The Law on Powers of Attorney & Rep. Agreements
As we have advised, when your mother or father are getting older, it is wise for the parent(s) and child/children to have powers of attorney and representation agreements in place. Not doing so will require that the children obtain committeeships, which are much more complicated.
Alas, another case where finances get in the middle of sibling relationships.
The recent case of Putman v Putman, 2021 BCSC 1700, discussed the Power of Attorney Act and Representation Agreement Act and the applicable law to the aforementioned legal instruments. In this case, the petitioner, David Putman, and the respondent, Linda Putman, were brother and sister; they were jointly appointed as attorneys pursuant to an enduring power of attorney granted by their mother, Margaret Putman. The respondent had also been appointed as Margaret’s representative pursuant to a representation agreement made pursuant to s. 9 of the Representation Agreement Act, R.S.B.C. 1996, c. 405 (the “RA Act”). The two siblings were unable to agree as to the appropriate medical treatment for their mother and likely more so, how best to deal with valuable real estate owned by their mother; alas, another case where finances get in the middle of sibling relationships. The petitioner also complained about what he alleged were unilateral and inappropriate actions by his sister. The parties sought relief pursuant to s. 36(1)(a) of the Power of Attorney Act, R.S.B.C. 1996, c. 370 (the “POA Act”):
the brother sought order revoking the appointment of his sister or alternatively making her an alternate; and
the sister sought a direction that she have sole conduct over the health care arrangements and related financial arrangements for their mother, and an order reimbursing her for funds spent on Margaret's care when her brother prevented her from accessing her mother’s funds.
From reviewing the case, what is important to note is the language when appointing joint attorneys. The lawyer drafting your POA must be clear as to who has the ultimately authority on decisions, or alternatively, whether the decisions must be made with unanimity.
Ultimately, Mr. Justice Veenstra stated as follow:
[117] I am concerned about David's conduct in the past year. Having suggested in June 2020 that all of the properties needed to be "liquidated", as the parties moved into the fall of 2020 and spring of 2021 he refused to engage with Linda in putting that into effect. His refusal to consider a reverse mortgage as an alternative, and his anger with VanCity when they allowed RRIF funds to be withdrawn when necessary to fund Margaret's care, all suggest to me that David was intentionally seeking to starve Margaret of liquidity in order to provoke a crisis and impose his much more limited view as to the proper care to be provided for her.
[118] As noted above, s. 19(3)(a) of the POA Act requires each attorney to give priority when managing the adult's financial affairs to meeting the personal care and health care needs of the adult, to the extent reasonable. For the reasons set out above, I conclude that Linda's decisions as to the level of care were reasonable. David's actions have not been in compliance with the requirement of s. 19(3)(a).
[119] I am concerned that if David is permitted to act unilaterally in respect of the financial aspects of Margaret's health care arrangements, he may continue to take steps that will interfere with payments and with the relationships with care providers.
[120] I also conclude that the expenses Linda incurred personally after David's conduct cut off funds in March 2021 are reasonable expenses for which she is entitled to reimbursement pursuant to s. 7 of the POA.
[121] In light of all this, I will provide the directions sought in Linda's notice of application that were identified as being an issue in this hearing. Specifically, I would order pursuant to s. 36(1)(a) of the POA Act that:
a) Linda have sole conduct over the health care arrangements and related financial arrangements for Margaret;
b) Linda be reimbursed for payments made to finance Margaret's additional care since March 19, 2021; and
c) Linda may unilaterally act and direct Margaret's financial institutions with respect to payments for Margaret's medical and care-related expenses and that David's approval, authorization or signature with respect to such expenses are not required.
[122] In my view, the decisions to be made with respect to the sale of Margaret's two remaining properties are momentous decisions as to which there should be unanimity. I am concerned in particular that neither party commit to any sort of commission arrangement with respect to the potential sale of the Surrey Property before the parties have a good sense of where their dealings with the City of Surrey are going. One of the benefits of a sale to the City would be the avoidance of a large commission payment and the parties may be able to obtain the advice they require on a non-commission basis. I am also concerned, given David's strange dealings with Margaret's long-standing accountant, that unnecessary disruption on that front be avoided. As a result, I would direct that:
a) Decisions with respect to the listing or sale of real estate must be made with unanimity; and
b) Any change to the existing accountant also requires unanimity.
[123] As noted above, in light of my comments above with respect to Linda's occupation of the Surrey Property from March 2019 to March 2021, I expect David to review his position and consider whether there is a need to further pursue the matter. Should David wish to pursue a claim for compensation to Margaret in respect thereof, there will be a trial of that issue. If that is to happen, the parties can apply to me for directions as to such matters as identification of issues, provision for discovery and any other matters necessary to prepare for that trial.
[124] David's application to remove Linda as an attorney or to make her an alternate is dismissed.
In summarizing the law, the Court stated:
Issues
[76] It appears from the above that a key issue in this matter is to determine which of the parties' competing viewpoints as to the costs of both Westminster House and Comfort Keepers reflects the best interests of Margaret.
