Sunday, February 28, 2021

West Vancouver (District) v. British Columbia (Attorney General)

 

You might own a unique piece of land that you want preserved for the public well after your death. Perhaps there is a heritage building on the land, or perhaps you value the land because of its natural beauty. You could look at leaving the land the municipality or regional district in which the land is located. If so, I am guessing you probably don’t want the municipality to sell the land to the highest bidder to use the land for the construction of massive buildings. Accordingly, you might but conditions on the use of the land through imposing a trust.  In contrast to most trusts, a charitable trust can continue forever. Think about it: if the municipality accepts the land, you may be able to require that as trustee the municipality must preserver it in natural state a thousand years from now.

It is good policy to allow people to create trusts imposing conditions on the use of the land when leaving it to a municipality. By allowing people to impose conditions on the use of the land, people are encouraged to gift land to the public for worthwhile activities. The municipality does not have to accept the gift of land if the conditions are too onerous, but if it does accept the land, then it should honour the terms of the trust.

The difficulty is that something that makes good sense now, might be less beneficial in changing circumstances in even twenty years from now, let alone a hundred or a thousand. Municipalities are governed by elected councils who try to carry out the interests of the community in changing circumstances. They may consider, for example, that it would be better to sell the land, and use the funds to purchase other lands as a park, or perhaps something quite different such as providing low-cost housing.  How does the law balance the competing interests of honouring commitments to the person who gave the land to the municipality and the changing needs of the community?

Charitable trust law in British Columbia employs a couple of different methods that allow some flexibility in limited circumstances. One is called “cy-près,” which means as near as possible. If the purpose of the trust has become impossible or impracticable, the trustees of a charitable trust may apply to court to allow the trust to be varied so that it may be used for some other, but similar, purpose. For example, if trust were created solely to fund research to prevent small pox, and there are still funds left after small pox was eradicated, the trustee could apply to court to vary the trust so that the funds could be used for research to eradicate some other infectious disease.

Impossibility or impracticability is a fairly tough threshold to meet, and rightly so. There is another tool for varying charitable trust, and this the court’s power to make an administrative scheme. The court may vary the trust to provide a better means to achieving the purposes of the trust. On the one hand the threshold is not as high as for cy-près, but on the other it must be consistent with the purposes of the settlor or will-maker who created the trust. I previously wrote about The Sidney and North SaanichMemorial Park Society v. British Columbia (Attorney General) in which Madam Justice Dardi applied the administrative scheme-making power to allow the Park Society to change the terms of the trust to provide more flexibility in leasing land it owned, in generating revenue form the lands, and in the application of funds from expropriated lands, in order to better carry out the purposes of the trust.

The cy-près and administrative scheme-making powers are common law tools to provide some flexibility. Additionally, British Columbia has legislation allowing municipalities, regional districts and certain other organizations to apply to court to vary trusts, ant it is to the legislation to which I will turn.

In her will, Clara Brissenden left 2.4 acres of land with a house on it to the District of West Vancouver (the “District”) “to be used and maintained by it for public park purposes and I express the wish that in developing the said Amended Lots as a public park the trees and natural growth be preserved as far as may be practical.” Ms. Brissenden died in 1990, and the District accepted the land. The District rented out the house to a caretaker and named it Brissenden Park, but did not develop any of the land as a park until 2018. The park was a neighbourhood park with a fairly small amount of traffic. A trail counter at one entrance in 2019 indicated an average amount of visitors of 6 per day.

In 2017 the Council of the District resolved to try to change the terms of the trust for the property to allow it to subdivide the property and keep the northern half as a park, and to sell the southern half, and then use the sale proceeds to purchase waterfront properties to add to another busier park on the waterfront. The plan the District Council ultimately adopted would see the sale of 43 percent of the land, which would be subdivided into three residential lots, each with a covenant protecting the trees on the northern 10 feet. The District would name the two properties it intended to purchase with the sale proceeds “Brissenden Waterfront Park.”

