In a recent decision of the Alberta Court of King’s Bench, Lloyd et al v. de Walle et al, the Court removed a litigation representative in a dispute surrounding an Enduring Power of Attorney. The case raises important issues about fiduciary obligations, the role of personal directives, and the Court’s responsibility in protecting vulnerable individuals.

Enduring Power of Attorney and Capacity Dispute

The donor, Harvey Lloyd, executed an Enduring Power of Attorney on September 1, 2016, appointing the defendants as his attorneys. Years later, the donor commenced litigation to revoke the Enduring Power of Attorney, alleging he lacked the capacity to execute it at the time. He also claimed he had since regained capacity and filed expert evidence in support.

The donor’s agent under a Personal Directive and his partner joined as co-applicants in the litigation. The donor’s agent also acted as his litigation representative in related actions and was deeply involved in advancing claims on his behalf.

Court-Ordered Capacity Assessment and Refusal to Comply

A critical turning point occurred when the Court ordered the donor to undergo a medical capacity assessment. The goal was to obtain a clear, independent evaluation of the donor’s capacity to manage his financial affairs. However, the donor did not attend the scheduled appointment.

Instead, the donor’s agent unilaterally declared the donor incapacitated based on her own observations and informed opposing counsel that he would not participate in the assessment. Acting under her Personal Directive authority, the agent also instructed counsel to admit that the donor lacked capacity, a statement that would essentially resolve the litigation against the defendant attorneys without a judicial determination.

The Agent’s Dual Roles and Alleged Conflict of Interest

The agent’s conduct prompted the defendant attorneys to bring an application seeking her removal as the donor’s representative and “interested person” under Alberta’s Powers of Attorney Act. They alleged she had a conflict of interest and acted contrary to the donor’s best interests.

The Court agreed. The Court reviewed the agent’s legal authority under the Personal Directive, which extended only to non-financial personal decisions. The Court found the agent had overstepped by interfering in financial and estate litigation matters that fell outside her legal purview.

Moreover, the agent was also named as an executor and beneficiary under the agent’s 2016 Will. Despite this, she had filed an affidavit challenging the Will’s validity, arguing the donor lacked capacity and was unduly influenced when it was executed, all while acting as his representative. These conflicting positions raised serious concerns about her ability to act impartially.

Court’s Analysis: Fiduciary Duties and the Best Interests of the Donor

The Court emphasized that both an “interested person” under the Powers of Attorney Act and a litigation representative under the Alberta Rules of Court must act in a fiduciary capacity, always placing the vulnerable individual’s interests first. The Court retains a continuing duty to assess whether those in such roles fulfill their responsibilities.

The Court concluded that the donor had breached her fiduciary obligations to the donor by:

• Attempting to rely on a Personal Directives Act “Declaration of Regained Capacity” to prove the donor’s capacity in financial matters, even though such declarations apply only to personal decision-making;
• Opposing efforts to schedule or complete a formal capacity assessment;
• Admitting to the donor’s incapacity in court proceedings to avoid further litigation;
• Prioritizing her own interests in the estate by attempting to invalidate the Will in which she is named executor and beneficiary.

The Court found these actions incompatible with the agent’s fiduciary obligations and ordered her immediate removal as both an interested person and litigation representative. With the agent removed, the Court ordered that the defendant attorneys, as adverse parties, apply for the appointment of a new litigation representative for the donor.

Lessons for Enduring POA Donors & Personal Representatives

This case reinforces several foundational principles in Alberta estate and incapacity law, including those relating to Enduring Powers of Attorney (POA).

The Court Determines Capacity in Enduring Power of Attorney Disputes

Only the Court can determine whether a donor had capacity to execute or revoke an Enduring Power of Attorney. Agents under Personal Directives cannot usurp that authority.

Declarations under the Personal Directives Act Are Limited in Scope

Such declarations relate solely to non-financial personal decisions. They are not applicable in disputes over financial capacity or estate planning documents.

Litigation Representatives Must Be Conflict-Free

A litigation representative must act solely in the best interests of the person they represent. Conflicts of interest, especially financial or testamentary ones, can disqualify an individual from this role.

Court Oversight is Ongoing

The Court retains jurisdiction to remove and replace interested persons and litigation representatives at any stage of the proceedings to protect vulnerable individuals.

Implications for Families and Estate Practitioners

This decision is a cautionary tale for those acting under Enduring Powers of Attorney or Personal Directives and lawyers representing vulnerable adults.

Importance of Transparency and Independence

Professionals advising clients in similar situations should ensure transparency in roles and responsibilities and independence when advocating for or against capacity.

Proper Use of Personal Directives and Enduring POAs

Agents and attorneys should strictly adhere to the powers granted under each document. Overreach, even if well-intentioned, can lead to removal and further litigation.

Avoiding Conflicts

Those who stand to benefit financially from an estate should exercise extreme caution if acting in any representative capacity. Conflicts must be disclosed and may require the appointment of an independent party.

Documenting Capacity

Capacity assessments should always be completed by qualified professionals. Courts are hesitant to accept lay opinions, especially from individuals with a stake in the outcome.

Contact Getz Collins and Associates for Trusted Advice on Enduring Powers of Attorney

At Getz Collins and Associates, our wills, estates, and trusts lawyers bring decades of collective experience to helping clients navigate complex personal care matters, including Enduring Powers of Attorney. Known as a trusted pillar in the Alberta legal community, we are committed to delivering client-focused service with flexible options and transparent, accessible fee structures. Whether you’re planning for the future or facing a dispute, we work diligently to protect your interests every step of the way.

With offices in Calgary and Strathmore, we proudly serve clients throughout Alberta, including Airdrie, Cochrane, Okotoks, Drumheller, Chestermere, Hussar, and nearby communities. Our practice combines a local, community-oriented mindset with the innovation and professionalism of a modern law firm. To book a consultation regarding your estate matter, call us at 587-391-5600 or connect with us online.