Family, Estates & Trusts 


Family Dispute Leads to Contested Committeeship Application

Suspicion, differences of opinion, and conflict between family members make it very difficult to select an appropriate committee for a loved one. An application to the BC Supreme Court was necessary in Klop (Re), 2021 BCSC 644 to resolve a dispute among siblings. They could not agree on which of them should be appointed representative of their elderly mother who was no longer capable of managing her financial affairs or her person due to dementia. The court’s decision in Klop (Re) is helpful for anyone who wants to understand the factors the court considers when deciding who to appoint as a committee.

Conflict between siblings

Mr. and Mrs. Klop married, raised 10 children, and owned a large dairy farm in BC. When Mr. Klop died in 2013, he and Mrs. Klop owned equal shares in the farm. Two of the Klops’ sons, Gerald and John, worked full-time at the farm for several decades, starting at age 15. Through a series of transactions that took place shortly after Mr. Klop’s death, the farm company was reorganized, and ownership was transferred to Gerald and John (the “2013 Transactions”). Four of the Klops’ daughters were deeply suspicious of the 2013 Transactions, which took place when Mrs. Klop was in her 80s and beginning to exhibit some cognitive decline. The daughters questioned whether Mrs. Klop had capacity to understand the 2013 Transactions, to instruct her solicitor, or to consent to the transfer of her personal wealth. The daughters alleged that Gerald and John had been secretive, duplicitous, and uncooperative when asked about the farm company’s restructuring.

Mother declared incapable

The daughters sought the appointment of one of them—Antonia—as committee of both the person and the estate of their mother under the Patients Property Act, R.S.B.C. 1996 c. 349 (“PPA”). By the time the matter came before the court in 2021, Mrs. Klop was 87 years old, suffering from severe dementia, and living in a BC assisted living facility. The medical evidence supported a declaration that Mrs. Klop was incapable of managing herself and her affairs.

Disagreement over who should be committee

Once the order was made declaring Mrs. Klop a “patient” within the meaning of the PPA, the next step is for the court to appoint a committee. The daughters position was that the potential conflict of interest should disqualify Gerald and John from acting as committees. Gerald and John did not oppose Antonia being appointed as committee for their mother’s person, but they did not agree that Antonia should be appointed committee of their mother’s estate.

Factors in selecting a committee

Section 6(1) of the PPA empowers the court to appoint any person to be the committee of a patient, but the PPA does not set out criteria for selection of a committee. The factors the court may consider in appointing a committee have been identified in other BC court cases, and they include:

  • whether the appointment reflects the patient’s wishes, obviously when he or she was capable of forming such a wish;
  • whether immediate family members are in agreement with the appointment;
  • whether there is any conflict between family members or between the family and the patient, and whether the proposed committee would be likely to consult with immediate family members about the appropriate care of the patient;
  • the level of previous involvement of the proposed committee with the patient, usually family members are preferred;
  • the level of understanding of the proposed committee with the patient’s current situation, and will that person be able to cope with future changes of the patient;
  • whether the proposed committee will provide love and support to the patient;
  • whether the proposed committee is the best person to deal with the financial affairs and ensure the income and estate are used for the patient’s benefit;
  • whether a proposed committee has breached a fiduciary duty owed to the patient, or engaged in activity which diminishes confidence in that person’s abilities to properly handle the patient’s affairs;
  • who is best to advocate for the patient’s medical needs;
  • whether the proposed committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out; and
  • whether a division of responsibilities such as between the patient’s estate and the patient’s person to different persons would serve the best interests of the patient, or would such a division be less than optimal for the patient.

The inquiry is fact specific, and a particular factor may or may not be applicable and may attract different weight depending on the circumstances of a case.

Who should be appointed committee?

The court appointed Antonia committee of her mother’s person and Gerald and John as committees of their mother’s estate. Of the factors set out above, the following were the most relevant in this case:

  • Patient’s Wishes: Mrs. Klop made an enduring power of attorney (“POA”) in favour of Gerald and John in November 2012. While there was evidence of Mrs. Klop intermittently exhibiting some signs of mild cognitive decline and impairment around the time the POA was made, there was no evidence sufficient to prove or even raise significant concern that the decline in Mrs. Klop’s cognitive state was so extreme that she lacked capacity to grant the POA. This weighed significantly in favour of the appointment of Gerald and John.
  • Family Conflict and Willingness to Consult: There was evidence that Gerald and John were not as forthcoming with their siblings as they could have been at the time of the 2013 Transaction, but no basis for a finding that they were being secretive or obstructing inquiries by other siblings to the family’s accountant and lawyer. Further, this factor is primarily concerned with obtaining co-operation as to a patient’s personal care. Antonia was being charged with that responsibility, by consent of Gerald and John. All agreed that Mrs. Klop was being well cared for in the assisted living facility.
  • Dealing with Financial Affairs and Ensuring the Income and Estate are Used for the Patient’s Benefit: Mrs. Klop had annual income of approximately $19,800 from her Old Age Security, CPP payments, and a modest amount of investment income. She also received dividend payments from the farm company. The daughters argued that because Gerald and John hold the power to declare dividends, their mother is “left at the mercy of Gerald and John’s generosity”. The potential may exist for Gerald and John to be put into a conflict of having to choose between the best interests of the company and of their mother in deciding whether to declare a dividend, but any such concern was theoretical. There was no evidence that the arrangement had not been or would not be in the best interests of Mrs. Klop. The court was satisfied that adequate provision was being made for Mrs. Klop’s expenses through the amounts credited by the company, and as directors of the company, Gerald and John were best positioned to direct to her any monies she needs, and otherwise to handle her finances.
  • Breach of Fiduciary Duty: The daughters argued that the POA made Gerald and John fiduciaries to their mother, and they were in a conflict of interest in having the majority of her wealth transferred to them through the 2013 Transaction. The court found no evidence of Mrs. Klop having insufficient capacity to undertake the 2013 Transactions and no evidence that the 2013 Transactions were effected under Gerald and John’s POA.

In fact, the body of evidence established that, contrary to the daughters’ characterization of events, the transfer of ownership of the farm company did not begin with the 2013 alteration of the company’s share structure; it had been contemplated for some time prior to Mr. Klop’s death. Documents dating from 2012—which, unfortunately, were not disclosed to the daughters in a timely manner—demonstrated that the reorganization was a component of tax-driven estate planning. A memorandum prepared by Mr. and Mrs. Klop’s accountant in 2012 explicitly stated:

It is recognized that Gerald and John have stayed behind and contributed significantly to the existing value of [the Company] and they are being rewarded accordingly.

The reorganization plan documents are not testamentary documents and not admissible themselves as evidence of Mr. and Mrs. Klop’s intentions or capacity. However, taken with affidavit evidence from the accountant and lawyer who assisted Mr. and Mrs. Klop with their estate planning, the court was satisfied that there were no concerns as to any breach of fiduciary duty or conflict of interest that should disqualify Gerald or John from acting as committee of their mother’s estate.

Legal advice on committeeship applications

Our estate planning lawyers regularly assist clients with Committeeship Applications. The inquiry on an application for committee is inquiry fact specific, and a particular factor may or may not be applicable and may attract different weight depending on the circumstances of a case. Overall, the question is governed by an assessment of who will serve the patient’s best interest.

If you have concerns that a family member or friend is being taken advantage of due to mental incapacity, or have questions about committeeship applications, claims for lack of capacity or undue influence, contact Onyx Law Group’s team of Vancouver family law and estate litigation lawyers for a 30-minute free consultation.

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