Recently, the Toronto Star published an article describing a story with a twist on the usual power of attorney (“POA”) induced situation of abuse.
A typical financial abuse scenario may consist of the following: an individual whose capacity is in question executes a POA document that enables a friend or relative to act on his or her behalf; the friend or relative uses said POA to sell the grantor’s home to his or her own benefit; as a result, the grantor is robbed of the security he or she would have had based on the equity in the home.
Star reporter Mark Weisleder describes a series of events involving a man with a history of mental illness who gave permission to his friend to fix and sell a property he owned in St-Catherines. The incentive? The friend would obtain 50% of the profits of sale.
These two individuals entered into a Sales Agreement according to which the proceeds of sale as well as the expenses incurred to sell or maintain the property would be divided in half.
The friend followed through, invested a modest sum of money in the property, and then asked the owner to provide her with a POA to enable her to sell the property. Once the property was sold and the owner had received the profits of sale, his friend expected to receive half of that amount. However, the owner had a change of heart and decided to provide her with only $20,000 for her efforts in addition to what monies she had invested in fixing the property.
Justice Wilson of the Ontario Superior Court of Justice, in reviewing this case, found that the Sales Agreement was invalid for two reasons: first, due to legislative provisions found in the Real Estate and Business Brokers Act 2002 and secondly, because the Sales Agreement was unconscionable and, as such, unenforceable.
This case differs from a “typical” abuse scenario in so far as it is the grantor of the POA who most benefited from the sale of the home. Nevertheless, this set of facts does resemble many cases of financial abuse in that it refers to a friend who, ostensibly, sought to take advantage of a person who was not in a mentally healthy state and, as a result, had a difficult time making decisions about his property.
Ferraton v Shular reminds us that courts may use the doctrine of unconscionability in determining contractual enforceability where indicia of vulnerability are found. Even if an agreement is made in writing, where there is unconscionability—uneven bargaining power and an improvident bargain—a contract may be set aside.
Link to the case on CanLii
Link to The Star article
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The Need to Plead
When are pleadings necessary in contested estate disputes? This was one of the questions dealt with in Notarfonzo Estate, 2013 ONSC 2496 (CanLII).
The Canadian deceased was survived by his wife and nine year old daughter in Cuba. In his previous Wills, the deceased named his wife and daughter as his beneficiaries. Just twelve days before he died of lung cancer in a palliative care unit, he made a new Will naming his brother as the sole beneficiary. He also transferred property to his brother during his lifetime.
The Children’s Lawyer started an application on behalf of the daughter. The application challenged the validity of the last Will, disputed the validity of the lifetime transfers to the brother, and claimed support for the dependant daughter.
At an earlier hearing, the court ordered the brother to disclose the deceased’s earlier Wills and information about the assets and liabilities of the estate. Some of this disclosure was provided. At this hearing, the Children’s Lawyer asked the court to order a trial of the issues in the application. The brother agreed that the court should order a trial, but also argued that the matter should be converted into an action with pleadings. The court agreed, and ordered the Children’s Lawyer to serve a Statement of Claim within 30 days. The Children’s Lawyer had resisted this order, arguing that it did not have enough information to frame the claims. The Court acknowledged that this was a concern, but found that, since the first round of disclosure had been delivered, the Applicant now had enough information to plead the daughter’s claims properly.
A case should proceed as an action, the court held, when findings of credibility are necessary or where live testimony is necessary. This was that kind of a case: there were key witnesses who interacted with the deceased. Their evidence would need to be weighed.
The Children’s Lawyer also asked for a tracing order and an interim preservation order. This request was dismissed, but without prejudice to renewing it later. The Court held that the previous order that the brother not dissipate the deceased’s assets would be good enough for the time being.
Finally, the Court ordered the estate trustee to pay $4,100.00 per year in interim dependant’s support to the daughter, which was in keeping with the deceased’s previous level of support.
You can read the case here: Notarfonzo Estate, 2013 ONSC 2496 (CanLII).