Abel v. Abel et al, 2017 ONSC 7637
Court File No.: 1656/15 Date: 2017-12-22
Ontario Superior Court of Justice
Between:
Guy Abel Applicant
– and –
Scott Abel, Executor of the Estate of Gordon Arthur Abel, Attorney for Property and Personal Care of Gordon Arthur Abel, Attorney for Property and Personal Care of Lily Hazel Frances Abel Respondent
Counsel: S. Flaherty, for the Applicant G. Tillman, for the Respondent
Heard: October 2, 2017
Justice L.C. Leitch
[1] The applicant seeks an order appointing himself as the guardian of property and personal care of Lily Hazel Frances Abel and an order compelling the respondent to return and/or pay the sums of $435,236.83 and $4,722.23 to Lily Hazel Frances Abel and/or her estate – paragraphs (a) and (c) of Notice of Motion before the court.
[2] The applicant also sought a number of other orders which were not pursued when the motion was heard and thus that part of the motion remains outstanding. This requested relief for passing of accounts by the respondent should be resolved between the parties.
Brief Background Facts
[3] The applicant and respondent are two of three sons of Lily Hazel Frances Abel, who is a resident in a nursing home in London and who suffers from dementia.
[4] The respondent was appointed by Lily Abel in January, 2015 as her attorney for property and personal care. At that time Lily’s spouse and the father of the applicant and the respondent, Gordon Abel, similarly appointed the respondent as his attorney for property and personal care.
[5] Gordon died on March 10, 2016.
[6] On March 6, 2016, four days prior to his death, Gordon executed a new Will in which the respondent was appointed his Executor and the beneficiary of the remainder interest in his estate. The new Will contained a provision that said:
3.(d) I wish to acknowledge that during my lifetime, I, together with my spouse, have made certain gifts of funds to our son, Scott Abel, and such funds belong absolutely and beneficially to our son, Scott Abel.
[7] In June 2016, the applicant sought an order appointing him as guardian of property and personal care for his mother in place of the respondent and for an accounting and return of any funds received by the respondent from his father and mother. This application was opposed by the respondent and he swore an affidavit September 14, 2016 setting out his opposition to the application.
[8] In relation to their father’s Will, the respondent has included, as an exhibit to his affidavit sworn September 14, 2016, a letter from the solicitor who prepared that Will, stating that she “had no concerns whatsoever with Mr. Abel’s capacity to provide instructions and sign a Will” and she enclosed “letters from doctors attesting to Mr. Abel’s capacity”.
[9] On November 4, 2016, the respondent was cross-examined on his affidavit and gave certain undertakings. On this cross-examination it was revealed that at various times throughout 2015, Lily and her husband had transferred $435,236.83 to the respondent.
[10] When this motion was brought, the respondent had not answered the undertakings given on his cross-examination.
[11] On December 21, 2016 the respondent was ordered to “provide informal accountings” in relation to his father’s estate and his mother’s assets.
[12] There is an issue whether the respondent has adequately complied with that order.
[13] On June 20, 2017 an order was made requiring the respondent to answer his outstanding undertakings and to provide the informal accounting that had been previously ordered on or before July 31, 2017. The order further provided that if the respondent failed to produce what the court ordered, his responding affidavit filed in this proceeding would be struck.
[14] This application was scheduled to be heard on August 22, and it was adjourned to September 5.
[15] On September 5, counsel for the respondent, not the counsel apperling on this motion, filed an affidavit in which he took responsibility for the respondent’s delay in answering his undertakings. Counsel noted the respondent had been “very diligent in attempting to answer the undertakings”, and that it was counsel who had been “dilatory and mistaken in the delivery of the answers to the undertakings”. Further, counsel deposed that he thought the undertakings had been answered “when clearly they appear to have not been delivered”. Counsel took sole responsibility for what had occurred and deposed that “the fault of this lies solely with me and not my client”.
[16] There was no affidavit from the respondent and counsel who had sworn the affidavit appeared on the application. As a result the matter was adjourned to September 13.
