Report on Vulnerable Investors

The Canadian Foundation for Advancement of Investor Rights and the Canadian Centre for Elder Law have published their Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity.  The report is co-authored by Marian Passmore and Laura Tamblyn Watts. 

As set out in the Executive Summary:

The report focuses on two main areas of specific challenge for vulnerable investors: 

i. Elder financial abuse and undue influence: A person or persons may be trying to financially exploit the investor through a variety of forms of elder abuse, which can include abuse of a power of attorney or other legal authority, fraud, theft, threats, misuse of funds, coercion, abuse of trust, physical threats or by other means. Additionally, a client may exhibit behaviour or provide instructions to a financial services representative that the representative believes to be unduly influenced by a person close to the client.  

ii. Diminished capacity: A client may lose the capacity to provide instructions to a representative, due to dementia, a psycho-social or developmental disability or health reasons such as episodic delirium or medication use. The representative, staff member or compliance officer may be concerned that trades are radically different than previously, or that the client is exhibiting erratic behaviour or is forgetful. If the client does not have a functioning enduring power of attorney on file, this situation can become very complex and delicate.  

A representative or staff member who observes signs of elder financial abuse or undue influence, or diminished mental capacity, may want to assist and/or take protective action, but be unsure about whom to contact, his or her authority to act, and the legal ramifications of notifying others or not following the client’s disbursement instructions. 

Depending on the circumstances, these situations may warrant protective action. A representative may want to notify a person close to the client, report a suspected abuser to the authorities, or prevent the disbursement of funds from a client’s account. Currently, Canada’s securities regulatory regime does not equip representatives to protect vulnerable investors in these ways. There are many reasons for this, spanning from inadequate training on mental capacity and undue influence, to unclear reporting requirements and processes, to insufficient regulatory guidance and protection for representatives who want to take protective action. As a result, many representatives are unfamiliar with the warning signs of vulnerability, unsure of how to escalate issues when they do notice them, and unclear of their authority to act.

The report comprehensively sets out the problems, practices and in Canada, and other jurisdictions, and sets out several specific recommendations.

A Practical Guide to Elder Abuse and Neglect Law in Canada

The Canadian Centre for for Elder Law has published A Practical Guide to Elder Abuse and Neglect Law in Canada. The content and purpose of the guide is summarized in the Canadian Centre for Elder Law's media release as follows:

This comprehensive resource includes snapshots of the law in each of the thirteen provinces and territories,a comparative table that allows for quick reference, a set of guiding principles for working with vulnerable adults, and sections that discuss mandatory reporting of abuse
and neglect, rules around confidentiality of personal and health information, and the relationship between mental capacity and elder abuse. The guide also contains a lengthy list of resource agencies.

“Circumstances of abuse, neglect and risk present practitioners from every discipline with ethical dilemmas and challenging questions about how to respond pppropriately in order to protect clients without over-stepping oundaries,” says Staff Lawyer Krista James. “Elder abuse is a complex area of practice that involves many areas of law and rules that vary depending on the province in which you are practicing. It is hard for even a specialist to appreciate their obligations. This tool is a practical resource that will help lawyers, social workers and health professionals to enhance their practice in this area.”

You can also read A Practical Guide to Elder Abuse and Neglect Law in Canada in French here.

Kelowna Seniors Safety Fair, June 14th, 2010

The Senior Outreach and Resource Centre, is presenting its 6th Annual Seniors Safety Fair in Kelowna, British Columbia, on Monday, June 14th; from 9:00 am – Noon at Trinity Baptist Church, at the corner of Spall and Springfield.

The fair features a presentation by Linda Myers, Hon. BSW, RSW, on "The Emerging Landscape of Adult Protection in British Columbia” from 9:00 am to 10:30 am.

For more information call 250-861-6180.

CBC Story on the B.C. Public Guardian and Trustee

I heard a story the other day on the Canadian Broadcasting Corporation airing complaints about the Public Guardian and Trustee of British Columbia. I heard the story on radio and television. I have since found it on the CBC website here.

Some of the criticisms were directed at the Public Guardian and Trustee’s handling of allegations of financial abuse, and of the Public Guardian and Trustee’s powers. These powers include the power to become appointed as a guardian of a mentally incapable person, even if that person has already appointed an attorney under a power of attorney.

