Duty of an attorney

In the very recent Court of Appeal decision in  Richardson Estate v. Mew, 2009 ONCA 403 an argument was made that an attorney, acting under a power of attorney, could have made a change in an insurance designation to benefit the attorney.  The Court made short work of that argument pointing out that an attorney must, in general, act for the interests of the donor.

 

Presumably, the Court’s ruling does not impact on powers of attorney, say securities transfer documents, granted for consideration, that are clearly for the benefit of the attorney.  That issue, however, is for another day.

 

The Court held:

 

[46]          Section 32(1) sets out the duties and standard of care of a guardian of property.  It provides that:

 

A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit.

 

[47]          Section 32(1) did not change the common law. Rather, it codified the obligations and the standard of care of an attorney at common law: Banton v. Banton (1998), 164 D.L.R. (4th) 176 ( Ont. S.C.), at p. 241. 

 

[48]          In Banton, Cullity J. held that while an attorney acting under a continuing power of attorney is always a fiduciary, the scope of the attorney’s fiduciary duties depends on whether the donor of the power is incapable at the time of the transaction.  If the donor is mentally incapable, the attorney’s position approaches that of a trustee.  If not, the relationship between donor and attorney is similar to one of agency.  At p. 239 of Banton, Cullity J. explains:

 

An attorney for a donor who has mental capacity to deal with property is merely an agent and, notwithstanding the fact that the power may be conferred in general terms, the attorney's primary responsibility in such a case is to carry out the instructions of the donor as principal. As an agent, such an attorney owes fiduciary duties to the donor but these are pale in comparison with those of an attorney holding a continuing power when the donor has lost capacity to manage property. … The attorney [for an incapacitated donor] must make decisions on behalf of the donor and, pursuant to sections 32 and 38 of the Substitute Decisions Act, 1992, he or she is a "... fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person's benefit". The status of such an attorney is much closer to that of a trustee than an agent of the donor.

 

[49]          As a fiduciary, Ms. Ferguson was obliged to act only for the benefit of Mr. Richardson, putting her own interests aside: see Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, at para. 125.  In Elgi (Committee of) v. Elgi (2004), 28 B.C.L.R. (4th) 375 (S.C.), aff’d (2005), 262 D.L.R. (4th) 208 (B.C.C.A.), Garson J. described the prohibition against using a power for the attorney’s profit, benefit or advantage at para. 82 in the following way:

 

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members. [Citations omitted.]