Pirie v Pirie, 2017 ABQB 104

Court of Queen’s Bench of Alberta Citation: Pirie v Pirie, 2017 ABQB 104 Date: 20170215 Docket: 1601 08378 Registry: Calgary Between: Reginald Jack Pirie, also known as Jack Pirie Applicant - and - Kim Mae Pirie, Neal Edward Pirie, Mark David Pirie, and Daphne Joy Pirie Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.J.

Hall _______________________________________________________ Background [ 1 ] This is an application to determine whether the Applicant had the mental capacity to revoke his 2008 Enduring Power of Attorney and to create a new Enduring Power of Attorney. The Respondents make a cross-application to determine whether the Applicant has the capacity to handle his own financial affairs. [ 2 ] Mr. Jack Pirie is 88 years of age.

He is married to Daphne Pirie, but he separated from her in late 2014 or early 2015 after some 53 years of marriage. [ 3 ] In 2008 Jack executed an Enduring Power of Attorney, appointing his three children and his wife jointly as his attorneys. It was what is known as a “springing” Power of Attorney, in that it was to take effect only when, through Jack’s mental incapacity or

infirmity, he could no longer make reasonable judgements in respect of matters relating to all or any part of his estate. [ 4 ] After separating from his wife, Jack started to look for a new wife. He hired a woman, who had a questionable background, to find him a wife. He paid her $25,000 for her efforts. She introduced Jack to Leslie. Jack spent three weekends with Leslie, then made a proposition to her that she live with him with a view towards marriage, but if it did not work out, he would pay her $100,000.

He set up an account into which he transferred $100,000 to secure this arrangement. [ 5 ] Jack’s attorneys became aware of this arrangement and the background to it, and were quite upset. They hired a lawyer to write to the matchmaker (who sought another $100,000 in fees, in a letter to Jack, which his children discovered). The lawyer warned off the matchmaker. According to Jack, the matchmaker showed the letter to Leslie, and Jack never heard from Leslie ever again. [ 6 ] Quarrels broke out between Jack and his children.

The children were concerned about Jack’s mental abilities, having found this recent conduct by him to be entirely out of character. [ 7 ] At the request of the children, Jack agreed to see Dr. Arlin Pachet, PhD, Clinical Psychologist, for an assessment. [ 8 ] Dr. Pachet’s assessment report stated that Jack suffered medium level dementia, with significant neurocognitive dysfunction, characterized by forgetfulness, executive dysfunction and poor insight. His report indicated severe executive functioning issues.

He did note in the report that Jack possessed adequate understanding and appreciation regarding the nature and purpose of an Enduring Power of Attorney. [ 9 ] Jack was unhappy with this assessment and made arrangements to attend the Mayo Clinic in Phoenix, Arizona for a further assessment. He was examined and assessed there by Dr. Bryan K. Woodruff, Neurologist. Dr. Woodruff determined, in his report, that Jack suffered from mild cognitive impairment, primarily demonstrating memory impairment, with some variable performance on executive tasks. Dr. Woodruff denied that Jack suffered from dementia. Dr.

Woodruff reported that, as long as Jack utilized strategies such as written reminders and other external memory supports, he should still be able to advocate for himself in terms of his day-to-day activities; including meeting with his lawyers and managing financial matters. Dr.

Woodruff noted that, generally, people with mild cognitive impairment retained capacity to engage in such decision making. [ 10 ] Jack’s children became aware of the results of this assessment but they were not convinced. [ 11 ] The Enduring Power of Attorney provided that the written declaration of the attorneys and of Jack’s attending physician would be conclusive proof that the contingency previously described had occurred, whereupon the Enduring Power of Attorney would become effective. The children approached Jack’s long time physician, Dr. Szabo. Dr.

Szabo, however, had been fired by Jack and Jack had obtained a new doctor, Dr. Williams. The children approached Dr. Williams, and on May 5, 2016 she signed a Declaration that Jack was not competent to make decisions regarding matters relating to his estate. On May 6, 2016 all of the named attorneys signed a like Declaration. The 2008 Enduring Power of Attorney was thereby activated. [ 12 ] Jack’s evidence is that this was done without him being consulted or advised. The Enduring Power of Attorney was activated both to his surprise and disgust. [ 13 ] However, having obtained the favourable opinion of Dr.

Woodruff as to his competence, Jack attended upon a lawyer of his choosing and executed a Revocation of his 2008 Enduring Power of Attorney, on July 22, 2016.

On the same date he executed a replacement Enduring Power of Attorney appointing his brother Glen as his attorney; in the alternative his long-time assistant Susanne Shaw; and in the further alternative Glen’s wife Sharon. [ 14 ] The parties have agreed that Jack’s three children owe Jack and his wife not less than $7,000,000.00 (Statement of Agreed Facts, para 9). [ 15 ] Jack has been requesting monies be re-paid to him, or to him and his wife, out of the loans that they have made to their children, or out of the company which he started and ran throughout his working life.

