2023 MBKB 109, 2023 MBKB 109

Date: 20230630 Docket: CI 17-01-11988 (Winnipeg Centre) Indexed as: Drewniak v. Smith et al. Cited as: 2023 MBKB 109 COURT OF KING’S BENCH OF MANITOBA B E T W E E N: KATHERine ISABEL DREWNIAK, ) Dana J. Nelko ) Emily A. Rempel applicant, ) for the applicant ) - and - ) ) Ian B. Scarth MARGARET ELEANOR SMITH and ) for the respondents MARGARET GABRIELLE SMITH, ) respondents. ) ) JUDGMENT DELIVERED: ) June 30, 2023 GRAMMOND J.

Introduction [ 1 ] The applicant seeks an order that the enduring Power of Attorney executed by the respondent Margaret Gabrielle Smith (the “Donor”) on November 29, 2016 (the “2016 POA”) is invalid and should be set aside due to undue influence, or alternatively a lack of mental capacity. The parties have filed multiple affidavits in this proceeding, conducted cross-examinations on those affidavits, and conducted seven witness examinations pursuant to Court of King’s Bench Rule 39.

Background [ 2 ] The applicant and the respondent, Margaret Eleanor Smith (the “respondent”) are sisters, and the Donor is their mother. From 2003 to 2016, the applicant held the Donor’s power of attorney, and the respondent was named as the alternate attorney. [ 3 ] The applicant does not seek an accounting or allege any financial wrongdoing by the respondent since the 2016 POA was executed.

During her tenure as attorney the respondent has continued to employ the same accounting and investment advisors to manage the Donor’s substantial estate as did the applicant prior to the execution of the 2016 POA. [ 4 ] A timeline of pertinent events is as follows. [ 5 ] On September 24, 2012, the Donor’s family doctor, Dr.

Hauch, wrote a letter to the Canada Revenue Agency advising that “…in August 2005 [the Donor] started to develop some cognitive impairment and memory issues secondary to her stroke. …This cognitive impairment continued to increase and by 2007 she was beginning to have other issues with her memory…”. [ 6 ] Having said that, on February 22, 2013 the Donor executed a will naming the applicant and a financial institution as co- executors, with the respondent as the alternate executor.

The validity of that will is not before me, but neither side appears to contest the Donor’s capacity to have made it. [ 7 ] On November 29, 2013, the Donor attended a meeting with her financial advisors to discuss an early gifting plan (the “Gifting Plan”), pursuant to which payments would be made to her children and grandchildren. Thereafter, the Donor made substantial gifts to her grandchildren in the summer of 2014 and in November 2015. Again, no issue has been taken with her capacity to do so.

[ 8 ] The respondent deposed that in 2014 the Donor began to complain to her about the applicant’s “mismanagement of her finances”, and that the Donor said the applicant was “…over-bearing and was restricting [the Donor] from her banking information”. As argued by the applicant, there is no corroborative evidence of the respondent’s assertions in this regard.

At the hearing of this matter, the parties agreed that the Donor is now without mental capacity, and accordingly there is no evidence on the record from the Donor with respect to this issue. [ 9 ] In the fall of 2014 the applicant and the respondent had a falling out. The applicant says it was a misunderstanding.

The respondent says she opposed a $50,000.00 gift that the applicant intended to make to a cousin, that would ultimately be paid from the funds of the Donor and/or the Donor’s sister. [ 10 ] The respondent deposed that in 2015 the applicant’s husband received a $5,000.00 loan [1] and a $5,000.00 gift from the Donor to purchase a new vehicle, regarding which she did not question the applicant. [ 11 ] The respondent deposed that the Donor’s complaints about the applicant continued in 2015 and 2016. [ 12 ] On May 19, 2016, the Donor was seen by a neurologist, Dr.

Anang, who opined that “there is evidence of cognitive impairment affecting predominantly the amnestic (memory) domain but also involvement of visuospatial, attention and executive domains to a lesser extent… She has agreed to be referred to the clinic for adults with early cognitive difficulties” [emphasis added]. [ 13 ] The first occasion on which the respondent appears to have told the Donor’s advisors about any concerns was on June 28, 2016 when she sent an e-mail to John Poyser, a lawyer who had acted for the Donor in the past, relative to the Donor’s will.

The e-mail reflected that “Personally, I don’t think [the Donor] is capable of making the decision to remove [the applicant] as Executor. One minute she seems lucid, and the next she isn’t. She seems to have difficulty holding on to anything you tell her. Even for 5 – 10 minutes”. The e-mail also reflected that the respondent was concerned about how the applicant was managing the Donor’s assets, and that she felt the applicant was using the Donor’s money “as her own bank account”.

On cross-examination, the respondent stated that she was expressing the Donor’s concerns in the e-mail, that the Donor asked her to write the e-mail, and that she did not have any evidence to support her statement. [ 14 ] On August 25, 2016 Dr. Anang reported that the Donor had “[c]ognitive impairment with prominent amnestic and behavioural features probably meeting criteria for dementia”. [ 15 ] Also on August 25, 2016, the respondent contacted the Donor’s investment advisor, Mr. McCartney, and asked about an impending gift to the Donor’s grandchildren.

