All About Estates

Court of Appeal Denies Stay of Order to Sell Property In Power of Attorney Dispute

In the recent decision of Volk v. Volk, 2020 ONCA 297, the Court of Appeal for Ontario declined the moving parties’ motion for a stay pending appeal of an Order granting the sale of real property alleged to have been purchased by attorneys for property with the funds of the incapable grantor.

Facts:

The underlying application involved the property of Doris Volk (“Doris”). Doris was incapable, and her property was under the management of her two daughters, Darlene Mussato (“Darlene”) and Lisa Volk (“Lisa”), whom Doris had previously appointed as co-attorneys for property.

Doris’ husband, George Volk (“George”), commenced an application as Doris’ dependant under the Substitute Decisions Act against Darlene and Lisa seeking, among other relief, guardianship of Doris’ financial and personal care, and a passing of accounts. George alleged that Darlene and Lisa had abused their power of attorney in order to enrich Darlene and her daughter, Felicia Kowalski (“Felicia”). In addition, Darlene and Lisa had sold the matrimonial home in which George and Doris had resided, and George sought an accounting of those funds. George further alleged that the proceeds of sale of the matrimonial home were used by Darlene and Lisa to purchase, improve and maintain real property at 4 Rose Cottage Lane in Shomberg (the “Shomberg property”), including supplying the down payment, payment of the mortgage and other expenses. The Shomberg property was owned by Doris (1%) and Felicia (99%) as tenants in common, but occupied by Darlene.  George sought an Order for the sale of the Shomberg property on the basis that it was depleting Doris’ assets to her detriment (and by extension, George’s detriment, as Doris’ dependant).

George brought a motion for interim relief in which he sought an order that Darlene and her partner vacate the Shomberg property, that it be listed for sale, and that the proceeds of sale be paid to George in trust for Doris. This relief was granted by the application judge on January 7, 2020. Darlene and Felicia appealed the order and brought a motion for a stay of the order for the sale of the Shomberg property pending the appeal.

Analysis

The motion for a stay was dismissed. The Court applied the three-part test governing whether a stay should be granted as set out by the Supreme Court of Canada in RJR-Macdonald Inc. v. Canada (Attorney Genera), 1994 CanLII 117 (SCC). The moving party must show that (a) there is a serious question to be tried; (b) the moving party will suffer irreparable harm if the stay is refused; and (c) the balance of convenience favours granting the stay.

The first branch of the test was not met. There was little chance the appeal would succeed as Darlene and Felicia had not identified a plausible ground of appeal. In particular, the Court refused to accept Darlene and Felicia’s explanation for their failure to attend the hearing in January 2020 which resulted in the decision from which they appealed. In addition, the Court did not accept that the judge at first instance erred in ordering the sale of the Shomberg property when George was not an owner, since George’s application was brought under the Substitute Decisions Act and Darlene and Felicia had failed to identify an error committed by the application judge pursuant to that statute.

Regarding the second branch of the test, Darlene and Felicia would not face irreparable harm from the sale of the Shomberg property, as neither of them resided at the Shomberg property (Darlene had been ordered to vacate) and each had little more than a minimal financial investment in the Shomberg property.

Regarding the third branch of the test, there was no harm to Darlene and Felicia from the sale of the Shomberg Property. Neither currently resided there (although due to Court order) and they had no financial stake in the property. On the other hand, there was potential harm to George with respect to his concerns about the ongoing depletion of Doris’ assets in maintaining the Shomberg property. As such, the balance of convenience favoured George.

Take Away

This case is an example of the type of “urgent” matter that the Court has heard by way of teleconference and video conference during the COVID-19 pandemic.

About Rebecca Studin
Rebecca Studin was called to the Bar in 2009. Before joining de VRIES LITIGATION LLP, Rebecca practised estates and commercial litigation at a full-service international law firm in Toronto. Rebecca’s estates experience includes will interpretation applications, will rectification applications, solicitor’s negligence actions, and other estates and trusts matters. Rebecca obtained her law degree from Osgoode Hall Law School after earning her honours bachelor of arts degree from Glendon College, York University. Following her call to the Bar, Rebecca was selected as a Fox Scholar and spent a year training as a barrister at the Middle Temple, Inns of Court, in London, UK.

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