Common Types of Financial Abuse by Caregivers

Common Types of Financial Abuse by Caregivers

A British Columbia nurse was fined by the College of registered nurses in the amount of $17,500, plus ordered to pay investigation costs of $16,500 for financial abuse of an elderly couple, now deceased.

The nurses misdeeds included being the couple’s power of attorney, putting her name on title to their mobile home, paying for her dentistry, vision care and $1600 a month medications, all on top of her monthly salary.

The nurses college rather understatedly reported that she “failed to maintain appropriate boundaries in her seeking of substantial financial benefits from an informed client.”

One of the concerns expressed by the nurses college was that with an aging population with many having significant assets, there is a healthcare worker staff shortage and caregivers may be hired that are somewhat “circumspect”.

Many of our aging population have both the desire and the financial means to remain living in their homes for as long as physically or mentally possible, which gives more opportunity for financial abuse or physical neglect by a devious caregiver.

The convicted nurse raised the somewhat laughable defence that she was merely providing personal care, as opposed to nursing care to the couple. The college of nurses however found that helping the couple with their daily bowel functions and dressings for wound care is indeed part of nursing care.

A caregiver can be loosely defined as anyone who cares for a person who cannot care for him or herself.

The caregiver typically assist the patient or dependent person with activities in daily life.

Every experienced estate litigation lawyer has come across situations of financial abuse undertaken by caregivers who invariably become personally involved, even romantically, with their much older and typically infirmed patients.

The elderly, infirmed and disabled members of our society make up the majority of those who need, use, and depend on caregiving services. They are vulnerable and typically frail and elderly, and the caregivers knowingly take advantage of their weakness and infiltrate their lives and seek and obtain financial gain.

The more informed and dependent the elderly patient is, the more likely the caregiver will have access to and utilize the elderly person’s financial information, records and accounts.

2 Types of financial abuse committed by caregivers:

1. Financial theft, forgery and embezzlement

These are probably the most common forms of caregiver financial abuse. The caregiver typically has access to and opportunity to review financial documents and records, and to undertake financial transactions, such as banking and the payment of bills.

The financial abuse may start by simply taking a few dollars in cash here and there and progress to forging signatures on cheques or manipulating the elderly person into signing cheques or agreements that benefit the fraudulent caregiver at the expense of the patient.

From a legal perspective, it would be very unwise to grant a caregiver a power of attorney or to allow them to control their financial investments- this should be left to a trusted family member or professional fiduciary.

All to often an unscrupulous caregiver preys upon the trusted nature of elders to gain access to financial information and then use fraud to commit financial abuse.

 

2. Property theft

It is not uncommon for family members to start noticing that certain personal effects go missing from the elderly person’s residence. This may start off with things such as coin collections and range up to the theft of valuable goods or even the misappropriation of real property.

Elders who live in relative isolation from close family members or loved ones are most vulnerable to such theft. The family member may notice for example that the car is still in the driveway, but not know that registration of the car has been transferred to the caregiver.

Fraudulent caregivers will work hard to create the illusion to the family and the patient of earned trust and competence.

I have come across more than one caregiver who has made a good living out of fleecing elderly and unsuspecting patients.

 

Caregiver financial fraud: 13 red flags to watch for

1. Any attempt to isolate or prevent the patient from speaking to family or third parties;

2. becoming too friendly and/or romantically involved with the elderly patient;

3. asking for legal authority such as banking privileges or a power of attorney;

4. accessing personal documents such as a will, financial accounts, investment accounts and the like;

5. withholding medical information from the family;

6. withholding financial information from the family;

7. overstepping normal expected boundaries of a caregiver;

8. suggesting opening new financial accounts or the transfer of existing ones

9. receiving “gifts” more than token value;

10. asking for donations to their favourite charity

11. participating in identity theft, such as obtaining social insurance numbers or credit card pin numbers;

12. asking to be joint holder on a bank account;

13. words or actions to the effect that the caregiver makes the older adult believe that he or she is special or lucky to be chosen by the caregiver to receive their care

Dysfunctional Families: Financial Control

Dysfunctional Families: Financial Control

Financial abuse in dysfunctional families is a common tactic to gain power and control within the family.

I was reminded about this fact when reading an article in the British Telegraph today about a large divorce settlement between  the long time spousal owners of Laura Ashley. One of the daughters of the family was  asked why such a wealthy family would undergo such a long bitter divorce proceeding, and she responded that it was not about the money, but was really about control. She related how her father was absent throughout much of her life and manipulated the family through financial control.

This financial abuse is one of the most powerful methods of keeping family members to toe the line or risk financial disinheritance or worse. Research indicates that financial abuse is experienced in 98% of abusive relationships. The victims  indicate that their lack of ability to provide financially for themselves was the main reason for staying in our returning to such a battering relationship.

Financial control/abuse occurs across all socio-economic, educational, ethnic and racial groups. It applies to both elder  and domestic abuse.

As with other forms of abuse, financial abuse may begin subtly and progress over time. The manipulation is often hidden amongst the family while the abuser publicly appears charming and the epitome of a good family provider.

Typically what  ultimately results is the concept of an “allowance” for good behavior and  deprivation of monies for perceived bad behavior.

The adult child in the Laura Ashley family for example, was disowned by the financially abusive father for marrying someone she loved, but whom the father did not approve. One can easily understand the untenable position that the daughter was put in between having to choose between marrying the person she loved or being disowned by her wealthy father.

