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Representation Agreements: Review And Critique British Columbia now has four new laws that promote an adult’s right to self-determination. The Acts also provide support and protection for those who are vulnerable or incapable of making their own decisions. The new legislation attempts to find a balance between protecting and empowering society’s most vulnerable people, who are often elderly and disabled. These four Acts comprise what is known as the Adult Guardian Legislation. 1. Representation Agreement Act (RAA) 2. Health Care (Consent) and Care Facility (Admission) Act 3. Adult Guardianship Act 4. Public Guardian and Trustee Act The purpose of this article is to review and critique in some detail
the Representation Agreement Act (RAA), and to only comment briefly
on the other three Statutes. The legislation and more information
about the new Adult Guardianship Legislation can be found at the
Public Trustee’s Web site: www.trustee.bc.ca
2. Why Do We Need the New Legislation? British Columbia is simply part of a Western-world movement to reform guardianship law; changes have already occurred in all American States as well as Britain, Australia, and New Zealand. The reasons for the reforms might be summarized as follows.
The legislation has been in-the-making for more than nine years. The goal and intent of the legislation is laudable, but a number of concerns and discrepancies have yet have to be “ironed out.” It must be stressed that the legislation is essentially all-new Statute law. 3. Brief Overview of the Representation Agreement Act Most of the provisions of this Act will come into law on February 28, 2000. As of that date, adults will be able to use Representation Agreements (RA) to authorize someone they trust to be their representative. Representatives can be given authority to make decisions about personal care, health care, and legal and financial affairs, should the adult become mentally incapable. A Representation Agreement can be customized. A monitor may also be named to oversee the activities of the representative, should that be desired. The adult can also specify when the Agreement will take effect and under what circumstances. There are two types of Representation Agreements: 1. Section 7 “Standard” Agreements, and It is intended that Standard Agreements contain comparatively straightforward decisions, such as authorizing a representative to look after the adult’s routine financial affairs may be completed and signed without the involvement of a lawyer. Section 9 Agreements are more detailed, and deal with more complex decisions, such as authorizing a representative to manage the adult’s business or refusing to give consent to life-support treatments for the adult. Those Agreements will require consultation with a lawyer. Representation Agreements will replace enduring Powers of Attorney, although ordinary Powers of Attorney will still continue to be available. If a person makes an enduring Power of Attorney prior to September 5, 2000, the date when Section 8 of the Power of Attorney Act is repealed, the document may continue to be used. Please note, however, that enduring Powers of Attorney only authorize a person to manage someone else’s financial affairs, and do not authorize anyone to make health or personal care decisions. A Representation Agreement will allow for both health care and financial decisions to be made by the representative. At this time, submissions are being made to the government that enduring Powers of Attorney be allowed to continue, at least for a longer period than September 5, 2000. While there have been abuses committed with enduring Powers of Attorney, it is submitted that all in all, they are a simple, inexpensive, and valuable estate-planning tool that should be allowed to continue in tandem with the new Representation Agreements. It is anticipated that most lawyers will prepare Section 9 Representation
Agreements, which require a higher degree of mental capacity on
the part of the adult, than do Section 7 Agreements. Section 7 Agreements
may in future become a “standard form” document prescribed
by Regulation. 4. Review of Representation Act Provisions A remedial constructive trust is a trust imposed by Court order as a remedy for a wrong. The entitlement to that remedy may be a matter of substantive law, but the trust itself is not created by the acts of the parties, or even by the obligation to make restitution, but by the order of the Court. As with other Court orders, the trust will come into being when the order is pronounced, unless, in an appropriate case, the order is made retroactive or its coming into force is deferred. It may be that in many cases where a remedial constructive trust is imposed, the Court will order that it be imposed with effect from the time when the situation arose which gave rise to the unjust enrichment. There must, of course, be a causal connection between the property in question and the unjust enrichment. See Sorochan v. Sorochan, supra, and Rosenfeldt v. Olson, 1 B.C.L.R. (2d) 108, [1986] 3 W.W.R. 403, 25 D.L.R. (4th) 472 (C.A.). The remedial constructive trust must be distinguished from the substantive constructive trust which the Court declares to have arisen, as a result of the conduct of the parties, and by the force of that conduct alone, at the earlier time when the relevant conduct occurred. If a substantive constructive trust is found to have arisen in that way, then there is no discretion remaining in the Court to refuse to declare the existence of the trust. The ordering of a remedial constructive trust is only one of the remedies which may be ordered as a result of a wrong committed by one person against another that is properly categorized as unjust enrichment. The available remedies include an order to pay money, as damages, and they include other remedies stemming either from legal origins or equity origins, as the circumstances of the case may require. “It must be emphasized that the constructive trust is remedial in nature. If the Court is asked to grant such a remedy and determines that a declaration of constructive trust is warranted, then the proprietary interest awarded pursuant to that remedy will be deemed to have arisen at the time when the unjust enrichment first occurred.” LeClair v Leclair Estate, May 1998, B.C.C.A The Representation Agreement Act is divided into six parts. Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Purpose of the Act Section 2 of the Act states that its purpose is to allow adults to arrange in advance how, when, and by whom decisions about their health care, personal care, financial affairs, or other matters will be made if they become incapable of making decisions independently. The intent is to avoid the need for the court to appoint someone. Presumption of Capability Section 3 presumes each adult to be capable of making, changing, or revoking a Representation Agreement, and making decisions about health care, personal care, and legal matters and about the adult’s financial affairs, business, and assets. Representatives Section 5 provides that an adult making a Representation Agreement may name as his or her representative, one or more of the following.
