E.B. v. S.B. et al., (2010) 248 Man.R.(2d) 260 (QB)

• Judge: Burnett, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: January 27, 2010
• Jurisdiction: Manitoba
• Citations: (2010), 248 Man.R.(2d) 260 (QB);2010 MBQB 15

E.B. v. S.B. (2010), 248 Man.R.(2d) 260 (QB)

MLB headnote and full text

Temp. Cite: [2010] Man.R.(2d) TBEd. FE.013

E.B. (applicant) v. S.B. and B.K. (respondents)

(CI 04-01-40221; 2010 MBQB 15)

Indexed As: E.B. v. S.B. et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

Burnett, J.

January 27, 2010.

Summary:

The applicant E.B. and the respondent B.K. were sisters. The respondent S.B. was their mother. S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002. On November 19, 2004, E.B. applied for an order terminating the POA and requiring B.K. to provide an accounting. On December 2, 2005, E.B. applied for an order appointing herself as "committee of both the property and/or personal care" of S.B. The applications were consolidated and a trial of the various issues was directed, including: (i) whether S.B. had capacity on April 5, 2002, to revoke a prior POA granted to E.B. and S.B.'s brother, N.S., and to appoint B.K. as her attorney under the April 5, 2002 POA; (ii) whether the POA was obtained through undue influence exerted by B.K.; (iii) whether there had been or should be an accounting by B.K., and if so, for what period of time; (iv) whether B.K. had made improper payments pursuant to the POA; (v) whether the power of attorney should be terminated; (vi) whether S.B. had made gifts to B.K. when she lacked capacity or as a result of undue influence exerted by B.K.; and (vii) whether a committee should be appointed for S.B., and if so, whether it should be E.B. or the Public Trustee of Manitoba.

The Manitoba Court of Queen's Bench determined the issues accordingly.

Editor's Note: Certain names in the following case have been initialized or the case otherwise edited to prevent the disclosure of identities where required by law, publication ban, Maritime Law Book's editorial policy or otherwise.

Agency - Topic 345

Creation of relations - Elements - Mental capacity to grant power of attorney - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002 - E.B. applied for, inter alia, an order terminating the POA and requiring B.K. to provide an accounting - The Manitoba Court of Queen's Bench found, inter alia, that when S.B. executed the POA she was not "mentally incapable of understanding the nature and effect of the document" (Powers of Attorney Act, s. 10(3)) - In other words, on April 5, 2002, S.B. had capacity to appoint B.K. as her attorney under the POA - The lawyer who prepared the POA did not have concerns about S.B.'s competence, and there was no suggestion that he was aware of any suspicious circumstances - The geriatric psychiatrist who testified was of the opinion that, in April 2002, S.B. was capable of making a decision to execute a POA - Further, S.B.'s bank manager, who had known her for 22 years, testified that she had no concerns that S.B. was not competent and capable - See paragraphs 9 to 22.

Agency - Topic 1075

Authority of agent - Express authority - Power of attorney - Revocation - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002 - On November 19, 2004, E.B. applied for an order terminating the POA and requiring B.K. to provide an accounting - E.B. contended that B.K. was not providing adequate funding for S.B. and that B.K. had taken steps where S.B.'s interests were not paramount - B.K. was not obtaining receipts for payments, including payments to herself and S.B.'s brother, N.S. - She was not providing the formal accounting to N.S., which was required annually under the POA - He had not requested and did not want one - In December 2007, B.K. wrote to E.B. and said: "As my lawyer told your lawyer, I am willing to release an equal amt. of money to both of us, either as a one-time or on an annual basis. Please call me only directly if you are interested." (Exhibit 9) - The Manitoba Court of Queen's Bench held that while no steps had been taken (to the court's knowledge) to distribute S.B.'s estate in this fashion, having regard to all of the evidence, including Exhibit 9 and B.K.'s failure to meet her fiduciary obligations as a trustee, it was satisfied that S.B.'s welfare was not paramount in her attorney's mind - A person of prudence, discretion and intelligence would have obtained receipts for payments of $1,000 - Accordingly, the POA should be terminated - See paragraphs 35 to 54.

Agency - Topic 1076

Authority of agent - Express authority - Power of attorney - Passing of accounts - [See Agency - Topic 1075 ].