The respondent later advised the applicant that she did so to confirm whether Mr. McCartney had spoken with the Donor about the gift, which he had not done. Rather, Mr. McCartney had communicated only with the applicant. The applicant admitted that she became very angry with the respondent for doing so, because the gift was part of the Gifting Plan. [ 16 ] On August 30, 2016 the applicant and respondent exchanged text messages which reflect that the Donor had forgotten about the Gifting Plan. [ 17 ] On September 1, 2016, the respondent e-mailed Mr.

Poyser’s office and requested an appointment with him, so he could assess the Donor. [ 18 ] On September 14, 2016, the respondent e-mailed the applicant and asked a series of questions about gifts made or to be made from the Donor’s estate. The respondent also asked for a copy of the power of attorney under which the applicant was acting.

On the same date, the applicant responded and stated “…you’re really scaring me with going from not asking any questions about the … transfers and guessing that there are problems with the way I take care of Mom’s affairs … I have honestly assumed that you remembered what had been planned years ago.” The respondent advised the applicant that she was aware of the impending gifts under the Gifting Plan, but was unsure of the final amount.

The applicant and respondent agreed that no further steps would be taken relative to the gifts until November 2016. [ 19 ] On October 5, 2016, the Donor wrote a handwritten note to Mr. Poyser, asking for copies of her will, health directive and power of attorney. On October 7, 2016, Mr. Poyser wrote to the Donor and stated, among other things, that: I also have an email from one of your daughters suggesting that your mental capacity no longer allows you to handle your own affairs. The email also suggests your daughters are locked in a dispute over how your affairs are being handled under your Power of Attorney.

Unfortunately, in those circumstances I cannot release copies of your file documents on the strength of your note. I need to speak with you and assess your capacity myself. [ 20 ] On October 19, 2016, the Donor spoke to Ms. Elona McGifford, the lawyer who prepared the 2016 POA, on the telephone. Ms. McGifford noted that “she sounds very competent”. [ 21 ] On October 24, 2016, the respondent sent an e-mail to Ms. McGifford stating “I understand from my mother that you have spoken on the phone, but she is very unclear if you and she are going to be meeting.

If you have made an appointment to see her, could you confirm with me … She doesn’t remember how to retrieve her phone messages”.

[ 22 ] On October 25, 2016, the Donor spoke to Mr. Poyser on the telephone and he concluded that she was competent to request and receive copies of her will and existing power of attorney. The Donor asked Mr. Poyser who she had appointed previously as power of attorney and he advised that it was the applicant. The Donor advised Mr. Poyser, among other things, that:

a) the applicant was away for a month, and held the Donor’s mail during that time;

b) the applicant said that the Donor was not competent, which made her mad;

c) the applicant tends to act unilaterally and had been bossy, which the Donor and the respondent think is wrong;

d) the Donor might want to change her power of attorney; and

e) the Donor knew that the applicant was trying to be helpful, but that she was handling all of the investments, which was wrong. [ 23 ] Mr. Poyser noted that the Donor “ may be competent”, and acknowledged that his discussion with her was insufficient to determine whether she could change her power of attorney, because that was not the purpose of the call. [ 24 ] On October 27, 2016, the respondent advised Ms.

McGifford in an e-mail: “I am worried about my mother’s capacity to change her POA … [b]ut I believe you will assess her when you are speaking to her.” [ 25 ] On November 1, 2016, the Donor was seen by a neurologist, Dr. Hughes, who stated that her “…mental processing appears to be good, but her memory is letting her down quite severely”. [ 26 ] On November 8, 2016, the applicant advised the respondent that a full report of the Donor’s investment and banking records, assets and expenses would be provided. [ 27 ] On November 29, 2016, Ms. McGifford met with the Donor at which time the 2016 POA was executed. Ms.

McGifford prepared a detailed memorandum to file after the meeting, reflecting, inter alia , that:

a) Ms. McGifford and the Donor had spoken on the phone twice previously about the Donor’s wish to change her power of attorney;

b) the Donor had intended to meet with Mr. Poyser to prepare a new power of attorney, but he advised her that there was a conflict of interest that prevented him from doing so;

c) Ms. McGifford did not understand until the meeting date that the Donor did not trust what the applicant was doing;

d) The Donor advised Ms. McGifford that:

i) she did not like the way the applicant was dealing with her affairs; ii) she no longer trusted the applicant to act as her attorney since the applicant had not been showing her bank account statements [2] or sharing information about transactions, including possible gifts to grandchildren and a great-grandchild; iii) the Donor was not comfortable with the applicant continuing to control her banking or take her mail; and iv) the Donor did not believe that the applicant was acting in her best interests;

e) the Donor was a “little confused” as to whether she was allowed to change her power of attorney, and she got the notion of an attorney and executor mixed up, which did not concern Ms. McGifford, because it is not uncommon;

f) the Donor was able to describe her assets and basic expenses, but Ms. McGifford did not get the sense that the Donor could do her own banking, despite a general understanding of what expenses would have to be paid;

g) the Donor provided personal details to Ms. McGifford, including information about her family members, accountant, and financial planners;

h) the Donor did not know until the respondent told her that she had signed documents to have the applicant put as her joint account holder. The Donor said that these accounts should not fall to the applicant by right of survivorship; and

i) the Donor trusted the respondent, and recognized that since the respondent does not reside in Winnipeg, it would be more difficult for her to act as attorney, but she wanted her to get the Donor’s banking information and make decisions where needed, including when the Donor no longer has capacity. [ 28 ] Ultimately, Ms. McGifford concluded that the Donor was mentally capable of understanding the nature and effect of the 2016 POA, and swore an affidavit of execution to that effect. [ 29 ] On December 14, 2016, the Donor met with Mr.