The District petitioned the court to allow it to vary the trust to facilitate its plan to sell a portion of the Brissenden Park to allow the purchase of waterfront land. Carrying out the terms of the trust clearly did not meet the threshold of impossibility or impracticability in order to apply cy-près. The District sought to vary the trust by asking the court to apply its administrative scheme power and it also relied on section 184(2) and (3) of the Community Charter which says:

(2) If, in the opinion of a council, the terms or trusts imposed by a donor, settlor, transferor or will-maker are no longer in the best interests of the municipality, the council may apply to the Supreme Court for an order under subsection (3).

(3) On an application under subsection (2), the Supreme Court may vary the terms or trusts as the court considers will better further both the intention of the donor, settlor, transferor or will-maker and the best interests of the municipality.

The Attorney General of British Columbia was named as the respondent in the petition. The Attorney General, who has a responsibility to enforce charitable purpose trusts, opposed the application.

Justice Edelmann, in West Vancouver (District), v. British Columbia (Attorney General), declined to apply the scheme-making power to this trust. He found that Ms. Brissenden’s specific intention was to preserve the specific property Ms. Brissenden left to the District rather than a broader purpose of contributing to public parks. The District’s proposal would alter the purpose of the trust. He wrote:

[54]       The District’s application before me turns on the characterization of the plan and whether the very specific directions from Ms. Brissenden in her will should be considered the object or charitable purpose of the trust, or whether they are merely administrative in nature.

[55]       As set out above, in my view both the will itself as well as the context of its drafting indicate that the purpose of the trust was to preserve the Brissenden Property, with its trees and natural growth if practical, for use by the community as a park. It is clear from the terms of Ms. Brissenden’s will that she felt the Brissenden Property itself, and in particular the mature trees on the Brissenden Property, had an inherent value for the community that warranted protection. The representatives of the District around the time of the gift appear to have explicitly agreed with that assessment. The proposed plan would be contrary to this direction from Ms. Brissenden, as a significant portion of the trees and natural growth would be removed for development, and the proposed “Brissenden Waterfront Park” would appear to have neither mature trees nor substantial natural growth. I do not find that the direction to preserve the trees and natural growth is a mere administrative matter, and in my view, it is much more appropriately characterized as part of the charitable purpose of the trust.

Justice Edelmann then considered whether he should vary the trust under section 184 of the Community Charter. He found that the legislation was intended to modify the common law and “allow greater flexibility in varying trusts for which the municipality is the trustee.” The wording of the legislation implies that there must also be a change in circumstances since the trust came into effect.

The legislation balances the intention of the settlor or will-maker on the one hand, and the best interests of the municipality. Justice Edelmann wrote:

[99]       I agree with the District’s submission that the clause read in context implies a conflict between the intention of the settlor and the best interests of the municipality. There are at least two indications of this. First, if the variation independently furthered the “intention of the settlor”, there would not appear to be any impediment to its implementation by the municipality as trustee under existing trust mechanisms. Secondly, an application can come before the court only in circumstances where the municipality is of the opinion there is a conflict between the “terms or trusts” and the best interests of the municipality.

[100]    The question of whether the variation is one “the court considers will better further both” the intention of the settlor and the best interests of the municipality would therefore indicate an assessment of both elements together rather than independently. Ultimately, this Court must consider the impact of the proposed variation for both the intention of the settlor and the interests of the municipality. 

Mr. Justice Edelmann held that it was appropriate to vary the terms of the trust to allow the District to sell part of the property and use the proceeds to purchase the waterfront property for parkland. Although the plan did not reflect Ms. Brissenden’s specific intention for the property to become a park, her “intentions can be framed more broadly in terms of development of park space in which residents of the District will have access to more natural environment.” The plan was consistent with her broader charitable purpose.

He also agreed that the plan was in the best interests of the District.

[112]    A substantial amount of documentation was placed before the Court indicating that the current proposal was developed following extensive consideration and consultation by the District. There is no dispute that the waterfront parks surrounding the Argyle properties are regularly used by many thousands of residents of the District. The parks in question are a destination for visitors from the surrounding region and beyond. As noted earlier in these reasons, I accept that the proposed plan takes into consideration the multiple factors that converge in managing a park system for a large urban community. It is a well-documented plan that has been subject to extensive study and consultation, taking into consideration the other park space available to residents in the various parts of the District. I accept that the proposed plan is in the best interests of the District and its residents.