Common examples of financial control or abuse are:

  • Forbidding family members to work or have their own funds;
  • controlling how money is spent
  • hiding assets
  • forcing family members to work in a family business without pay
  • withholding funds for basic needs and care
  • withholding money or giving meager allowances
  • the abuser spending money lavishly on him or herself while depriving the family
  • refusing to pay child or spousal support or manipulating court proceedings by hiding or not disclosing assets
  • threatening family members with homelessness and other forms  of insecurity
  • denying education or employment opportunities
  • intentionally squandering or misusing family resources
  • controlling telephone, vehicle, and other forms of isolation
  • blaming the victim for inability to manage money
  • destruction of personal property belonging to the victim
  • forging signatures for financial transactions

Civil Fraud

Civil Fraud

The tort of civil fraud (as opposed to criminal fraud)  was reviewed by the Supreme Court of Canada in Bruno Appliance and Furniture Inc. v Hyrniak 2014 SCC 8  and concluded there are four elements .

18      The classic statement of the elements of civil fraud stems from an 1889 decision of the House of Lords, Peek v. Derry(1889), L.R. 14 App. Cas. 337 (U.K. H.L.), where Lord Herschell conducted a thorough review of the history of the tort of deceit and put forward the following three propositions, at p. 374:

First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false…. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.

19      This Court adopted Lord Herschell’s formulation in Parna v. G. & S. Properties Ltd.(1970), [1971] S.C.R. 306 (S.C.C.), adding that the false statement must “actually [induce the plaintiff] to act upon it” (p. 316, quoting Anson on Contract). Requiring the plaintiff to prove inducement is consistent with this Court’s later recognition in Snell v. Farrell [1990] 2 S.C.R. 311 (S.C.C.), at pp. 319-20, that tort law requires proof that “but for the tortious conduct of the defendant, the plaintiff would not have sustained the injury complained of”.

20      Finally, this Court has recognized that proof of loss is also required. As Taschereau C.J. held in Angers v. Mutual Reserve Fund Life Assn. (1904), 35 S.C.R. 330 (S.C.C.) “fraud without damage gives … no cause of action” (p. 340).

21      From this jurisprudential history, I summarize the following four elements of the tort of civil fraud:

(1) a false representation made by the defendant;

(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(3) the false representation caused the plaintiff to act; and

(4) the plaintiff’s actions resulted in a loss.

Financial Abuse of the Elderly

Financial Abuse of the Elderly

 

Elderly people are more susceptible to financial abuse and  fraudulent schemes such as telemarketers  and contest frauds .

Due to medical, technological and public health advances, the life span of a typical North American male or female has increased from age 68 in 1950 to approximately 80++ today and growing.

By sheer numbers alone our aging population has a greater percentage of the populace than ever.

Seniors also have an enormous amount of accumulated wealth and purchasing power that is much greater than  ever before. Nielsen rating stated  that 100 million consumers over age 50 spent $230 billion on packaged goods last year.

Con artists, scammers and other perpetrators of fraud well know this current state of affairs and are increasingly persistent and creative in the manner in which they target the “elderly”.

In 2010 20% of Americans over aged 65 admitted to having been subjected to a form of financial fraud or abuse, sometimes from their own family members.

I suspect that many others are too embarrassed to report their victimization.

Apparently one of the reasons the elderly are such targets is that they are simply more trusting than younger people despite their life experiences which one would suspect ought to lead to the opposite.

Psychologists state that this has to do with actual changes to the brain that don’t allow the elderly persons to detect the ” untrustworthy face” nearly as well as y0unger people. There is a decline in their ” gut feeling” about potential financial risks or dangers. they have a tendency to devote more of their memory and awareness to “positive” matters in general.

Seniors similarly have an increased capacity for becoming a victim of fraud due to a decline in their ability to comprehend financial decision making to the extent that one study suggests the decline is %1 for each year after age 60, despite the fact that they are seemingly not aware of any such decline.

A senior is thus more likely to become a target of  a telemarketer for example due to this deceased ability to comprehend their financial decline  when in fact it is present, perhaps even obvious   and increasing with one’s age.

There is a great need for family members to work with financial advisors to protect the interests of their aging family members.

Long time spouses who are suddenly widowed or divorced  are very vulnerable and obituaries are reviewed  by the scammers, and family members need to be aware of this.

On the other hand, much of the business conducted at disinherited.com is as a direct result of financial abuse by a family member or members.

Gift of House Upheld Trust

Gift of House Upheld Trust

Franklin v Cooper 2016 BCCA 447 upheld a decision of the Supreme Court that the presumption of resulting trust applied and that the defendant daughter who received gift of house by her mother in joint tenancy, instead held the house in trust for the estate of their mother.

The facts found by the court of appeal were:

In 1989, the deceased transferred title to her home to herself and Ms. Cooper as joint tenants. The deceased died on June 30, 2012, and Ms. Cooper took sole title to the property by survivorship. Ms. Cooper took the position that the 1989 transfer was under an agreement. She claimed that it was in consideration of expenses Ms. Cooper had paid for in the past, and also in consideration of a promise to pay for expenses in the future. Ms. Cooper says that she agreed to support her mother, and to ensure that she was never placed in a nursing home.

[3] Ms. Franklin denied the existence of any such agreement. She contended that her mother’s decision to place the property in joint title was primarily to prevent her mother from being defrauded into transferring title away to a third party. She gave evidence to the effect that she had been offered the opportunity to go on title, herself, but that the offer was contingent upon her dissolving her marriage, as her mother also wanted to ensure that Ms. Franklin’s husband would not gain any matrimonial interest in the property.