Agency - Topic 1076

Authority of agent - Express authority - Power of attorney - Passing of accounts - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney executed April 5, 2002 - E.B. applied for, inter alia, an order terminating the power of attorney and requiring B.K. to provide an accounting - The power of attorney required a formal accounting annually to N.S., S.B.'s brother - The Manitoba Court of Queen's Bench stated that "Although B.K. has provided to N.S. some statements and information, she has not provided a formal accounting or a statement of receipts and disbursements, and N.S. has not requested and does not want one. In fact the evidence suggests that N.S. is not interested in receiving or obtaining a proper accounting. In my view, this is unacceptable for a number of reasons, not the least of which is that the terms of the Power of Attorney (and S.B.'s wishes) are not being met. The purpose of the accounting is to provide some assurance that S.B.'s estate is being properly administered. The rationale for the requirement to account is to scrutinize the attorney's handling of an incompetent individual's assets, thus protecting him/her from negligence or abuse of power by the attorney and to ensure that the attorney has acted in accordance with his/her fiduciary or other duties mandated by statute. ...  Clearly S.B. believed that an annual accounting to N.S. would be a safeguard for her and her estate. In my view, it is irrelevant whether N.S. requests or wants a formal accounting. If B.K. does not provide such an accounting to N.S., there is no effective means of safeguarding S.B.'s estate. Equally concerning is the fact that B.K. is apparently making payments to herself and to N.S., she is not obtaining receipts from him, and she is not requiring N.S. to account for the monies he receives from her." - See paragraphs 41 and 42.

Fraud and Misrepresentation - Topic 824

Undue influence - Presumed undue influence from special relationships - Adult child and elderly parent - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002 - E.B. applied for, inter alia, an order terminating the POA - The Manitoba Court of Queen's Bench determined that S.B. knew and approved of the content of the POA and had the necessary capacity - Further, the court held that there was no proof that the POA was executed as a result of undue influence - The evidence clearly indicated that S.B. and her late husband trusted B.K. and involved her in their financial affairs - Whether the test for undue influence respecting a POA was the test for wills or the test for gifts, there was virtually no evidence to suggest that on or before April 5, 2002, B.K. exerted undue influence respecting S.B.'s execution of the POA - Based on the totality of the evidence, S.B. knew and appreciated what she was doing, she had the benefit of independent advice before signing the POA, and executed it freely and voluntarily - See paragraphs 23 to 26.

Fraud and Misrepresentation - Topic 824

Undue influence - Presumed undue influence from special relationships - Adult child and elderly parent - [See Gifts - Topic 305 ].

Gifts - Topic 305

Capacity to make and receive gifts - Proof of - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002 - On November 19, 2004, E.B. applied for an order terminating the POA and requiring B.K. to provide an accounting - On December 2, 2005, E.B. applied for an order appointing herself as "committee of both the property and/or personal care" of S.B. - The applications were consolidated - At issue, inter alia, was whether S.B. had made gifts to B.K. when she lacked capacity or as a result of undue influence exerted by B.K. - Dr. Ducas, a geriatric psychiatrist testified that S.B. understood the meaning of a POA, and it was her opinion that: (i) in April 2002 S.B. was capable of making a decision to execute a POA; (ii) in September 2004 she was capable and competent to terminate a POA and change a POA; and (iii) in October 2004 S.B. had the ability to comprehend gifts to B.K. and was competent to execute a POA - Dr. Lebedin deposed that he had examined S.B. in October 2005 and that, in his opinion, she was suffering from "Dementia Alzheimer's type" and was incapable of managing her own affairs - Similarly, Dr. Hechtenthall deposed that he had examined S.B. on or before January 8, 2006, and that, in his opinion, she was suffering from dementia and was incapable of managing her own affairs - The Manitoba Court of Queen's Bench stated that the presumption of undue influence had been triggered, given B.K.'s relationship to S.B. - As there was no evidence of independent advice, the question became whether S.B. made the gifts with "no actual influence" and "as a result of her own full, free and informed thought" - The court stated that because S.B. was incompetent, it was necessary that the proof of the gifts come from B.K. or be found in or inferred from other evidence, including S.B.'s conduct post-gift - In her testimony, Dr. Ducas said that she explored with S.B. the area of gifts made to B.K., and it was Dr. Ducas's impression that such gifts were made freely and without pressure and that S.B. had the ability to comprehend gifts to B.K. - S.B. and her husband were generous people, and there was considerable evidence concerning gifts made by S.B. and her husband (prior to his death) and subsequently by S.B. herself - The court found that, on the totality of the evidence and the court's assessment as to the witnesses' credibility, S.B. made the gifts to B.K. as a result of "her own full, free and informed thought" - See paragraphs 55 to 70.

