Two Ontario brothers who fought over repayment of a mortgage on their elderly father’s home stared each other down in Ontario Superior Court of Justice. When one brother defaulted on the nearly $870,000 owed their father, the other served a notice to sell the home. So began their date with court to decide if a power of attorney was valid and who owed what.
Collecting a Family Debt
“Mario” moved from his Ottawa home to a retirement residence in 2012, giving his eldest son “Andrew” (not their real names) power of attorney for property to make financial decisions for him. Six months later, Mario stepped down as director of the home construction company he founded in 1968 in favour of Andrew. Using the power of attorney, Andrew tried to collect on a mortgage Mario lent to his youngest son “Steve” in 2006.
Did Father Have Dementia?
By 2013, when the mortgage matured, Steve and his family were living in Mario’s and his wife Dianne’s home. Steve argued Andrew had manipulated Mario into giving him power of attorney, saying his father lacked the mental capacity to sign. He produced a 2015 medical report suggesting Mario suffered from vascular dementia — problems making decisions, often due to a stroke — and possible Alzheimer’s disease. His father, he said, had developed dementia around 2009 and couldn’t possibly have authorized Andrew to represent his financial affairs.
Signing Away Decision Making Ability
The court was troubled by Steve’s comments. Steve had Mario assign power of attorney to him in 2013. He said his father had cried on the phone in 2012 when he told him he didn’t want to give Andrew power of attorney. But if Mario had dementia, how would he know Andrew had power of attorney or be able to consent to Steve taking over?
Stalling Legal Action on Mortgage
That wasn’t all. Besides arguing Andrew lacked authority to bring a legal action on his father’s behalf, Steve suggested the mortgage was unenforceable. He claimed to have entered into an oral agreement with Mario that he could repay the mortgage whenever he wished, “if ever”. Yet, the mortgage documents required repayment if Steve defaulted or when the loan matured. Steve had defaulted over a year before the mortgage was up for repayment. He had tried to use his 2013 power of attorney to get Mario to renew the loan.
Fraud Statute Prevents Oral Agreements
Had his father truly forgiven the mortgage? Ontario’s Statute of Frauds required that changes to a mortgage be in writing and signed by Mario or his power of attorney Andrew. Since Steve and Andrew weren’t getting along, why hadn’t Steve had Mario put the oral agreement in writing to prevent a legal dispute?
Determining If Witness is Credible
The court had other reasons to be concerned. Mario and Dianne required the money tied up in the mortgage to pay their ongoing bills. Steve said Mario told him he had no use for the money and he didn’t need him to repay it. But Andrew said Mario’s company, which he took over in 2012, had only $313,000 in cash and his parents only $69,000 in their personal bank accounts. The seniors’ monthly living expenses exceeded $11,000, including upkeep on their former home. Clearly, they needed the money they had lent Steve to live on. The judge rejected Steve’s evidence, calling him not a credible witness.
Deciding If a Lawsuit is Valid
If Mario had dementia in 2009, he couldn’t instruct Andrew to force Steve to repay the mortgage. Steve complained Andrew had no right to launch the lawsuit. The judge agreed that Mario’s capacity to give Andrew instructions should be assessed under the Substitute Decisions Act. The Act allows family members to act on behalf of someone who lacks mental capacity to make their own financial or health care decisions. For Steve to challenge Andrew’s power of attorney, he would have to file a separate legal action under the Substitute Decisions Act. If Mario couldn’t represent himself in court, the Ontario Public Guardian and Trustee could do so.
Staying Legal Judgment Temporarily
Since who had the right to power of attorney over Mario’s decisions was up in the air, the judge stayed his decision on the lawsuit. That would give Steve time to make an application to the court about Mario’s mental capacity. Failing that, his youngest son had to pay back the mortgage loan. It was just a matter of time, unless Steve could produce more compelling and credible evidence. As the brothers discovered, blood may be thicker than water, but money talks.
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