Frostiak, her accountant, and told him that she had switched her power of attorney to the respondent. She said that she was concerned that her money was not being handled properly by the applicant, or that it was being dissipated and was gone, or that the applicant was taking money from her. She was very upset and crying during the meeting, which Mr. Frostiak attributed to her concerns and to the dispute between the applicant and respondent.

[ 30 ] On December 15, 2016, the Donor met with Mr. McCartney, her financial advisor, and advised him that the 2016 POA represented a “changing of the guard”. [ 31 ] On December 22, 2016, the Donor was assessed by the Geriatric Assessment Team at Deer Lodge Centre, who reported that:

a) the Donor was somewhat repetitive in conversation, and struggled with word finding;

b) the Donor had insight into her memory changes, acknowledging that her short-term memory was not the best, and admitting to frustration with word finding;

c) the Donor’s MMSE [3] score was 27/30;

d) the Donor advised that the applicant had previously managed her finances, but that her power of attorney was switched to the respondent;

e) the Donor was aware that this issue was causing stress within the family, but advised that her decision was based upon wanting to see monthly accounting statements;

f) the applicant made the Donor feel “unsettled and anxious”, while the respondent was more calming;

g) the Donor reported that the applicant “stresses her out and always has due to her strong personality”; and

h) the Donor acknowledged worry over the current family dynamics with the recent change in POA but stands by the decision that she and her sister Eileen have made. [ 32 ] On or about January 7, 2017, the Donor again met with Mr. McCartney and told him that she wanted the respondent to look after her affairs. He noted that “she seemed able to grasp the situation and her account review”. [ 33 ] On or about January 17, 2017, Dr. Hughes assessed the Donor’s capacity to assign the responsibilities of a POA, at the request of the applicant.

He opined that the Donor had the requisite capacity to make the 2016 POA, stating: … my impression is that her cognitive deficits principally relate to short-term memory. Her insight and her judgment appear to be relatively preserved. In particular, she was able to explain to me the rationale for having assigned financial POA to her younger daughter. I can see no reason why [the Donor] would lack the decision-making capacity to assign POA to family members of her choosing.

He added that “…a more in-depth assessment of [the Donor’s] decision-making capacity might be obtained by requesting an assessment from … psychiatry”. Issues [ 34 ] The applicant argued that the presence of undue influence was the primary ground upon which the 2016 POA should be set aside, and advanced a lack of mental capacity as an alternative argument. I have determined that I will consider first the issue of the Donor’s capacity, followed by the allegations of undue influence.

Accordingly, I have characterized the issues before me as: 1) Did the Donor have the requisite capacity to execute the 2016 POA?; and 2) If the Donor had capacity, was she unduly influenced by the respondent to make the 2016 POA? Issue 1: Did the Donor Have the Requisite Capacity to Execute the 2016 POA? The Law [ 35 ] Section 10(3) of The Powers of Attorney Act , C.C.S.M. c.

P97 , provides that: Capacity of donor when power executed 10(3) An enduring power of attorney is void if at the time of its execution the donor is mentally incapable of understanding the nature and effect of the document. [ 36 ] In my view, s. 10(3) requires that I consider the issue of the Donor’s capacity before considering the allegations of undue influence. Section 10(3) is potentially dispositive of this application, in that if it applies in this case, the 2016 POA is void and must be set aside.

The Act does not contain any provisions that speak to undue influence or the impact upon the validity of a power of attorney where undue influence is found. [ 37 ] Pursuant to the common law, there is a presumption that an adult has the mental capacity to execute a power of attorney, and the law is clear that a competent donor has the ability to appoint and replace their attorney at any time ( Robertson v. Harding , 2018 MBCA

67, at para. 44). [38] As the court stated in Young v. Paillé et al, 2012 MBQB 3, at paras. 33 and 34, citing Vout v. Hay, (SCC),[1995] 2 S.C.R. 876, the person challenging the validity of a power of attorney (in this case the applicant) bears the onus of proving thatthe Donor lacked capacity at the material time.

Having said that, if the applicant can establish the existence of suspicious circumstances,the onus would shift to the respondent to show that the Donor had the requisite mental capacity to execute the 2016 POA. [39] The court in Vout commented upon the law of suspicious circumstances, and the shifting onus relative to the validity of a will, asfollows: 25 … [S]uspicious circumstances may be raised by (1) circumstances surrounding the preparation of the will, (2) circumstancestending to call into question the capacity of the testator, or (3) circumstances tending to show that the free will of the testator wasoverborne by acts of coercion or fraud. … 26 Suspicious circumstances in any of the three categories to which I refer above will affect the burden of proof with respect toknowledge and approval. … Although the propounder of the will has the legal burden with respect to due execution, knowledge andapproval, and testamentary capacity, the propounder is aided by a rebuttable presumption.

Upon proof that the will was duly executedwith the requisite formalities, after having been read over to or by a testator who appeared to understand it, it will generally be presumedthat the testator knew and approved of the contents and had the necessary testamentary capacity. 27 Where suspicious circumstances are present, then the presumption is spent and the propounder of the will reassumes the legalburden of proving knowledge and approval. In addition, if the suspicious circumstances relate to mental capacity, the propounder of thewill reassumes the legal burden of establishing testamentary capacity.