If an adult names more than one representative in an Agreement, then the adult must assign a specific area of authority to each representative. It is not clear at this time if “specific” means that each representative must have a “different” area of authority. Alternate Representatives Section 6 provides that an alternate representative may be made, but it must be specified in the Agreement as to the circumstances in which the alternate representative is authorized to act in place of the representative, including for example, if the representative is unwilling to act, if he or she dies, or is for any other reason unable to act. Standard Provisions Under a Section 7 Agreement, an adult may authorize his or her representative to help the adult make decisions, or to make decisions on behalf of the adult about any of the following:
some major health care and minor health care (see the Health Care (Consent) and Care Facility (Admission) Act, but not the types of health care prescribed by section 34 (2) (f) of that Act; obtaining legal services for the adult and instructing counsel to commence proceedings, except divorce proceedings, or to continue, compromise, defend or settle any legal proceedings on the adult’s behalf;
A representative may not be authorized under this Section to assist in a decision to refuse life-supporting care or treatment. Test of Incapability for Standard Provisions: Section 8 An adult may make a Section 7 Representation Agreement even though the adult is incapable of:
All relevant factors are to be considered when deciding whether an adult is incapable of making a Section 7 Representation Agreement, including (but not restricted to):
Please note that no minimum threshold of capacity is specified. In fact, as capacity is presumed, the onus will be on a person challenging the Agreement to prove that the adult was incapable. Enhanced Agreements: Section 9 These Agreements are more complex, and require the use of a lawyer (or a yet-to-be announced "other prescribed class," such as Notaries) to prepare same. They authorize his or her representative to do any or all of the following:
Under Section 9, an Agreement is invalid unless:
The Test of Incapability for Section 9 Agreements Section 10 states that it is presumed that an adult may authorize a representative to do any or all of the things referenced in Section 9, unless the adult is incapable of understanding the nature of the authority and the effect of giving it to the representative. Section 9 Agreements will require more mental capacity than Section 7 Agreements. There is a small body of Ontario case law for reference, as well as the existing case law on Powers of Attorney, Trusts, agency, committeeships, testamentary capacity, and fiduciary obligations. Compensation issues may be assisted by the Trustee Act and committeeship case law. Monitors: Section 12 An adult preparing a Representation Agreement must either name someone to act as a monitor, or state in writing or dictate at the time of signing the Agreement that a monitor is not required. An adult must name someone as a monitor, however, if the adult proposes to authorize a representative to do anything referred to in Section 7(1)(b), namely the section relating to the routine management of the adult's financial affairs, unless the adult consults with a person authorized to complete a certificate in the prescribed form under Section 9, or the representative is the adult's spouse. An adult may name a monitor who is willing and able to perform the duties and exercise the powers of a monitor. A monitor must complete a certificate in the prescribed form. The monitor is a new “watchdog” concept, which may or may not actually play a significant role in Representation Agreements. The writer’s personal opinion is that most adults will waive the provision of having a monitor in a Section 9 Agreement, and that most people, if capable, will prepare Section 9 Agreements, rather than Section 7 Agreements. Form, Signing And Witnessing Agreements Section 13 provides the following.