I do not know anything about the specific cases referred to in the CBC’s story, and my comments are not directed at those cases.

But there is another perspective. I say this despite the frustrations I sometimes feel in dealing with the Public Guardian and Trustee’s office (or with many other large bureaucracies).

I will illustrate by making up a fictional case, but it is based on a variety of circumstances that I have come across in my law practice.

Steve is concerned about his aunt, who is 95, and lives alone. She is a widow, with no children. In the last three years, Steve has noticed that she has memory problems. Steve is close to his aunt. She remembers him, but she can’t seem to remember his children’s names when they visit her.

Steve recently learned that his aunt gave her niece (Steve’s cousin) a power of attorney, and transferred her house into a joint tenancy with the niece about six months ago. His cousin has been doing some of his aunt’s banking for her.

Steve’s aunt had not been particularly close with her niece, until about a year ago, when her niece started to visit her aunt several times a week. The niece recently bought a Porsche. Steve does not know where his cousin got the money to buy a Porsche, but he does not believe that his cousin has substantial wealth.

Steve suspects, but cannot prove, that his cousin is taking financial advantage of their aunt. He does not have a power of attorney for her.

Steve goes to a lawyer for advice.

Even if Steve were inclined to sue his cousin, he cannot do so. He has no authority to act on his aunt’s behalf. In British Columbia, there is a legal presumption that Steve’s aunt has capacity to make her own decisions, and only she can sue.

Nor does Steve have any real way of investigating what has happened. He has no right to review his aunt’s bank accounts, or insist that his cousin provide him with an accounting.

If Steve wants authority to investigate or sue on behalf of his aunt, he could apply to the Supreme Court of British Columbia to have his aunt declared incapable of managing his affairs, and for him to be appointed as her committee (or adult guardian). He would need affidavit evidence from two doctors that his aunt is incapable. The application would cost thousands of dollars, and likely take at least a couple of months. His cousin may contest his appointment. If appointed, Steve would have the significant responsibilities of managing his aunt’s finances.

Alternatively, Steve could contact the Public Guardian and Trustee’s office and ask for an investigation.

The Public Guardian and Trustee has the powers to investigate, and if there is evidence of abuse, to have Steve’s aunt’s bank accounts and other assets temporarily frozen to prevent further abuse.

In the circumstances described above, the Public Guardian and Trustee’s office might find that Steve’s aunt is still capable of making her own decisions, and that Steve’s cousin has done nothing wrong. Steve’s aunt’s memory loss may be minimal, and her functioning otherwise good. Steve’s aunt might have transferred the house into a joint tenancy knowing full well what she was doing, as part of her estate planning (although it is probably not estate planning that I would recommend). Steve’s cousin may be using the power of attorney solely for the purpose of helping her aunt. His cousin may have had other funds to buy the Porsche. In these circumstances, the Public Guardian and Trustee would need not do anything more.

But if Steve’s aunt were not capable of managing her own affairs, and if a director of a mental health facility or psychiatric unit signs a certificate that his aunt is incapable, then the Public Guardian and Trustee could be appointed as her guardian.

The Public Guardian and Trustee could then sue Steve’s cousin for the return of the title of Steve’s aunt’s house back into her own name. If Steve’s cousin received money from their aunt, the Public Guardian and Trustee could also sue for that money. It would ultimately be up to the court (not the Public Guardian and Trustee) to decide whether Steve’s cousin is entitled to keep her interest in the house and any funds she received after a trial.

I stress that I am not commenting on the specific cases referred to in the CBC story. Nor am I suggesting that the current legislation in British Columbia does not need reform. It does. In fact the Legislative Assembly has passed new legislation, but the government has not brought the new legislation into effect.

But I do think it is necessary for the Public Guardian and Trustee to have sufficient powers to investigate, and where necessary to take steps to remedy, allegations of financial abuse.

British Columbia Association of Community Response Networks Online Auction

The B.C. Association of Community Response Networks is holding its third annual online auction now. You can check out this link with the online auction items until June 30, 2009.

Seniors Safety Fair, Kelowna, B.C.

Seniors Outreach Services Society is presenting its annual Seniors Safety Fair on Monday, June 15, 2009, from 9:00 am to noon, at the Trinity Baptist Church, and Springfield and Spall, in Kelowna, B.C.