[4] There were a number of issues at trial. The trial judge ultimately found that the 1989 agreement contended for by Ms. Cooper did not exist. She found the transfer of the home into joint tenancy to be a gratuitous transfer, and applied Pecore v. Pecore, [2007] 1 S.C.R. 795, holding that there was a presumption that the transfer was not a gift, and that Ms. Cooper held her interest in trust for her mother during her mother’s life, and now holds it in trust for her mother’s estate.

[5] The judge recognized that the issues before her turned largely on findings of credibility:

[6] The evidence of Ms. Franklin and Ms. Cooper is conflicting in virtually every aspect. Both present diametrically opposing pictures of their mother’s life, her needs and wants, and their relationships with their mother and each other. Accordingly, the resolution of this case will depend largely on findings of credibility.

Committeeship and the Patients Property Act

Committeeship and the Patients Property Act

Re Haston 2016 BCSC 1962 is a good review of the law relating  to the appointment of a committee under the Patients Property Act, as well as the criteria for choosing the best party to be the committee. Once appointed the committeeship voids any Powers of Attorney or Representation agreements that existed prior to the court order for committeeship.

21      The applicable statutory provisions for the judicial determination of whether a person is incapable of managing herself or her affairs are found in s. 3 of the Patient Property Act

Hearing of application

3(1) If, on

(a) hearing an application, and

(b) reading the affidavits of 2 medical practitioners setting out their opinion that the person who is the subject of the application is, because of

(i) mental infirmity arising from disease, age or otherwise, or

(ii) disorder or disability of mind arising from the use of drugs,

incapable of managing his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs,

incapable of managing his or her affairs or incapable of managing himself or herself, or incapable of managing himself or herself or his or her affairs, it must, by order, declare the person

(2) The court may, on hearing an application under this section and reading the affidavits described in subsection (1), direct an issue to be tried, and in that event the following provisions apply:

(a) the question in issue is whether the person who is the subject of the application is, because of

(i) mental infirmity arising from disease, age or otherwise, or

(ii) disorder or disability of mind arising from the use of drugs,

(b) this Act applies to the issue and the trial of it;

(c) the Supreme Court Civil Rules apply;

(d) the court must

(i) dismiss the application, or

(ii) by order, declare that the person who is the subject of the application

(A) is incapable of managing his or her affairs,

(B) is incapable of managing himself or herself, or

(C) is incapable of managing himself or herself or his or her affairs.

the court is satisfied that the person is, because of

(c) mental infirmity arising from disease, age or otherwise, or

(d) disorder or disability of mind arising from the use of drugs,

(e) incapable of managing his or her affairs,

(f) incapable of managing himself or herself, or

(g) incapable of managing himself or herself or his or her affairs.

Law

24      Section 6 of the PPA provides that “on application . . . the court may appoint any person to be the committee of a patient.” The powers of a committee are set out in ss. 15 and 17.

25      In circumstances where a patient has been declared incapable of managing herself or her affairs, these include “all the rights, privileges and powers with regard to the estate of the patient as the patient would have if of full age and of sound and disposing mind”, and as well “the custody of the person of the patient”: PPA s. 15(1)(a) and (b)(ii).

26      A committee is also vested with all “the rights, powers and privileges that would be exercisable by the patient as a trustee, as the guardian of a person, as the holder of a power of appointment and as the personal representative of a person, if the person were of full age and of sound and disposing mind”: PPA s. 17.

27      Section 16 allows the court to “attach conditions or restrictions” on the powers of a committee in the same order by which the committee is appointed. Committeeship may be divided between multiple joint or co-committees.

28      The PPA does not prescribe any criteria for the selection of an appropriate committee. Section 18(1) provides as follows:

18(1) A committee must exercise the committee’s powers for the benefit of the patient and the patient’s family, having regard to the nature and value of the property of the patient and the circumstances and needs of the patient and the patient’s family.

29      Counsel provided two main authorities that discuss the relevant factors the court should consider when determining who is best suited to act as a committee under the PPA: Baker-MacGrotty v. Baker, 2016 BCSC 699[Baker-MacGrotty] and Bowman (Re), 2009 BCSC 523 [Bowman].

30      In Bowman, at paras. 32-34, Dardi J. held that “the test for determining who is an appropriate committee . . . is governed by the patient’s best interests”; the choice between two proposed committees involves an inquiry into who will best serve those interests: see also Re Pineo [1985] B.C.J. No. 1171 (S.C.) at para. 6.

31      In Baker-MacGrotty at para. 37, Bernard J. quoted Masuhara J.’s helpful summary from Stewart (Re), 2014 BCSC 2321, of the applicable law on this question. Masuhara J. listed the following considerations:

(a) whether the appointment reflects the patient’s wishes, obviously when he or she was capable of forming such a wish;

(b) whether immediate family members are in agreement with the appointment;

(c) whether there is any conflict between family members or between the family and the patient, and whether the proposed Committee would be likely to consult with immediate family members about the appropriate care of the patient;

(d) the level of previous involvement of the proposed Committee with the patient, usually family members are preferred;

(e) the level of understanding of the proposed Committee with the patient’s current situation, and will that person be able to cope with future changes of the patient;

(f) whether the proposed Committee will provide love and support to the patient;

(g) whether the proposed Committee is the best person to deal with the financial affairs and ensure the income and estate are used for the patient’s benefit;

(h) whether a proposed Committee has breached a fiduciary duty owed to the patient, or engaged in activity which diminishes confidence in that person’s abilities to properly handle the patient’s affairs;

(i) who is best to advocate for the patient’s medical needs;

(j) whether the proposed Committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out; and

(k) whether a division of responsibilities such as between the patient’s estate and the patient’s person to different persons would serve the best interests of the patient, or would such a division be less than optimal for the patient.

