A few months ago the Ontario Court of Appeal released its decision in Palichuk v. Palichuk, 2023 ONCA 116 (CanLII) (“Palichuk”) which upheld the decision of the applications judge. The applications judge dismissed a guardianship application and awarded costs against the appellant. The appellant sought guardianship of her mom and alleged that her mom lacked capacity to execute a will, powers of attorney for property and personal care, and transfer title to mom’s house to another daughter as bare trustee. The appellant also alleged that her mom had been unduly influenced by her other daughter to sign all four impugned documents.

There were two main issues on appeal: whether the applications judge erred in finding mom capable and, after doing so, whether he erred in determining that it was irrelevant if mom had capacity or was unduly influenced at the time the four documents were signed. In the view of this author, central to the court’s analysis was that the appellant sought a guardianship appointment and there was no evidence that the other daughter was acting under either power of attorney.

Mom responded to the guardianship application, defended her decision to sign the four documents and argued that she did not need a guardian. Mom willingly obtained a capacity assessment from Dr. Richard Shulman. Mom’s evidence was that she was angry at the appellant, was afraid of and felt bullied by her, and that the appellant was “very controlling.” Mom believed that the appellant only cared about her money and that she had stolen from her (the court found that the evidence did not support this belief). Mom even brought her own application against the appellant seeking an order compelling the appellant to relinquish co-ownership of a bank account with mom. The appellant had refused to do so claiming that she needed to protect mom’s money from her other daughter.

Dr. Shulman assessed mom’s capacity presently and retrospectively on the date the four documents were signed. Dr. Shulman concluded that, at both periods of time, mom was capable of executing a will, revoking and granting powers of attorney for property and personal care, managing her property (albeit with some minor assistance), and making personal care decisions. Dr. Shulman found that while mom did not understand the concept of a trust and believed she had gifted her house to her daughter, she nevertheless understood that she could return to her house at any time. Moreover, mom confirmed that she gave her house to her daughter because she wanted to. Dr. Shulman noted that mom was adamant that the appellant had stolen from her. However, a mistaken belief is not evidence of incapacity. Mom understood that the appellant was seeking to be her guardian and denied needing one. However, mom expressed that if the court believed a guardian was necessary then she wanted it to be her other daughter and not the appellant.

After receiving Dr. Shulman’s report and knowing mom’s evidence, the appellant continued to a hearing and asked that the application be converted to a trial. The only expert opinion evidence of capacity was that of Dr. Shulman; the appellant did not produce a competing expert opinion. The appellate court noted that this was critical to the application judge’s determination that mom was capable.

With respect to the finding that mom had capacity, the appellate court disagreed that the applications judge erred in relying on Dr. Shulman’s report even though it contained factual inaccuracies (primarily that the appellant did not steal from her mother). The appellate court reiterated its comments in Leonard v. Zychowicz, 2022 ONCA 212 (CanLII) that a judge can make findings of fact based on the preferred expert evidence and is entitled to deference absent a palpable and overriding error. In this case, the applications judge accepted Dr. Shulman’s expert evidence and had no competing opinions to consider. The appellate court commented that even if the applications judge had disregarded Dr. Shulman’s evidence the appellant did not proffer sufficient evidence to rebut the presumption of capacity in s. 2 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30. The appellate court agreed that there was no basis for a guardianship order given that mom was capable of managing her property and making personal care decisions.

Regarding the other main issue on appeal, the appellant argued that the applications judge ought to have determined mom’s capacity when the four documents were signed and whether she was unduly influenced when they were signed. However, because the appellant sought a guardianship order the appellate court agreed with the applications judge that it was not necessary to determine capacity at the time the documents were signed. Rather, only mom’s capacity at the time of the application had to be determined. Similarly, determining whether mom was unduly influenced when the documents were signed was irrelevant since mom has capacity to change the impugned documents. The applications judge correctly determined that the question was “hypothetical and premature” given that mom is capable of making a new will and revoking and granting new powers of attorney for property and personal care. The appellate court stated:

“…I agree with the submissions of [mom’s] counsel that, terminology aside, the application judge’s broader concern was about engaging in an academic or hypothetical exercise because [mom], having been found capable, could change all the impugned documents. [Mom] could make the changes to revoke any or all of the impugned instruments in the middle of that trial, resulting in a waste of judicial time and resources. It would also put the litigants to unnecessary expense.”

The appellate court also commented on the appellant’s challenge of the will and trust while mom was alive and capable. The appellate court did not accept that will challenges can occur during the testator’s life. Rather, it stated that:

“…litigation among expectant heirs may occur before death when a present dispute comes before the court. Practically, there will be some cases in which the validity of a will, trust or transfer incidentally comes into play. This does not mean that it is either necessary or desirable for the law to permit direct challenges to these instruments during the grantor or testator’s life.”

Given the decision in Palichuk, parties would be wise to re-assess their challenge of powers of attorney, trusts, and/or wills when faced with incontrovertible evidence that the grantor or testator is capable of granting and revoking those instruments.

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