The COVID-19 pandemic has reminded us all of the need to support elderly persons in our communities. With January being Alzheimer’s Awareness Month, this blog focuses on a recent decision of the Ontario Superior Court of Justice, which highlights the vulnerability of the elderly who no longer have the cognitive ability to manage their financial affairs, and the powers of the Public Guardian and Trustee (“PGT”) to step in and seek the assistance of the courts to protect them.
It is also a good summary of some basic legal principles that arise often in estate litigation. See Public Guardian and Trustee v. Cherneyko et al. 2021 ONSC 107.
The PGT steps in
By way of an application heard on November 30, 2020, the PGT sought an order terminating the Continuing Power of Attorney that appointed Jean Cherneyko’s neighbour Kristina Munson as guardian for Jean’s property, on the basis that she was not capable of managing her property. By Judgment dated January 5, 2021, Kristina was removed and the PGT was appointed as permanent guardian of Jean’s property.
Jean is a 90-year old senior with cognitive impairment and a diagnosis of dementia. She had a niece, who lived out of the country, but no known children. Prior to her admission to a long-term care facility, she lived alone in her own home. In a short period of time, Jean entered into a series of transactions which had all the hallmarks of suspicious circumstances:
- On August 15, 2019, she attended at a law firm with Kristina, at which time she appointed Kristina as her Attorney for property and personal care. She also signed a new will making Kristina her estate trustee, and a residual beneficiary under her estate.
- On August 27, 2019, Jean and Kristin attended at Jean’s bank, where she transferred $250,000 to Kristina and $195,000 to her niece. These amounts totalled approximately half of Jean’s net worth.
- On August 31, 2019, Jean was admitted to hospital due to acute delirium and progressive cognitive decline; Kristina said that Jean had become increasingly confused in the preceding few months.
- On September 1, 2019, a physician examined Jean and noted that she had established dementia consistent with Alzheimer disease.
- On October 1, 2019, Jean was admitted to a long-term care facility.
- Shortly thereafter, Kristina’s son moved into Jean’s home.
The PGT initiated an investigation after Jean’s bank froze her accounts in March, 2020.
Gift or resulting trust?
The primary issues considered by the Court were as follows:
The sufficiency of the evidence
- The affidavit of a neighbour was not helpful since it related to the close relationship between Jean and Kristina, which was not at issue;
- The affidavit of the niece was self-serving, and the court gave it no weight;
- The affidavits of the PGT investigator and Kristina were rife with hearsay; however, there was no objection to the admission of hearsay evidence; and
- Kristina failed to keep receipts of expenses purportedly paid on Jean’s behalf, making it difficult for the court to determine exactly how much had been spent.
Whether the transfer of money to Kristina was a gift.
The court relied upon the leading Supreme Court of Canada case of Pecore v. Pecore, 2007 SCC 17, for the principle that where there is a gratuitous transfer of property, there is a presumption of a resulting trust rather than a gift.
- Kristina failed to rebut that presumption.
- The banker who was present at the time of the transfer of money and who had supposedly “approved it” and concluded that Jean understood the transaction did not give evidence.
- The funds paid to Kristina, purportedly to compensate her for acting as Jean’s Attorney, represented $2,000 per month, which was almost the amount charged to Jean by the long-term care facility. However, the language of the Power of Attorney provided that no attorney was to be paid at all for serving in this capacity.
The Court found that Jean lacked the capacity to make a gift – and that these funds were therefore impressed with a resulting trust in favour of Jean. Kristina was ordered to repay these funds.
Whether Kristina breached her fiduciary duty to Jean.
The Court found that
- Even if Jean presented as competent when she transferred the funds and the transfer was in accordance with Jean’s instructions, there were “alarm bells” which Kristina did not heed.
- She did not exercise the appropriate degree of caution and good judgment given the circumstance.
- Further, despite Jean’s financial resources, Kristina made no inquires about how they could be used to allow Jean to remain in her home. Nor did she list the home for sale so that Jean would have access to the sale proceeds.
- Instead, she moved her son in at low rent (and, for a period of time, no rent). She put her own interests, and those of her son, before Jean’s.
- Finally, she did not keep receipts and could not account for the funds of over $83,000 supposedly spent on Jean’s behalf. These expenditures were far greater than Jean spent on her own behalf when she was competent.
Kristina was ordered to repay these amounts too.
A heartbreaking conclusion
Reading this Judgment in the age of COVID-19 is particularly poignant, as we know that our vulnerable seniors living in long-term care facilities experience higher rates of infection and death.
Paragraph 48 of the Reasons for Judgment are heartbreaking:
The effects of the pandemic particularly on long term care residents in this province have been dire. It seems to me that since March 2020 more than at any time in the past, any genuinely concerned person charged with caring for an elderly person in long term care would have at least considered the issue of taking whatever steps could be taken to remove the person from this situation if it was in any way possible. I have seen no such evidence from [Kristina] on this application.