32      I would add to this non-exhaustive list the following considerations: whether the proposed Committee’s resides near the patient; whether the proposed Committee is able to provide transportation for the patient, if necessary; whether outside demands on the proposed Committee’s time and availability will detract from his or her ability to perform his or her obligations; and whether the proposed Committee is able and willing to facilitate any recreation or religious practice in which the patient wishes to participate.

Fraudulent Misrepresentation

Fraudulent Misrepresentation

Jasmur Holdings Ltd v Taynton Developments Inc. 2016 BCSC 1902 reviewed inter alia the tort of fraudulent misrepresentation.

116.       The tort of fraudulent misrepresentation has four elements. They were recently summarized by the Supreme Court of Canada in Combined Air Mechanical Services Inc. v. Flesch 2014 SCC 8 (S.C.C.), at paragraph 21:

[21] From this jurisprudential history, I summarize the following four elements of the tort of civil fraud:

(1) a false representation made by the defendant;

(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(3) the false representation caused the plaintiff to act;

and (4) the plaintiff’s actions resulted in a loss.

117      With respect to negligent misrepresentation, the elements were described in Queen v. Cognos Inc. [1993] 1 S.C.R. 87 (S.C.C.) at 110:

. . . (1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. . . .

118      As Kirkpatrick J. said in PD Management Ltd. v. Chemposite Inc. 2006 BCCA 489 (B.C. C.A.), at paragraph 14:

[14] It is settled law that an alleged misrepresentation must pertain to a matter of fact. In MacMillan v. Kaiser Equipment Ltd., 2003 BCSC 672, aff’d 2004 BCCA 470, this Court dismissed the claims for damages for misrepresentation because “it is clear that each of the alleged representations relate to a future occurrence, and not to an existing state of events. A future offer . . . is not an actionable representation” (para. 85). 

137      The plaintiffs rely on D. Debenham, The Law of Fraud and the Forensic Investigator, 3rd ed. (Toronto: Carswell, 2012) at page 14 with respect to their claim of constructive fraud:

Constructive fraud does not require a proof of design to mislead or deceive another, but of some failure to perform an obligation in good faith, or in accordance with the intention of the parties, often out of self-interest. It is not simply bad judgment or negligence, but it is more – a failure to properly respect the rights of one who is vulnerable to the power of another. That vulnerability may be as a result of a preceding contractual obligation which has left one person at the mercy of another, or it may be as a result of the facts and circumstances of the particular case. Constructive fraud does not imply fault, in the sense of intentional misconduct, like actual fraud does. The standard for constructive fraud is objective, while actual fraud (also known as “fraud at law”) requires a subjective dishonest intention. Thus, in cases like Boardman v. Fhips and Regal (Hastings) Ltd. v. Gulliver, the courts have found constructive fraud where the defendants thought they were acting entirely properly, because the court found that their conduct did not comport the legal standard required of someone who had power over the affairs of another.

Proprietary Estoppel

Promissory Estoppel Revisited

NOTE:   This Court of Appeal Decision was over turned by the Supreme Court of Canada 2017 SCC 61 and the claim was allowed

 

See blog entry dated  February 2,2018

 

The BC Appeal Court in Cowper-Smith v Morgan 2016 BCCA 200 allowed an appeal in part to over turn the successful  the claim brought for proprietary estoppel at trial by finding that the claim should not be allowed where a non owner of property gave assurances and a reliance thereon with respect to her future intentions based on the assumption she would inherit from her mother the owner., when she might not.  Since the sister  had no enforceable equitable or legal right to the property at the critical time being when the representation was made, the brother should not have relied upon it.

The deceased mother transferred her house into joint tenancy with her daughter in 2001. In 2002 the mother made a will leaving her estate equally to her three children. The mother’s investment accounts were over several years transferred into joint names with the daughter.

A declaration of trust for the house and bank assets was signed in 2001.

The defendant sister told her siblings that the house was put into her name only so she could assist in their mother’s affairs and would all eventually go to her mother’s estate.

The defendant daughter promised to sell one of her brothers her anticipated 1/3 share in the house to lure him back to Canada to take care of his mother.

The trial and appeal courts over turned the transfers and distributed her estate equally as per her will on the basis of undue influence  but the appeal over turned the portion of the judgement that allowed the brother to succeed on the basis that he relied upon the promise made by his sister, he took care of his mother for years, but the sister reneged on her promise to transfer to him her 1/3 of the house as she did not own it when she promised it.

The Appeal Court stated in part:

Commerce International Bank Ltd., [1982] Q.B. 84 (Eng. C.A.) at 122:

When the parties to a transaction proceed on the basis of an underlying assumption (either of fact or of law, and whether due to misrepresentation or mistake, makes no difference), on which they have conducted the dealings between them, neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.

