Fiduciary Duties of a Power of Attorney
The BC Court of Appeal case of Meng Estate v Liem 2019 BCCA 127 confirmed that a person acting under a power of attorney owes a fiduciary duty to the donor. This is a duty of the utmost good faith where the donee (attorney) is obligated to place the interests of the donor first.
At a minimum these obligations include the attorney’s duty to account for all transactions, to exercise reasonable care (to the standard of a typically prudent person managing his or her own affairs) and not to act contrary to the interests of the donor (McMullen v Webber, 2006 BCSC 1656).
A claim for breach of fiduciary duty carries with it the staunch of dishonesty, if not of deceit, then of constructive fraud. Nocton v Lord Ashburton (1914) AC 932(HL)
The Court of Appeal overturned a finding of a breach of fiduciary duty by the acting attorney and stated that even though Mr.Liem was in a fiduciary relationship with the opposing party, not every potential breach of duty is a breach of fiduciary duty. A cause of action may also be rooted in breach of contract or negligence.
A fiduciary may breach duties owed in contract or negligence without those breaches being transformed into breaches of fiduciary duty (Girardet v Crease & Co. (1987) 11 BCLR (2d) 36). In Meng the Court of Appeal noted “typically, a breach of fiduciary duty captures circumstances in which there is a breach of the duty of loyalty owed by the fiduciary and include circumstances involving acting in the face of a conflict, preferring a personal interest, taking a secret profit, acting dishonestly or in bad faith, or a variety of similar or related circumstances. This is not an exhaustive list.” The evidence did not support a finding that the appellant acted dishonestly or in the face of a conflict of interest, ignored the wishes of the opposing party, preferred his interest to theirs, or in any way benefited from signing the contract. The court found that he attempted to fulfill his duty of loyalty.
The court determined that the real complaint was that the attorney failed to exercise the care, diligence and skill of a reasonably prudent person by negligently failing to ascertain and thereby take into account the opposing parties current wishes, resulting in the sale that was not in their best interest because they changed their minds and then disagreed with the price.
The claim was really one of negligence, not of breach of fiduciary duty.
The Power of Attorney Act S19 Sets Out the Duties of a Power of Attorney:
- An attorney must:
- act honestly and in good faith
- exercise the care, diligence and skill of a reasonably prudent person,
- act within the authority given in the enduring power of attorney and under any an enactment, and
- keep prescribed records and produce the prescribed records for inspection and copying at the request of the adult.
- to the extent reasonable, give priority when managing the adult’s financial affairs to meeting the personal care and health care needs of the adult;
- unless the enduring power of attorney states otherwise, invest the adult’s property only in accordance with the Trustee Act;
- to the extent reasonable, foster the independence of the adult and encourage the adult’s involvement in any decision-making that affects the adult;
- not dispose of property that the attorney knows is subject to a specific testamentary gift in the adult’s will, except the disposition is necessary to comply with the attorney’s duties;
- to the extent reasonable, keep the adult’s personal effects at the disposal of the adult.
A power of attorney can be a valuable document if an appropriate trustworthy attorney is appointed. Unfortunately, in the wrong hands a power of attorney may also facilitate fraud, theft and abuse of the donor, especially where the donor is elderly and vulnerable.
Angela Price-Stephens is an English and Canadian lawyer who has 25 years’ experience as a litigator of complex and challenging claims. Whether you are disinherited, a personal representative contemplating litigation, facing a claim brought by a beneficiary, or challenging abuse of power of attorney, Angela is here to provide cost effective, practical legal advice.
For more information on this article, or for confidential discussion of your claim, contact Angela Price-Stephens at 250 869 1124, or send her a confidential email at email@example.com.