[17] On each of the return dates of this motion, as an interim measure, the respondent was ordered not to withdraw or expend any funds in his capacity as Attorney except for ordinary monthly expenses for his mother and in particular, he was not allowed to reimburse himself for any purported expenses.
Discussion
(a) Should the respondent’s responding materials be struck?
[18] The first issue raised on this motion is whether the respondent’s affidavit should be struck. The applicant seeks this relief noting that the respondent failed to comply with his undertakings given on his cross-examination, failed to comply with the December 2016 Order and the June 2017 Order, and the materials late filed were insufficient and not in compliance with the court orders. The applicant emphasizes that there has been a lack of transparency in relation to what has occurred with respect to Lily’s and Gordon’s finances. The applicant further alleges that what has been produced reveals that the respondent has been paying personal expenses from the accounts over which he has fiduciary responsibility.
[19] The applicant also notes that there are no bank records or any accounting after December 31, 2016.
[20] The applicant urges this court to state that it has “had enough” of the respondents non-compliance with court orders and that the very fact of the non-compliance supports the applicant’s assertion that the respondent is an inappropriate Attorney—that is, either the respondent is not taking his obligation seriously or he is incapable of doing so. This latter point will be discussed more fully below.
[21] The respondent raises the issue of what is meant by an “informal” accounting; he emphasizes the missing time periods from the disclosure are the fault of counsel and not the respondent; he submits that the undertakings required him to use best efforts and he has done so; and that while he may have made questionable expenditures, they are not large in quantity or number.
[22] It is clear from the evidence presented on this application that the respondent’s record keeping is not impressive and does not meet the standard required of an Attorney. As a result, the applicant has unnecessarily been frustrated in obtaining answers to questions he is entitled to ask. However, considering that counsel has taken full responsibility for the delay and inadequacy of the responses to the respondent’s undertakings and that there is some ambiguity in what was required from the respondent in terms of an informal accounting and the exercise of best efforts, I am satisfied that the respondent’s materials should not be struck.
(b) Should the respondent be removed as Attorney of property and personal care?
[23] There is no question that the respondent charged expenses to his mother which are highly questionable. The amount of those expenses is potentially $4,722.23. As the applicant alleges, it appears that the respondent recovers wide ranging expenses whenever he travels to London to visit his mother.
[24] The applicant also raises issue with respect to the fulfillment of the respondent’s duties in relation to the personal care and hygiene for Lily.
[25] The position of the respondent is that these proceedings reflect the history of estrangement between the applicant and the respondent and the applicant and his parents.
[26] The respondent’s counsel acknowledged that the applicant has a right to raise questions and he is entitled to information with respect to financial aspects of his mother’s property and with respect to her personal care. However, he emphasized that the wishes of the party who appoints the Attorney should be respected and honoured.
[27] The respondent’s proposal is that there should be a full hearing in relation to these issues. Further, the respondent questions whether there is adequate information before the Court reflecting that the applicant has the ability to serve as the guardian of property and, in particular, no evidence that he has the appropriate qualifications.
[28] The Substitute Decisions Act 1992, S.O. 1992, c. 30 mandates a number duties that an Attorney is responsible for and that are relevant to this case. For example, s. 32(1) notes that an Attorney “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.” Under ss. 32(4)–(5), the Attorney shall foster regular personal contact between the incapable person and supportive family members and friends of the incapable person and shall consult with supportive family members and friends of the incapable person when making decisions. Section 32(6) requires that an Attorney “shall, in accordance with the regulations, keep accounts of all transactions involving the property.”
[29] Powers of attorney can be terminated and replaced under ss. 12(1)(c) and 22(1) of the Substitute Decisions Act, which state the following:
- (1) A continuing power of attorney is terminated,
(c) when the court appoints a guardian of property for the grantor under section 22;
- (1) The court may, on any person’s application, appoint a guardian of property for a person who is incapable of managing property if, as a result, it is necessary for decisions to be made on his or her behalf by a person who is authorized to do so.
[30] However, the law is clear that courts should be wary of terminating a power of attorney that was granted by a donor when he or she had the capacity to grant the power of attorney, because the wishes of the donor should be respected unless his or her wishes are no longer in his or her best interest.
