Law Times

Law Times • may 11/18, 2009 Ottawa's trial of the century T he news media here are going nuts, calling it "the trial of the century." News coverage has gone around the world: "Ottawa mayor on trial for fraud and infl uence peddling!" It began in earnest last Monday. Everything is over the top. Th e CBC sought to broadcast it live. Radio-Canada is triple- teaming coverage. Lawyers are doing live blogging. Quiet, municipal Ottawa is fi nally on the map for more than nice tulips and a long skating rink. Mayor Larry O'Brien hired brilliant criminal counsel Mi- chael Edelson. He's the kind of defence lawyer you want if you are charged with a serious off ence. Th e Crown attorney is Scott Hutchison, a guy with equal chops in the courtroom. Municipal corruption tri- als do occur in Canada. Th ey usually involve elected offi cials taking money for fa- vours. Rarely are they about criminal allegations arising from a mayoralty race. Police allege that in the run-up to the 2006 election, multi-millionaire candidate O'Brien off ered Terry Kilrea, an out-of-luck, right of centre candidate, to get him a federal government job with the Na- tional Parole Board if in return Kilrea would drop out of the mayoralty race. Not true, not true at all, says O'Brien. Kilrea dropped out. O'Brien entered, and as the only right- wing candidate, easily won with 47 per cent of the vote, defeating incumbent Liberal mayor Bob Chiarelli and activ- ist Alex Munter. Kilrea then went to police. O'Brien told everyone the that allegations against him were all a pack of lies by Kilrea and no off er had ever been made or accepted. Th e news media probed into the story. It was delicious. Th ey re- ported an outdoor café meeting between Kilrea and O'Brien, al- legedly watched from across the street by a Conservative provin- cial MPP doing her exercises in a woman's health club. Th e story went around the world. She has received her subpoena. In news reports police al- leged O'Brien and Kilrea met at night in parking lots behind Tim Horton's coff ee houses. O'Brien denied anything il- legal had ever occurred. Ontario Provincial Police launched a huge inquiry. It lasted eight months, which stretched into 14 months when provincial justice offi cials and the RCMP became involved. Finally they charged O'Brien. Charging politicians and investigating possible links to federal cabinet ministers is something you do carefully in The Hill By Richard Cleroux this country. Th e charges against O'Brien are: * Pretending to have infl u- ence over the government of Canada or a minister of the government in order to gain a benefi t contrary to s. 121 (d) of the Criminal Code. * Soliciting, recommending, or negotiating an appoint- ment in order to gain a ben- efi t, contrary to s. 125 of the Criminal Code. Th e parole board job involve- ment brought in the Mounties. Subpoenas went out in re- cent weeks to government ministers and high offi cials: Transport Minister John Baird; former Conservative election co-chairman John Reynolds, now a prominent lobbyist; and Prime Minister Stephen Harp- er's director of appointments, Dave Penner. Some witnesses may claim cabinet secrecy. A conviction would have immense legal consequences, calling into question the legal- ity of laws O'Brien voted for, especially those in which he cast the deciding vote during the past three years. Th e mayor chose to stay on during the police investiga- tion. Council did not demand his resignation. Ottawa had a plan for a bil- lion-dollar light train project. Th e mayor cast the deciding vote against it, leaving Ottawa as the largest city in Canada to rely totally on buses. O'Brien stepped down when the trial began, describ- ing the allegations as "lies" and the police investigation as "politically motivated" and the charges as "frivolous." Th e trial also has political implications because cabi- net ministers have been sub- poened as witnesses. Th ere is expected to be evidence pre- sented involving police wire- taps and transcripts. One popular media account links Baird to an alleged meet- ing with Kilrea in Hy's Steak- house and Bar in Ottawa. Baird, a practising vegetar- ian, has told news media he was in the steak house not with Kil- rea, but with a member of the Young Conservatives. Over at City Hall this trial can't end soon enough for them, one way or the other. Likely for Harper as well. LT Richard Cleroux is a freelance reporter and columnist on Parlia- ment Hill. His e-mail address is richardcleroux@rogers.com. www.lawtimesnews.com COMMENT The duty of an attorney to account BY JOHN O'SULLIVAN AND LORI M. DUFFY For Law Times A s a general rule, a person exercising a power of attorney for property in Ontario has no legal duty to account to anyone other than the grantor of the pow- er, where there are no reasonable