact at the time he was living in a long-term facility and had severe mobility issues. Two cash withdrawals on May 5, 2008, one for $350.00 and one for $200.00, could not be explained.

[47] Also, Albert candidly admitted he used John Paul’s funds to obtain services for himself. For example, in June 2008, Albert paid $338.00 for dental services for himself from John Paul’s account. This was explained as being on account of fees to which he was entitled by virtue of his acting as power of attorney for property.

[48] I find that Albert did breach his statutory duty in respect of some of the transactions at issue. This will have some bearing on the amount of compensation he will receive on this passing of accounts.

The Appropriate Level of Compensation for Albert

[49] Counsel argued about the standard of care that applied in this matter. In the Act, s. 32(8) states that a person who seeks compensation shall exercise the degree of care, diligence, and skill that a person in the business of managing the property of others is required to exercise. Albert’s counsel argued there is some authority to suggest that the higher standard does not automatically apply: Barltrop v. Bensette, 2012 ONSC 2196, 214 A.C.W.S. (3d) 65).

[50] I am of the view that Albert has not conducted himself even in accordance with a lower standard of care, as set out in s. 32(7) of the Act, a standard of a person acting with ordinary prudence. As noted above, I have found that Albert has breached his statutory duty by failing to keep records on an ongoing basis, in his transferring funds out of an account owned by John Paul for his own use, and by taking compensation by paying for goods with these funds rather than making regular, transparent, and easily tracked payments of money to himself for compensation, at one of the regular intervals dictated by the Act. However, in making this finding, I have also found that John Paul’s financial position was not compromised by this behaviour.

[51] In argument, Paula’s counsel identified $32,824.27 in funds that she seeks Albert to repay on the basis that he either used the money for his own ends or did not identify how the expenditure of the funds benefited John Paul. Many of Albert’s answers to the specific questions about why particular expenditures were made were “I don’t know” or “I don’t recall”. However, my review of the evidence does not indicate that funds to the magnitude as argued by Paula have been demonstrably proven to have been either unaccounted for or misspent by Albert. As noted above, his method of taking compensation was imperfect. His method of taking compensation was improper. However, in argument, Paula’s counsel was not sufficiently particular in tying the evidence to the submissions made such that I would be prepared to accept the number proposed by Paula as representing a just or appropriate approach to an assessment of whether Albert’s accounts should be passed or to what level of compensation he is entitled.

[52] In my view, Albert did not properly account for many items, and did take monies for personal items in a manner that did not allow for an easy reconciliation with the records provided. This, in my view, requires that his compensation be reduced, but not in the degree as argued by Paula.

[53] I am of the view that Albert is entitled to some compensation for his efforts but certainly not anywhere near the amount he has claimed. I was referred to the decision of Strathy J. in Zimmerman v. McMichael Estate, 2010 ONSC 2947, O.J. No. 2162. In that decision, he referred to one of his own earlier decisions, Re Assaf Estate, quoting a respected probate text. At paragraph 35, Strathy J. stated:

35 In Assaf Estate (Re) (2009), 2009 11210 (ON SC), 94 O.R. (3d) 561, [2009] O.J. No. 1086, I referred to the following statement in Rodney Hull, Maurice Cullity & Ian Hull, Macdonell, Sheard and Hull on Probate Practice, 4th ed. (Toronto: Carswell, 1996) the authors state at 358-359:

The conduct of an executor or trustee in carrying out his or her duties may be such as to justify the Court in depriving him or her or the right to remuneration; and an executor must make a proper accounting as a condition precedent to being awarded compensation. But only exceptional misconduct should deprive him or her of the right to remuneration ... In general, although an executor may be guilty of neglect and defaults, these, if not dishonest, and capable of being made good in money, do not deprive the executor of the right to compensation although they may influence the amount allowed.

[54] In Zimmerman, Strathy J. also pointed out at paragraph 36 that:

36 An attorney who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person's property has not adequately carried out his/her duties and will be held personally liable for the unsubstantiated withdrawals: Lanthier v. Dufresne Estate, 2002 2653 (ON SC), [2002] O.J. No. 3397, [2002] O.T.C. 671 (S.C.J.) at paras. 52-57; Re Ronson, [2000] O.J. No. 1294 (S.C.J.) at paras. 15-20.