Circumstances had changed since Ms. Brissenden and her husband Pearly Brissenden (who died before her) had discussed leaving the property to the District. Justice Edelmann noted:

[117]    I accept that there have been relevant changes in the circumstances since the time when the District had discussions with the Brissendens about donating their property. In addition to the substantial increase in the cost of acquiring waterfront property, which has limited the ability of the District to pursue the Argyle Acquisition Policy, there have also been significant changes in the population of the District that would inevitably impact the usage of the park system. It is in the context of the current circumstances that the District is of the opinion that strict adherence to the terms of the trust are no longer in its best interest.

Justice Edelmann was alive to the risk that allowing trusts to be varied could discourage gifts of property to municipalities. He noted a distinction between a chilling effect for a specific municipality if it does not abide by the terms of trusts set out by those gifting property to it, and a broader chilling effect if the court allows the trusts to be varied too readily. He wrote:

[120]    In my view there is an important distinction to be made between the broader chilling effects of a low threshold for s. 184(3) variation, such that it would discourage charitable gifts to any municipality in trust, and the chilling effect in relation to the specific municipality before the court. In my view, the petitioning municipality is in a position to consider the chilling effect of the variation it is seeking on the future gifts it might receive in trust, and deference should be afforded to that assessment.

[121]    With regard to the broader chilling effect, there is presumably some risk inherent in varying the terms of a trust in a manner that deviates from settled law such that potential donors may consider the terms of their gifts less secure. However, if the legislature’s intention to expand the scope of possible variations is to be given effect, that inherent risk cannot be an impediment to any variation outside of existing trust law principles. The court should seek to strike an appropriate balance in demonstrating respect for the terms and trusts established by the settlor in the context of an expanded scope for variation.  

Saturday, February 20, 2021

Using Two Wills to Minimize British Columbia Probate Tax

 In British Columbia when a will is probated, or in other words proved, the personal representative is required to pay probate tax. The legislation imposing this tax is called the Probate Fee Act, but the fees are really a tax. The tax is calculated on the value of the estate, at a rate of approximately 1.4 percent (I am simplifying a little). If the will maker was ordinarily resident in British Columbia at his death, then the tax applies to real estate and tangible property in British Columbia (such as cars, furniture and art), and his worldwide intangible assets (such as money, stocks and bonds).

There are various techniques used to avoid or minimize probate fees, some of which are well thought out, and some of which are ill advised. Many of these techniques centre around minimizing the wealth that is dealt with under a will, so that the value of the estate is small. For example, spouses may hold their house, bank accounts and investment accounts jointly with a right of survivorship, so that on the death of one, the survivor becomes the sole owner, and the will of the first to die either does not need to be probated, or if the will is probated, the jointly held assets do not need to be listed as part of the estate, and may be excluded form the calculation of probate tax. Trusts are also employed to minimize probate tax.

One technique that has become more popular in British Columbia since changes in our succession legislation in 2014 is the use of two wills dealing with British Columbia. The idea is for the will maker to have two wills, one governing assets for which a grant of probate is necessary for the will-maker’s executor to deal the assets, and the other governing assets for which no grant of probate is required.

For example, supposing the will-maker’s main assets are a house owned solely by the will-maker, which is worth $2 million, and shares in a company that are worth $10 million. If he has a will dealing with all of the assets, on his death when the will is probated, the probate tax will be approximately $168,000. The executor will need to probate the will in order to obtain title to the house to either transfer it to a beneficiary or sell it to pay debts and expenses, and distribute the balance of the proceeds to the beneficiaries. But it might not be necessary to obtain probate to deal with the shares of the company if the will-maker is the only shareholder, or if there is a small group of shareholders and the company’s directors will agree to transfer the shares to the executor without a grant of probate. I am assuming that the shares are not traded on a stock exchange. The difficulty is that the executor cannot pick and choose which assets to disclose when applying for probate: the executor must swear an affidavit setting out all of the assets that pass to her as the executor.

