Crossing the void

The ties between Canada and the UK run long and deep. It is not surprising, then, that residents of the UK may own property in Canada, spend extended time in Canada or both.

Should this affect planning for incapacity? The answer is yes. In these circumstances, a client’s plan for incapacity should encompass property located in Canada, as well as the possibility that the onset of a client’s incapacity may occur while the client is in Canada.

Legal regimes

How this is to be done is made complicated by the fact that in Canada the laws respecting powers of attorney, health directives, substitute decision making and the like are under provincial and territorial jurisdiction. This means that there are thirteen different legal regimes for substitute decision making in Canada.

The holiday cottage in Ontario, the quaint seaside home on the south shore of Nova Scotia, the guest ranch in Alberta and the ski chalet in Whistler: all the subject of different laws. A client hit and catastrophically injured by a car on the streets of Montreal, Yellowknife or Winnipeg? Same.

Welcome to the world of planning challenges faced by Canadian legal advisers every time a client has interests that spread beyond the borders of one province or territory.

What follows is a discussion of some of the issues Canadian legal advisers, and practitioners based in the UK and beyond, will face in planning for incapacity across any Canadian internal or international borders.

If you get the shakes whenever you even read the words ‘conflict of laws’, you may want to skip the next couple of dozen paragraphs and go straight to the conclusion, where consultation with a Canadian legal adviser is emphatically advised.

Otherwise, read on.

For clarity, in this article I use the familiar terms of lasting power of attorney, donor and attorney wherever possible. The actual terms in Canadian legislation vary from jurisdiction.

There are springing, enduring and continuing powers of attorney, representation agreements, mandates and care directives. These could be signed by a grantor, donor or mandator, and given to an attorney, agent, proxy or mandatary.

The terminology is often different for arrangements for the management of property on the one hand and substitute decision making regarding health and welfare on the other.

Silent witness

There is no guarantee that a lasting power of attorney made in either a Canadian or foreign jurisdiction will be recognised in another Canadian jurisdiction. While some provinces and territories have statutes that expressly provide for recognition of ‘foreign’ powers of attorney, others are silent on the issue.

In Prince Edward Island, the law is silent regarding recognition of a foreign-made lasting power of attorney for property, but expressly recognises a power of attorney for health, so long as it meets the formal requirements of the jurisdiction it was made in, or the jurisdiction in which the donor habitually resides.

In these circumstances, it is hard to draw a positive inference from the silence.

Recognition can also depend on compliance with the law of the jurisdiction in which recognition is sought. In the Yukon Territory, this is a prerequisite for recognition of what is there called a health directive.

Some Canadian jurisdictions have execution requirements that could also affect recognition. For example, Manitoba recognises a foreign lasting power of attorney for property if it is valid according to the law of the place it was made.

But what might happen if the drafter of the power of attorney intended it to only apply to the donor’s Manitoba property, and the document expressly stated this? Would the document then be subject to the strict witnessing requirements of Manitoba’s law, which calls for the witnesses to be from specified categories of qualified persons (for example, lawyers, police officers, judges)?

There are no mandatory registration systems for powers of attorney anywhere in Canada, although some jurisdictions have voluntary systems for registration.

Quebec is the only Canadian jurisdiction with a civil law system, rather than common law. In Quebec a power of attorney does not have to be registered at the time it is made, but cannot be used upon incapacity before it is subjected to a court process called homologation.

In some Canadian jurisdictions, such as Ontario, the making of a new power of attorney automatically revokes all previous powers of attorney, unless the existence of multiple powers of attorney is expressly contemplated. When coupled with the issue of recognition of foreign powers of attorney, one can imagine many scenarios where insufficient attention to the laws of the applicable jurisdictions could result in the unintentional revocation of a power of attorney.

For example, a donor from the UK who spends summers at a holiday cottage in Ontario makes a property power of attorney in Ontario, appointing a close friend who is an Ontario resident. The intention is to authorise the Ontario attorney to act in the event of incapacity with respect to Ontario property.

The donor then returns to the UK and updates her power of attorney there, appointing her brother who resides in the UK. Ontario is a jurisdiction that recognises foreign powers of attorney if validly made in their own jurisdiction. Could this result in the UK power of attorney revoking the Ontario power of attorney, contrary to the apparent intentions of the donor?

In some Canadian jurisdictions, revocation requires written notice to the attorney. If you make a new power of attorney in a jurisdiction where this automatically revokes a previous power of attorney, can this effectively revoke a power of attorney in another jurisdiction where written notice is required? Does it make a difference whether or not the second jurisdiction is one in which foreign powers of attorney are expressly recognised so long as they are validly made under their own laws?

Positive duty

In all Canadian jurisdictions, attorneys for property have a duty to account for their dealings with the donor’s property.

However, some jurisdictions also impose a positive duty to act in the event of the donor’s incapacity, usually where there is a ‘springing’ power of attorney (one triggered by incapacity), and so long as the attorney has accepted the appointment.

While the Yukon Territory imposes this obligation only if the attorney has agreed in writing to the appointment at the time the power of attorney is executed, other jurisdictions, such as Alberta and the Northwest Territories, impose the duty so long as the attorney has at any time indicated acceptance of the appointment.

These laws are silent on how it is determined that the attorney has accepted the appointment, but it is clear that the intent is to impose liability on an attorney who knows or reasonably ought to know that the donor is incapable, but fails to act. It may be prudent to ask a client who has ties in Canada whether he has agreed to act as anyone’s attorney there, and explore whether this is practicable and advisable.

Technology should make it possible for an attorney to act anywhere from anywhere. However, all the major banks in Canada carry on business extensively in the United States, and are required to comply with American laws in and outside of that country.

In recent years, because of anti-terrorism and anti-money laundering laws, donors have faced the additional challenge that our banks and their investment firms are restricted in their dealings with a foreign-based attorney for property.

Recently I worked with clients who were originally from the UK and had no family in Canada. After consultation with their Canadian bank, they gave up on the notion of appointing a UK-based family member as their Ontario attorney, and appointed a close friend in Canada instead. The arrangement was going to be too complicated.

There has been some movement towards uniformity in powers of attorney law in the western provinces of Manitoba, Saskatchewan, Alberta and British Columbia. In 2008, the Western Canadian Law Reform Agencies (WCLRA) jointly delivered a final report on areas for reform.

The WCLRA recommended uniformity with respect to three key aspects of the law: recognition of powers of attorney, duties of attorneys and safeguards against misuse.

Beyond this effort, there has been only minimal interest or action.

For now, the recommended approach for UK-based advisers is the same as for Canadian advisers: determine in what jurisdictions the client has property or ties, and seek out advice from an adviser in that jurisdiction.

It may be most prudent most of the time for the client to make separate arrangements for incapacity in each applicable jurisdiction, but even then it will be important to ensure that the arrangements between Canada and the UK, as well as between Canadian jurisdictions, do not conflict or lead to unintended results.

Jan Goddard is the managing partner of Toronto-based Goddard Gamage Stephens LLP www.ggslawyers.com