It May Be Time to Revisit Your Continuing POA Property Precedent

 In Estate Litigation

A series of recent Capacity and Consent Board decisions have called into question the use of standard language found in many continuing power of attorney for property precedents found in law firms across Ontario, including the current Law Society of Ontario annotated precedent. Specifically, the issue relates to the language used to declare that a power of attorney for property is a “continuing” power of attorney for property pursuant to the Substitute Decisions Act, 1992 (“SDA”). In a series of recent decisions, the Capacity and Consent Board has found that commonly used “continuing” language represents an intention to postpone the effectiveness of the power of attorney, which may not have been the intention of the grantor.

Traditionally, where a grantor of a power of attorney for property becomes incapacitated, the power of attorney for property terminates. However, the SDA allows for a continuing power of attorney for property, which is a power of attorney for property that can continue to be exercised after the incapacity of the grantor. Pursuant to subsection 7(1) of the SDA, in order for a power of attorney for property to be a continuing power of attorney for property, it must i) state that it is a continuing power of attorney or ii) express the intention that the authority given may be exercised during the grantor’s incapacity to manage property.

It is common to see continuing power of attorney for property language intended to address the requirements of subsection 7(1) of the SDA. Indeed, the February 21, 2019 Law Society of Ontario annotated continuing power of attorney for property precedent provides language for the purpose of meeting the subsection 7(1) requirements, as follows:

Declaration as Continuing Power – I declare that this Power of Attorney for Property is a Continuing Power of Attorney for Property pursuant to the Substitute Decisions Act, 1992 and that the authority given may be exercised during any subsequent legal incapacity on my part.

The corresponding annotation confirms the intended effect of the precedent language:

At common law, a power of attorney for property terminates on the incapacity of the grantor. By contrast, the current legislative framework under the Substitute Decisions Act, 1992 S.O. 1992, c.30 (the “SDA”) makes it possible to provide for a continuing power of attorney for property (“CPA”), which may be exercised during the grantor’s subsequent incapacity.

However, subsection 7(7) of the SDA provides that the coming into effect of a power of attorney for property can be postponed to a specified date or a specified contingency, and it appears that the precedent language often used in continuing power of attorney documents for the purpose of meeting the requirements of subsection 7(1) of the SDA is being interpreted by the Capacity and Consent Board as an intention of a contingent grant of authority under subsection 7(7) of the SDA.

In BV (Re), 2016 CanLII 46381 (ON CCB), the Board looked at, among other things, whether a finding of incapacity to manage property was valid. In its Reasons for Decision, the Board referred to language similar to the precedent language in questioning whether the authority granted by the power of attorney was intended to be contingent on a subsequent finding of incapacity:

It was also unclear as to the import, if any, of what may be a triggering clause in the Power of Attorney (“in case I should become a patient in a psychiatric facility and be certified as not competent to manage my property under the Mental Health Act,” at paragraph 3(b) read together with “”I authorize my attorney to do, on my behalf, any and all acts, which I could do if capable” at paragraph 1 and “I declare that this power of attorney may be exercised during any subsequent legal incapacity on my part” at paragraph 3(a)).  It would appear that the Power of Attorney may not have provided for the management of BV’s property absent a finding of incapacity, making Dr. Diaz’s finding necessary to trigger the Power of Attorney.

Similarly, in NP (Re), 2015 CanLII 63970 (ON CCB), language similar to the Law Society precedent language was addressed by the Board, and in that instance the Board interpreted the language to be a triggering provision for the purposes of subsection 7(7) of the SDA, not as language intended to meet the “continuing” requirements under subsection 7(1) of the SDA:

“Counsel also submitted that s. 54 does not apply because there was a continuing power of attorney that provides for the management of NP’s property.  The evidence disclosed that NP executed a continuing Power Of Attorney (POA) in February 2008.  A review of the Terms of the POA discloses that it may be exercised “during any incapacity on my part to manage my property, pursuant to section 7 of the Substitute Decisions Act.” The terms indicate that the attorneys are authorized to act when a specified contingency occurs – i.e.  any incapacity on the part of NP.