The two-will strategy involves making a separate will that deals only with the shares of the company, or perhaps including some other assets which can be dealt with by the executor without a grant of probate. The other will deals with the other assets, for which a grant of probate is or may be required. Different terminology may be used, such as “primary will” and “secondary will,” or “general will” and “restricted will,” but for simplicity I will refer to the will dealing with shares as the “corporate will,” and the other will I refer to as the “general will.” In this example, if the shares are dealt with in the corporate will, and only the general will needs to be probated, the probate fees will be approximately $28,000, a saving of $140,000.

This two-will technique has been popular in Ontario longer than in British Columbia. In British Columbia we rely on the wording of section 122 of the Wills, Estates and Succession Actwhich says that an applicant for a grant of probate or administration must disclose information about the property of the deceased person and the value of the property “that passes to the applicant in his or her capacity as the deceased person’s personal representative….” The probate tax is then calculated on the basis of the value of those assets. For this to work, the executor of the general will must be a different person from the executor of the corporate will, so that the executor of the general will may swear an affidavit that excludes the shares in the corporate will. Otherwise, the property in the corporate will also pass to the same personal representative, and she will have to list the shares of the company, which defeats the purpose.

One downside is that the will-maker needs to name more people to act as executors and alternate executors to ensure that the same person is not the executor of both wills.

I find drafting two wills to be challenging, and there are a number of pitfalls that need to be avoided.

First, the order in which the wills are signed is important. The corporate will should be signed first and this needs to be documented either in the will or a memorandum, or better yet both. This is because the executor of the probated will need to swear that it is the last will.

Second, the standard revocation clause in the general will must be modified so that it does not revoke the corporate will.

Third, the assets in each will must be carefully defined so that it is apparent which assets are governed by which will, and that assets for which a grant of probate is required are clearly excluded from the corporate will so that it does not become necessary to also probate the corporate will.

Fourth, consideration should be given to which debts are to be paid out of the assets governed by the general will, and which debts are to be paid out of the corporate will. This is less tricky if the beneficiaries of each will are identical, but is more complex if there are different beneficiaries in each will. For example, if the will-maker wishes for one child who is expected to take over the business to receive all or most of the assets in the corporate will, while other children receive more under the general will, the will-maker will likely want to ensure that taxes and other expenses attributable to the property governed by the corporate will is ultimately borne by the beneficiary or beneficiaries of the corporate will, and not the beneficiaries of the general will.

Fifth, while the executors of the two wills must be different persons, they must also be able to work well together to deal with such issues as filing tax returns.

There are not many reported cases in British Columba dealing with the use of two wills to minimize probate tax at the time I am writing this post, but in one case Master Wilson (now Mr. Justice Wilson) held that it is permissible to apply to probate only one of two wills, which lends support to this strategy. The case is Berkner (Estate), 2017 BCSC 619.

Sunday, February 14, 2021

Enforcing a Judgment Against a Beneficiary of a Trust Against Lands Held in the Trust

 

Can a judgment against a beneficiary of a trust be registered and enforced against land held in the trust? As illustrated by the decision in Clarke v. Braich, 2021 BCSC 121, in British Columbia the answer depends on the nature of the beneficiary’s interest in the trust. If the beneficiary does not yet have the right to the property held in trust, then a judgment may not be registered against the land.

Kenny Braich is both a trustee and beneficiary of a trust that had been settled by his mother, Surjeet Singh. The terms of the trust are that during Ms. Singh’s lifetime, all of the income was payable to her, and no one else was entitled to any of the capital until her death. This is a popular estate-planning tool, often referred to as an “alter-ego trust.” The trust assets, which included four parcels of land (the "Trust Lands"), are to be distributed in accordance with a deed of appointment that she signed. The deed of appointment provides for a “Final Distribution Date,” which was the date of her death, and a “Division Date,” three years later. During the period between the Final Division Date and the Distribution Date, the trustees have the power to distribute income from the trust property to the capital beneficiaries. The trustees and the capital beneficiaries are Kenny Braich and his brother, Bobby Braich. The deed of appointment provides that on the Division Date, the trust property will be divided equally between the Braich brothers, but if either of them dies before that date, his share will go to his children, or if he does not have any children, to his brother.