[55] I adopt the reasoning of Strathy J., which in my view, provides that compensation can be awarded even in the face of breaches of duty by the attorney. The issue is quantum when compared to the nature of the breaches of duty.

[56] The various statutory breaches noted above and in particular Albert’s non-answers to pointed questions about a number of substantial withdrawals from his father’s account, leads me to the conclusion that he is going to have to pay some of those monies back. However, I find Albert’s actions do not qualify as exceptional misconduct. It was short sighted and cavalier. For example, he would charge his father for food and coffee that he bought while journeying from Oregon to Scheiber. This strikes me as petty from a man who was himself gainfully employed and for which the travel back to Ontario, to visit his father, would have been made regardless of whether or not he had the legal financial duties he had. In fact, given his use of the Internet to move money around, and John Paul’s limited mobility, in my view, there really was no particular need for Albert to be in Ontario to perform his duties as attorney. The visits were gratuitous to the task of acting as a power of attorney for property. I am sure John Paul was happy to see Albert. I am sure the visits were a benefit to him and Albert. But the visits were a benefit of a personal nature to Albert. I find in general the expenses associated with the visits were not necessary for John Paul’s benefit.

[57] The submissions of counsel for both parties in this file were not particularly helpful to the Court in addressing the specific accounting issues necessary to resolve the matter. Counsel for Albert took the position that as “all the money was there”, that a simple application of the statutory percentages would determine an appropriate quantum of compensation. This approach blithely ignores Albert’s failure to keep records and his very poor choice in taking compensation in goods on an ongoing basis without specific records demonstrating precisely why he was entitled to the monies.

[58] Albert seeks total compensation of $29,417.38. This is comprised of:

McCausland Hospital fees paid personally by Albert $6,315.62

Travel Expenses paid $11,913.84

Attorney Compensation based on statutory formula $11,187.92

Total $29,417.38.

[59] Of this $29,417.38 amount, Albert has taken $24,308.07, either by cash payments or purchases of goods or services for himself or his family. The objectors withdrew objection to Albert being entitled to claim the amounts he paid to the McCausland Hospital. I took Albert’s own evidence to be that he is satisfied with the amount he has been paid to date and does not expect John Paul’s Estate to pay the $5,109.31 that his counsel, in his submissions, indicated was still owing as of April 20, 2011.

[60] In the initial accounts filed at this trial, the statutory compensation was calculated to be $11,495.63. The difference in final submissions was explained by slight changes in the amounts claimed to be proper revenue and expenses of the estate.

[61] In response to Albert’s compensation claim, counsel for Paula took what I view as a “throw in the kitchen sink” approach. An attack was made on almost all of Albert’s expenditures. For many of the expenditures, Albert had an answer. Occasionally a vague and evasive answer, but an answer nonetheless. For some expenditures, he indicated he didn’t know or did not remember. I have commented on the value of those types of answers above. However, I do not think that in the circumstances it has been proven that Albert has mishandled or misappropriated $32,000.00 worth of John Paul’s funds.

[62] In argument, counsel for both parties failed to adequately demonstrate precisely how or why their particular position on compensation should be adopted.

[63] I am of the view that this litigation was designed by the objectors to achieve a result that required Albert to pay monies back to John Paul’s estate. Personal bitterness between brother and sister has overcome a rationale approach to sorting out a problem that did not particularly affect the beneficiary of the duties at first instance. During his life, John Paul was well looked after. Albert took out too much of his money while doing it, but John Paul did not suffer.

[64] I was referred to the decision of Smith J. in Lanthier v. Dufresne Estate, 2002 2653 (ON SC), [2002] O.J. No. 3397, 116 A.C.W.S. (3d) 603 (ONSC). In that decision, Smith J. found a power of attorney for property had failed to meet the standard of care required, but nevertheless the beneficiary had been well looked after during the term the power of attorney was exercised. In that case, a claim for compensation was reduced from $14,264.00 to $8,585.00, based on the courts discretion. This represented an approximately 40% reduction.