The children, however, are reluctant to make this payment to him, and so far they have not paid the requested funds to Jack or his wife. [ 16 ] At issue in this application is whether Jack’s 2016 Revocation of the 2008 Power of Attorney is valid, and whether his appointment of new attorneys in 2016 is valid. Also, by cross-application by the Respondents, there is an issue as to whether Jack has capacity to handle his own financial affairs. [ 17 ] Viva Voce evidence was heard on the application. Dr.

Woodruff gave his evidence, called by the Applicant (Jack), de bene esse ; there is in evidence a disk and a transcript of that evidence. Jack also called Dr. Shulman, Dr. Pachet, a home worker Kezia Vathsliwkenich and his brother Glen Pirie. As well, Jack himself gave evidence. [ 18 ] The Respondents called Jack’s son Neal Pirie and Jack’s long-time assistant Suzanne Shaw, as well as introducing an Affidavit of Mark Pirie, tendered by consent of opposing counsel. The Law [ 19 ] The Powers of Attorney Act , RSA 2000, c P-20, deals with Enduring Powers of Attorney.

It expressly permits the use of an Enduring Power of Attorney which becomes effective upon the mental incapacity or infirmity of the donor: section 2(1)(iii)(b). [ 20 ] The terms “mental incapacity” and “infirmity” are not defined by the Act . [ 21 ] The Act provides, at

section 3:

An enduring power of attorney is void if, at the date of its execution, the donor is mentally incapable of understanding the nature and effect of the enduring power of attorney. [ 22 ] The Act provides, at section 13(1): ...an enduring power of attorney terminates: (a) ...if it is revoked in writing by the donor at a time when the donor is mentally capable of understanding the nature and effect of the revocation; [ 23 ] The “donor” in the Act is the person who gives the Enduring Power of Attorney; in our case, it is Jack. [ 24 ] There is no question that the 2008 Enduring Power of Attorney was valid when made.

The issue before me is whether its Revocation in July 2016, and the execution of the replacement Enduring Power of Attorney on the same date are a valid Revocation and a valid appointment, respectively. [ 25 ] As shown by the excerpts from

section 3 and 13(1) of the Act , set out above, the determination that must be made is whether, at the time of the Revocation and new appointment, Jack was mentally capable of understanding the nature and effect of the Revocation and the nature and effect of the new Enduring Power of Attorney. [ 26 ] Counsel for Jack references the decision of this Court in Midtdal v Pohl , 2014 ABQB 646 ( Midtdal ). In that case Justice Moreau reviewed

section 3 of the Powers of Attorney Act in determining whether a donor had capacity to execute an Enduring Power of Attorney. She referenced the decision in Godelie v Ontario (Public Trustee) (1990), 21 ACWS (3d) 1251 (Ont Dist Ct) , which in turn relied upon a decision of the English Chancery Division, K (Enduring Powers of Attorney), Re (1987) [1988] 1 All ER 358 (hereinafter “ Re K ”).

In the Midtdal decision Justice Moreau states, at para 92: In K (Enduring Powers of Attorney), Re , the donor was suffering from “pre-senile dementia.” While at times lucid and capable of making decisions with full understanding of what she was doing, at other times she would become confused and suffer a loss of memory. Hoffman J held that it was not necessary for the donor to be capable of managing his or her property and affairs on a regular basis. Capacity to execute the power of attorney would be established if the donor understood that (

a) the attorney would be able to assume complete authority over the donor’s affairs; (

b) the attorney could do anything with the donor’s property that the donor could have done; (

c) that the authority would continue if the donor became mentally incapable; and (

d) would in that event become irrevocable without confirmation by the court. [ 27 ] It is clear from the decision that Justice Moreau accepted the recitation above as being a proper statement of the test as to whether a donor had capacity to execute an Enduring Power of Attorney. [ 28 ] Justice Moreau, at para 93, also noted that the British Columbia Court of Appeal had referred to the Re K principles in Egli (Committee of) v Egli , 2005 BCCA 627 . Justice Moreau adopted the test in Re K and applied it in her decision. [ 29 ] Justice Moreau’s decision deals with the test set out in

section 3 of the Powers of Attorney Act respecting the capability of a donor to execute an Enduring Power of Attorney. The test for Revocation of an Enduring Power of Attorney, set out in section 13(1)(

a) of the Act , utilizes the same test; ie for the Revocation to be valid the donor must be mentally capable of understanding the nature and effect of the Revocation. [ 30 ] If the test from Re K is the one to be applied, then there can be no doubt that the 2016 Revocation and the 2016 Enduring Power of Attorney are both valid. It was clear from the evidence given by Jack that he fully understood the four elements of the test as stated. Further, Dr. Pachet and Dr.

