People often make Powers of Attorney to deal with financial (property) and healthcare decisions in the event they become incapacitated by reason of age, accident or other mental infirmity. However, it is surprising how many people do not understand what a power of attorney is for and what are the repercussions creating same. Many frequently asked questions surround powers of attorney, such as: does a power of attorney continue after death?; Is a power of attorney the same as an executor under a Will? Are there different kinds of powers of attorney?
While many provinces have specific legislation related to appointing an enduring power of attorney and the attorney’s duties after appointment, New Brunswick’s power of attorney legislation only recently came into force on July 1, 2020. Indeed, it was the last province in Canada to do so. Prior to this legislation coming into force, lawyers drafting powers of attorney relied on the common law and other statutes for guidance on issues, such as: does this person have capacity to make a power of attorney?; Who can legally act as a power of attorney?; What duties does an Attorney of a power of attorney have to the Grantor?
Under the common law, a person has capacity to grant an enduring power of attorney if he or she: a. Is able to understand the basic nature and purpose of the enduring power of attorney; and b. understands the consequences of same (i.e. the Attorney of the power of attorney can make potentially all financial and healthcare decisions for that person, which could cause loss of funds, or decisions that may not be exactly what the Grantor of the power of attorney would make under the circumstances).
The duties of the power of attorney were laid out in various cases in New Brunswick. For example, in LeBouthillier Estate v. Selosse (Appeal by LeBouthillier), 2014 NBCA 68 (QL), B.R. Bell J.A. (as he then was) for the New Brunswick Court of Appeal, outlined the relevant jurisprudence confirming an attorney acting under a power of attorney has a fiduciary duty to the Grantor, meaning the attorney must act in good faith and only in the best interests of the Grantor.
Yet it is difficult to explain with clarity the concept of fiduciary duty to a client without having some specific examples and details about what a power of attorney can and cannot do. Even if the Attorney understands her duties at the time of discussion, she may find herself in trouble later on without some specific guidelines. (for example, see previous post here on misuse of Powers of Attorney).
Add to this the fact that different statutes applied to different aspects of common powers of attorney (i.e. the Infirm Persons Act for personal care provisions and the Property Act for property matters), one can easily understand why powers of attorney could go wrong in executing their duties. (see for example Trites v. Trites and Jones, 2017 NBQB 085, wherein Mr. Justice Rideout of the Court of Queen’s Bench in Moncton ordered the Applicant’s wife and daughter to return two 2016 Toyota RAV4s, which the wife purchased with funds she transferred from her husband’s bank account as his Power Of Attorney.)
2. The Enduring Powers of Attorney Act SNB 2019, c 30
The new Enduring Powers of Attorney Act (the “Act”) provides much needed guidance for legal counsel as well as Grantors and Attorneys on different aspects of creating and using powers of attorney. For example, section 2(1) sets out the required capacity for an individual to make a power of attorney:
2(1)A person has capacity with respect to a matter or an act if the person is able to
(a) understand the information that is relevant to decisions with respect to the matter or act, and
(b) appreciate the reasonably foreseeable consequences of decisions with respect to the matter or act.
2(2)A person is presumed to have capacity unless it is determined otherwise.
Although this section essentially codifies the common law requirements for capacity, it is helpful to have this information in one location as a reference point. It is also helpful to clarify that capacity is presumed unless determined otherwise.
Section 4, dealing with the validity of a power of attorney, is one of the more notable sections in the new Act because it adds new requirements for counsel to ensure that a power of attorney is valid. This section reads as follows:
4(1)An enduring power of attorney is valid if
(a) the grantor had the capacity to make it,
(b) it is in writing and is signed and dated by the grantor or, in the circumstances described in subsection (2), by another person,
(c) in the case of an enduring power of attorney in which an attorney for property is appointed or an attorney for property and an attorney for personal care are appointed,
(i) it is signed and dated in the presence of a lawyer, and
(ii) it includes or is accompanied by a written statement by the lawyer declaring that the lawyer
(A) is a practising member of the Law Society of New Brunswick,
(B) reviewed the provisions of the enduring power of attorney with the grantor,
(C) was present when the enduring power of attorney was signed by the grantor or, in the circumstances described in subsection (2), by another person, and
(D) is of the opinion that the grantor had the capacity to make the enduring power of attorney, and
(d) in the case of an enduring power of attorney in which only an attorney for personal care is appointed, it meets the requirements of paragraph (c) or it is signed and dated in the presence of two witnesses, both of whom are adults and neither of whom is the attorney or the spouse, common-law partner or child of the attorney, and it is signed by the two witnesses.