[31] The following observation of Hickman C.J. in Re Hammond Estate, 1999 19754 (NL SC), [1999] N.J. No. 28 at paras. 25 and 31 (Nfld. S.C. (T.D.)) was referenced in the cases relied on by the applicant and the respondent (Teffer v. Schaefers (2008), 2008 46929 (ON SC), 93 OR (3d) 447 at para. 22 (Sup. Ct.) and Glen v. Brennan, [2006] O.J. No. 79 at para. 9 (Sup. Ct.)):
A preference expressed by a person in anticipation of becoming mentally incompetent is particularly important, and should be respected unless this would clearly not be in the person's best interests.
There must be strong and compelling evidence of misconduct or neglect on the part of a donee duly appointed under an enduring power of attorney before a court should ignore the clear wishes of the donor and terminate such power of attorney.
[32] Somers J. also noted in Glen at para. 9 that the continuation of the appointed power of attorney should be favoured and wrote the following:
The courts have generally taken the view that a written power of attorney executed by the donor at the time when [he or she] was apparently of sound mind…is simpler to deal with and gives the donee more flexibility in dealing on behalf of the donor. Also, favouring a continuation of the appointment respects the wishes of the person who made the grant.
[33] The test for removal of a power of attorney was clearly laid out by Fragomeni J. at paras. 24–25 of Teffer and requires the following two issues to be determined:
There must be strong and compelling evidence of misconduct or neglect on the part of the attorney before a court should ignore the clear wishes of the donor; and
The court must be of the opinion that the best interests of an incapable person are not being served by the attorney.
[34] As noted by Whitten J. in McMaster v. McMaster, 2013 ONSC 115 at para. 24, a case relied on by the applicant, examples of attorney misconduct under the first step of the test in Teffer include failure to provide a monthly accounting; failure to voluntarily pass accounts; failure to provide missing information or documentation with respect to missing funds; and an inability to follow court orders.
[35] I am satisfied that the first part of the test for removal of a power of attorney is met in this case even when based only on the evidence presented on this application. The respondent used Lily’s money for his own benefit. The respondent has an obligation as a fiduciary to act for Lily’s benefit, which is statutorily mandated by 32(1) of the Substitute Decisions Act. A fiduciary is not permitted to use trust funds for personal meals and expenses even if such meals are purchased after conducting work as the fiduciary (Zimmerman v. McMichael Estate, 2010 ONSC 2947 at paras. 53–57). Since the respondent took $4,728.52 to pay for his own food, travel, and alcohol, which were expenses solely for his own benefit, he breached his fiduciary duty to Lily, which amounts to misconduct.
[36] It is also possible (based on the applicant’s allegations) that other forms of misconduct existed as well. For example, if it is established that the respondent does not consult the applicant or his brother and is restricting the applicant and his brother’s contact with their mother, this would be misconduct, because the respondent will have breached his duties under section 32(4)–(5) of the Substitute Decision Act. Additionally, if the respondent does not keep accounts of all transactions involving property and does not voluntarily provide monthly accounts, pass accounts, or provide documentation for transactions, the respondent will have engaged in misconduct based on Teffers and McMaster and under s. 32(6) of the Substitute Decisions Act.
[37] However, as set out above there is a second part to the test for removal of an Attorney —that is whether or not Lily’s best interests are being served by the respondent as Attorney. I have concluded that this second issue is more difficult to determine on the evidence available on this application record.
[38] The applicant’s submissions focused on the fact that the respondent does not act in Lily’s best interests, because he did not follow court orders and fails to address Lily’s personal care needs, which are two issues that are not clearly or obviously supported by the record. I have already noted that the failure to follow court orders is complicated by the respondent’s counsel taking responsibility, and I struggle to accept based on the evidence before me that Lily’s personal care needs are not being properly addressed. The applicant acknowledged that the test for removal requires the court to be satisfied that the attorney does not act in the donor’s best interest, but did not specifically address how the respondent’s financial misconduct amounts to not acting in the best interests of Lily. For example, if the applicant had submitted that taking $4,728.52 depleted Lily’s assets in a way that affected her ability to pay for personal care or some other interest, then the applicant could have made an argument that the respondent’s misconduct amounted to behaviour that was not in the best interests of Lily. Perhaps, the applicant does not have to go so far to explain that the money taken was vital to pay for Lily’s expenses, but the point is that the applicant did not specifically explain how the respondent did not act in Lily’s best interests by taking the money or how the respondent would not be able to act in Lily’s best interests if the funds are paid back.
