All About Estates

Power of Attorney Disputes: Effective Capacity Assessments

I was honoured to moderate a panel today at the Advocates’ Society’s CPD today “Capable or Not? How to Effectively Litigate and Mediate a Power of Attorney Dispute” (which will be available for purchase online in a couple of months as a webcast archive at TAS’ website). Justices McEwen and Pattillo both spoke and both justices agreed that Justice Penny’s recent decision in Adler v. Gregor, 2019 ONSC 3037 should be required reading regarding capacity assessments in power of attorney disputes. As such, I will blog about this case for those who may have missed it.

Agnes Adler (age 90) has two daughters: Judy and Andrea. The two were engaged in bitter power of attorney litigation regarding their mother. Three powers of attorney are at issue. Agnes had a 2000 POA that named both daughters as attorneys, a 2015 POA naming only Andrea and September 2017 POAs which named both daughters.

Matters had come to a head in 2017. Judy’s husband had sued Andrea and her husband for defamation. At the same time, Agnes’ cognition was deteriorating. Andrea arranged for a capacity assessment in August 2017 and the capacity assessor found that Agnes was incapable to manage property and grant a POA for property. Judy then took her mother on a cruise. When they returned, Judy took Agnes to see a new lawyer (recommended by Judy’s husband) to make new powers of attorney in September 2017. Judy arranged for a new capacity assessment for Agnes in October 2017. The new capacity assessor found that Agnes was capable of granting a POA for property and for personal care.

Judy commenced litigation to enforce the September 2017 POA and declare the 2015 POA invalid for lack of capacity (she quickly abandoned this alternative argument). Section 3 counsel was appointed to represent Agnes (i.e. counsel appointed by the PGT pursuant to section 3 of the Substitute Decisions Act).

The matter came before Justice Penny who found that “while both daughters, I am sure, want the best for their mother, their mother’s interests have absolutely nothing to do with this dispute.  This dispute is a power struggle between two siblings with long and abiding resentments toward one another, pure and simple.”

Justice Penny was unhappy with both Judy and Andrea’s materials, commenting that they were filled with “hearsay (from their mother and others), speculation, suspicion, innuendo and argument.” His Honour was even more unhappy with the two capacity assessments, criticizing Judy and Andrea’s personal involvement in the respective capacity assessments. Justice Penny found that Andrea provided biased or incomplete histories and background to the assessor and had a hand in drafting the final assessment report.

However, these concerns “pale[d] in comparison” to Judy’s involvement with the October capacity assessment. The first draft of the capacity assessment stated that Judy was present throughout the assessment; Judy insisted that this be changed to provide that she was not present. Judy made numerous other changes to the capacity assessment draft, including correcting answers given by Agnes during the assessment (“at which,” Justice Penny noted, “Judy claims she was not present”). Additionally, Justice Penny found that while the August assessment may be short on analysis, the October assessment was “virtually devoid of any analysis.”

His Honour concluded that capacity assessments were not designed or contemplated to be used as weapons in high conflict litigation. As such, while a capacity assessment would normally fall into the “participant expert” category of opinion evidence, capacity assessments obtained in contemplation of litigation will need to meet the tests set out in rule 53.03 regarding expert reports as well as be scrutinized by the court pursuant to the factors set out by the Supreme Court of Canada in R. v. Mohan.

Ultimately, Justice Penny rejected both capacity assessments as unreliable due to the bias and interference of Judy and Andrea (although his Honour concluded that Andrea’s interference was “somewhat less egregious” the difference was in degree, not kind). Instead, Justice Penny relied on the opinions of medical professionals who had treated Agnes as well as Agnes’ section 3 counsel who noted that who Agnes wished to act as her attorney “appeared to vary (I suspect based upon which daughter she just spoke to).”

Agnes wanted her daughters to get along and to cooperate in her care and the management of her property, according to Justice Penny. However, his Honour concluded that while this was an understandable wish it was completely out of touch with reality. His Honour found the September 2017 POAs to be invalid and upheld the 2015 POA as the valid power of attorney for Agnes (his Honour would have also set aside the September 2017 POAs on the ground of undue influence).

Justice Penny then dealt with two issues arising from Andrea acting as attorney. Agnes’ money was in a joint account with Andrea. While this may have had convenience for administering Agnes’ funds, his Honour found that there was no benefit and some risk to leaving the account joint. As such, his Honour ordered Andrea to put all of Agnes’ accounts under Agnes’ sole ownership. Andrea had also accepted a $25,000 gift from Agnes in 2017. In this circumstances, this was “highly inappropriate” and Justice Penny ordered the funds to be repaid.

Justice Penny reiterated that the parties should have no expectation that Agnes would pay either of their legal fees. In fact, his Honour asked both parties to explain why they should not equally share in the reimbursement of Agnes’ full indemnity legal fees.

In a handwritten endorsement his Honour did, in fact, order that each daughter pay half of Agnes’ full indemnity costs. His Honour rejected the argument that there had been divided success and found that Andrea was substantially successful. While his Honour would have been inclined to order substantial indemnity costs due to Judy’s conduct in the litigation, Judy had also served several offers to settle. His Honour disagreed that these offers to settle were “better” for Andrea than the result of the hearing but did find them to be bona fide offers. As such, his Honour fixed Andrea’s costs (payable by Judy) at approximately half of her actual costs (i.e. not substantial indemnity). His Honour pointedly held that there was to be no recovery from Agnes’ assets.

Justice Penny’s decision comprehensively sets out the factors and legal tests in a power of attorney dispute and is useful for that reason alone. However, counsel should pay special attention to his Honour’s comments on capacity assessments. Capacity assessments are for the court, not the parties, and parties tamper with them at their peril.

About Jacob Kaufman
Jacob Kaufman is a lawyer with de VRIES LITIGATION LLP. Jacob assists clients with will challenges, dependant support claims, guardianship applications, power of attorney disputes and other estate and trust litigation matters. He has appeared before various levels of court, including the Superior Court of Justice and the Court of Appeal for Ontario. Jacob obtained his law degree from the University of Western Ontario (with distinction) after completing an Honours Bachelor of Arts degree from Queen’s University in history (with distinction). He has written articles for the International Law Office, Legal Alert and the OBA’s Deadbeat. Email: jkaufman@devrieslitigation.com

1 Comment

  1. Pauline Morris

    September 18, 2019 - 9:44 pm
    Reply

    Thanks, Jacob. As a capacity assessor myself, I appreciate the commentary. It is essential that we remain non-partisan. I always ensure that the environment is neutral, and the client is able to speak with me in complete privacy. I try to get corroborative evidence from neutral sources as well, though sometimes the family fight is such that this is difficult. I see misuse of the term ” capacity assessment” from lawyers all the time. When there is no SDA role (guardianship or triggering conditional POA), the term does not fit…these things are actually letters of opinion about capacity to do something very specific, like write a Will, enact a Power of Attorney for Property, or give legal direction in litigation. No legal weight. When you are looking for one, remember that this is ‘expert’ opinion only and worth exactly that. As for me, I have no interest in getting used for ammo in a family fight! This has all got to be goal-directed and specific to the Court or Counsel’s need to direct action.

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