Ms. Singh died on July 11, 2019. Accordingly, that date was the Final Distribution Date, and the Division Date will be July 11, 2022.

Scott Clarke obtained a judgment against Kenny Braich and registered the judgment against the Trust Lands. Registering a judgment against real estate is a useful way of enforcing a judgment. The judgment takes priority over future registrations such as transfers and mortgages, and the creditor may also apply to court to have the property sold to satisfy the judgment. Kenny Braich brought an application to court to discharge the registration from the title to the Trust Lands.

Madam Justice Baker granted Mr. Braich’s application to discharge the registration. Although Kenny Braich is a beneficiary of the trust, he does not have a beneficial interest in the trust property, specifically the Trust Lands. This distinction is important. A beneficiary of a trust may have a personal claim against trustees if they don’t comply with their duties as trustees, but the beneficiary does not necessarily have a claim to the property held in trust. A personal claim against trustees is referred to as a claim “in personam.”

The reason Kenny Braich does not have a beneficial interest in the Trust Lands is that if he dies before the Division Date, the trust property that he would receive if he were then alive, will go to other beneficiaries, that is his children or his brother. It is only on the Division Date that we will know for sure if he will receive the Trust Lands, and until then, he is only entitled to receive income.

His creditors can have no greater rights to the Trust Lands than he.

Madam Justice Baker wrote at paragraphs 50 and 51:

[50]         Kenny Braich is in no different position than the residual legatee in the case of Hollebone [v. Paterson, (1982), 42 B.C.L.R. 132].  Until the Division Date, his interest in the Trust is strictly in personam. He has no rights against the Trust Lands before the Division Date, and neither do his creditors.

[51]         As such, I do not agree with Mr. Clarke when he argues he is entitled to register his judgment against the Trust Lands pursuant to COEA [Court Order Enforcement Act] s . 86.  Until the Division Date, Kenny Braich does not have a beneficial interest in the Trust property, which includes the Trust Lands, against which Mr. Clarke is entitled to register his judgment.

Madam Justice Baker ordered the registration discharged. If Mr. Clarke wishes to enforce the judgment against the Trust Lands, he will have to wait until July 11, 2022.

 

Saturday, January 02, 2021

Sofia Courthouse, Sofia Bulgaria

 

My son Thomas Rule took this photograph of the Sofia Courthouse, when he was in Sofia Bulgaria in the fall of 2019. According to Wikipedia:

The need for a common building to house all the courts in Sofia was raised in 1926 with the foundation of the Judicial Buildings fund. Construction began in 1929 and finished in 1940. While it was the first structure in this strict monumental style in the city, it was followed by the Bulgarian National Bank in the 1930s and the Largo in the 1950s. The initial architectural plan was the work of Nikola Lazarov, later redesigned by Pencho Koychev. The Court House has a syenite plinth, a facing of white limestone and a noticeable cornice below the top floor. The four-storey building (with two additional underground floors) spreads over a ground area of 8,500 square metres and has 430 premises, of which 24 courtrooms, a library and a bank hall, totalling 48,000 square metres of used area.
The facade features five large gates and 12 columns. In its style, the Court House is eclectic, uniting several Classical themes, with a fourth floor instead of a baluster, as well as Roman and Byzantine style decorations on the doors, windows and corbels.


Sunday, December 27, 2020

Suspension of Limitation Periods in British Columbia Ends March 25, 2021

The British Columbia Government suspended limitation periods effective March 25, 2020. A limitation period sets the time limit in which someone may file a lawsuit. Because of Covid-19, the B.C. Government suspended the limitation periods. So for example, if a two-year limitation period would have expired on say May 19, 2020, the limitation period did not expire, but has been extended until after the suspension is lifted. 

Now, it will begin to run again after March 25, 2021.