If the Agreement is made under Section 9 of the Act,
People who may not witness the signing of an Agreement:
A witness must then complete a certificate in the prescribed form. If there is a defect in the execution of the Agreement, then a person named in the Agreement as a representative may apply to the court for an order that the Agreement is not in invalid solely because of the defect. Note that the execution requirements are more onerous than Powers of Attorney, and are more akin to those of a Will. Because the document will be an Agreement among ??? between parties whose interests may conflict, lawyers may be unable to act for all involved (i.e., the adult, the representative, the alternate representative, and the monitor), and independent legal advice may be necessary. This may mean increased complexity and cost. There also may be a greater likelihood that the Agreement is improperly executed, with the resultant cost of a court application to cure the defect, if the adult is incapable of entering into a new one. There is also a potential for liability for the witnesses re: the issue of capacity. When an Agreement Becomes Effective: Section 15 An Agreement becomes effective on the date it is executed unless the Agreement provides that it, or a provision of it, becomes effective later, when an event occurs. If the latter is the case, then the Agreement must also specify how the event is to be confirmed and by whom. This section allows for the possibility of “springing Representation Agreements” that come into effect in the event of incapacity. Particular drafting care must be exercised to carefully define the triggering event. Duties, Powers, and Liability of Representatives and Monitors Duties of Representatives Section 16 provides that a representative must act honestly and in good faith, exercise care, diligence of a reasonably prudent person, and act within the authority given in the Agreement. When helping the adult make decisions, the representative must consult to the greatest extent possible with the adult to determine his or her current wishes, and then comply with those wishes if it is practicable to do so. If the adult’s current wishes cannot be determined or it is not practicable to comply with them, then the representative must comply with any instructions or wishes that the adult expressed while he or she was capable. If the adult’s instructions are not known, then the representative must act on the basis of the adult’s known beliefs and values, or in the adult’s best interests. A representative may not delegate any authority given in the Agreement. There is no longer any “catch-all” power such as the Power of Attorney clause: “anything that can lawfully be done by an attorney.” The representative must, if handling the adult’s financial affairs, keep proper accounting records and keep the adult’s assets separate from the representative’s assets. This section does not apply to assets that were jointly owned by the adult and the representative before the Agreement came into effect, but in that case, the representative holds the adult’s interest in the assets in trust for the adult. Those accounting records must be produced and copied at the request of the adult, the adult’s monitor, or the Public Trustee. If a conflict of interest or potential conflict arises between the adult and the representative, the representative must notify the Public Trustee about the conflict. The prohibition to prevent representatives from delegating any authority will create many difficulties for representatives. For example, there may be a prohibition against using a discretionary investment account, even if the representative sets the investment policy. A strict interpretation of this Section would mean that the representative must be directly involved in every trading decision that is made. Power to Retain Services Section 17 provides that an adult's representative may retain the services of a qualified person to assist the representative in doing anything the adult has authorized the representative to do. Rights of Representatives to Information Section 18 provides that a representative has a right to all the information necessary to help the adult make, or to make on behalf of the adult, informed decisions under the Representation Agreement. Section 18(2) provides that anyone who has custody or control of the information must disclose that information to the representative. The claim overrides any claim of confidentiality or privilege, except a claim based on solicitor/client privilege. Duties and Powers of Monitors Section 20 provides that a monitor for an adult must try to make sure that the representative complies with the required duties of representatives under the Act. At any reasonable time, the monitor may visit and speak with the adult. Anyone having custody or control of the adult must not hinder the monitor from visiting or speaking with the adult. If the monitor has reason to believe that the representative is not complying with the Act, then the monitor may require the representative to produce accounting records, or to report to the monitor on the matters the monitor specifies, and must notify each person who signed the Agreement of the representative’s failure to comply with Section 16 of the Act. If the representative does not comply with the monitor's direction, the monitor must promptly inform the Public Trustee. Removal or Replacement of Monitors Section 21 provides that on application by a representative or any other interested person, the court may remove or replace a monitor if the monitor is no longer acting _______??? or is otherwise unsuitable, and the adult who named the monitor is incapable of changing the Representation Agreement. Section 25 states that a monitor is not liable for any act or failure to act of a representative, if the monitor acts in good faith and exercises the care, diligence, and skill of a reasonably prudent person. Duty to Keep Information Confidential Section 22 provides that a representative or a monitor must not disclose information obtained in the exercise of authority under a Representation Agreement, except to the extent necessary for the purpose of performing the duties, an investigation, or an application to the court. If Authority is Exercised when Agreement is Not Effective or Valid Section 24 provides that if a representative who acts within the authority given in a Representation Agreement does not know, or could not reasonably have known, that the Agreement, or a provision of it, is not in effect or is invalid, the representative:
Similarly, the Agreement is valid and binding in favour of a person who did not know, or had no reason to believe, that the Agreement or provision was not in effect or was invalid. Payment and Expenses: Section 26 No person is entitled to be remunerated for acting as a representative unless the Agreement expressly provides for the remuneration. A person is entitled to be reimbursed from an adult’s assets for reasonable expenses properly incurred in performing the duties. Changing, Revoking, or Ending Agreements Changing or Revoking Agreements: Section 27 An adult who has a representative may change or revoke the Representation Agreement at any time, if the adult is capable of making the Agreement. Written notice of the change or revocation is to be given to each representative, each alternate representative, and the monitor. Automatic Cancellation of Financial, Business, or Asset Provisions Section 28 provides that a Representation Agreement under Section 7 or Section 9 is cancelled on the bankruptcy of the adult or representative, on the conviction of the representative for an offence involving dishonesty, or as provided for in Section 19.1(3) (b) of the Patients Property Act. When Agreements Come to an End Section 29 provides that an Agreement ends:
This section does not apply if there is more than one representative, or an alternate is chosen and is willing and able to act. Punctuation and words do not make sense. Objecting to Agreements, Changes, or Revocations: Section 30 Any person may make an objection to the Public Trustee if there is reason to believe that the adult is, or was at the time, incapable of making, changing, or revoking a Representation Agreement presence of fraud or undue pressure, the making, use, or revocation of an Agreement inconsistent with the wishes, values, beliefs and best interests of the adult who made, revoked, or changed the Agreement, or anything improper that has occurred in the making, use, or revocation of the Agreement. On receiving notice of an objection, the Public Trustee must then promptly review the objection, conduct an investigation to determine the validity of the objection, and then advise the objector of the outcome. There is also a procedure for applying to the court for inter alia, an order cancelling all or part of the Representation Agreement. Section 32 sets out the powers of the court. The court must consider the wishes, instructions, values, and beliefs of the adult who made the Agreement. If the adult is found to be capable, then the court cannot override the adult’s wishes. If the adult is incapable, then the court may make an order that is in the best interests of the adult. Section 37 states that nothing in the Act limits the inherent jurisdiction of the Supreme Court to act in a parens patriae capacity. Agreement Does Not Deprive Adult of Power to Act: Section 36 An adult who is capable may do anything that he or she has authorized a representative to do. Pre-Existing Agreements: Section 39 An Agreement that was made before this Act authorized the making of a Representation Agreement, that would have been a valid Representation Agreement if, at the time, the Agreement was made, is valid and is deemed for all purposes to have been made under this Act. Sections of the Act Not to be Proclaimed at This Time Registry: the previous provision to register the Representation Agreements The previous requirement to have everyone involved in the Agreement present together when the document is executed Certain mandatory requirements for Representation Agreements, such as the requirement to specify dispute resolution methods Practice Issues Assessing Capacity Although the intention of the Act is to permit adults with diminished capacity to enter into Representation Agreements, the threshold of such capacity is not defined, and will almost certainly become the subject of court interpretation. The capacity test is different for Standard (Section 7) and Enhanced (Section 9) Agreements. The Representation Agreement Act does not articulate the capacity test for an adult who wishes to enter into a Standard Agreement. It simply provides that an adult might have capacity, even if the adult cannot make a contract or manage his or her own health care, personal care, legal matters, assets, etc., and lists some of the factors to be considered. The Representation Agreement Act intends to permit persons with diminished capacity to take some control over their lives by making Standard Representation Agreements—but on the other hand, it is impossible to determine with any certainty who is eligible to do so in terms of the mental capacity requirement that is imposed. Accordingly, a lawyer will have a duty to satisfy himself as to the adult’s capacity, and will have some concerns about possible liability for same. The questions set out in Section 8(2) provide a framework for assessing whether the adult is incapable; they are particularly important to persons such as the representative, the monitor, the practitioner, and the witnesses who all have legal obligations to consider the adult’s capacity. Drafting Concerns For an excellent precedent of a Representation Agreement, I refer the reader to the Agreement provided by Andrew MacKay, of Alexander, Holburn, for the Continuing Legal Education course on the New Guardianship Legislation, held February 11, 2000. Some other issues to consider might also include the following. If doing an Agreement for an adult who has a handicapped child, provide that