NS Supreme Court orders son to repay late mother's estate for breach of power of attorney duties

In a recent ruling, the Supreme Court of Nova Scotia ordered a son to repay $80,000 to his late mother’s estate for violating his duties under a Power of Attorney (POA).

In Galbraith v. Smith, 2024 NSSC 40, Elizabeth Galbraith successfully claimed against her brother, Murray Smith, for breaching his duties while managing their late mother, Patricia Smith's estate. The court ordered Murray to repay $80,000 to Patricia’s estate and all rent received from a tenant he had arranged.

The court highlighted the responsibilities and obligations of individuals given a POA to manage the affairs of a family member who can no longer do so due to health issues. The court explained that a POA allows one to act on behalf of another regarding property and financial matters. Still, it requires the attorney to act in good faith and the donor’s best interests, with an obligation to account for their actions.

Elizabeth's application to the court sought a full accounting from Murray for his management under the POA executed by their mother in 2017, and reimbursement for any losses or expenses he incurred in breach of his obligations. Despite Murray providing some accounting records, the court found his efforts insufficient and his attitude towards his responsibilities dismissive.

The court's analysis focused on Murray’s failure to properly account for transactions made under the POA, including renovations to the family home and management of Patricia’s financial assets. While Murray argued the renovations, totalling approximately $89,048.30, were necessary for Patricia’s benefit and increased the home’s value, Elizabeth contended they were primarily for Murray’s benefit with intentions of purchasing the home post-Patricia’s passing.

The Supreme Court determined that Murray did not maintain proper records or receipts for most transactions and failed to create a statement of assets and liabilities at the beginning of his tenure as an attorney, as required by the Nova Scotia Powers of Attorney Act. As a result, the court ordered Murray to repay $80,000 to the estate, representing unaccounted funds from the initial financial assets estimated at $170,000.