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Power of Attorney - Property

. Falsetto v. Falsetto

In Falsetto v. Falsetto (Ont CA, 2023) the Court of Appeal held that when an attorney (under a power of attorney) acts with the informed consent and at the direction of the donor, they are thereby not acting in a fiduciary capacity:
[48] For these reasons, I accept Salvatore’s submission that Sam was a fiduciary both in respect of Salvatore’s bank accounts and in his use of the Power of Attorney, and the trial judge erred in law in finding otherwise.

[49] However, in my view, the trial judge made no error in concluding that Sam did not act in breach of his fiduciary obligations. On the trial judge’s findings, Salvatore authorized all of the impugned transfers. Therefore, when Sam acted as attorney to transfer assets to himself, he was fulfilling Salvatore’s instructions. Where a donor has capacity, the attorney is primarily informed by the donor’s instructions, and the attorney is not in breach of their obligations if they follow those instructions.

[50] In Richardson (Estate Trustee of) v. Mew, 2009 ONCA 403, 96 O.R. (3d) 65, at para. 49, this court referred to the following description of the prohibition against using a power of attorney for personal profit, citing Egli v. Egli, 2004 BCSC 529, 28 B.C.L.R. (4th) 375, at para. 82, aff’d 2005 BCCA 627, 262 D.L.R. (4th) 208:
It is the attorney's duty to use the power only for the benefit of the donor and not for the attorney's own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. [Emphasis added; citations omitted.]
[51] In this case, as the trial judge found, Salvatore had full capacity and knowledge, and he consented to the impugned transfers. In fact, Salvatore instructed his attorney, Sam, to make the transfers.

[52] In these circumstances, despite being a fiduciary, Sam was entitled to use his powers as attorney to effect the transfers for his own benefit.


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Last modified: 05-07-23
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