The feature speaker is my friend Jim Herperger of FH&P Lawyers, whose presentation is entitled "You Can't Take it With You." There will also be displays from 30 organizations.

The Seniors Safety Fair is being held as part of World Elder Abuse Awareness Day.

B.C. Association of Community Response Networks Second Online Auction

The B.C. Association of Community Response Networks is holding its second annual online auction from June 1 through June 30, 2008. You can access the online auction during this period here.

Fourth Annual Seniors Safety Fair

Seniors Outreach Society is presenting their fourth annual Seniors Safety Fair in Kelowna, British Columbia on June 9, 2008. The details are as follows:

To Commemorate International Elder Abuse Awareness Day

Monday, June 9th 9-1pm at Trinity Baptist Church Springfield and Spall

Refreshments, door prizes and entertainment

Browse displays, ask questions and gather information from local organizations that can help you maintain your safety and independence.

8:30-9:00 Coffee’s on!

9:00 Welcoming Remarks/Seniors Outreach Services

9:05-10:00 Panel Sherri Wood-Community Response Network: Purpose of Elder Abuse Awareness Day, Designated Agencies Public Guardian and Trustee: Role of
PGT David Desautels: Legal Information Outreach Worker Community Policing- Senior Contact Telephone Program Cindy Fairs- Lifeline

10:00-11:00 David Salzano, BC Securities Commission:
Invest RIGHT

11:00-12:00 –Visit displays by participating organizations. Get you blood pressure checked!

12:00-1:00- Alex Johnson, Community Policing: Safety at Home and in the Community

1:00- Thank you.

For further info Call 861-6180

Report of the National Seniors Council on Elder Abuse

The National Seniors Council has issued its report on elder abuse. The National Seniors Counsel was established last March to advise the Government of Canada. Its initial priorities are: "to develop ways to raise awareness of elder abuse and combat this issue;and to better understand the factors that lead to pockets of low-income seniors among unattached seniors, particularly women." This report follows regional meetings involving experts and stakeholders in five cities across Canada.

There is an interesting discussion in the report about how privacy legislation may impede the reporting of abuse. The report says at page 12, in reference to federal privacy legislation, the Personal Information Protection and Electronic Documents Act, SC 2000, c. 5,

As a result, industries in the federally-regulated private sector have taken steps to ensure that they are not in violation of privacy regulations. However, examples were provided of instances where banks were reluctant to report suspected cases of possible fraud or abuse of power of attorney, claiming that they were unable to do so due to restrictions placed upon them as a result of privacy legislation. As well, healthcare professionals reported that there is reluctance to report possible physical or psychological abuse of elders for fear of repercussions due to infractions of privacy legislation.

Legal experts informed the National Seniors Council of the need to clarify whether reporting a suspicion of elder abuse violates current privacy legislation. The National Seniors Council was asked to consider how the federal government might be able to work with these sectors to ensure they understand the application of privacy legislation.

CBC Story on Abuse in Nursing Homes

CBC TV will be airing a story on abuse of residents in nursing homes tonight on Marketplace. According to the CBC website article "Violence on rise among residents in Ont. nursing homes," there has been an increase of violence by residents with severe dementia on other residents. There is a debate in Ontario about whether those patients suffering from severe dementia with violent tendencies should be in nursing homes or in separate psychiatric facilities.

Although the story is based on Ontario, these issues are certainly not confined to Ontario.

Seniors Outreach is Presenting Seniors Safety Fair on June 15, 2007

June 15, 2007 is Elder Abuse Awareness Day.

I have the honour of being one of the speakers at the Seniors Safety Fair on Elder Abuse Awareness Day in Kelowna, British Columbia, presented by Seniors Outreach Services Society. Here is the announcement:

Seniors Outreach
SERVICES SOCIETY

Presents our 3rd Annual
Seniors Safety Fair
On International Elder Abuse Awareness Day
Friday June 15th
1340 Ellis St (Health Unit)

Noon-1:00 pm
Browse displays, ask questions and gather information from local agencies and organizations that can help you maintain your safety and independence.