Both of these issues must be proved in accordance with the civilstandard. [40] The court in Young stated that these principles apply in the context of a power of attorney, and confirmed that the standard ofproof applicable to both the establishment of suspicious circumstances and the establishment of the requisite mental capacity is a balanceof probabilities. [41] The law also provides that the requisite capacity to execute a power of attorney is less than that necessary to execute a will. Asset out in Dubois v.

Wilcosh, 2007 MBQB 20, at paras. 16 and 17 and Young at para. 32, a donor must understand that the powergranted to an attorney:

a) is the complete authority to act in all financial matters;

b) will extend to the attorney the power to do anything with the donor’s property that they could have done;

c) will continue if the donor becomes incompetent; and

d) will become irrevocable upon the donor’s incompetence. [42] Having said that, the law is clear that the obligations of a lawyer taking instructions for a power of attorney are significant. InDubois, the court quoted from a 1999 Manitoba Law Reform Commission Report which provided that: [17] …The duty imposed in a lawyer taking instructions for a will is onerous. He or she must be satisfied, by way of personal inquiry,not only that true testamentary capacity exists, but that the instructions are freely given and that the client understands the effect of thewill.

A solicitor cannot discharge this duty by asking perfunctory questions, receiving apparently rational answers, and simply recordingthe words expressed by the client in legal form. … The lawyer’s duty to substantiate competence is particularly important if there are suspicious circumstances, such as doubt being cast onthe client’s capacity to either make a will or understand and approve the will’s contents.

For example, when dealing with clients whosecompetence may be in question, it is essential that the lawyer investigate any formal wills, to discover the reasons for any contemplatedvariation or changes. [43] The court in Dubois also stated: [17] The importance of fulfilling this obligation and making adequate notes has been underscored in Slobodianik v. Podlasiewicz, 2003MBCA 74….

In connection with the preparation of a power, Report 102 at page 19 states: If the lawyer has concerns about the donor’s competence, it may be necessary (with the donor’s permission) to arrange for a formalassessment by a physician, psychiatrist, or psychologist. The obligation to make adequate inquiries and meaningful notes applies equally in the preparation of an enduring power of attorney as inthe case of preparation of a will. The extent of the inquiries will vary depending on the circumstances.

[44] In Slobodianik v. Podlasiewicz, 2003 MBCA 74, the court commented upon the duty of a lawyer taking instructions for a willwhere suspicious circumstances are raised. The court cited Murphy v. Lamphier, [1914] O.J. No. 32 (QL), 31 O.L.R. 287, a 1914decision of the Ontario High Court, where the court stated: 120 A solicitor is usually called in to prepare a will because [they are] a skilled professional… . [They have] duties to perform whichvary with the situation and condition of the testator.

In the case of a person greatly enfeebled by old age or with faculties impaired bydisease, and particularly in the case of one labouring under both disabilities, the solicitor does not discharge [their] duty by simply takingdown and giving legal expression to the words of the client, without being satisfied by all available means that testable capacity existsand is being freely and intelligently exercised in the disposition of the property. The solicitor is brought in for the very purpose ofascertaining the mind and will of the testator… [45] The court in Slobodianik also cited Peters (Estate of) v.

Ewert, 2002 BCSC 1540, where the court stated: 93 … [the solicitor] did not go far enough, given the suspicious circumstances … to substantiate testamentary capacity. Furtherinquiries needed to be made to ascertain … capacity. Perhaps those inquiries were made, but if so, they were not documented and [thesolicitor] has a very limited recollection of their conversations.

If a solicitor has good reason to be concerned about testamentarycapacity – and such seemed clearly to be the case here – then a systematic assessment of the testator’s capacity should take place, and ifdoubts remain then there should be an assessment by a physician or a psychologist. [46] The court in Slobodianik also quoted Scott v. Cousins, [2001] O.J.

No. 19 (QL), 102 A.C.W.S. (3d) 457, where the court stated: 70 … At the very least, the solicitor must make a serious attempt to determine whether the testator … has capacity and, if there is anypossible doubt - or other reason to suspect that the will may be challenged – a memorandum, or note, of the solicitor’s observations andconclusions should be retained in the file [citations omitted]. Some of the authorities go further and state that the solicitor should notallow a will to be executed unless, after diligent questioning, testing or probing he or she is satisfied that the testator has testamentarycapacity.

This, I think, may be a counsel of perfection and impose too heavy a responsibility. In my experience, careful solicitors whoare in doubt on the question of capacity, will not play God – or even judge – and will supervise the execution of the will while taking,and retaining, comprehensive notes of their observations on the question. [47] The court in Slobodianik also stated: 31 The decision of Abrahamson Estate, Re, (MBKB), relied on for support by the trial judge, stands in starkcontrast to the facts before this court.

In that case, the solicitors who took instructions to prepare a will (in suspicious circumstances)were fully aware of their obligations, made extensive notes, and satisfied themselves by pertinent and lengthy questions that the testatrixpossessed sufficient capacity to execute a will. 32 In my opinion, Mr. Iwanchuk’s evidence simply does not meet the obligation expected of a lawyer in circumstances such as thosebefore us. There were no notes; conclusions were expressed but the factual background required to justify these conclusions was eitherabsent or substantially lacking in detail.

