An unfortunate reality for many families is that their loved ones are at risk of being taken advantage of as their mental state declines. Sometimes, the people taking advantage of an individual’s diminished capacity are the same ones that should be providing care and attention. When such an instance occurs, it can lead to a flurry of court orders such as transferring legal powers, assigning guardians, and arranging for the sale of the person’s estate assets and property.

In the recent case of Williams v. Harrington before the Ontario Superior Court of Justice, a pair of guardians sought to be awarded costs from an incapacitated person’s spouse who had taken advantage of his wife’s ill health. The primary hurdle they faced was that the spouse was not a party to the litigation.

Husband objected to wife’s guardians’ request to list home for sale

The parties in the present case wanted to amend a judgment from September 2020. In that decision, the incapacitated person (Ann) was found to lack the capacity to manage her property. For this reason, two individuals (Valerie and Kristen) were named joint guardians of Ann’s property, and the court approved a proposed management plan. The need for guardianship arose after Ann’s spouse, Robert, took advantage of his role under Ann’s power of attorney.

The guardians wanted to make changes to the management plan. These changes included updating Ann’s place of residence, obtaining possession of Ann’s property, and listing the house for sale. Ann was a tenant in common of the property with Robert, and each spouse owned 50% of the home. Robert was not a party to these proceedings.

The guardians requested relief against Robert in relation to the ordered sale of the property. Robert, although a non-party, attended to express his concerns about selling the home. Likewise, Ann, although lacking capacity, filed an affidavit expressing her opinion that the property should not be sold.

Court found husband manipulated and financially exploited incapacitated wife

Despite Ann’s affidavit, the Court maintained the previous judgment’s findings that Ann was incapable of managing her property. Nevertheless, she was asked to give evidence in Court so that the reliability of her affidavit could be assessed. Unfortunately, her state was such that no weight could be given to her oral testimony or affidavit evidence. In explaining his reasons, Justice McCarthy wrote:

“It is apparent to me that Ann is generally confused about her circumstances and clearly lacks insight into her situation. She could not for example recall how long her driver’s license has been suspended … Ann suggested that she wanted to go home to [the property] but could not articulate why … She claimed that she would rent out the Bradford property if necessary. This is strangely at odds with her repeated assertion that she wanted to live there … She could not identify why she agreed to move to Barrie in the first place. She simply stated, ‘That’s a good question.’”

The Court found the amendments requested by the guardians would help protect Ann’s physical safety and financial security. In bringing the application, the guardians were deemed to be doing so in good faith. The Public Guardian and Trustee also approved their request. In the end, Justice McCarthy determined that it would be in Ann’s best interest if the property were indeed sold for four reasons:

  1. Robert was financially exploiting Ann;
  2. Robert had manipulated Ann;
  3. Ann was extremely vulnerable;
  4. Ann could not comprehend the financial risks she faced; and
  5. Ann still had valuable equity in her home that Robert had compromised.

Parties sought costs from non-party husband

After allowing the application in part with regard to the property, the Court addressed the matter of costs. The guardians and Ann sought to have their costs recovered from Robert. While costs are not generally ordered against non-parties, a Court may choose to do so in cases involving “gross misconduct, vexatious conduct or conduct by a non-party that undermines the fair administration of justice.”

Legal costs of application would have been incurred regardless of non-party’s conduct

The Court acknowledged that Robert had exploited and manipulated Ann in the role of power of attorney. This posed a risk to Ann’s physical and financial health. Although this would amount to gross misconduct on the part of Robert, the Court disagreed that the costs should be borne by Robert alone for the following reasons:

  1. Robert did not cause Ann’s incapacity, even if he exploited it. Ann’s deteriorating mental state would have eventually required a guardianship in any event.
  2. The motion to amend to sell the property would have been required regardless of Robert’s conduct, given the 2020 judgment.
  3. Robert was a non-party to the application and never formally opposed the relief sought by the guardians.
  4. Even without the exceptional circumstance of Robert’s misconduct, the motion for amendment of the management plan would still have been necessary, and Ann’s estate would have borne the cost entirely.
  5. The motion to amend was opposed by Ann herself, whose involvement required an in-person hearing to examine her affidavit with the help of oral testimony.

For these reasons, the Court held that the costs for all parties should be paid out from the proceeds of the property sale before distributing the remaining funds equally between Ann and Robert.

Derfel Estate Law Provides Trusted Advocacy in Capacity & Guardianship Matters

Derfel Estate Law in Toronto helps protect vulnerable people’s financial, personal, and health-related interests through trusted advice on guardianship, capacity, and power of attorney matters. Our dedicated estate lawyers also advocate for clients in cases involving executor and trustee misconduct and are experienced in files involving complex issues requiring a passing of accounts. To speak with a skilled estate lawyer to ensure your rights and interests are protected (as well as those of your loved ones), please call 416-847-3580 or reach out online.