[39] In relation to the financial misconduct and whether the respondent has acted in the best interests of his mother, the respondent’s factum and affidavit are unhelpful. The respondent only writes that he has “accounted for the allegations with respect to the handling of my his [parents’] affairs”, “welcomes the opportunity to appear before the Court to support his position”, and has “provided answers” to concerns about personal expenses.
[40] I observe that respondent’s evidentiary record contains a number of exhibits and the evidence included in those exhibits is not properly before the court in affidavit form. It is difficult to determine reliability and veracity of that evidence and what weight, if any should be attributed to it.
[41] I have concluded that, to use of the words of Hickman C.J. in Re Hammond, there is not strong and compelling evidence of misconduct or neglect that is clearly not in the best interests of Lily justifying the court to ignore Lily’s clear wishes and terminate the power of attorney. However, as stated above, there are examples of clear financial misconduct (for example payment of the respondent’s gym membership and meal expenses relating to the respondent’s friend) and examples of potential financial misconduct. Therefore the issue of whether the power of attorney should be terminated requires a trial of that issue.
(c) Is the applicant entitled to the order he seeks requiring the respondent to repay the $435,236.83 transferred to him? Does the property transferred to the respondent consist of a gift or a resulting trust?
[42] The issue raised on this motion relates to inter vivos transfers made to the respondent with the result that except for real property, all of the life savings of Lily and her husband have been transferred to the respondent. The applicant emphasizes that these transfers occurred in the months following the granting of the power of attorney to the respondent.
[43] The presumption of resulting trust is the general rule for gratuitous transfers and the onus is placed on the transferee to demonstrate that the transfer was intended as a gift (Pecore v. Pecore, 2007 SCC 17 at para. 27, the leading case as cited in Down Estate v. Racz-Down, [2009] O.J. No. 5537 (Sup. Ct.)). The Supreme Court held that the presumption of advancement is limited in application to transfers by mothers and fathers to minor children (Pecore at para. 40). Therefore, there is a rebuttable presumption that an adult child given property by a parent “is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs” (Pecore at para. 36). The Supreme Court held that the presumption of advancement is not applicable even to transfers made to dependent adult children because “it would be impossible to list the wide variety of circumstances that make someone ‘dependent’ for the purpose of applying the presumption” (Pecore at para. 40).
[44] Therefore, the transfers totalling $435,236.83 from Gordon and Lily Abel to the respondent are presumed to have been held by the respondent in trust for Gordon and Lily, because the transfers were made to the respondent when he was an adult. The respondent carries the onus of rebutting this presumption. Even if the respondent was a “dependent” adult child (which there is no evidence to suggest that he was dependent on his parents in any event), he would still carry the onus of rebutting the presumption of resulting trust.
[45] To rebut the presumption of a resulting trust, the transferee must provide evidence to show on a balance of probabilities that the transfer was a gift (Pecore at paras. 42, 44). The evidence necessary to rebut the presumption depends on the facts of the case (Pecore at par. 55). Evidence of intention that arises subsequent to a transfer should not automatically be excluded, but it must be relevant to the intention of the transferor at the time of the transfer and the trial judge must assess the reliability of the evidence and determine what weight it should be given (Pecore at para. 59). The Court of Appeal held that the common law requires corroborating evidence to rebut the presumption of resulting trust, and the corroborating evidence can be direct or circumstantial and can consist of a single piece of evidence or several pieces considered cumulatively (Foley (Re), 2015 ONCA 382 at para. 28 citing Burns Estate v. Mellon (2000), 2000 5739 (ON CA), 48 O.R. (3d) 641, at para. 29 (C.A.)). For example, in Pecore, the Supreme Court held that the statements that the transferor parent made to legal counsel while drafting his last will were good indicators of his intention and agreed with the trial judge’s reliance on the corroborating evidence provided by the lawyer who drafted the transferor parent’s last will.
