Our estate litigation lawyers handle Wills Variation Act dispute and Power of Attorney and estate litigation claims together with other Vancouver and BC estate litigation issues.
In Houston v. Houston (2012 BCCA 300), the British Columbia Court of Appeal released a fascinating decision on power of attorney. The case examined several legal issues surrounding power of attorney including: revocation, fiduciary duty of agent, and the authority of agent to sever a joint tenancy. If you have any questions regarding power of attorney, division of estate assets or wills and estate litigation, please call MacLean Estate Litigation toll free at 1 877 602 9900 to book an appointment at any of our 4 offices in Vancouver, Surrey, Kelowna or Fort St John BC.
The appeal arose in a family dispute that developed in the last months of Dr. George Houston’s life. Dr. George Houston died in 2008 at the age of 92. The action was brought by Mrs. Houston, the widow of the deceased, both in her personal capacity and as her late husband’s executrix. They had been married 34 years when he died and it had been the second marriage for both of them. Dr. Houston Sr. had four children from his previous marriage, including the defendant Dr. James Houston; Mrs. Houston had two children, including a daughter, Ms. Fowler, from whom she was estranged for many years. Mrs. Houston met Ms. Fowler in 2007 and they were reunited. Mrs. Houston was 91 when her husband died. The couple had identical wills leaving his or her estate to the survivor of the couple, and any residue to the six children.
In 2005, Dr. Houston made an enduring power of attorney, appointing Mrs. Houston and his son Dr. James Houston as his attorneys. The power of attorney provided that each could “act separately”, which means that either Mrs. Houston or Dr. James Houston could use the power of attorney to deal with the assets without involving the other. In 2008 the year of his death, Dr. Houston granted a second power of attorney in favour of his wife and secondarily, in the event she was “unable or unwilling to act”, to Dr. James Houston.
Dr. James Houston concerned for his father’s wishes used the first power of attorney to severe the joint tenancy on the condominium where Dr. Houston Sr. lived creating a tenancy in common. If the condominium were held in a joint tenancy, then on the death of either of the two owners, title would pass to the survivor. But because Dr. James Houston used the power of attorney to sever the joint tenancy, Dr. George Houston’s half-interest in the condominium fell into his estate. Although Dr. George Houston’s will provided that his wife would receive his estate, his children have started a different action under the Wills Variation Act, seeking to vary his will to provide them with a share of his estate. As mentioned, the Houston’s wills stated that the estate would go to the spouse and then equally to their six children on both of their deaths; however, since Dr. Houston’s death, Mrs. Houston changed her will so all the assets go to her children leaving Dr. Houston’s four children out.
At trial, Mrs. Houston claimed that the first power of attorney had been revoked by the second power of attorney, and that even if the first power had not been revoked, James Houston had engaged in “self-dealing” ” in severing the joint tenancy and thus breached the fiduciary duty owed to his principal. The trial judge found that the son had acted in accordance with his father’s authorization to do what was necessary to protect his “estate wishes.” Mrs. Houston appealed the trial judge’s findings. The Court of Appeal upheld the lower court’s ruling.
The Court of Appeal examining the facts further finding that Dr. Houston Sr. was “a “gentle man” and not in robust health, and was caught in the middle: he wanted to protect his children’s interests as the Houstons had always planned to do in their wills, but he did not want to ‘cross’ his wife, who was his caretaker. She and her daughter began to take some steps in 2008 that were bound to attract the concern, if not animosity, of Dr. Houston Sr.’s children.”
Mrs. Houston reunited with her daughter, Ms. Fowler, in 2007 at the age of 90. Soon thereafter, Ms. Fowler began to get involved in the family’s financial and legal affairs. Ms. Houston signed a new power of attorney in favour of Ms. Fowler. And Ms. Fowler was involved in investments being sold and switched to different financial institutions. Additionally, Mrs. Houston influenced Dr. Houston to sign the second power of attorney in 2008.
Dr. James Houston concerned about the new developments set up an appointment for Dr. Houston with an attorney, but he did not attend because of Mrs. Houston’s objections. Dr. George Houston told his son Dr. James Houston and his daughter Mrs. Russell that he was concerned about Ms. Fowler’s influence on her mother, that he wanted their estates to be eventually divided six ways, and that he wanted Dr. James Houston to get some legal advice on his behalf. Dr. James Houston received advice that the only way to secure his father’s estate was to sever the joint tenancy.
The Court of Appeal found that the second power of attorney did not revoke or terminate the first one; they were both operating legally at the same time. Para 33:
It is clear that the first power of attorney signed by Dr. Houston Sr. did not on its face provide for its revocation, termination or even suspension on the happening of any particular event. It is equally clear that the second power of attorney made no express reference to the first power of attorney, and indicated no intention on the donor’s part to terminate, revoke or suspend the first or any other power of attorney. Nor was any notice of termination given to James in respect of the first instrument.
The court found that the mere fact that a second power of attorney has been executed does not reflect an intention by the donor to revoke this first one.
Additionally, the court examined whether Dr. James Houston breached his fiduciary duty he owed to his father. The Judges found that “though there can be no doubt that a fiduciary who engages in ‘self-dealing’ or who receives a secret benefit or profit from a transaction carried out on the donor’s behalf, is accountable to the donor for such profit, the exception exists where the donor consents to or authorizes the attorney’s acting as he or she has.” See s. 27 of the Property Law Act,:
Attorney cannot sell to himself or herself
27 A sale, transfer or charge to or in favour of himself or herself by an attorney named in a power of attorney, of land owned by the principal and purporting to be made under the power of attorney, is not valid unless the power of attorney expressly authorizes it or the principal ratifies it.
The Court of Appeal agreeing with the lower court found that although the father had not specifically directed his son to use the power of attorney to sever the joint tenancy, he had “clearly instructed Dr. James Houston to use the power of attorney so that his estate would be preserved and his ultimate wishes fulfilled.”
The court found that Dr. Houston wanted to protect his estate wishes, which he reasonably believed to be in jeopardy; however, he was unable to protect his estate because of his age and health and the opposition of Mrs. Houston and Ms. Fowler. Dr. Houston authorized his son in general terms to act, which he did by severing the joint tenancy. The court dismissed the appeal. As a result, the severance of the joint tenancy stands, and the half-interest in the condominium falls into Dr. George Houston’s estate, and is subject to the children’s Wills Variation Act claims.
If you have any questions regarding power of attorney, division of assets or wills and estate planning, please call MacLean Estate Litigation toll free at 1 877 602 9900 to book an appointment. At MacLean Estate Litigation, we can answer any questions regarding power of attorney, tenancy in common, and division of estate assets. It is crucial that you get the right legal advice to protect your assets and provide for your family. We have for offices across the province to service you located in downtown Vancouver, Surrey, Kelowna, and Fort St. John.