Doherty v Doherty

Summary

Molly Doherty appointed her son, Terrence Doherty, as her attorney for property. While acting under the power of attorney, Terrence transferred more than $329,000 of Molly’s funds to himself, his wife, and their son. He claimed the transfers were gifts authorized by his mother.

After Molly’s death, the Estate Trustee challenged the transactions and sought repayment.

Justice Dietrich found that Terrence failed to prove the transfers were valid gifts and held that he breached his fiduciary duties as attorney for property. The Court ordered repayment of the funds by the recipients and awarded full indemnity costs. The decision was subsequently upheld by the Court of Appeal for Ontario, which confirmed the trial judge’s findings and analysis.

Key Principles

• An attorney for property owes a strict fiduciary duty to the grantor and must act solely in the grantor’s best interests.
• An attorney for property cannot exceed the authority granted under the power of attorney or the Substitute Decisions Act, 1992.
• Unlike an ordinary agent, whose authority may arise from the instructions of a capable principal, an attorney for property is a statutory fiduciary subject to heightened duties of loyalty, accountability, and avoidance of conflicts of interest.
• ⁠The attorney’s fiduciary obligations remain paramount regardless of the grantor’s capacity.
• Attorneys cannot engage in self-dealing or transfer assets to themselves or family members unless expressly authorized by law or the power of attorney.
• Transfers by an attorney to themselves or related parties are subject to close scrutiny by the Court.
• ⁠A party alleging that a transfer was intended as a gift bears the burden of proving the donor’s intention.
• Where an attorney improperly transfers assets, the Court may order restitution and hold both the attorney and recipients personally liable.
  
  

Result

The Court ordered repayment of the improperly transferred funds and awarded full indemnity costs. The decision, later affirmed by the Court of Appeal, stands as a strong reminder that a power of attorney is not a licence to distribute a grantor’s assets and that attorneys who exceed their authority or place themselves in a conflict of interest will be held strictly accountable for breaches of their fiduciary duties.