Saskatchewan Estate Litigation Update: Bistretzan v Krpan, 2024 SKKB 199

December 20, 2024
Accounting | Power of Attorney | Power of Attorneys Act

The recent Saskatchewan King’s Bench decision in Bistretzan v Krpan, examined when a Court will order an attorney to provide a final accounting. The decision in Bistretzan offers a variety of lessons, which include:

  1. That the period of the accounting should cover only the period in which the attorney actually used the power of attorney to make transactions;
  2. If an attorney did not use the power of attorney to conduct numerous transactions, a Court may determine that it is not reasonable to go to the work of preparing a formal final accounting. In other words, there is a “reasonableness” inquiry imported into the Court’s decision whether or not to order a final power of attorney accounting;
  3. If you are resisting providing an accounting, you cannot simply avoid the detailed work of preparing a formal final accounting, by simply giving the underlying records to the person who is seeking an accounting.
Background:

The factual background in Bistretzan included the below:

  1. Karen Bistretzan (“Karen”) sought an order under The Powers of Attorney Act, 2002, SS 2002, c P-20.3 (“Act”) that Diana Rae Krpan (“Diana”) and Donna Eva Balez (“Donna”) provide a final accounting of actions taken collectively by them as attorneys for Rita Marie Eugenie Bistretzan (“Deceased” or “Rita”);
  2. The Deceased had given a power of attorney to Diana and Donna on August 25, 2015 (“Power of Attorney”);
  3. The Deceased, who was the mother of all parties involved in the court application, died on January 12, 2023;
  4. Prior to her death, the Deceased had also appointed Diana sole executrix of her estate in her Last Will and Testament, executed on June 14, 2014;
  5. The beneficiaries of the Deceased’s Estate were Karen, Donna and Diana;
  6. Following the Deceased’s death, Karen asked Diana for a full accounting of Diana’s activities respecting her use of the power of attorney from August 25, 2015, to January 12, 2023;
  7. Diana provided extensive information, but not in the sworn statutory form of a final power of attorney accounting. Karen remained unsatisfied with the information provided to her by Diana;
  8. Karen thus commenced a court application seeking an order directing both Diana and Donna to provide a formal accounting for their power of attorney activities;
  9. Diana argued that she had already provided voluminous documentation to support the information. Diana said that she exercised her authority under the Power of Attorney on only a few occasions during the final years of Rita’s life;
  10. Similarly, Donna said that she exercised her authority under the Power of Attorney only twice. She said that she had relied upon her Power of Attorney to have Rita registered at certain care homes in Regina, but at no time did she make decisions respecting Rita’s financial affairs.
Decision:
Issue 1: Whether or not Diana was required to provide a formal power of attorney accounting?

The Court held that Diana was indeed required to provide a formal power of attorney accounting, from the period of January 1, 2021, to January 12, 2023.

The Court concluded that Diana was the “the point-person for Rita as well as her principal attorney.” The Court noted that Diana had used the Power of Attorney on a number of occasions, such as:

  1. Diana cancelled Rita’s Saskatchewan Government Insurance auto policy and her license plates;
  2. Diana registered Rita at Parkside Extendicare Home;
  3. September 2022 – Diana cancelled Rita’s tenancy agreement for her rental unit at Lakewood Common, as well as her accounts with SaskTel, and SaskPower; and
  4. January 13, 2023 – Diana may have shown the Power of Attorney to staff at the care home when she removed Rita’s belongings on the day of her death.

Diana and the Deceased had also been joint owners on a bank account, and Diana had made transactions under such account (although Diana said that such transactions were distinct from any transactions Diana made using the Power of Attorney).

The Court ultimately concluded that it was reasonable to require Diana to provide a final accounting:

[32]          I am persuaded by the evidence that Diana was principally responsible for looking after Rita’s best interests and personal affairs utilizing the EPA on several occasions. In light of all the relevant circumstances, to quote Bryant Estate, it is reasonable to require her to make a formal accounting of her activities as Rita’s attorney as requested to do so by Karen.

In the course of reaching this conclusion, the Court made a number of observations that are relevant to practitioners who work in the area of powers of attorney.