The testator was not examined in any meaningful way as to his ability to understand. There wasno systematic assessment of the testator’s capacity, and no detail was provided to enable the court to determine whether adequate stepshad been taken to satisfy the question of testamentary capacity. Analysis [48] I have considered the evidence that relates to the Donor’s capacity. It is clear that she has a history of medical issues that startedin approximately 1996 when she suffered a stroke.

Thereafter, and prior to the execution of the 2016 POA, she also suffered a heartattack, a broken hip and pelvis, seizures, and some cognitive impairment. [49] I will comment first upon Ms. McGifford’s evidence. It is clear from the respondent’s October 24 and 27, 2016 e-mails to Ms.McGifford that she was forewarned about potential issues with the Donor’s capacity to grant a new power of attorney. In addition, theDonor was 85 years of age when she executed the 2016 POA, and was suffering from some cognitive impairment.

Having said that, Ms.McGifford had two telephone conversations with the Donor prior to the meeting at which the 2016 POA was executed, and I am satisfiedthat she turned her mind to whether the Donor had the requisite capacity to do so. [50] Ms. McGifford testified on cross-examination that once she is satisfied that a client has capacity to make a power of attorney, ifthere are no other reasons not to proceed, the client need not justify to her why they want to grant the new power. In this case,nevertheless, Ms.

McGifford’s memorandum to file reflects several reasons communicated by the Donor as to why she wanted toterminate the applicant’s power of attorney and grant the same power to the respondent. [51] The applicant argued that Ms. McGifford did not ask common sense questions relating to the Donor’s medical condition, that shecould have inquired of Mr. Frostiak whether the Donor was receiving financial statements, and that she could have called Mr. Poyser todiscuss the Donor’s capacity. [52] Although Ms.

McGifford could have elected to ask more questions relative to the Donor’s medical condition, I note that withintwo months of the execution of the 2016 POA, Dr. Hughes concluded that the Donor had the requisite capacity to grant it. Similarly, theDeer Lodge Geriatric Assessment team provided, in December 2016, a favourable assessment relative to the Donor’s cognition. As such,

I am not satisfied that additional inquiries would have changed Ms. McGifford’s assessment of the Donor’s capacity after two telephoneconversations with her and the meeting at which the 2016 POA was executed. I am satisfied that the extent of Ms. McGifford’sassessment was satisfactory. [53] I appreciate that Ms. McGifford was unaware of the details of the Gifting Plan, but her memorandum to file reflects that theDonor “…opened separate accounts for the grandchildren a few years ago instead of doing gifts under her Will”, and in my view the lackof detail given to Ms.

McGifford does not reflect a lack of capacity on the part of the Donor. Certainly, Ms. McGifford was aware of therespondent’s concerns with respect to the Donor’s capacity, and with those concerns in mind, it was open to her, after speaking with theDonor directly, to conclude that the Donor had the requisite capacity. I am satisfied that the extent of Ms.

McGifford’s assessment wassufficient to satisfy herself that the Donor had capacity to execute the 2016 POA, that the Donor’s instructions were given freely, andthat she understood the effect of the document. [54] The applicant argued that a competent person should not be able to change a longstanding power of attorney without anyadditional questions being asked, or a more in-depth analysis being done. I simply do not agree. The court in Robertson stated clearlythat a competent donor has the ability to appoint and replace their attorney at any time.

If a lawyer is satisfied that a donor is competentpursuant to the tests set out in s. 10(3) of the Act and in Dubois, there is no need to make further inquiries, or investigate the Donor’smotives for changing their power of attorney, subject, of course, to the presence of suspicious circumstances. [55] The applicant acknowledged that when the Donor met with Ms. McGifford, she knew that she had significant assets, that sheneeded help, and what execution of the 2016 POA would accomplish.

The applicant also acknowledged that during her tenure as theDonor’s attorney, prior to the execution of the 2016 POA, she involved the Donor in financial discussions and the management of herfinances. All of these factors are consistent with the Donor having capacity to execute the 2016 POA. [56] The applicant has not provided any direct evidence that the Donor was mentally incapable of understanding the 2016 POA whenit was executed, or that would tend to negative the existence of capacity.

As such, I have concluded that the applicant has not met theonus of proving either that the Donor lacked capacity at the material time or that suspicious circumstances existed relative to the Donor’scapacity. I am not satisfied that the Donor was mentally incapable of understanding the nature and effect of the 2016 POA at the time ofits execution for the purposes of s. 10(3) of the Act. [57] Moreover, I am satisfied, based upon the evidence before me, including Ms.

McGifford’s memorandum to file, that the Donorunderstood, at all material times, that the 2016 POA would grant to the respondent the complete authority to act in all financial matters,including the power to do anything that the Donor could have done, and that the 2016 POA would continue if the Donor becameincompetent. Ms.

McGifford’s memorandum to file reflects that the Donor “…trusts that [the respondent] will look after her accoutns[sic] when she no longer has capacity”. [58] I note the applicant’s argument that if the Donor’s capacity was partially compromised at the material time, such that she wasvulnerable, less pressure or coercion would have been needed to effect a change to the power of attorney. I will consider that argumentbelow, as it relates to the applicant’s allegations of undue influence. Conclusion on Capacity [59] I have concluded that the Donor had the requisite capacity to make the 2016 POA.

Issue 2: Was the Donor Unduly Influenced by the Respondent to Make the 2016POA? The Law [60] I will comment first upon the law of undue influence generally. As I noted in Re Estate of Rose May Hazlitt, 2017 MBQB 184,citing Vout, undue influence is an affirmative defence raised by a party attacking the validity of a document, and that party bears theonus of proof. [61] Having said that, as set out above the court in Vout also commented upon the law of suspicious circumstances, and the shiftingonus of proof.