Guardian and Ward - Topic 244

Appointment and qualifications of guardian - Of incompetent persons - Appointment of committee of person - The applicant E.B. and the respondent B.K. were sisters - The respondent S.B. was their mother - S.B. named B.K. as her attorney in a power of attorney (POA) executed April 5, 2002 - On November 19, 2004, E.B. applied for an order terminating the POA and requiring B.K. to provide an accounting - On December 2, 2005, E.B. applied for an order appointing herself as "committee of both the property and/or personal care" of S.B. - The applications were consolidated - E.B. and S.B. lived in Winnipeg, while B.K. lived in Brooklyn, New York - The Manitoba Court of Queen's Bench terminated the POA and required B.K. to provide an accounting - The court held that S.B. met the criteria in s. 75(2) of the Mental Health Act and an order should be made appointing a committee of both her property and personal care - There was no question that E.B. was deeply concerned with her mother's wellbeing, and it was apparent that E.B. spent both time and money attending to her mother's needs - While a social worker agreed that there were benefits to E.B.'s interaction with her mother, it was clear that E.B. and S.B. had had a difficult relationship - More troubling was the fact that E.B. could not get along with anyone who looked after her mother - Further, the battle between E.B. and B.K. was ongoing and the family dynamics were explosive - It was in S.B.'s best interests for the Public Trustee of Manitoba to act as Committee - See paragraphs 71 to 80.

Guardian and Ward - Topic 245

Appointment and qualifications of guardian - Of incompetent persons - Appointment of committee of estate - [See Guardian and Ward - Topic 244 ].

Guardian and Ward - Topic 812.3

Public trustee or guardian - Appointment - Dependent adult - [See Guardian and Ward - Topic 244 ].

Persons of Unsound Mind - Topic 726

Committees (incl. substitute decision maker) - Appointment - Committee of the person - [See Guardian and Ward - Topic 244 ].

Cases Noticed:

Dubois et al. v. Wilcosh et al. (2007), 211 Man.R.(2d) 182 (Q.B.), refd to. [para. 15].

Hay Estate, Re, [1995] 2 S.C.R. 876; 183 N.R. 1; 82 O.A.C. 161, refd to. [para. 24].

Vout v. Hay - see Hay Estate, Re.

Herberman Estate, Re, [2001] O.T.C. Uned. 853; 40 E.T.R.(2d) 98 (Sup. Ct.), refd to. [para. 26].

Streisfield v. Goodman - see Herberman Estate, Re.

Johnson Estate, Re (2008), 223 Man.R.(2d) 317 (Q.B.), refd to. [para. 40].

Huzel v. Habing - see Johnston Estate, Re.

Peake v. Clark (2008), 339 Sask.R. 165; 2008 SKQB 246, refd to. [para. 40].

Lefebvre Estate, Re (2007), 419 A.R. 347; 2007 ABQB 195, refd to. [para. 42].

Lander v. Lyall et al., [2006] Man.R.(2d) Uned. 62 (Q.B.), refd to. [para. 48].

J.L. v. S.L.L. et al. - see Lander v. Lyall et al.

Hammond Estate, Re (1999), 173 Nfld. & P.E.I.R. 240; 530 A.P.R. 240 (Nfld. T.D.), refd to. [para. 48].

Todosichuk v. Daviduik, [2008] Man.R.(2d) Uned. 68; 247 D.L.R.(4th) 715 (Q.B.), refd to. [para. 50].

Kibsey Estate v. Stutsky (1990), 63 Man.R.(2d) 34 (C.A.), refd to. [para. 67].

H.M. v. Public Trustee (Man.) (2003), 171 Man.R.(2d) 69 (Q.B.), refd to. [para. 71].

Counsel:

Jacqueline Collins, for the applicant;

Larry Nasberg, for the respondents.

This application was heard by Burnett, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following decision on January 27, 2010.