70      While the principles of fairness and flexibility have informed the modern approach to the application of proprietary estoppel, as adopted by this Court in its jurisprudence (see Idle-O Apartments Inc. v. Charlyn Investments Ltd., 2014 BCCA 451 (B.C. C.A.) at para. 49; Sabey v. von Hopffgarten Estate, 2014 BCCA 360 (B.C. C.A.); Scholz v. Scholz, 2013 BCCA 309 (B.C. C.A.) at para. 31; Sykes v. Rosebery Parklands Development Society, 2011 BCCA 15 (B.C. C.A.) at paras. 44-46; Erickson v. Jones, 2008 BCCA 379 (B.C. C.A.) at paras. 52-57; Trethewey-Edge Dyking (District) v. Coniagas Ranches Ltd. [2003 CarswellBC 657 (B.C. C.A.)] at paras. 64-73; Zelmer v. Victor Projects Ltd. (1997), 34 B.C.L.R. (3d) 125 (B.C. C.A.) at paras. 36-37), there remains a necessary balancing between an overly broad application of the doctrine under the general guise of “unfairness” and an overly narrow application of the doctrine that places excessive weight on the technical requirements of the doctrine. See Lord Scott’s observations in Cobbe v. Yeoman’s Row Management Ltd., [2008] UKHL 55 (U.K. H.L.) in contrast to Lord Neuberger’s comments in Thorner v. Major, [2009] UKHL 18 (U.K. H.L.).

71      These underlying rationales and explanations for the evolution of the doctrine have led to its modern iteration as enunciated by Madam Justice Bennett in Sabey and affirmed by Madam Justice Newbury in Idle-O Apartments Inc. at para. 49:

[49] From the foregoing I infer that although proprietary estoppel is, like most equitable remedies, flexible and aimed at doing justice, and although the basic elements of the doctrine are not to be technically confined, those elements must still be made out and an equity established. I reproduce again the encapsulation of the doctrine provided recently in Sabey:

Is an equity established? An equity will be established where:

There was an assurance or representation, attributable to the owner, that the claimant has or will have some right to the property, and

The claimant relied on this assurance to his or her detriment so that it would be unconscionable for the owner to go back on that assurance.

If an equity is established, the court must determine the extent of the equity and the remedy appropriate to satisfy the equity.

72      As was noted by Bennett J.A. in Sabey, the bulk of the analysis occurs at the first stage, where “findings with regard to assurances, reliance and detriment are made” and where the court must determine whether it would be unconscionable for the person “to fail to make good on a promise to create a legal right in favour of someone else” (at para. 27).

73      Thus, the elements of the modern doctrine of proprietary estoppel require:

(i) an assurance or representation by the defendant that leads the claimant to form a mistaken assumption or misapprehension that he or she has an interest in the property at issue;

(ii) a causative connection between the assurance or representation and the claimant’s reliance on the assumption such that the claimant changes his or her course of conduct; (

iii) a detriment suffered by the claimant that flows from his or her reliance on the assumption, which causes the unfairness and underpins the proprietary estoppel; and

(iv) a sufficient property right held by the defendant that could be transferred to satisfy the right claimed by the claimant.

 

The Majority of the Court held:

98      There is no doubt that the applicable standard of review in this case is that described by Newbury J.A. in Idle-O Apartments Inc. as follows (at para. 72):

[72] At the outset, I note that the granting of a remedy for proprietary estoppel is a discretionary matter that attracts a high degree of appellate [deference]. The classic statement of the applicable standard of review may be found in Friends of the Old Man River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, where the Court quoted with approval the following passage from Charles Osenton & Co. v. Johnston, [1942] A.C. 130 (H.L.):

The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified…(See also Wenngatz v. 371431 Alberta Ltd., 2013 BCCA 225 at para. 9; Stone v. Ellerman, 2009 BCCA 294 at para. 94; and Harper v. Canada (Attorney General), 2000 SCC 57at para. 26.)

99      In considering whether there has been a wrongful exercise of discretion, I begin by noting that in Uglow v. Uglow, [2004] EWCA Civ 987 (Eng. & Wales C.A. (Civil)) at para. 9, the Court of Appeal described the following general principle:

The overriding concern of equity to prevent unconscionable conduct permeates all the different elements of the doctrine of proprietary estoppel; assurance, reliance, detriment and satisfaction are all intertwined.

100      In my view, the assurance given by Gloria to Max in this case was so based on uncertainty as to undermine any claim based on proprietary estoppel and that uncertainty goes to the root of reliance. The uncertainty arises from the fact that both at the time the assurance was given by Gloria and at the time Max acted upon the assurance, the Property was owned by Elizabeth; that is, Gloria had no beneficial interest in the Property and was uncertain what interest she would eventually inherit, if any. In the circumstances, Max cannot have been reasonably certain Gloria could do what she represented she would do. His hope and belief, initiated and encouraged by her, that he would likely be given the opportunity to buy whatever interest Gloria might inherit does not give rise to an interest in his mother’s estate. With respect, I do not agree with Smith J.A.’s view that Gloria’s “clear entitlement to a one-third interest in the Property at the time of the judge’s order” is relevant to whether an estoppel arose when Max acted upon the assurance given to him.

101      In relation to reliance as an essential element of a claim founded upon proprietary estoppel, Snell’s Equity, 31st ed (London: Sweet and Maxwell, 2005) says, at §10-18:

A must have acted in the belief either that he or she already owned a sufficient interest in O’s property to justify the expenditure or that he or she would obtain such an interest although it is not necessary for A to establish that he or she had an expectation in relation to a specific or clearly identified piece of property. But if A has no such belief, and improves land in which he knows he has no interest or merely the interest of the tenant, or licensee or as an occupier who incurs expenditure in the hope of obtaining planning permission and then entering into a contract to buy the land, he or she has no equity in respect of his expenditure. It is not sufficient that A believes he will obtain an interest over O’s property if he is also aware that O may change his mind.

[Emphasis added.]

102      Snell’s Equity proposes that in order to establish the estoppel it is necessary for A to show that O “created or encouraged the belief or expectation on the part of A that O would not withdraw from the agreement in principle”. That is a description of a present and ongoing obligation.