4(2)An enduring power of attorney may be signed and dated by a person on behalf of the grantor if
(a) the grantor is unable to sign and date the enduring power of attorney,
(b) the person signs and dates the enduring power of attorney at the direction and in the presence of the grantor, and
(c) the person is an adult who is not the attorney or the spouse, common-law partner or child of the attorney.
Section 4(1) adds the requirements for lawyers witnessing the signing of powers of attorney to include statements confirming they have turned their mind to the issue of capacity and confirmed in writing that a Grantor has the requisite capacity as set out in section 2(1). While these details should be confirmed each time a lawyer witnesses the signing of a power of attorney anyway, this section helps ensure these tasks are completed, or the power of attorney would be invalid. Section 4(2) is also interesting, as it allows a grantor of a power of attorney to appoint someone else to sign the power of attorney on his/her behalf. It will be interesting to view the future circumstances under which this section is used.
Another interesting section deals with individuals who are prohibited from acting as powers of attorneys:
6(1)A grantor shall not appoint the following persons as an attorney:
(a) a person who has been convicted of an offence involving dishonesty, unless the enduring power of attorney states that the grantor is aware of the conviction;
(b) a person who provides health care services or support services to the grantor for compensation, unless the person is the spouse, the common-law partner or a relative of the grantor; or
(c) a person who is a member of a class of persons prescribed by regulation.
6(2)A grantor shall not appoint an undischarged bankrupt as an attorney for property.
6(3)If a person who is not an adult is appointed as an attorney, the person may only act when the person becomes an adult.
One final section worth noting is section 12, which deals with the duties of attorneys:
Duties of attorneys
12(1)An attorney shall
(a) act honestly and in good faith,
(b) exercise reasonable care, and
(c) act within the authority given under the enduring power of attorney.
12(2)When making a decision on behalf of a grantor who lacks the capacity to make the decision, the attorney shall consult with the grantor, if it is reasonable to do so, and
(a) make the decision in accordance with any relevant instructions given by the grantor when the grantor had capacity,
(b) in the absence of any instructions, make the decision in accordance with the current wishes of the grantor, if the wishes are reasonable,
(c) if the wishes of the grantor cannot be determined or are unreasonable, make the decision that the attorney believes the grantor would make if the grantor had the capacity to make the decision, taking into consideration the values and beliefs of the grantor, or
(d) if the attorney is unable to determine what decision the grantor would make, make the decision that the attorney believes to be in the best interests of the grantor.
12(3)For the purposes of paragraph (2)(a), if a grantor has given instructions that are inconsistent with previous instructions, the attorney shall make the decision in accordance with the most recent instructions.
12(4)When an attorney for property is acting on behalf of a grantor who has capacity with respect to property and financial affairs, the attorney shall consult with the grantor and act in accordance with the instructions of the grantor.
This section of the Act is particularly interesting, as it requires the Power of Attorney to consult with the Grantor of the Power of Attorney prior to making decisions (if possible).
The new Enduring Powers of Attorney Act is a helpful addition to New Brunswick’s legislative landscape. It should help lawyers, Grantors and Attorneys of Powers of Attorney in the future with ensuring the Grantor’s wishes are respected. It will hopefully reduce the amount of misuse of Powers of Attorney, which has unfortunately become a common issue today. Here are some helpful links for more information on this Act:
- https://www2.gnb.ca/content/gnb/en/news/news_release.2019.11.0602.html (GNB Press Release regarding Act);
- https://www2.gnb.ca/content/dam/gnb/Departments/ag-pg/PDF/en/LawReform/Notes43.pdf (Law Reform Notes 43 (April, 2020), including outline keys sections of the Act);
- https://www.canlii.org/en/nb/laws/stat/snb-2019-c-30/latest/snb-2019-c-30.html (link to the Act itself)