I am pleased to see that the suspension is ending. I never understood the rationale. Although Covid-19 has had a significant impact on the court system, causing delays in hearings, it did not significantly affect the ability to file claims in court. Limitation periods set the time limits for filing claims, rather than for having them heard in court. 

The suspension of limitation periods have in some cases caused delays in distributing estates, mainly because someone wishing to make a wills variation claim has 180 days from the date of probate to do so. The Wills, Estates and Succession Act provides for a 210-day waiting period, because someone making a claim has another 30 days to serve the personal representative with the Notice of Civil Claim. In some cases, the personal representative can get consents to an early distribution from those who are entitled to apply to vary a will. but in other cases, that is not feasible, either because they won't sign a consent or can't because they are minors.  In those cases, personal representatives need to wait for the 210 days to expire, but during the suspension, the limitation period of 180 days continues until after the suspension is lifted. Funds held in estates have been tied up at a time when the economy needs funds to flow. 

Monday, November 16, 2020

Kimberly Rule is Speaking to Canadian Bar Association B.C. Wills and Trusts Sections Tomorrow

Kimberly is presenting on the topic of proprietary estoppel  by video conference tomorrow at 4:15 pm.., November 17, 2020. Her presentation will include a discussion of the decision in Linde v. Linde, 2019 BCSC 1586, in which she successfully argued a  claim to a ranch based on proprietary estoppel. 

Sunday, November 15, 2020

Powers of Attorney: Consider Allowing the Person You Appoint to Use Your Wealth to Support Your Spouse and Family

 

When acting as an attorney under an enduring power of attorney in British Columbia for someone who has lost the capacity to make her own decisions, the attorney must act in the best interest of the person who appointed her. The word “attorney,” in this context does not mean a lawyer, but rather the person appointed in the power of attorney. (If I may digress a little, although some refer to the attorney as the “power of attorney,” a power of attorney is actually the document, rather than the person appointed.) But whether you call her an “attorney” or “power of attorney,” the principle that she must act in the best interest of the person who appointed her generally makes sense. You don’t want to give someone the power of sell your house, or withdraw your investments to someone who is going to take your money or give it to someone else, leaving you impoverished. But as we will see, it is not always that straight forward.

 You may want to allow your attorney to use your funds to benefit others particularly your spouse, minor children and perhaps adult children. If you have a history of charitable giving, you may want to allow your attorney to continue to make donations if you are not longer capacitated. When spouses make powers of attorney, they often appoint each other. It is also common for spouses to pool at least some of their financial resources for their benefit as a couple, even when they keep many of their assets separate. When one spouse loses capacity, the other when acting as attorney may be placed in a conflict of interest by virtue of the fact that the management of the now incapacitated spouse’s assets may benefit the capacitated spouse who is the attorney.

This issue can and should be addressed in the power of attorney. In your power of attorney, you may relax the rule the the attorney must act in your best interest by expressly allowing the attorney to use some of your assets to benefit your spouse or others. You can include a clause allowing for gifts, which can be unlimited, or restricted to a certain amount or percentage of your assets annually. You can expressly provide that your attorney may make decisions to benefit himself, especially if the attorney is your spouse. When I take instructions to draft a power of attorney, I ask clients if they want to allow their assets to be used to benefit their spouses, and most do.

Unfortunately, most of the powers of attorney I have seen over the years do not address this issue. Many are simple one-page documents with no provisions allowing the attorney to use the power of attorney to support other family or to make any gifts. In some cases this may work just fine, but the difficulties for a spouse in a financially interdependent marriage or common-law relationship when the power of attorney is silent on this issue is illustrated in the case of Sommerville v. Sommerville, 2014 BCSC 1848.

Richard Craig Sommerville (referred to in the decision as “Craig”) appointed both his spouse, Isabel Sommerville, and his daughter Janet Sommerville as his attorneys. Either could act separately. His marriage to Isabel was his second marriage, and Janet was his daughter from a previous marriage.