103      The circumstances in the case at bar resemble those in the many reported inheritance cases, including In re Basham and Thorner v. Major, with an important exception: the assurance here did not come from the beneficial owner of the property interest. In my view, the interest found by the judge to have been wrongly obtained through undue influence in respect of the land transfer and Declaration of Trust cannot be regarded as sufficient interest to permit Gloria to make representations or give assurances that might give rise to a proprietary estoppel. The assurance Gloria gave to Max had nothing to do with an interest in the Property created by the transfer or Declaration of Trust (both of which she thought, at the time, to be intended to simply facilitate the handling of the estate). The interest she promised to Max was the right to buy her expected inheritance. She did not yet own that inheritance and might never have come into it.

104      Walker L.J., in the passage from Thorner cited by Smith J.A., was of the view that in order to constitute proprietary estoppel, “the assurances given to the claimant (expressly or impliedly, or, in standing-by cases, tacitly) should relate to identified property owned (or, perhaps, about to be owned) by the defendant” (emphasis added).

105      Walker L.J. does not expand upon his view that an estoppel may arise from assurances made by one who is about to be the owner of the property. Neither the source nor the extent of that qualification to simple ownership is described, other than by a reference later in the paragraph to Crabb v. Arun District Council, in which there is no discussion of property about to be owned by the Council that made the representation in that case. In fact, in Crabb there are repeated references to the legal rights of the person making the representation. Denning M.R. states: “Short of an actual promise, if he, by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights — knowing or intending that the other will act on that belief — and he does so act, that again will raise an equity in favour of the other; and it is for a court of equity to say in what way the equity may be satisfied” (emphasis added). Scarman L.J., citing Willmott, notes: “the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right” (emphasis added). In short, there is nothing expressly stated in Crabb that contemplates an estoppel arising with respect to property that is other than legally owned by the person making the representation.

106      Even assuming there to be some basis for the view that proprietary estoppel might arise as a result of an assurance given by one about to be the owner of property, I would not expand that class of persons so far as to include a potential beneficiary who gives an assurance to another, years before the death of a testator, with respect to what she will do with an inheritance that she merely anticipates receiving, if the person receiving the assurance acts as requested in the meantime. Not only is there uncertainty, in such a case, with respect to the promisor’s ability to deliver a proprietary interest to the promisee at the time the assurance is given, the uncertainty is not resolved when the promisee acts in reliance upon the promise.

107      Leaving aside, for the moment, the question whether Gloria was in a position to exert undue influence upon her mother, there was uncertainty with respect to the property interest Max was being promised. First, there was uncertainty whether Gloria would inherit anything from her mother. She might have predeceased her mother. Her mother might have changed her will and left Gloria more or less than a one-third interest in the property. Her mother might have sold the house and moved into accommodation more suited to her declining health. Simply by liquidating her property Elizabeth Cowper-Smith would have precluded Max from asserting a right to buy anything from Gloria. Certainly it is not suggested that Elizabeth was in any way restricted in her dealings with the property simply because her daughter made assurances to Max about what she would do on Elizabeth’s death.

108      Without exerting undue influence upon her mother, Gloria was not in a position to determine what property interest Max would receive in exchange for his move to Victoria. The fulfilment of Gloria’s promise was entirely conditional on her mother’s actions, which were outside her control.

109      Further, an obligation on Gloria’s part cannot have arisen before she inherited an interest in the Property. In this case, unlike the inheritance cases, no obligation arose simply as a result of the reliance upon the assurance. Where the assurance comes from the testator, the estoppel arises because there has been such reliance, making it inequitable to permit the testator to resile from the promise. A remedy is available before the testator’s death. As noted by Mummery L.J. in Uglow, proprietary estoppel may be relied upon to prevent a testator from making a will giving specific property to one person, if by his conduct he has previously created the expectation in a different person that he will inherit it:

The testator’s assurance that he will leave specific property to a person by will may thus become irrevocable as a result of the other’s detrimental reliance on the assurance, even though the testator’s power of testamentary disposition to which the assurance is linked is inherently revocable.

110      As Professor MacDougall observes in Estoppel at §6.38, there is a temporal element to proprietary estoppel. The demands of equity and how they are properly satisfied may change over time; but the equity arises when there is reliance. That is the foundation for what he describes at §6.73 as a “more orthodox approach” to the question we face than that which is taken by Smith J.A.:

… [P]roprietary estoppel will not apply where the owner in fact has no existing rights with respect to the property in question when the equity would otherwise arise — i.e., at the time of the detrimental reliance.

111      Uncertainty with respect to the promisor’s ability to fulfill the promise is closely related to the concept of reliance. Key to the acquisition of a proprietary interest by estoppel is the principle that it is unconscionable to permit a person to fail to keep a promise made and reasonably relied upon by the promisee. How can there be reasonable reliance upon a promise to convey an interest in property made by one who does not have such an interest or whose interest is uncertain?

112      Like my colleague, I recognize the evolution of the law of proprietary estoppel has been marked by tensions between, on the one hand, broad principles of flexibility and fairness, and on the other hand, narrow technical requirements. While the jurisprudence tells us that proprietary estoppel is no longer a “Procrustean bed constructed from some unalterable criteria” (see Idle-O Apartments Inc. at para. 23), the Court in Crabb nonetheless insisted the exercise of equitable jurisdiction be rooted in identifiable principles. To that end, the Court adopted the words of Harman L.J. in Bridge v. Campbell Discount Co., [1961] 1 Q.B. 445 (Eng. C.A.) at 459:

Equitable principles are … perhaps rather too often bandied about in common law courts as though the Chancellor still had only the length of his own foot to measure when coming to a conclusion. Since the time of Lord Eldon the system of equity for good or evil has been a very precise one, and equitable jurisdiction is exercised on well-known principles.