Welcome and Introductions

Presentations:
1:00- 2:15 Kevin Rothwell-Better Business Bureau: “Top Ten Scams”
Alex Johnson, Community Policing: “Personal Safety Tips”

2:10-2:30 – Break – Refreshments

2:15-4:00 Stan Rule- Tinker, Churchill & Rule Barristers:
“The Pitfalls of Bad Estate Planning (With a Few Good Estate Planning Ideas Thrown In)”

4:00 –Closing remarks/ -Thank you.

Call 861-6180 for further info
*Please do not park in the Health Unit parking lot, as you are likely to be towed. There is street parking in the area, and the library parkade is available next door.

With appreciation to Advocare Health Service for providing refreshments.

British Columbia Association of Community Response Network Workshop

A couple of weeks ago, I attended a workshop here in Kelowna on financial abuse of adults presented by the B.C. Association of Community Response Networks. I was given the opportunity to speak about powers of attorney, representation agreements, and civil claims that one may bring to deal with financial abuse. I also heard and learned from some excellent presenters.

Oddly, I came away with a combination of pessimism and optimism.

First, the pessimism. I have realized for a long time that in many cases it is futile for a victim of financial abuse to sue the abuser. It is costly, and in many cases the abuser doesn't have anything. The abuser has spent everything on drugs, or gambled the money away. At the workshop, I got a sense from one of the presenters, a RCMP member, how difficult it is for the police, and the crown prosecutors, to pursue criminal charges against the abuser. The victims tend to be vulnerable, and may have diminished capacity. This makes it very hard for the victims to be effective witnesses in a criminal trial.

The other cause for my sense of pessimism is the realization that abusers do not just act abusively once. They tend to carry out further acts of abuse against either the same victim, or against others.

But, I also came out of the workshop with greater optimism. There are a lot of dedicated people working through the Community Response Networks and other organizations working at preventing abuse. The key is prevention, and there are tools available.

If you are aware of or concerned that there might be abuse of an adult who appears to be vulnerable, in British Columbia you can contact a designated agency.

The B.C. Association of Community Response Networks is holding an online auction from June 1 through June 30, 2007 to raise funds. During this time period, you can get more information by visiting the website.

A Power of Attorney and A Parent's Autonomy

As children grow up, they sometimes struggle with their parents for greater independence and the right to make their own decisions, while their parents worry about them. Sometimes, later in life, the roles are reversed. The children worry, and the parents must assert their autonomy.

This kind of issue can arise when a parent gives his or her children a power of attorney, allowing the children to handle financial transactions for the parent. The children may decide that they need to take control, fearing that the parent is not managing his or her affairs well. Not surprisingly, the parent may see things differently.

This is what happened in a Supreme Court of British Columbia decision released yesterday. The case is McMullen v. Webber, 2006 BCSC 1656.

Mr. George McMullen is 86 years old. He had granted a power of attorney to his three children in 2001. Any two of them were permitted to use it to manage his financial affairs, including dealing with his condominium.

After his wife passed away in 2002, his two daughters became concerned about his financial decisions. His handling of money changed. He depleted his investments, and went into debt. He met a 42 year old woman in Hawaii, and his daughters believed that he was giving her money. They believed that she was taking advantage of him. His daughters felt that his judgment was impaired.

In order to protect Mr. McMullen, his daughters used the power of attorney to transfer a 99% interest in his condominium into their husbands' names. (One of the daughters gave evidence that a one percent interest was left in their father's name so that it could not be mortgaged or sold without his consent, but I would guess that the fact he would still qualify for a homeowner's grant if he kept a one percent interest on title might have been a factor.)

The judge in this case, Madam Justice Fisher, found that the daughters were genuinely trying to protect their father's condominium for him. They were not acting out of any improper motives.

Mr. McMullen was seen by a number of physicians, including his family doctor, a geriatric specialist and a psychiatrist. All of them opined that he was capable of managing his affairs. One of them diagnosed him with depression.

Madam Justice Fisher held that the transfer of the condominium was a misuse of the power of attorney, and ordered it transferred back into Mr. McMullen's name. His daughters were not entitled to transfer the condominium without his knowledge or consent. They breached their fiduciary duties (or duties of loyalty) to him by transferring the title.