[77] The other issue to consider is whether there is any basis to remove Linda from her position as attorney.
[78] The final issue is to determine what directions the court should give in order to allow the parties to move forward ensuring that Margaret's best interests are advanced.
Applicable Law
[79] Several provisions of the POA Act are relevant.
[80] Section 10 defines a number of terms including the following:
"financial affairs" includes an adult's business and property, and the conduct of the adult's legal affairs;
"personal care" includes the following matters in respect of an adult:
(a) diet, dress and hygiene;
(b) health related activities, including medication;
(c) social, recreational, employment and educational activities;
(d) shelter, including admission to a care facility under the Health Care (Consent) and Care Facility (Admission) Act;
[81] Section 18 deals with the situation where a power of attorney assigns authority to multiple attorneys:
(4) An adult who names more than one attorney may assign to each of them
(a) a different area of authority, or
(b) all or part of the same area of authority.
(5) If all or part of the same area of authority is assigned to more than one attorney, the attorneys must act unanimously in exercising the authority, unless the adult does one or more of the following in the enduring power of attorney:
(a) describes the circumstances in which the attorneys need not act unanimously;
(b) sets out how a conflict between attorneys is to be resolved;
(c) authorizes an attorney to act only as an alternate attorney and sets out
(i) the circumstances in which the alternate is authorized to act in place of the attorney, including, for example, if the attorney is unwilling to act, dies or is for any other reason unable to act, and
(ii) the limits or conditions, if any, on the exercise of authority by the alternate.
[82] Section 19 sets out the duties of an attorney:
(1) An attorney must
(a) act honestly and in good faith,
(b) exercise the care, diligence and skill of a reasonably prudent person,
(c) act within the authority given in the enduring power of attorney and under any enactment, and
(d) keep prescribed records and produce the prescribed records for inspection and copying at the request of the adult.
(2) When managing and making decisions about the adult's financial affairs, an attorney must act in the adult's best interests, taking into account the adult's current wishes, known beliefs and values, and any directions to the attorney set out in the enduring power of attorney.
(3) An attorney must do all of the following:
(a) to the extent reasonable, give priority when managing the adult's financial affairs to meeting the personal care and health care needs of the adult;
(b) unless the enduring power of attorney states otherwise, invest the adult's property only in accordance with the Trustee Act;
(c) to the extent reasonable, foster the independence of the adult and encourage the adult's involvement in any decision-making that affects the adult;
(d) not dispose of property that the attorney knows is subject to a specific testamentary gift in the adult's will, except if the disposition is necessary to comply with the attorney's duties;
(e) to the extent reasonable, keep the adult's personal effects at the disposal of the adult.
[83] Pursuant to s. 24:
(1) An attorney must not be compensated for acting as an adult's attorney unless the enduring power of attorney expressly authorizes the compensation and sets the amount or rate.
(2) An attorney may be reimbursed from an adult's property for reasonable expenses properly incurred in acting as the adult's attorney.
[84] The jurisdiction of the court to give directions is reflected in s. 36(1):
(1) On application by an attorney, the court may
(a) give directions respecting the scope of an attorney's powers and duties, and
(b) make an order directing a person to release information to the attorney for the purpose of allowing the attorney to exercise the attorney's authority under this Act.
[85] A power of attorney, given that it carries with it the power to deal with the adult's legal and financial affairs unilaterally, will in most cases impose fiduciary obligations on the attorney: Egli v. Egli, 2004 BCSC 529 at paras. 79-82, including the following from para. 82:
[82] It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage . . . The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor . . . I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members.
See also Sommerville v. Sommerville, 2014 BCSC 1848, at paras. 33-34.
[86] As noted in Sull v. Pengelly, 2019 BCSC 575, at paras 128-131:
[128] Thus, an attorney has a fiduciary duty to act in accordance with the authority granted to the attorney by the donor and to use that power only for the benefit of the donor: s. 19(2) of the Act. The scope of the attorney’s authority is set out in the power of attorney.
[129] A fiduciary is subject to a broad duty to act in good faith and in the best interests of the person over whom he or she exercises discretion or control. She must fully disclose all information relevant to the trust and confidence placed in her and that she must not reap a personal benefit or use the property or goods that she has discretion or power over …
[130] An attorney can only use the power of attorney for his or her own benefit when it is done with the full knowledge and consent of the donor: Egli at paras. 81-82.
[131] Where the attorney is found to have breached their fiduciary duty to the donor/deceased the court has, inter alia, ordered (1) that funds and improperly transferred accounts be repaid to the estate: Egli at para. 88; Robillard at para. 113; and (2) a full accounting be provided by the attorney: Chapman at para. 30 and McEwen at 731.
If you require a Power of Attorney, Representation Agreement, or a Committeeship, please contact Tri-City Legal asap as we are experts and up-to-date with the ever-changing law in this regard.