Shulman both confirmed that, based upon that test, the Revocation and the new appointments were valid. [ 31 ] However, counsel for the Respondents maintains that the test finds its genus in Banks v Goodfellow (1870), LR 5 QB 549 (Eng QB). He notes the rationale for the Banks v Goodfellow test is under attack, and so should be the test as set out in Re K . He argues that the test set out in Re K is a test developed by common law rather than through legislation. He says the test should evolve with time.

He argues that the test provides the “what” that is required to revoke an enduring Power of Attorney and replace it with a new one, but that test does not consider the “why”; why is the donor making this change? Is the change the donor is making a rational and reasonable one, or is his reasoning flawed by reason of mental illness? [ 32 ] Dr. Pachet gave his opinion that the test should include an analysis as to the rationale for the Revocation and new appointment.

He says further that, if the court looks at the rationale in this case, Jack’s reasons for the change are misguided because of his mental infirmity of dementia. (It should be noted, however, that even Dr. Pachet acknowledged that having one’s estranged spouse and one’s primary debtors as his attorneys is not a very acceptable solution). [ 33 ] Dr. Shulman also favoured a consideration of “why” when applying the test. He said the Court has a difficult task in making a determination as to whether Jack’s reason for making these changes is rational or irrational due to mental illness. [ 34 ] Dr.

Woodruff was not asked these questions. However his opinion was that Jack is able to manage his financial affairs, such that the question would not naturally arise. The mild cognitive impairment that he identified in his assessment of Jack did not affect his ability to make a rational decision.

Analysis [ 35 ] I am not convinced that I should depart from the test as adopted by this Court in Midtdal . A person should be able to execute or revoke an Enduring Power of Attorney so long as he understands the nature and effect of what he is doing; and that should be the case even if, at the time, he is not capable of minding his own affairs by virtue of mental infirmity. The Court would start down a slippery slope, if, in performing this analysis, it attempted to determine the extent to which the decision was rational or appropriate.

The purpose of the Powers of Attorney Act and Enduring Powers of Attorney is to allow the donor to protect against infirmity, without surrendering to the Court the decision as to who should act as his attorney. [ 36 ] Further, if I was to consider the “why” as urged by counsel of the Respondents, so as to incorporate the question as to the legitimacy of Jack’s rationale for making the change that he has made, I would consider that he has expressed ample reasons for his decision to change his attorney from his estranged wife and children to his brother and the two alternatives.

He says his children are treating him like a child; he says he should be entitled to his own money; he says decisions as to his financial affairs should not be controlled by his estranged wife, nor his children who are his major debtors; and he says that his brother is loyal and is a businessman whom he trusts; likewise, he trusts the alternates. [ 37 ] The opinions of the doctors differ as to the level of Jack’s infirmity. Dr. Pachet found that Jack suffers from dementia, ie a disease of the mind that has progressed further than that found by Dr.

Woodruff, who found Jack to have a mild cognitive impairment. [ 38 ] Dr. Pachet, in coming to his conclusion, said that Jack had an “unjustified concern of malfeasance by his children”. He seems to have accepted the children’s assertion that they intended to act and were acting in their father’s best interest, whereas he rejected Jack’s opinion that they were unjustified in refusing to provide him with the money that they owed to him. [ 39 ] Dr.

Shulman noted that Jack presented with a history of very high premorbid functioning and intelligence, but felt that Jack’s recent history was consistent with a “significant decline in cognition associated mainly with disinhibition, poor judgement and behavioural changes”. He agreed with Dr. Pachet’s finding that Jack was not capable of managing his assets independently, although he felt that Jack could be included in the decision making process by his attorneys. [ 40 ] Dr.

Shulman was not prepared to find whether Jack’s rationale for wanting to make the change to his brother as his attorney was a rational one, or was impaired by mental infirmity. [ 41 ] I am of the opinion that Jack has expressed ample reasons for his decision to change his attorney from his estranged wife and their children, to his brother or the two alternates. [ 42 ] In the result, I find that the July 2016 Revocation of the 2008 Power of Attorney and the execution of a new Enduring Power of Attorney in July 2016 are valid as they were both competently executed and meet the test set out in Midtdal . [ 43 ] The Respondents have cross-applied to say that I should declare that Jack Pirie is incapable of handling his financial affairs. [ 44 ] The July 2016 Enduring Power of Attorney is expressed, not as a springing Power of Attorney, but rather to take effect immediately upon execution.

That is to say, by virtue of my decision above, Glen Pirie is now Jack’s Enduring Attorney. No declaration as to Jack’s mental status is necessary to affect that result. I am of the view, therefore, that in these circumstances it is not necessary for me to make the determination requested in the cross-application, and I decline to do so. [ 45 ] The parties may speak to me regarding costs. Heard on the 4 th day of January, 2017 to the 6 th day of January, 2017. Dated at the City of Calgary, Alberta this 15 th day of February, 2017. R.J. Hall J.C.Q.B.A. Appearances: John E.S. Poyser for the Applicant

R.D. Boettger, Q.C. for the Respondents