someone continue to care and provide for the child. Consider waiving a monitor for a Section 9 Agreement, and specifying this in the document. Provide for remuneration for the representative, and possibly also for a monitor. Have separate Agreements for different purposes, such as one for land title purposes, another for health substitution directions, and so forth. Review the Law Society Checklist and Interview questions. Use defined terms in a manner consistent with the Act and regulations, as several words and terms are defined. When drafting conditions or triggering events, give detailed instructions that are certain. Keep in mind the powers permitted under Standard versus Enhanced Agreements, as they are different. Consider a clause waiving solicitor-client privilege over ongoing files when mental infirmity is documented by a doctor. Fees There has been much speculation as to what to charge for these Agreements. I would speculate that lawyers will almost always prepare an Enhanced Agreement. In my view, an hourly rate will be most appropriate; I would expect that a minimum of one to two hours (and possibly more) will be spent for all attendances. Powers Of Attorney As previously stated, enduring Powers of Attorney may be prepared until September 5, 2000, after which time they may not be, as Section 8 of the Power of Attorney Act will then be repealed. Enduring Powers of Attorney made before September 5, 2000, will be grand fathered under the new legislation. One should be careful NOT to insert a clause revoking all previous Powers of Attorney, as there may be other Powers of Attorney at banks, etc., that you would not wish to terminate. Conflicts of Interest Concerns As a practice tip, it is advisable for the practitioner to prepare a written handout for both adults and the representatives that summarizes the relative rights and obligations of the parties. When taking instructions for the preparation of a Representation Agreement, the adult will be the client, but there will also be one or more representatives (as well as possibly monitors) that will also be parties to the Agreement. Both the adult and the representative should be asked to sign a “conflicts letter,” pursuant to Chapter 6 of the Professional Conduct Handbook. There will probably not be a conflict at the outset, but conflicts may arise in the future:
By this time, the adult may well be incapable, and the early consent given to the practitioner to continue to act cannot be realistically taken to cover the existing situation. Thus, it is best to advise all parties at the start that you will either not act for any party if the conflict cannot be resolved, or will act only for the adult. It is necessary to take and keep detailed notes. Where there is any question of capacity, undue influence, abuse, and so forth, then take additional notes, witness statements, medical reports, and so forth. Quick Overview of the Other Three Acts Adult Guardianship Act: Part 3 Part 3 of this Act relating to the support and assistance for abused and neglected adults will become law on February 28, 2000. Basically, the Public Guardian and Trustee will designate agencies to deal with abuse, neglect, and self-neglect, and to receive reports and arrange for support and assistance in the form of various health and social services. New procedures to assist agencies will involve such things as a quick response for use in emergencies; interim and longer-term court orders that restrain those responsible for abuse from having contact with the adult; maintenance orders; and support and assistance orders to provide adults, where found to be mentally incapable, with needed services. The Patient’s Property Act will remain in force. Public Guardian and Trustee Act As of February 28, 2000, the Public Trustee will be known as the Public Guardian and Trustee of British Columbia. The new Act will clarify and improve the ability of the Public Trustee to address cases where individuals are financially abused. The new provisions will allow the office to better support and assist community agencies dealing with financial abuse situations. The Act primarily relates to the powers of the Public Trustee, which are generally speaking expanded. Among other things, the Public Trustee will have greater flexibility in managing funds more effectively and profitably for clients. Health Care (Consent) and Care Facility (Admission) Act This Act will become law on February 28, 2000. Specifically, the new law sets out:
This Act can deal with disputes that might arise about giving or refusing health care. The Board will be a last resort. Many aspects of the new legislation are laudable and long overdue, particularly those relating to health care decisions. Unfortunately, lawyers being lawyers, they seem to be generally negative and critical of much of this “ long-time coming” legislation. It appears to me that the legislation has been largely “social worker” driven, that it is too bureaucratic, and that there are a goodly number of vagaries and inconsistencies in the present legislation. Hopefully, many of these concerns will be “fixed” by regulations, or in time, by judicial consideration. I fully expect that lawyers will in fact charge higher fees for such Agreements than originally intended by the drafters, and that the concept of the monitor will be largely ignored in Section 9 Agreements. As with other instances of a major change in practice as a result of new legislation, however, the Bar will adapt and forge ahead. In time, I submit that all in all, the new legislation will be a significant improvement over the current choices available. My personal wish is that the legislature will allow for the continued use of enduring Powers of Attorney as a parallel choice to the Representation Agreement. A managing partner with Milne Selkirk, Trevor Todd restricts his practice to estates and estate litigation. Voice (604) 264-8470; fax (604) 264-8675; ttodd@milneselkirk.com ; www.milneselkirk.com . |
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