Saturday, July 27, 2019

Order Declaring Person Incapable of Managing Her Person Revokes Power of Attorney

[This guest post is written by Taeya Fitzpatrick of our firm, Sabey Rule LLP. She discusses the impact of an order declaring someone incapable of managing her person in British Columbia on a power of attorney.]

I have recently come across an interesting issue with respect to the Patients Property Act and, perhaps, an unintended consequence in the way section 19 was drafted.

Under the Patients Property Act, a person can be declared a patient by reason of being unable to care for their person, their finances, or both. Another person can then be appointed as the committee of the estate of the patient, committee of the person of the patient, or both.

However, even if the application before the Court only concerns the person, the effect of being declared a patient results in any and all power of attorney agreements being terminated from the date of the order:

Effect on power of attorney or representation agreement of person becoming a patient by court order

19  On a person becoming a patient as defined in paragraph (b) of the definition of "patient" in section 1,
(a) every power of attorney given by the person is terminated, and
(b) unless the court orders otherwise, every representation agreement made by the person is terminated.

Section 1 part b provides the definition of “Patient” relevant to section 19:

(b)          a person who is declared under this Act by a judge to be
(i) incapable of managing his or her affairs,
(ii) incapable of managing himself or herself, or
(iii) incapable of managing himself or herself or his or her affairs;

Therefore, once a person is declared incapable, if no one applies to be committee of the patient’s finances, the Public Guardian and Trustee becomes committee by default. At issue in Re Clay, 2016 BCSC 261, was whether the declaration of incompetence severed the representation agreement. Unlike a power of attorney, a representation agreement can be preserved by the court in appointing someone as a committee of the estate of a person.

In a recent case that I was personally involved in, the daughter of the patient applied for, and was granted, committeeship of the person of her mother. The daughter did so as the previous personal representative of the mother was no longer able to continue the job and no one had been appointed as an alternate. The daughter had only intended to take over her mother’s person and had no intention to disturb the power of attorney which had been granted to a trust company. Regardless of those intentions, the Patients Property Act operated to sever the power of attorney and the Public Guardian and Trustee became the acting committee of the estate of the mother.

I then, on behalf of the trust company applied to the court to resume the trust company’s handling of the mother’s finances. The application was successful, but as a result of the Ac, the mother was put to unnecessary expense. This should operate as a cautionary tale to counsel to make sure that their applications will not have unfortunate, unintended consequences.

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