grounds to believe the grantor is incapable of managing property. However, even if cer- tain that the grantor would never require an account- ing, anyone exercising a power of attorney should be very careful to ensure they will be able to account in the future to a person adverse in interest. If the grantor dies and the attorney is then appointed trustee for the grantor's estate, the court has a discretion to require the former attorney/estate trustee to account to a benefi - ciary of the estate for the period of time they were acting under the power of attorney. Th is was the conclusion of the Ontario Su- perior Court of Justice in McAllister Estate v. Hudgin released in August 2008. Th e court or- dered the deceased's daughter, who was estate trustee and had also been the deceased's attor- ney, to account to her brother, a benefi ciary of the estate, for the period of the power of attorney despite the daughter's objection and despite the fact that there was insuffi cient evi- dence to raise a concern about the deceased's capacity to manage her property up until death. (Th e order provided that formal estate accounts were not required "at this stage," only production of certain fi nancial records.) Th e court ruled that where the grantor is deceased and the attorney and the estate trustee are the same person (and therefore there cannot be a true accounting between attorney and estate trustee), the court can ex- ercise a discretion to require an accounting after considering two main questions: (1) the extent of the attorney's involvement in the grantor's fi nancial aff airs, and (2) whether the applicant has raised a signifi cant concern in respect of the management of the grantor's aff airs that warrants an accounting. In the McAllister case the evidence was clear that the former attorney had "complete control" over the deceased's fi nances. Also the applicant brother had raised a "signifi - cant" concern in that on a calculation of the deceased's known income and expenses there should have been approximately $100,000 more than there was in the deceased's ac- count as of the date of death. Th e court based its jurisdiction to make this order on two grounds: s. 42 of the Substitute Speaker's Corner Decisions Act which gives the court the pow- er to order the accounts of an attorney to be passed on the application of "any" person, and alternatively, the court's general powers in re- spect of directions in Rule 75.06 of the Rules of Civil Procedure. Th ere are other recent instances where an attorney/estate trustee has been compelled to account other than to the grantor. In Bigelow Estate (Re) the estate trustee did not dispute that the former attorney who was also the estate trustee should account to a ben- efi ciary for the period the power of attorney was exercised. Th is was an application by the estate trustee to pass the estate accounts. An objection fi led by one of the de- ceased's children focused on the "opening bal- ance" of the accounts at the date of death. Th e objector complained about expenses during the exercise of the power of attorney. Th e estate had willingly produced docu- mentation for the attorney period and made a "concerted eff ort" to answer the objector's requests for information. Th e objector argued these answers were inadequate. A three-day hearing ensued which focused on the alleged depletion of the deceased's as- sets during his life, including gifts to family members, cash withdrawals without support- ing documentation, lack of receipts for ex- penses reimbursed to the attorney, and certain charges to the grantor's credit card accounts. Th e court entertained the complaints, but held the objector's suspicions were unfounded and that his investigation "revealed nothing to justify any fi nding of impropriety or breach of duty of any kind" by the attorney. An appeal is pending. Another recent case in which an attorney who became estate trustee was ordered to ac- count to a benefi ciary for the period of the power of attorney is De Zorzi Estate v. Read. Th e wisest course for a person exercising a power of attorney for property in Ontario following these decisions is to assume that he or she will be required at some point in the future to account to persons opposed in in- terest, and to conduct themselves accordingly throughout their tenure as power of attorney. Th ey may also want to ensure, if they can, that the document naming them as attorney provides protection for the costs they may be forced to incur in preparing accounts and passing them before the court. LT John O'Sullivan and Lori M. Duff y are partners with WeirFoulds LLP in Toronto. O'Sullivan can be reached at josullivan@weirfoulds.com, while Duff y's e-mail address is lduff y@weir foulds.com. PAGE 7

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