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POWER OF ATTORNEY - Scope of authority

Tuesday, February 18, 2020 @ 9:07 AM  

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Appeal by the plaintiff finding the respondent did not owe the appellant a fiduciary duty under a power of attorney. The appellant and respondent agreed to purchase a property as joint tenants. The respondent paid the deposit of $75,000. As the appellant resided in China, she granted the respondent power of attorney authorizing him to mortgage the property if the appellant’s funds did not arrive in time for closing. Although the appellant’s funds were transferred in time for closing, the respondent obtained a mortgage, such that his only contribution to the purchase price was the deposit. The appellant sued for breach of fiduciary duty. The judge found the respondent did not owe the appellant a fiduciary duty. Even if there was a breach, the judge found the appellant lacked clean hands, referring to false evidence tendered at trial and to the fact the appellant’s contribution came from China, at least in part, through sums designated tourist reasons. The appellant argued the judge erred in failing to find the power of attorney created a fiduciary duty, in failing to find the respondent breached that fiduciary duty in exercising the power as he did, and in holding that an equitable remedy was barred by the clean hands doctrine and restricting the remedy to a contractual accounting.

HELD: Appeal allowed. There was no basis in law, or in this particular instrument, to eliminate the fiduciary duty owed by the respondent to the appellant. This power of attorney created a fiduciary duty owed by the respondent to the appellant in respect to the discretion and power he was authorized to use. The power of attorney fixed the respondent with a fiduciary duty to use it for the benefit of the appellant. While it was possible that the exercise of the power might also benefit him, the hallmark of compliance with the fiduciary duty was creation of benefit to the appellant. The contribution of the parties to the purchase was unequal in the respondent’s favour, by reason of his use of the power of attorney. This was a clear breach of the fiduciary duty the respondent owed the appellant under the power of attorney. The judge, by failing to address consent to use of the power of attorney in this way, erred in law in finding there was no breach of the duty. The judge’s conclusion that the appellant was barred from an equitable remedy because she did not come to the court with clean hands was incorrect. Neither of the bases offered by the judge for applying the doctrine applied, and her conclusion on the legality of the appellant’s money transfers appeared to be formed by taking judicial notice of matters requiring evidence. Considering both the respondent’s use of the mortgage proceeds to fund his interest in the property and his relatively small contribution to the purchase price, there was no good reason to deny the common remedy of disgorgement.

Wang v. Wang, [2020] B.C.J. No. 47, British Columbia Court of Appeal, M.E. Saunders, D.C. Harris and G. Dickson JJ.A., January 16, 2020. Digest No. TLD-February172020001