  1. First lesson:

First, the Court held that the appropriate time period that the final power of attorney accounting must cover, is for the time period during which actual transactions were being undertaken by the attorney. This may be a relatively short period of time. The Court held:

[43] The uncontroverted evidence of both Diana and Donna is that neither of them exercised their authority under the EPA until approximately two years prior to Rita’s death. I accept this evidence. I conclude that in light of all the relevant circumstances, it is reasonable to direct Diana to comply with the requirement that she prepare a formal accounting under s. 18.1 of the POAA and Form K of the POA Regulations on her activities from January 1, 2021, to January 12, 2023.

[emphasis added]

  1. Second lesson:

Second, the Court held that even if an attorney has provided the underlying banking or records, the Court can still require that the person prepare and swear a formal power of attorney accounting.

Here, Diana had already provided to Karen extensive documentation outlining her and Donna’s activities in relation to their dealings with the Deceased’s affairs between June 14, 2014 to August 23, 2023. However, the documentation was not presented in the proper format for a final accounting, and was not sworn. The Court held that Diana was required to place the information into the format of a formal final accounting.

  1. Third lesson:

Third, Diana argued that she should not have to account for transactions on a joint bank account that held a joint account with the Deceased. Diana said that such account was separate and apart from her activities as the Deceased’s attorney. As a result, these activities should fall outside the scope of a formal accounting under the Act. The Court did not agree. Because Diana was simultaneously Rita’s principal attorney and a holder of a joint account with her mother, this made it somewhat difficult to segregate these two responsibilities.

The Court held:

[38] In any event, Form K, the relevant form “for a final accounting by a property attorney for the purposes of section 18.1 of the [POAA]” contains specific categories for reporting by an attorney of assets jointly held with the grantor. See: The Powers of Attorney Regulations, RRS c P-20.3 Reg 1, ss 3(k) [POA Regulations], and Form K. Plainly, the POAA contemplates that accounts held jointly by the grantor and the attorney are relevant when a formal accounting is directed pursuant to that section.

[39]      Accordingly, for these reasons, I direct that Diana provide a formal accounting of her activities as Rita’s attorney, including transactions relating to the joint account.

  1. Fourth lesson:

Finally, the Court in Bistretzan held that when determining whether to order a final accounting, the Court was entitled to examine whether the request for an accounting was reasonable in light of all relevant circumstances.

Bistretzan relied on a separate decision in Bryant Estate v Stuart, 2021 SKCA 54, which had involved the question of whether to order an estate accounting, and not a power of attorney accounting. The Court in Bryant Estate held that the Court could consider a reasonableness factor. Thus, there was not an automatic right to an estate accounting, if the provision of one would not be reasonable in the circumstances.

For some examples, Bryant held that it would be reasonable to order an estate accounting if an estate accounting had already recently been provided, or, if many years had passed since the estate was resolved (i.e. it would be unfair to expect the executor to have kept records for so many years).

The Court in Bryant held:

[35] I would not presume, in this decision, to attempt to identify all of the circumstances that might make a request for an accounting unreasonable, but it may be helpful to mention three. First, a request that is made too closely on the heels of another accounting might be unreasonable on the basis that not enough time has passed, or the trustee has not had enough opportunity to deal with the trust property, to warrant an additional accounting. Second, the state of affairs concerning the administration of a trust might make a request for an accounting unreasonable. Thus, for example, if the administration of an estate is on the very brink of being completed, it might be unreasonable to request an accounting until matters have been finally wrapped up. Third, at some point in time, it may become simply too late in the game for a beneficiary to properly expect an order requiring an accounting. This might be the case, for instance, if a request for an accounting is made many years after the time by which it might have been expected that the administration of an estate would have been completed. In other words, the timeliness of a request for an accounting might be a factor to be considered in deciding whether the request is unreasonable. Every determination of reasonableness will, of course, always be fact and context specific.

….