113      I do not read this Court’s judgment in Idle-O Apartments Inc. as suggesting that uncertainty that undermines reliance on a representation may be disregarded. To the contrary, when the Court considered whether an equity was established (at para. 23) it required the claimant to establish he believed in the existence of “a right created or encouraged by the words or the actions of the other party such that it would be unfair, unjust or unconscionable to allow the representor to set up its undoubted rights against the claimant”. At para. 57, the Court referred with approval to the trial judge’s recognition that detrimental reliance on the part of the claimant “underpins the claim and establishes the unfairness or unjustness that ought to be addressed by equity. Without such, … the doctrine may become ‘somewhat pointless’ and a ‘circumlocution for doing justice’.”

114      Newbury J.A., after describing the evolving conception of the scope of proprietary estoppel, noted:

[48] This court has adopted the “broader” approach to proprietary estoppel: see Zelmer at para. 49, Erickson at paras. 55-7, and most recently in Sabey at paras. 28-9. This approach is consistent with the judgment of Lord Denning in the seminal English case of Crabb v. Arun District Council, [1976] 1 Ch. D. 179 at 187-9; Oliver J. in Taylor Fashions; Buckley L.J. in Shaw v. Applegate, [1978] 1 All E.R. 123 at 130-1; and various other English authorities. On the other hand, English and Australian courts (and to some extent Canadian courts) have in recent years been at pains to emphasize that proprietary estoppel does not arise simply out of conduct that a court finds to be unconscionable. As observed by Lord Scott in Yeoman’s Row Management Ltd v. Cobbe, [2008] UKHL 55:

… unconscionability of conduct may well lead to a remedy but, in my opinion, proprietary estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present. These ingredients should include, in principle, a proprietary claim made by a claimant and an answer to that claim based on some fact, or some point of mixed fact and law, that the person against whom the claim is made can be estopped from asserting. To treat a “proprietary estoppel equity” as requiring neither a proprietary claim by the claimant nor an estoppel against the defendant but simply unconscionable behaviour is, in my respectful opinion, a recipe for confusion. [At para. 16.]

[Emphasis added.]

115      Professor MacDougall, at §6.34, echoes Lord Scott’s concerns, suggesting the doctrine of proprietary estoppel “should not be seen as a generalized remedial doctrine for unfairness.” Unfairness, in MacDougall’s view, is merely a general description of what the doctrine seeks to combat. Unfairness is not, in itself, an “overarching principle” that allows proprietary estoppel to be applied even in the absence of the typical requirements.

116      The Court in Idle-O Apartments Inc. further noted that the test for establishing a proprietary estoppel had recently been collapsed, in Sabey, into two components (see para. 30):

There was an assurance or representation, attributable to the owner, that the claimant has or will have some right to the property, and

The claimant relied on this assurance to his or her detriment so that it would be unconscionable for the owner to go back on that assurance.

[Emphasis added.]

117      While the criteria that define the limits of proprietary estoppel are not unalterable, I see no reason in principle why the cause of action should be expanded to permit a person to acquire an interest in property by reliance upon an assurance by a non-owner that falls short of a contractual obligation. Such an expansion would be problematic, untying entirely from its ties to property the only estoppel that can be used as a sword. I would not so extend the cause of action.

118      In my view, the fact Gloria used undue influence to obtain de facto control over the Property and Investments does not affect that conclusion. Max did not, in fact, rely upon that undue influence as assurance that Gloria would deliver on her promise. Even if he had known of the influence exerted by Gloria, equity should not come to the assistance of one who says he arranged his affairs in reliance upon a promise made by a person exerting improper control over a testator with respect to what she would do with the inheritance assured by the exercise of that control. In fairness to him it should be said that Max is not advancing that argument. Even so, the logic of that argument lies at the root of the proposition that undue influence distinguishes this case from others where a non-owner makes assurances about what rights an owner will exercise over property.

Conclusion

119      In the result, I would allow the appeal on this aspect of the order only and set aside the Order made in Max’s favour. In all other respects, I agree with my colleague’s reasons and conclusions.

Saunders J.A.:

I AGREE:

Appeal allowed in part.

Litigation Loans

Litigation Loans

The spiralling costs of litigation has led to an increasing number of litigants and lawyers  having to seek litigation loans to fund the court case.

It is not unheard of for personal 9njury lawyers to have a million dollars in out of pocket disbursement a for such expenses as retaining experts. If possible the lawyers will get the funding from their clients, but most often either the law firm or the client or both will resort to third parties who are prepared to loan the necessary funding, albeit at high interest rates.

The Ontario divional court decision of Narbutt  v. Sharpe Beresh Gnyś  May 2016 was such a situation.

Narbutt retained lawyer Gnys to act for her in a personal injury case when she was 17.

Her lawyer Gnys arranged for his client to borrow $13,500 to fund the out of pocket expenses .  There was a contingency fee arrangement between the client and lawyer.

Lawyer Gnys failed to advise her that the funds were being loaned to her by a corporatation owned and controlled by his wife. Nor did he tell her that the person assisting her in the loan applications was a member of his law firm, and also worked for the loan company, and did not represent her interests.

At the conclusion of the litigation years later, the amount of interest claimed was $28,000 , representing an effective interest rate of 19.5%.

the law firm sued for summary judgement and was awarded the entire amount.