[46] Therefore, the respondent must provide corroborating evidence beyond his own affidavit evidence that demonstrates on a balance of probabilities that Gordon and Lily intended the transfer of $435,236.83 as a gift.
[47] In relation to their father’s Will, the respondent has included in an affidavit sworn September 14, 2016, a letter from the Solicitor who prepared that Will, stating that she “had no concerns whatsoever with Mr. Abel’s capacity to provide instructions and sign a Will” and she enclosed “letters from doctors attesting to Mr. Abel’s capacity
[48] The respondent is not barred from relying on the provision in Gordon’s Will that states that Gordon intended the transfer of funds as a gift simply because the provision was added to the Will after the transfer. However, the reliability of the provision and the weight that it should be given must be assessed. The issue of undue influence in drafting Gordon’s Will therefore arises. (I note that the letter from the lawyer who drafted Gordon’s Will is currently submitted as an exhibit and it speaks only to Gordon’s capacity and not any other knowledge the lawyer may have had about his intention).
[49] The presumption of undue influence is potentially relevant here for two issues. First, the applicant has submitted that the respondent exerted undue influence over Gordon and Lily when they transferred the assets to the respondent. If undue influence existed with respect to the transfer, the transfers could be set aside. Second, the issue of undue influence could arise with respect to Gordon’s new Will and specifically the provision that relates to the inter vivos transfers.
[50] The burden of proof with respect to undue influence rests with the party alleging it (Vout v. Hay, 1995 105 (SCC), [1995] 2 S.C.R. 876 at paras. 21, 27–28.).
[51] However, a presumption of undue influence arises in certain relationships where a potential for coercion exists. The Supreme Court reviewed the law relating to undue influence in Geffen v. Goodman Estate, 1991 69 (SCC), [1991] 2 S.C.R. 353, which is relied on by the applicant. Though the Court delivered three separate reasons, a majority of the Court was in agreement that a presumption of undue influence arises only when one person is in a position to dominate another. Where “the potential for domination inheres in the nature of the relationship” between the transferor and transferee, the presumption of undue influence applies (Geffen at 377–378. See also Foley (Re) at para. 28). The “test embraces those relationships that equity has already recognized as giving rise to the presumption”, including parent and child relationships (Geffen at 378). However, the court made clear that the issue is whether the relationship had a “potential for domination”.
[52] The issue of undue influence cannot be resolved on the evidentiary record available on this motion. I note also that the property transferred to the respondent belonged to both Gordon and Lily, but the corroborating evidence that the respondent appears to reply on only relates to transfers made by Gordon alone.
[53] I conclude that the record does not establish that the applicant is entitled to the order he seeks requiring the respondent to repay the monies transferred to him. However, sufficient questions are raised to justify a trial in relation to this issue.
Conclusion
[54] No orders can be made in relation to the relief sought by the applicant. However, a trial is required in relation to the issues identified above – whether the continuing power of attorney should be terminated; the extent to which the respondent should reimburse Lily for monies paid for his personal expenses; and whether the respondent is obliged to repay any of the monies transferred to him.
[55] I ask counsel to agree upon the appropriate form and terms of an order directing a trial of the outstanding issues. If necessary counsel may make brief written submissions if the form and terms of the order cannot be agreed upon.
[56] The issue of costs of this motion is reserved to the trial judge.
"Justice L.C. Leitch"
Justice L.C. Leitch
Released: December 22, 2017
Citation: Abel v. Abel et al, 2017 ONSC 7637 Court File No.: 1656/15 Date: 2017-12-22
Ontario Superior Court of Justice
Between:
Guy Abel Applicant
– and –
Scott Abel, Executor of the Estate of Gordon Arthur Abel, Attorney for Property and Personal Care of Gordon Arthur Abel, Attorney for Property and Personal Care of Lily Hazel Frances Abel Respondent
Reasons
Justice L.C. Leitch
Released: December 22, 2017