With respect to undue influence, the court stated: 28 … it has been authoritatively established that suspicious circumstances, even though they may raise a suspicion concerning thepresence of … undue influence, do no more than rebut the presumption…. This requires the propounder of the will to prove knowledgeand approval and testamentary capacity. The burden of proof with respect to fraud and undue influence remains with those attacking thewill. See Craig v. Lamoureux, (UK JCPC), [1920] A.C. 349; Riach v.

Ferris, (SCC), [1934] S.C.R.725; Re Martin, supra. 29 It may be thought that proof of knowledge and approval will go a long way in disproving undue influence. Unquestionably there isan overlap. If it is established that the testator knew and appreciated what he was doing, in many cases there is little room for a findingthat the testator was coerced. Nonetheless there is a distinction. This distinction was aptly expressed by Ritchie J. in Re Martin.

Atpages 765-66, he stated: There is a distinction to be borne in mind between producing sufficient evidence to satisfy the Court that a suspicion raised by thecircumstances surrounding the execution of the will have been dispelled and producing the evidence necessary to establish an allegationof undue influence. The former task lies upon the proponents of the will, the latter is a burden assumed by those who are attacking the

will and can only be discharged by proof of the existence of an influence acting upon the mind of the testator of the kind described byViscount Haldane in Craig v.

Lamoureux [ (UK JCPC), [1920] A.C. 349], at p. 357 where he says: Undue influence, in order to render a will void, must be an influence which can justly be described by a person looking at the matterjudicially to have caused the execution of a paper pretending to express a testator's mind, but which really does not express his mind, butsomething else which he did not really mean. [emphasis added] The distinction to which I have referred is well described by Crocket J. in Riach v.

Ferris, supra, at p. 736 where he says: Assuming that in the case on behalf of a plaintiff seeking to establish the validity of a will, there may be such circumstances of apparentcoercion or fraud disclosed as, coupled with the testator's physical and mental debility, raise a well-grounded suspicion in the mind of thecourt that the testator did not really comprehend what he was doing when he executed the will, and that in such a case it is for theplaintiff to remove that suspicion by affirmatively proving that the testator did in truth appreciate the effect of what he was doing, there isno question that, once this latter fact is proved, the onus entirely lies upon those impugning the will to affirmatively prove that itsexecution was procured by the practice of some undue influence or fraud upon the testator.

A person may well appreciate what he or she is doing but be doing it as a result of coercion or fraud. [62] As I stated in Hazlitt, the law in Manitoba is unsettled relative to whether the foregoing test should be applied when consideringundue influence in the context of executing of a power of attorney.

Manitoba courts[4] have commented upon, but not decided, whetherthe test should be as set out in Vout, or whether a different test should be utilized, namely that which applies in the context of an intervivos gift. [63] I have considered, therefore, a number of cases relating to undue influence in the context of inter vivos gifts, as follows. [64] In Streisfield v. Goodman, [2001] O.J. No. 3314 (QL), 40 E.T.R. (2d) 98, (upheld by the ONCA and leave to appeal to the SCCdismissed), the court described the test that applies in the context of an inter vivos gift, with reference to Goodman Estate v.

Geffen, (1991) (SCC), 81 D.L.R. (4th) 211 (SCC), as follows: … influence is the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtleuse of power. To dominate the will of another is to exercise a persuasive influence over another. To determine whether the presumptionof undue influence applies requires an analysis of the relationship between donor and donee.

Certain relationships such as … parent andchild … have long been recognized as giving rise to the presumption. … Where gifts are involved, the court is concerned they not betainted … While the court found it unnecessary to show undue disadvantage to the donor or undue benefit to the donee, the presence ofsuch disadvantage or benefit makes the presumption more compelling. Once the presumption is raised, it is for the donee to rebut thepresumption by showing the donor made the gift as a result of [their] own full, free and informed thought.

Two ways to rebut thepresumption are to show no actual influence or that the donor received independent advice. The size of the disadvantage of benefit ispertinent to the issue of whether influence was exercised. [65] In Vanier v. Vanier, 2017 ONCA 561, the court commented upon the inter vivos gift undue influence test as follows: [50] … there are two prerequisites to the evidential shift in the burden of proof from the complainant … to the other party …First, the complainant reposed trust and confidence in the other party. Second, the transaction is not readily explicable by the parties’relationship.

This second part of the test has been held by the House of Lords to mean that the evidence must support a finding that thetransaction is “immoderate and irrational”. [66] To summarize, the main difference as between the undue influence test in the context of a will and that of an inter vivos gift iswhich party bears the onus of proof.

In the context of a will, the onus of proving undue influence is on the party impugning the will,whereas in the context of an inter vivos gift, where the presumption of undue influence applies and the two Vanier prerequisites are met,the onus of rebutting the presumption shifts to the recipient of the gift. [67] The applicant in this case submitted that I should apply the inter vivos gift undue influence test to the 2016 POA, because thattest evolved with a view to protecting vulnerable, living persons from impoverishment, whereas in the context of the validity of a will theanalysis is focused upon protecting the wishes of a deceased person. [68] The respondent submitted that I should apply the testamentary undue influence test, because granting a power of attorney

establishes a fiduciary relationship that the Donor can change prior to any mental incapacity, which is similar to the appointment of an executor in a will. In addition, an attorney is obligated to perform their obligations in accordance with the common law and applicable legislation, and must account for their actions, which is also similar to an executor named in a will. [ 69 ] I note that in Vanier , the court considered whether a power of attorney was executed as a result of undue influence. The court upheld the decision of the motion judge to apply the testamentary undue influence test.