The terms of NP’s POA stated that “the authority given in this continuing power of attorney may be exercised during any incapacity on my part to manage my property, pursuant to section 7 of the Substitute Decisions Act.” Sub-section 7(7) of the Act authorizes POA’s to come into effect when a specified contingency happens.  The provisions of NP’s POA indicate that the attorneys may exercise their power when she is incapable to manage her property.  Since NP’s power of attorney does not provide a method for determining when that situation has arisen, subsection 9(3) of the Act applies.

It states that a power of attorney comes into effect when the attorney is notified that a certificate of incapacity has been issued in respect of the grantor under the Mental Health Act…” Accordingly I held that s. 54(6) of the MHA did not prevent Dr. Hategan from assessing NP because the Power of Attorney was not in effect until Dr. Hategan notified the attorneys that a certificate of incapacity had been issued in respect of NP’s capacity to manage her property.   I held, therefore, that since there had not been a finding of property incapacity to trigger the exercise of the POA before Dr. Hategan  assessed NP, s. 54 (6) did not apply.

In a subsequent decision, AF (Re), 2017 CanLII 141936 (ON CCB), the Board relies on the reasoning in NP (Re), again in relation to the language that might have been intended for purposes of subsection 7(1) of the SDA. The language at issue was as follows:

In accordance with the Substitute Decisions Act, 1992, I declare that this power of attorney may be exercised during any future incapacity on my part to manage property.”

The Board noted the following:

Even if the POA remained a valid document and were not revoked, the panel agreed with the reasoning in NP (Re), 2015 CanLII 63970 (ON CCB) on this issue. Subsection 7(7) of the SDA provides that a continuing power of attorney may provide that it comes into effect on a specified date or when a specified contingency happens. The wording of the POA in this case clearly provided that the authority granted was contingent upon any future incapacity. It follows that a finding of incapacity would be the specific contingency before any authority under the POA could be exercised.”

I should note that a 2018 decision of the Superior Court seems to support the interpretation intended by the Law Society precedent. In Roach v. Todd, 2018 ONSC 5289 (CanLII), the court stated:

The Continuing Power of Attorney was executed by Willie on June 8, 2010 and was in full force and effect from that time until his death.  While it stated that the power of attorney “may be exercised during any subsequent legal incapacity” on Willie’s part, it was not conditional on such incapacity.  Instead, it expressly came into full force and effect on the date it was signed and witnessed.

However, there was no analysis by the court and the court made its finding in response to a claim by an attorney for property that she was not acting as an attorney for property when she made a number of suspicious transactions. In my view, the decision does not reach far enough to close the door on the interpretation of the language that is seemingly taking hold with the Capacity and Consent Board.

The language offered in the Law Society precedent could be clearer, particularly in light of subsection 7(7) of the SDA.

Until there is a resolution of this conflict between the apparent purpose of the language and the possible interpretation of the language (as evidenced, at least, by the Consent and Capacity Board), I would suggest that if a client’s intention is to grant a continuing power of attorney that confers authority immediately, then solicitors should modify the precedent language to specifically indicate the purpose of the language and indicate the continuing nature of the authority granted.  For example:

I declare that this Power of Attorney for Property is a Continuing Power of Attorney for Property pursuant to subsection 7(1) of the Substitute Decisions Act, 1992 and that the authority given may continue to be exercised during any subsequent legal incapacity on my part.

The risk of an unintended interpretation of the precedent language remains uncertain and can be mitigated through careful documenting of the grantor’s intentions at the time of drafting/execution; however, a minor amendment to the precedent language would provide useful clarity that could avoid an interpretation issue from arising.

This blog post was written by Chris McLeod, head of the Commercial Litigation team.  He can be reached at 613-367-0372 or at christopher.mcleod@mannlawyers.com.

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