How ought to an influence of lawyer be granted in a industrial context? | Dentons

This article briefly examines the use of powers of attorney in a business context (e.g., in a shareholders’ agreement) in light of current Ontario common law and legal framework and provides some considerations to be considered when granting a power of attorney in a trade agreement.

What is a power of attorney and what does it regulate?

According to judge BR Warkentin in Daley versus Daley,1 A power of attorney is a legal document that grants the appointed person (the “lawyer”) the fiduciary obligation to use the power of attorney issued in the name of the principal exclusively for the benefit of that principal, since the power of attorney grants the attorney an advantage without the power of attorney Constitutes a breach of the duty of loyalty.

Notwithstanding the foregoing is the enactment of the Power of Attorney Act2 and the Substitute Decision Act3 in Ontario replaces common law on powers of attorney,4th including the requirement that a general power of attorney be terminated in the event of intellectual disability or death of the principal.5 Under these statutes and under the POA Act, a general property power of attorney allowed the attorney to do on behalf of the grantor whatever the grantor could lawfully do through an attorney6th while the SDA provided, among other things, comprehensive governance for permanent powers of attorney for real estate and for powers of attorney for personal hygiene.7th The SDA determined that (i) in the context of an ongoing property power of attorney (a “CPOA“), A lawyer can make financial and property decisions for the testator, regardless of whether he was mentally capable or incapable; and (ii) as part of a power of attorney for personal care (“POAPC“), An attorney can make alternative decisions about the health, nutrition, care, and safety of the mentally retarded donor.8th

How does the legal landscape for trade powers apply?

A power of attorney in a commercial context can fall under the SDA provisions and count as a CPOA if it expresses the intention to exercise the power of attorney during the inability of the issuer to manage assets,9 which leads to several disadvantages that can complicate or nullify such granting in a commercial context, including:

  • An issuer of a CPOA can revoke a CPOA at any time if he is able to issue a CPOA,10 and a CPOA is terminated when the grantor executes a new CPOA (unless the grantor provides that there should be multiple CPOAs), revokes the CPOA, or dies,11 which destroy the intention to have the power of attorney irrevocably in a commercial context;
  • The lawyer must give an account of his handling of the testator’s property,12th which is often not intended in a commercial context, since the power of attorney is granted in favor of the lawyer; and
  • The attorney must act as “a trustee whose powers and duties are carefully, honestly and honestly exercised and fulfilled in good faith for the benefit of the disabled person”13th which would nullify the power of attorney granted in the commercial context in favor of the lawyer.

Is there another power of attorney in a commercial context?

According to the court in Wilkinson v. Young14th A power of attorney with regard to the assets of a grantor can be exempted from the general restrictions on termination imposed by common law in the event of intellectual disability or death of the grantor and which can also be distinguished from the CPOA under the SDA:

If a position is set up against payment or in a document and the purpose of the position is to safeguard the interests of the proxy, the power of attorney generally cannot be revoked, ie if the power of attorney is associated with an interest, the power of attorney is generally irrevocable […] Even if a power of attorney is given to a buyer against value and is designated as irrevocable, the power of attorney is neither revocable nor is it revoked by the death or disability of the donor. In all cases in which the agency is set up free of charge and only for the benefit of the client, it ends by operation of law with the death or mental incapacity of the client.fifteen

Therefore, when drafting a power of attorney in a commercial context, it is recommended to clarify that the power of attorney is (i) a worthwhile consideration to safeguard the interests of the lawyer (ie that the power of attorney is linked to interest ”) and is irrevocable; (ii) is not subject to the SDA, even if the authority granted can be exercised during the inability of the testator to manage assets; and (iii) not subject to common law requirements that the attorney owe the grantor fiduciary obligations or that the grant cease upon death or invalidity of the grantor.

In addition, a CPOA as under the SDA must be carried out by two witnesses (who cannot be the lawyer or their partner or the partner or child of the testator),16 a power of attorney in a commercial context probably does not need to be attested, and it is recommended that in such a situation no more than one person (this may be the proxy or his partner or the partner of the principal) or child), to distinguish such a grant from a CPOA. However, this factor is not decisive.

1 2015 ONSC 6741, paras. 92-93.

2 RSO 1990, c. P.20 [POA Act].

3 1992, SO 1992, c. 30th [SDA].

4 Supra grade 5 for up to 51.

5 Spar Roofing & Metal Supplies Limited v. Glynn, 2016 ONCA 296, para. 50 [Spar Roofing].

6 Supra Note 2, s 2.

7 Supra grade 5 for up to 51.

8 JB v. De Souza, 2018 ONSC 4061 at 15 [De Souza].

9 Supra Note 3, p.7 (1).

10 Ibid., P. 8 (2).

11 Supra Note 3, s 12 (1).

12 Ibid., P. 8 (1) (d)

13 Ibid., P. 32 (1).

14th [1972] 2 OR 239.

15 Ibid. and p. 2.

16 Supra Note 3, p.10.

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