Misuse of a Power of Attorney: Suing an Attorney in Ontario

A family looks at a parent's bank records and finds large withdrawals, transfers to the person named as attorney, or purchases that make no sense. The attorney says the money was a gift, or for the parent's care. It is a painful and confusing situation.

This article explains the duties an attorney for property owes, the legal routes families use, who can bring a claim, and what evidence tends to matter. Many points depend on the facts and the law in this area is still developing, so a lawyer should review your situation.

What an attorney for property must do

An attorney for property owes fiduciary duties under the Substitute Decisions Act, including the core duty to act exclusively for the grantor's benefit. In plain terms, the money is the parent's, to be used for the parent, not for the attorney.

In one case, on evidence of unexplained ATM withdrawals and personal purchases, a motion judge terminated the power of attorney and appointed the Public Guardian and Trustee as guardian of property. Those findings were not tested on appeal, so treat this as an illustration only.

Routes available to a family

If your parent is still alive and you fear ongoing harm, the Public Guardian and Trustee route may be the most immediate. If your parent has died, the focus usually shifts to the estate.

Who can bring a claim

At common law, only the grantor or the grantor's estate could call the attorney to account. Where the donor has died and the attorney is also the estate trustee, there can be no true accounting between the two roles, so beneficiaries have been allowed to seek leave under s. 42(4) to obtain an accounting for the pre-death period.

The law on third-party standing to compel an attorney to account is evolving, so do not assume you can or cannot bring a claim without advice. An estate trustee also has a duty to call in the estate's assets. If the estate trustee is not the attorney, they may be the one to pursue recovery.

Evidence and the legal presumptions

The attorney often says that money moved to them was a gift. The law treats gifts and transfers with some suspicion in certain relationships.

• For gifts or transfers, a presumption of undue influence arises where the relationship carries potential for domination; the transferee must then show the gift resulted from the transferor's full, free and informed thought.
• Independent advice helps but is not required in every case, and corroborating evidence is needed to rebut the presumption.
• A gratuitous transfer from a parent to an adult child is presumed to be held on resulting trust for the parent, and the child must rebut it on a balance of probabilities by showing the parent's actual intention at the time.
• The presumption was applied to bank accounts put into joint names with adult children, and the court weighs all the evidence of intention, including the terms of any power of attorney granted to the transferee.

Useful records usually include bank and credit card statements, the power of attorney document, any records the attorney kept, medical information about your parent's capacity, and messages about the money. Do not obtain records in ways that break privacy rules; a lawyer can help use proper channels.

A caution about care and compensation

Attorneys sometimes say the money was payment for years of care. A child who provides years of personal care on a promise of a share of property can succeed in unjust enrichment. The claimant must prove enrichment, corresponding deprivation and absence of juristic reason. Such claims turn on their own facts, so an unsupported say-so is rarely the end of the matter either way.

Timing, costs and next steps

The basic limitation period is two years from the day a claim was discovered. Because discovery dates are often argued, do not wait. Estate litigation follows the ordinary civil costs regime, and costs come from the estate only where public policy considerations apply. A blended order, with the loser paying part and the estate bearing the balance, is possible.

• Secure copies of the power of attorney and all account statements you can lawfully obtain.
• Make a timeline of withdrawals and transfers and what you were told about them.
• If your parent is alive and at risk, consider contacting the Public Guardian and Trustee helpline at 1-800-366-0335.
• Note the date you first learned of the problem because of the two-year period.
• Speak with an Ontario estates lawyer soon about leave, accounting and preserving assets.

Frequently asked questions