Mr. McMullen's right to make his own decisions trumped his daughters' concerns. Madam Justice Fisher wrote at paragraph 68,

Mr. McMullen may be making improvident decisions, according to his family, but the law entitles him to do so, provided he is capable of making financial decisions and does not harm others. There is no question that it has been, and continues to be, extremely difficult for Mr. McMullen’s family to watch him make what they see as questionable decisions, but unless and until Mr. McMullen is declared incapable of managing his financial affairs, his attorneys are not entitled to step in and make decisions for him without his knowledge and consent.

I take three points from this case.

First, it is important to keep in mind that an enduring power of attorney is meant to allow another person to assist with financial matters, but does not prevent the donor (or the maker) from making his or her own decisions.

Secondly, there are some people who may be mentally capable of managing their affairs, but vulnerable to undue influence and financial abuse. The law may provide a remedy after financial abuse has happened, but it can be difficult for concerned family members to take steps to prevent the abuse before it happens.

Thirdly, just as parents have to let their young adult children make their own decisions, children need to respect their parents' right to autonomy in later years.

S. 331 of the Criminal Code: Theft by Power of Attorney

An enduring power of attorney is an extremely useful planning tool. It allows you to appoint someone to manage your finances, and continues in effect even if you become incapacitated, and are unable to manage your own affairs.

As I have written before, the person you appoint in a power of attorney has a legal responsibility to act in your best interests. The person you appoint must not use the power of attorney to benefit himself or herself without your express authority.

Unfortunately, people occasionally abuse powers of attorney. I think some of the most reprehensible cases are those in which children take assets from their mentally incapacitated parents when not authorized to do so. They may rationalize their conduct on the basis that mom or dad would have agreed to give them the assets if capable, or that transferring assets while their mom or dad is alive will save probate fees. Whatever the rationalization, it is still wrong.

People who abuse powers of attorney need to be concerned about criminal prosecution as well as civil suits. In Canada, the Criminal Code, RSC 1985, c. C-46, has a specific offence for theft using a power of attorney. It is set out in s. 331 as follows:

Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of attorney.

June 15 is Elder Abuse Awareness Day in Kelowna

I have the honour of speaking at the Elder Abuse Awareness Day here in Kelowna, British Columbia. According to the Seniors Outreach Services Society press release,

Elder Abuse Awareness Day will be officially declared on Thursday, June 15th by the Mayor of Kelowna at the Interior Health centre, 1340 Ellis St. from 1 p.m. until 4 p.m. This special day raises awareness of the abuse and neglect that some of our seniors suffer, how these factors impact on people’s lives and what help is available in our community. June 15 also promotes the community resources that are available to help abused seniors in Kelowna and area. Guest speakers will include Stanley Rule of Tinker, Churchill, Rule, Barristers and Solicitors, and Susan Volkmann, MSW, Psychiatric Social Worker. There will be periods for questions and refreshments. For further information please call Seniors Outreach Services Society at 861-8610.

Canadian Provincial Responses to Elder Abuse Chart

The Canadian Centre for Elder Law Studies has published a chart comparing legislative responses to elder abuse in the Canadian provinces. It is available here.

Elder Abuse and Neglect: What to do.

The Public Guardian and Trustee of British Columbia has published a document on its website on what do in cases of suspected abuse, or neglect, or self neglect of an adult. I have posted an excerpt below.

PGT of BC: Disclaimer: "In an emergency�
If the situation is an emergency and someone's safety or life is at risk you can call the police emergency number for your community.
If it is not an emergency but there is still reason for concern�
If there is a bit of time to take action, you can do one or more of the following:
Talk to the adult if you feel comfortable doing so to find out if they need assistance and if there's someone you can contact for them.

Phone one of the Community Numbers in your community.

Phone the Designated Agency Number for your community if you have any doubt about whether the adult can seek help on their own. Under Part 3 of the Adult Guardianship Act , designated agencies must look into reports of adult abuse or neglect they receive. See Protecting Adults from Abuse and Neglect for more information.

For information on the Public Guardian and Trustee's role in helping an adult get support and receiving reports of abuse or neglect, visit the Services to Adults Assessment and Investigations page.

Phone VictimLINK 1�800�563�0808, which is a toll-free, 24 hour-a-day, seven day-a-week support and referral service.

Phone the BC Coalition to Eliminate Abuse of Seniors during regular weekday hours 1�866�437�1940 (toll free) to get information about who else can help. "