Obtaining An Accounting- Hull on Estates # 246
Listen to: Obtaining an Accounting
This week on Hull on Estates, Paul Trudelle and Nadia Harasymowycz discuss how an individual can seek an accounting. Specifically, they refer to the case Ekelshot-Kumelj, et al v. Bradley.
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Obtaining an Accounting - Hull on Estates- Episode #246
Posted on April 19, 2011 by Hull & Hull LLP
Nadia Harasymowycz: Hello and welcome to Hull on Estates. You’re listening to episode 246 on Tuesday, April 19, 2011.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
Nadia Harasymowycz: Hi and welcome to another episode of Hull on Estates. I’m Nadia Harasymowycz.
Paul Trudelle: And I’m Paul Trudelle.
Nadia Harasymowycz: If you want to be heard on Hull on Estates, you can participate by leaving us a comment. Email us at hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.
Paul Trudelle: How are you today, Nadia?
Nadia Harasymowycz: I’m well, Paul. How are you?
Paul Trudelle: I’m good. Still waiting for spring with the snow flying, we’re not getting it yet but hopefully it’s around the corner.
Nadia Harasymowycz: I’m in the same boat. I keep hoping to pull that spring jacket out of the closet.
Paul Trudelle: We’re gonna podcast today on a case that we came across that deals with the issue of obtaining an accounting where a grantor of a Power of Attorney to an attorney is in issue and there’s an allegation that the attorney acted improperly under that Power of Attorney. And it addresses what rights parties have, beneficiaries to the estate where that person passes away, to get an accounting from the attorney after death.
Nadia Harasymowycz: I think it may be best to start with a quick synopsis of this case and then maybe we’ll go into some of the law that governs the area of law and then further why the judge came up with the decision he did. So let me just start with that. The case we’re speaking about is Ekelshot-Kumelj et al and Bradley, citation is 2011 ONSC 83 and we’re gonna put a link on here for you so if you need any help, you can just go to our website. The basic premise of the case is that the now deceased had four daughters who…three of which brought this application. They’re actually two battles before the Court but the application is the one being dealt with on in this instance. And the application was to compel a passing of accounts by the other sister, the respondent in this matter, who held a Power of Attorney for the mother while she was alive. While the mother was alive, she had sold her home and moved in with the respondent daughter. And in the process of moving in with the respondent, the home needed to be renovated to accommodate certain things including an elevator and certainly just living accommodation for the mom. And that depleted significantly her estate assets.
Paul Trudelle: Right. There were substantial renovations to the respondent’s house having a value…I think the cost of the renovations was said to be $260,000 in order to make the house livable by the mother. I think the respondent acknowledged that the estate had an interest in her home as a result of its increase in value as a result of the renovations. However the other siblings were questioning the expenditures made on behalf of the mother, such as those renovations and other expenditures.
Nadia Harasymowycz: And at no time were…there was no evidence before the Court, it seems, on this particular application, that indicated that the mother didn’t have capacity at this time to deal financially. But, I mean, there’s some capacity issues with respect to her physical health but none that would have impacted her ability to make a decision to use her money for this purpose.
Paul Trudelle: Right. And I think that’s key and we’ll come back to that later.
Nadia Harasymowycz: For sure. And as part of this application, the three daughters of the deceased sought particularly a passing of accounts, both as estate trustee and as attorney because the respondent daughter was…or acted in both capacities. The general finding of this matter is that the judge ordered a passing of accounts as estate trustee but did not order a passing of accounts for the respondent daughter in her capacity as an attorney. And it seems to be on the basis that the applicant daughters were not entitled to that under the law.
Paul Trudelle: Right. And I think that again the key is the mother’s capacity while the attorney was…while these transactions were being undertaken. Maybe we can just look at the law briefly. The Substitute Decisions Act talks about keeping accounts. Section 32 states that one of the duties of a guardian or a person…an attorney where a person is incapable is to keep accounts in accordance with the regulations. The issue of passing of accounts is dealt with under Section 42. It says that the grantor of a Power of Attorney has…can seek an accounting as of right. Others are entitled to ask for an accounting but they require leave of the Court. And those others may be beneficiaries under an estate. So they may be entitled to get a passing, however they have to satisfy a Court that they’re entitled to that passing. And the Court considered whether in this case, the applicants were entitled to compel a passing of the trustee’s accounts. The Court looked at the capacity of the mother and found that there was no evidence that she was incapable. In fact, there was some evidence put before the Court from financial planners, doctors, the person who did the renovations, to the effect that the mother appeared to have capacity and was instrumental in making the decisions with respect to the handling of the finances and the undertaking of the renovations.
Nadia Harasymowycz: I think it should be noted in this particular case as well that the applicants chose not to cross-examine the respondent on her Affidavit so the evidence before the Court was Affidavit evidence. And if you’re in this type of situation, you should be considering what kind of evidence you should be bringing in, who you should be examining because it may become relevant in terms of the evidence that the judge is looking at.
Paul Trudelle: Right. I don’t know if they chose not to but I think it’s clear that there wasn’t examinations, whether it was by choice or otherwise. They didn’t have that evidence and because the Court didn’t have any evidence to find that the now deceased was incapable at the time, the Court didn’t feel that there was an automatic obligation to compel…to ask for and get an accounting.
Nadia Harasymowycz: The…in that request the applicants’ position stated that their argument was based on the fact that their mother was in a dependent, unequal position to the respondent who controlled and influenced the mother. And this came back to the evidence before the Court and the judge found that there was no evidence to indicate that there was a dependent and unequal position which would have been permissible, I guess, under the statute to allow them to seek such an accounting.
Paul Trudelle: Right. If she was clearly dependent, then I think the Court may have ordered the accounting. However there again, as the Court said, there was no evidence to support that. In fact, to the contrary there was some evidence to suggest that the mother, now deceased, was instrumental in making these decisions. The Court looked at another case, the case of Fair and Campbell where again there was a party seeking an accounting from an attorney. The Court distinguished between cases where the attorney is making decisions as opposed to merely executing the decisions. And where the attorney is merely executing the decisions and it’s the donor who is still making those decisions, then it’s…the Court won’t necessarily order an accounting in those circumstances.
Nadia Harasymowycz: As in every matter, I think the decision is very fact-specific and being applied to the law. But it’s interesting to note with this case that near the end of his judgment, the Honourable Justice Edwards comments on how the now estate trustee should inquire as to the value of her home for the purpose of dealing with the accounting because it’s tied into the assets of the mother prior to her death. And I think the commentary is interesting in terms of how you would move forward if you were dealing with an accounting or seeking an accounting, in both capacities of estate trustee or attorney.
Paul Trudelle: Right. And I think it’s important for parties who are either seeking an accounting or resisting giving an accounting as attorney to look at the circumstances of the donor and come up with strong evidence with respect to whether she was incapable or not. And I think it’s an answer for an attorney to say that they weren’t making the decisions, it was the deceased who was making the decisions. And in those cases, based on this case, it may be that an accounting may not be required.
Nadia Harasymowycz: Well I think that brings us to the end of this week’s discussion. I hope that you found our review of this case helpful and we always invite you to come to our website for further information on this and other topics. Thanks for listening and thank you for joining me today, Paul.
Paul Trudelle: Well thank you.
Nadia Harasymowycz: We look forward to hearing from you. You can send us an email at hull.lawyers@gmail.com. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estates law. We hope that you enjoyed the show. I’m Nadia Harasymowycz.
Paul Trudelle: And I’m Paul Trudelle. Until next week, so long.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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