The award was set aside on appeal on the basis that the loan was unconscionable, expressing concern about the way the identity of the lender was concealed from Narbutt, and the lack of independent legal advice offered to her.

“I find that these agreements are unconscionable because there was an imbalance of power, the Respondent took unfair advantage of the imbalance of power and the bargain was improvident.

“Furthermore, the Appellant had every reason to believe that everyone who spoke with her about the loans was representing her interests. The Appellant dealt with the lender in the belief that the lender was independent of her lawyer, who had been instrumental in the arrangement of the loan and choice of lender. She reasonably understood her law firm as assisting her in borrowing what was for her a substantial sum of money when in fact the Respondent, Valerie Gnyś, was the lender, her lawyer was the lender’s husband and employer and Mr. Beresh, who did accident benefits work for her lawyers, was in fact acting for the lender,”

The decision points out the necessity for lawyers to insist that their clients obtain independent legal advice and that there be full disclosure of any connection between the law firm and the lender.

Who Should Be Appointed Committee (Guardian)

Who Should Be Appointed Committee (Guardian)

The vexing problem of who should be appointed the committee (legal guardian) of a demented person under the Patient’s Property Act  RSBC often involves the worst of family “tug a wars” over the financial  and personal affairs of a loved one.

The law re who should be appointed committee was summarize In Stewart (Re), 2014 BCSC 2321, as follows:

[27]      The application for an appointment invokes the parens patriae jurisdiction of the court and is governed by an assessment of who will serve the patient’s best interest.

[28]      Section 18 of the Act states that:

A Committee must exercise the Committee’s powers for the benefit of the patient and the patient’s family, having regard to the nature and value of the property of the patient and the circumstances and needs of the patient and the patient’s family.

[29]      As has been observed in other cases, the Act does not prescribe criteria for the selection of an appropriate Committee. However, cases have identified various considerations; see for example: Vranic (Re), 2007 BCSC 1949; Bowman (Re), 2009 BCSC 523; Palamarek (Re), 2011 BCSC 563; Re Matthews, 2013 BCSC 1045; and Sangha (Re), 2013 BCSC 1965. They include:

(a) whether the appointment reflects the patient’s wishes, obviously when he or she was capable of forming such a wish;

(b) whether immediate family members are in agreement with the appointment;

(c) whether there is any conflict between family members or between the family and the patient, and whether the proposed Committee would be likely to consult with immediate family members about the appropriate care of the patient;

(d) the level of previous involvement of the proposed Committee with the patient, usually family members are preferred;

(e) the level of understanding of the proposed Committee with the patient’s current situation, and will that person be able to cope with future changes of the patient;

(f) whether the proposed Committee will provide love and support to the patient;

(g) whether the proposed Committee is the best person to deal with the financial affairs and ensure the income and estate are used for the patient’s benefit;

(h) whether a proposed Committee has breached a fiduciary duty owed to the patient, or engaged in activity which diminishes confidence in that person’s abilities to properly handle the patient’s affairs;

(i) who is best to advocate for the patient’s medical needs;

(j) whether the proposed Committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out; and

(k) whether a division of responsibilities such as between the patient’s estate and the patient’s person to different persons would serve the best interests of the patient, or would such a division be less than optimal for the patient.

[39]      The above listing is of course non-exhaustive or in any particular order. The inquiry is fact specific and a particular factor may or may not be applicable and may attract different weight depending on the circumstances of a case.

[38]         In Vranic (Re), 2007 BCSC 1949, Madam Justice Ballance made the following apposite remarks:

[91]      The test for selecting an appropriate Committee is determined on the court’s assessment of who will serve the patient’s best interests: Public Trustee v. Thomas James Pollen, [1996] B.C.J. No. 2394; Re Watson, [2006] B.C.J. No. 709, 2006 B.C.S.C. 503; Re Leeming (1984), 14 D.L.R. (4th) 315 (B.C.S.C.); Re Rempel, [2001] B.C.J. No. 1036, 2001 B.C.S.C. 735. Under the current legislative scheme, a declaration of incapacity and the appointment of a Committee has the effect of being a blunt order which results in a far-reaching fundamental loss of an adult’s liberties. The “best interests” test is a familiar one in law and, in particular, in the judicial determination of issues which affect children.

[92]      For sound reasons, that standard quite properly reflects the protective approach of the court in dealing with matters which affect children. Although the test by the same name applies in considering the appointment of a Committee for a mentally incapacitated adult, its application requires a more nuanced approach which acknowledges and takes into consideration issues concerning the adult’s autonomy, his personal dignity, his idiosyncrasies and the way he has chosen to live his life while capacitated. It also takes into account most assuredly any wishes he has validly expressed while mentally competent or lucid about who he would like to act as his Committee or otherwise make decisions on his behalf.

[93]      These factors should also inform the manner in which a Committee performs his or her duties. Additional important factors the court is to consider are, the proposed Committee’s previous involvement with the patient or his family, the proposed Committee’s knowledge and understanding of the patient’s situation and needs, the proposed Committee’s level of experience or capability in performing the duties of Committee, any kind of plan or scheme of the proposed Committee for the management of the patient and any potentially conflict of interest between the proposed Committee and the patient. Re West (1978), 20 N.B.R. (2d) 686 S.C.A.D.; Re Taylor (1982), 13 E.T.R. 168 (B.C.S.C.); Re Watts, [2002] B.C.S.C. 1331 (Master); Finlay v. Finaly (1997), 16 E.T.R. (2d) 216 (B.C.S.C.).