All About Estates

No Passing of Accounts Unless “Significant Concern”

Emerson and Marie Lewis appointed two of their six adult children, Donald and Douglas Lewis, as their attorneys for property. Their remaining four children (the “non-attorney siblings”) commenced an application pursuant to ss. 42(1) and (4) of the Substitute Decisions Act, 1992, S.O. 1992, c.30 (the “SDA”) for leave to require Donald and Douglas to pass their accounts as their parents’ attorneys for property. The application judge dismissed their application, and the non-attorney siblings appealed to the Court of Appeal for Ontario.

The appeal was dismissed.

Pursuant to s.42(1) of the SDA, “[t]he court may, on application, order that all or a specified part of the accounts of an attorney or guardian of property be passed.” Section 42(4) partially lists those who have standing to make an application under s.42(1), including “any other person, with leave of the court.” The test for determining whether leave should be granted is whether the court is convinced that: (1) the person seeking leave has a genuine interest in the grantor’s welfare; and (2) the court hearing the application under s.42(1) may order the attorney or guardian to pass his or her accounts.

Even where a person automatically has standing to make an application under s.42(4) of the SDA (namely, the grantor’s or incapable person’s guardian of the person or attorney for personal care; a dependant of the grantor or incapable person; the Public Guardian and Trustee; the Children’s Lawyer; and a judgment creditor of the grantor or incapable person), the court’s decision to order the passing of accounts remains discretionary. In considering whether to exercise its discretion to order a passing of accounts, the court will consider the extent of the attorney’s involvement in the grantor’s financial affairs, and whether the applicant has raised “significant concern” regarding the management of the grantor’s affairs so as to justify an accounting.

The court acknowledged that the non-attorney siblings had a genuine interest in their parents’ welfare. The issue on appeal was whether the non-attorney siblings had established any basis to warrant the court’s interference with the application judge’s conclusion that they had failed to raise a significant concern regarding the management of their parents’ property. According to the application judge, the “record falls far short and lacks evidentiary stamina to suggest that there is any direct allegation of misfeasance or wrongdoing” on the part of Donald and Douglas, and the Court of Appeal agreed. In particular, the unchallenged evidence was that Emerson remained capable of managing his and Marie’s affairs. Donald and Douglas helped their father manage his and their mother’s finances, such as by paying his bills, but always kept their father informed of what they did. In addition, and perhaps most compellingly, Emerson was represented by counsel and participated fully in the application. Emerson deposed that he had no concerns with the manner in which Donald and Douglas were managing his and Marie’s affairs, and he wished for the litigation to stop.

The Court of Appeal agreed that leave could be granted for an attorney to pass accounts without evidence of misfeasance or wrongdoing. Rather, the test is whether an applicant has “raised a significant concern in respect of the management of the grantor’s affairs to warrant an accounting.” This test could be met, for example, through evidence of a significant depletion of the grantor’s finances. However, the opposite occurred in this case; Emerson and Marie’s investment portfolios increased in value between the appointment of Donald and Douglas as attorneys for property, and the commencement of the application.

Take Away

The Court of Appeal has confirmed that leave of the court to compel an attorney for property to pass accounts will not automatically be granted. The applicant must present sufficient evidence to put the attorney for property to the task. Mere allegations of wrongdoing will not meet the threshold.

What is perhaps most unfortunate in this case is that Emerson and Marie both passed away within seven weeks of each other, after the application was heard. The non-attorney siblings appealed the dismissal of their application despite Emerson’s expressed wish for litigation between his children to end. Although not articulated in their reasons, the continuation of litigation may have swayed the court’s sympathies against the non-attorney siblings.

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.

1 Comment

  1. Catharine Williams

    February 26, 2020 - 2:06 pm
    Reply

    Such a sad story, especially for the parents to die while their adult kids were still in turmoil. Thanks for sharing.

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