The court found that the inter vivos undue influence test had no application on the facts of the case, because the second prerequisite, namely whether the transaction was “immoderate and irrational” was not met. The court accepted that the donor’s decision to give the power of attorney to one of her sons over the other was an “emotionally difficult but totally rational decision”, because she knew that one son was interfering with her access to funds.

The court also found that the donor was clear in what she told witnesses with respect to her decision to change her power of attorney, and noted that none of her evidence was challenged. [ 70 ] The Vanier decision was referenced in Rudin-Brown et al. v. Brown and Brown v. Rudin-Brown et al. , 2021 ONSC 3366 , where the court considered whether there were suspicious circumstances surrounding the execution of a power of attorney.

The court applied the Vout test as referenced above, and considered the following factors to determine whether suspicious circumstances existed, which it modified from the context of the validity of a will to that of a power of attorney:

a) the extent of physical and mental impairment of the donor around the time the power of attorney was signed;

b) whether the power of attorney constituted a significant change from the former power of attorney;

c) the factual circumstances surrounding the execution of the power of attorney; and

d) whether the attorney was instrumental in the preparation of the power of attorney. [ 71 ] The court stated that a fifth criteria from the Vout test, namely whether the document generally made testamentary sense, did not apply to powers of attorney. [ 72 ] I agree with the courts in Vanier and Rudin-Brown that the testamentary undue influence test should apply in the context of granting a power of attorney, for the following reasons:

a) both a power of attorney and a will are legal directives reduced to writing, which are often (but not always) prepared and executed with the assistance of counsel and in the presence of witnesses. Conversely, an inter vivos gift can be made without any written document or other corroborative context or evidence. For example, an inter vivos gift can be given by handing over physical possession of cash or other personal property;

b) a power of attorney imposes ongoing, fiduciary obligations upon an attorney that are similar to the obligations imposed upon an executor named in a will. That is so because both attorneys and executors are obligated to perform their obligations pursuant to legislation and the common law, and must account for their actions. Conversely, the recipient of an inter vivos gift owes no fiduciary duty and has no ongoing obligations to the donor;

c) a donor may change their power of attorney or their will at any time prior to incapacity, while an inter vivos gift, once given, cannot be revoked; and

d) neither the granting of a power of attorney nor the naming of an executor bestows a benefit upon the attorney or executor [5] , whereas the recipient of an inter vivos gift by definition receives a benefit. Analysis [ 73 ] Having determined that the Vout test should apply, I note that the 2016 POA appears to have been duly executed with the requisite formalities, after Ms. McGifford reviewed it with the Donor and the Donor appeared to understand it.

As such, it is presumed that the Donor knew and approved of the contents of the 2016 POA. [ 74 ] I must consider, however, the factors identified by the court in Rudin-Brown to determine whether the applicant has established the presence of suspicious circumstances.

I have already determined that the Donor had the capacity to make the 2016 POA, but I will consider the extent of any physical and mental impairment when the 2016 POA was signed together with each of the remaining three factors. [ 75 ] With respect to whether the 2016 POA constituted a significant change from the former power of attorney, I agree with the respondent that the changes made in the 2016 POA were not significant. Put simply, from 2003 to 2016 the respondent was named as an alternate attorney, and in 2016 she became the attorney.

In my view, this change supports the conclusion that the Donor had capacity at the material time, and that she made the 2016 POA of her own free will, because her decision to appoint the respondent as attorney is a very similar conclusion to that which she came when she executed her previous power of attorney in 2003. [ 76 ] I will next consider the factual circumstances surrounding the execution of the 2016 POA. The process of preparing and executing the 2016 POA unfolded over a period of months. The respondent first attempted to obtain an appointment for the Donor with her former lawyer, Mr.

Poyser, in June 2016. Thereafter, discussions ensued and ultimately Ms. McGifford was retained. As referenced above, Ms. McGifford acquainted herself with the Donor and her circumstances, and the 2016 POA was executed in late November 2016.

[77] Ms. McGifford’s memorandum to file reflects that at the time of execution, she met first with the Donor and the respondent, thenwith the Donor alone, and finally that the respondent re-joined the meeting at the end. In the context of multiple points of contactbetween the Donor and Ms. McGifford directly, there is nothing inherently suspicious about the respondent contacting Ms. McGifford oraccompanying the Donor to the meeting and leaving her to meet with Ms. McGifford alone.

In my view, these factual circumstances donot raise suspicion or call into question the Donor’s capacity at the material time. [78] I will add that the applicant was out of town from September 24 to October 24, 2016, which in my view is largely irrelevant. The2016 POA was executed well after the applicant’s return to Winnipeg[6], and I appreciate why she was not advised of the plans tochange attorneys in advance of execution.

When the applicant learned about the 2016 POA, she reacted badly, as the respondentanticipated she would. [79] Last, I will consider whether the respondent was instrumental in the preparation of the 2016 POA. The applicant argued that therespondent meddled in and poisoned the Donor’s mind as against the applicant. Certainly, the respondent scheduled appointments forthe Donor, including with Mr. Poyser and Ms. McGifford, but both of those lawyers communicated with the Donor directly with respectto her intentions. Ms.