Craig and Isabel Sommerville had a marriage agreement, which provided that each would have his and her separate assets, but the agreement also contemplated that they would have joint assets. Craig Sommerville owned the house they were living in, had larger investments and larger pensions. The agreement initially provided that if Craig Sommerville had to move out of the house because of ill health, Isabel would have to move out after a year, but they amended the agreement so that she would be able to stay in the house. Craig’s will provided that Isabel would be able to remain in the house after his death until she remarried or died. He left the residue of his estate to his four children.

Craig Sommerville had arranged for his pensions to go into a joint account with Isabel, who contributed a portion of her pension to the joint account. They used the joint account for their expenses. Craig also had investment income, including RRIFs, most of which was reinvested.

After Craig became ill, Janet Sommerville redirected his pensions into an account in his sole name, in contemplation that he may have to go into a care facility, which he subsequently did following a stroke. She did so without consulting Isabel first. Not surprisingly, Isabel disagreed, and Janet then brought a petition to court to seeking directions.

Janet Sommerville’s position was that the pension funds should be used first to pay for her father’s personal and care expenses, then expenses necessary to preserve the home, and then only to the extent that there is pension income left, the pension income could go into the joint account for Isabel’s use. Janet also sought to be mainly responsible for the management of Craig’s finances.

 Madam Justice Fisher summarized the duties of an attorney as set out in the legislation as follows:

 

[39]         An attorney’s duties are now enunciated in s. 19 of the Power of Attorney Act. Section 19 (1) essentially codifies the duties of a fiduciary to act honestly and in good faith, to exercise reasonable care, and to account to the donor, within the authority granted in the power of attorney. Section 19(2) specifies that an attorney making decisions about the donor’s financial affairs must act in the donor’s best interests, taking into account the donor’s “current wishes, known beliefs and values” and any directions contained in the instrument, and s. 19(3) requires an attorney to give priority “to the extent reasonable” to meeting the personal care and health needs of the donor.

Madam Justice Fisher rejected the argument made on Isabel’s behalf that an attorney could use the power of attorney for the benefit of the donor’s family in a manner analogous to a court appointed committee. She noted that the ability for an attorney to make gifts is set out in seciton 20 of the Power of Attorney Act is limited.

However, in exercising a power of attorney, you may consider the donor’s wishes including making provision for a spouse or other family member. She wrote:

[45]         In my view, s. 19 does not alter the attorney’s common law duty to act only for the benefit of the donor. However, the best interests of the donor are not to be considered in a vacuum. His “current wishes, known beliefs and values” may permit the attorney to continue to provide for a spouse or family member if there is clear and convincing evidence of an intention to do so, and it can be done without compromising the donor’s interests.

 Madam Justice Fisher found on the basis of Craig’s conduct in directing the pension income into the joint account, the terms of the marriage agreement and Craig’s will that he wished for Isabel to manage their family finances and he intended to share his pension income for their joint expenses.

At paragraph 72, Madam Justice Fisher issued directions under section 36 (1) of the Power of Attorney Act as follows:

1.       All of Craig’s pension funds should be deposited into a bank account in the joint names of both Isabel and Janet as attorneys for Craig. The funds currently held by Janet as attorney are to be deposited into such an account. The pension funds that are still being deposited into Isabel’s joint bank account should be re-directed into this new account. 

2.       Isabel is to continue to manage Craig’s finances and will responsible for running the bank account referred to in (1) and paying for Craig’s personal and health care expenses. Janet will be able to monitor the use of the account as a joint attorney. 

3.       In using the pension funds, Isabel is to give priority to Craig’s monthly personal and health care expenses. She may use pension funds that are not required for Craig’s personal and health care expenses in her discretion and for her own expenses. 

4.       While she continues to live in the Lochside residence, Isabel may use Craig’s investment income to pay expenses associated with the ownership of the home, which will include property taxes, insurance, utilities, repairs and maintenance. Otherwise, Isabel may not use Craig’s investment income for any purpose other than to supplement his personal and health care expenses if this becomes necessary. 

5.       If Janet has any concerns about how Craig’s income is being used, she is to consult with Isabel and is not to take any steps or make any directions without Isabel’s concurrence unless she considers it necessary to prevent Craig’s assets from being used improperly.