[65] I agree with counsel for Albert that “all the money is there”. Counsel for the objectors did not argue that money or assets were missing from John Paul’s bank accounts during the relevant period. However, I cannot condone Albert’s breach of duty by awarding the full statutory amounts of compensation that otherwise would be attracted by the size and transactions of John Paul’s situation for the four years Albert acted as power of attorney. Additionally, in my view, the amount paid for travel expenses had a personal component for Albert for which it would be unfair and unreasonable to believe that John Paul should or would have been prepared to pay.

[66] In the circumstances, I am exercising my discretion and disallowing a portion of the compensation claim made by the attorney. I order that Albert pay back to the Estate of John Paul Gauthier the amount of $10,000.00. This represents a repayment of approximately 40% of the amount Albert took while acting as attorney. I appreciate that of the amount he took, the McCausland Hospital fees are not disputed. However, the travel expenses and the statutory compensation claimed are in dispute. I cannot condone Albert’s approach by awarding him the full amount of statutory compensation nor do I find it appropriate that he should have been paid all his travel expenses, which were not entirely necessary for the well-being of John Paul.

[67] I recognize that the amount I have determined to be repaid approximates either a denial in full of the travel expenses claimed or a denial in full of the amount of statutory expenses. I want to be clear that I was not prepared to take that specific either/or approach to matters before me. In my view, a fair and reasonable amount of compensation for overseeing John Paul’s relatively straight forward affairs for approximately four years was $14,308.07. Albert took $10,000.00 too much while acting in capacity of power of attorney. Justice and fairness dictates that he pay it back to the Estate of John Paul on or before January 1, 2015.

Conclusion

[68] Order to go as follows:

1. This Court declares the attorney accounts as filed by Albert Gauthier for the period June 1, 2007, to April 20, 2011, (the “Period”) are hereby passed.

2. This Court declares the capital receipts and capital disbursements of the Estate of John Paul Gauthier for the Period are as follows:

Capital Account

Receipts $0

Disbursements $70,000.00

3. This Court declares the revenue receipts and revenue disbursements of the Estate of John Paul Gauthier for the Period are as follows:

Revenue Account

Receipts $158,567.84

Disbursements $161,691.22

4. This Court declares that for the period Albert Gauthier was entitled to compensation or reimbursement of funds for his efforts as acting as power of attorney in the amount of $14,308.07. This amount is inclusive of any and all funds paid by Albert Gauthier to the McCausland Hospital on behalf of John Paul Gauthier.

5. This Court orders that Albert Gauthier pay to the Estate of John Paul Gauthier the sum of $10,000.00 on or before January 1, 2015.

6. The passing of accounts in file CV-11-0256 shall proceed before Fitzpatrick J. at a date to be set by the trial coordinator. The parties shall arrange a trial management conference 30 days before the trial before Fitzpatrick J.

Costs

[69] In my view, the objectors were successful on this application. However, the conduct of Paula while a witness, a portion of which was contemptuous, and for which she apologized to the Court, has a bearing on any claim she may make for costs. The proceeding was unnecessarily protracted due to the failure of both counsel to come fully prepared to address the issues and to focus the evidence of their witnesses. In any event, I will not be prepared to order that the Estate of John Paul Gauthier be ordered to pay costs to either party for the conduct of this litigation. A modest amount was ultimately at issue at a trial that lasted five days. This will have a bearing on my considerations of any request for costs by either party.

[70] If counsel cannot agree on the matter of costs, I am prepared to accept brief written submissions. The submissions shall be no more than two pages, exclusive of copies of any offers that were exchanged and that counsel believes would bear on the issue of costs. The objector shall make their submission within ten days of release of these reasons. Albert shall have ten days thereafter to respond. If no submissions are received in any event by October 15, 2014, the issue of costs will be deemed to have been resolved.

The Hon. Mr. Justice F.B. Fitzpatrick

Released: September 29, 2014

COURT FILE NO.: CV-11-0256 & CV-12-0082
DATE: 2014-09-29

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

Derek David Sitko,
Plaintiff

• and –

Albert James Gauthier, in his capacity as Attorney for Property of the Late John Paul Gauthier, deceased, and in his Capacity as Estate Trustee,

Defendant

A N D B E T W E E N:

Derek David Sitko,
Applicant

• and -

Albert James Gauthier,

Respondent

REASONS FOR JUDGMENT

Fitzpatrick J.

Released: September 29, 2014

/mls