McGifford obtained instructions for the 2016 POA directly from the Donor, and met with the Donor alone whenthe 2016 POA was executed. Ms. McGifford gave evidence that the Donor “was making a concerted effort that she wanted to do this.” Inote also that the respondent forewarned both Mr. Poyser and Ms. McGifford that the respondent had memory issues and needed to beassessed as to her capacity to make the 2016 POA. There is simply no evidence before me that the respondent meddled or poisoned theDonor’s mind as against the applicant.

As such, I am not satisfied that the respondent was instrumental in the preparation of the 2016POA. [80] Having considered all of the relevant factors, both individually and as a whole, I have concluded that suspicious circumstanceshave not been established relative to the 2016 POA. As such, the applicant has not rebutted the presumption of knowledge and approvalof that document. [81] I will go on, however, to consider the allegations of undue influence which, as referenced above, is a separate but overlappingquestion from that of suspicious circumstances.

I will consider whether the execution of the 2016 POA pretended to express the Donor'smind, but did not actually do so and instead expressed something else that she did not really mean. [82] I note at the outset of my analysis the well-established principle that “[u]ndue influence is a subtle thing, almost always exercised in secret, and usually provable only by circumstantial evidence.” (Streisfield, at para. 137 quoting Atkinson on Wills (2nd edition, 1953),at page 638). [83] The applicant pointed to Timlick v.

Crawford, (BCSC), where the court considered the validity of a will, andfound both that the testator lacked capacity to make the will, and was unduly influenced by the named executor to do so. Morespecifically, the executor caused the testator to be isolated and screened from family and friends, and to believe several delusionspromoted by the executor, including that his family member was attempting to have him institutionalized and was robbing him of hisproperty. [84] In this case, there is no evidence that the respondent attempted to limit the applicant’s access, or anyone’s access, to the Donor.

The facts are that the respondent resides out of province, while the Donor and the applicant reside in Winnipeg. Moreover, the Donorresides in the same building as her sister, with whom she seems to have regular contact. Similarly, despite the applicant’s arguments,there is no evidence that the respondent provided false information to the Donor, about the applicant or otherwise. [85] The applicant also argued that undue influence can be unfair pressure, improper or misleading conduct, or trickery, which may bereferred to as a mere “puff” of undue influence that is short of coercion.

The applicant argued that the Donor would not have executedthe 2016 POA if she knew the truth, and pointed to a number of cases to support her position, including Re Kaufman, Anderson andHouge v. Walkey and Mason, (ONCA), Cadman Estate (Re), [1984] M.J. No. 327 (QL), and Banton v. Banton, (ONSC). [86] I note, however, that in Kaufman the court declined to make a finding of undue influence, because, as is the case here, there wasno direct evidence that supported the allegation.

In both Cadman and Banton, the court set aside a will on the basis that the testatorexecuted it under a mistaken belief due to a deteriorated mental state or cognitive impairment, neither of which are proven in this case. [87] I accept as a matter of law that undue influence can be established by conduct that constitutes unfair, improper or misleadingconduct, pressure, or trickery that is short of coercion. There is simply no evidence, however, that the respondent “planted seeds” in theDonor’s mind or influenced her to make the 2016 POA, or that it does not reflect the Donor’s true wishes.

The Donor, as an adult withcapacity, had the right to choose who should act as her power of attorney, and I am satisfied that she wished to change attorneys. [88] I recognize that when the 2016 POA was executed the Donor was of an age and in a general medical condition that she wasvulnerable in some ways, but in the absence of evidence, I do not accept that the respondent poisoned her mind against the applicant. Certainly, the Donor was not obligated to keep the applicant as her power of attorney ad infinitum, and in my view there was nothingimmoderate or irrational about her decision to appoint the respondent.

As such, even if I had applied the inter vivos gift undue influencetest when considering the validity of the 2016 POA, I would not have found that undue influence was proven. [89] I will add that after the 2016 POA was executed, a few errors in the applicant’s conduct during her time as attorney wereidentified, to the extent of $752.72, which has since been repaid to the Donor. I appreciate, particularly in that context, that the applicantmay have felt that she was accused wrongfully, and that her pride was hurt by the change reflected in the 2016 POA.

Having said that, Iam also satisfied that she reacted badly to the change, as evidenced in subsequent e-mail communications with the respondent and in herown evidence as advanced this litigation.

In addition, on December 14, 2016, the following was noted in the Donor’s medical chart:“[The applicant] is very concerned that her sister has obtained POA … [The applicant] is concerned that her mother is not competent tobe making this decision … Concerned her sister is taking money from her mothers account”, and that “Of note, a patient in the waitingroom reported to the front desk that they were concerned regarding [the applicant’s] treatment of her mother in the foyer, report she was

being very mean. No other details were provided.” [ 90 ] In my view, the applicant’s conduct after learning of the 2016 POA corroborates some of the reasons that the Donor expressed for wanting to change attorneys. Conclusion on Suspicious Circumstances and Undue Influence [ 91 ] The applicant has not established either suspicious circumstances or undue influence relative to the 2016 POA. Conclusion [ 92 ] The application is dismissed. [ 93 ] If costs cannot be agreed upon, counsel may seek an appearance to make submissions. ________________________ J.