[39]           I agree with Tinlineto the extent it rejects the idea that the obligation on a trustee to provide an accounting as per s. 55(1) is absolute and to the extent it rejects the notion that a judge faced with an application pursuant to s. 55(2) must reflexively make an order for an accounting if a trustee has failed to respond to a request for same. The Legislature cannot be taken to have intended that a request for an accounting, no matter how ill-timed or vexatious, must be honoured by a trustee or enforced by court order. However, as indicated, it is not necessary for a beneficiary to show cause as a precondition to obtaining an order pursuant to s. 55(2). A judge should make an order for an accounting under that subsection if a beneficiary has made a request that is reasonable in light of all of the relevant circumstances and that request has been denied or not acted upon by the trustee.

[emphasis added]

The Court in Bistretzan held that the same test – that of reasonableness – applies when the Court is asked to order a power of attorney accounting:

[16]           The same legal test, I conclude, operates in the context of an application brought pursuant to the POAA. Consequently, I must decide whether Karen’s request for an accounting by both Diana and Donna is reasonable “in light of all of the relevant circumstances”? It is not necessary to determine if just cause has been shown. I turn to that discussion now.

As an aside, in this author’s view, this conclusion in Bistretzan is a departure from the plain wording of The Powers of Attorney Act, 2002, SS 2002, c P-20.3. The relevant portion of the Act reads:

Final accounting

18.1 (1) Subject to subsection (2), every attorney acting pursuant to an enduring power of attorney shall, on the termination of the authority of the attorney:

(a) provide a final accounting, in the prescribed form, of the decisions made, actions taken and consents given respecting the grantor to:

    1. a person named by the grantor in the enduring power of attorney;
    2. if no person is named pursuant to subclause (i), an adult family member of the grantor;
    3. a decision-maker appointed pursuant to The Adult Guardianship and Co-decision-making Act, if any;
    4. a property guardian appointed pursuant to The Missing Persons and Presumption of Death Act, if any;
    5. if the grantor is deceased, the executor or administrator of the grantor’s estate; and
    6. the public guardian and trustee; and
    7. (b) verify by affidavit the final accounting required pursuant to this subsection.

[emphasis added]

The Act uses mandatory language, and says simply that a power of attorney “shall” provide a final accounting to a designated person on the death of the grantor. The legislation does not contain language which explicitly gives the Court the power to instead use its discretion, as to whether a given request for a final accounting was reasonable in terms of timing, the motivation behind its request, how much actual use was made of the power of attorney, how many years had passed since the death of the grantor, etc.

However, there may well be valid policy reasons for why some judicial discretion is a sensible safeguard, to ensure vexatious requests for accounting are not given effect to. That said, the legislature may wish to insert actual statutory language, and remove the mandatory wording which presently exists.

Issue 2: Whether or not Donna was required to provide a formal power of attorney accounting?

Having ordered that Diana provide an accounting, the Court did not order that her sister Donna provide an accounting.

The evidence disclosed that Donna had only used the Power of Attorney on two occasions:

  1. The first occasion was when she assisted admitting the Deceased into Sunset Care Home in Regina;
  2. The second occurred when Donna used it to have the Deceased admitted into convalescent care at Elmview Extendicare.

Donna further said that she did not conduct any financial dealings relating to her mother pursuant to the Power of Attorney. The Court held that it would not be reasonable to require Donna to provide a power of attorney accounting:

[26]         Second, in view of Donna’s very limited use of the EPA, and as discussed below, Diana’s activities as Rita’s principal attorney, it would not be reasonable in these circumstances to require Donna to complete a formal accounting of her activities acting in accordance with Rita’s EPA.

Conclusion:

The decision in Bistretzan reminds parties of a variety of lessons. Among these are the below:

  1. First, if you are seeking an accounting, it is possible that a power of attorney accounting may not be ordered if the attorney did not engage in much use of their power to conduct transactions or financial dealings for the grantor. A party may wish to closely examine how much a specific attorney actually used their powers to conduct transactions. If it appears that they used it on only a few occasions, and not primarily for engaging in property transactions, it may not be worth it for you to incur the legal cost in bringing a court application, only to risk a court declining to order an accounting;
  2. Second, if you are resisting providing an accounting, you cannot simply avoid the detailed work of preparing a formal final accounting, by giving the underlying records to the person seeking an accounting. You rather should prepare the formal final accounting in the form set out in the Powers of Attorney Regulations.