Should a man who commits fraud and theft using a power of attorney nevertheless benefit from the estate of his victim? There is a long standing principle of law that prevents a murderer from benefitting from the estate of his victim.  There are clear public policy reasons for this – we do not want a criminal to benefit from his crime.  But what about abuse under a power of attorney?

In a recent case (R. v. Hooyer, 2016 ONCA 44), the Ontario Court of Appeal had to grapple with these questions.  Mr. and Mrs. Carroll had come to rely on their neighbour Paul, whom they had known since he was a boy.  They had named him as the residual beneficiary in their wills (after each other), and appointed him as alternate on their Continuing Powers of Attorney for Property.  While they were both alive, he acted like a good neighbour – he visited from time to time, and helped with some of their daily care.

But after Mr. Carroll went into long term care, and Mrs. Carroll died, Paul undoubtedly abused his power.  He moved into the Carroll’s house and paid all the bills from their accounts.  He bought himself a new car for $37,000, and loaned money to a friend to buy another car.  He got refunds for the long-term care costs from Veteran’s Affairs, but used them for his own benefit, too.

By the time he was charged with fraud and theft under a power of attorney, 7 years later, he had run through $378,552.67 of the Carroll’s money.  To make it worse, he did not visit Mr. Carroll, and did not pay the long-term care bills, so that Mr. Carroll’s accommodation was downgraded.  By the time he died, Mr. Carroll’s bank account had $18 left in it and he owed $29,000 to the long-term care home and back taxes.

Paul argued that Mrs. Carroll told him he could use their property “as if it were mine,” and he took full advantage, ignoring his clear responsibility to act in Mr. Carroll’s best interest, even though he knew that he had not fulfilled his obligations.

At the criminal trial, Paul was convicted of both fraud and theft using a power of attorney.  He was given 2 years less a day custodial sentence, and ordered to repay Veteran’s Affairs. He was also ordered to make restitution to the estate of his victim, Mr. Carroll.  And here’s the twist.

Paul appealed to the Court of Appeal, where he repeated his argument that since he was the residual beneficiary under Mr. Carroll’s will, ordering him to repay the estate was just ordering him to pay himself. There would be plenty in the estate to pay debts and taxes and any legacies, and so it was plainly inappropriate, he argued, to force him to pay money that would just come back to him in the end.

Justice Doherty disagreed, stating: “[Paul’s] status as the residual beneficiary under the will should not preclude the making of a restitution order in favour of the estate.  Those responsible for administering the estate will determine what steps, if any, should be taken to enforce the restitution order through the civil process….”

It is not clear from the judgment who “those responsible for administering the estate” are, and it is also not clear whether, in the end, there would be any way they could resist paying the residue of the estate to Paul, or even insist on enforcing the restitution order.  Does crime pay? Probably not, since had he behaved properly, Paul would have inherited the estate, and spared himself a trial and time in prison.  But it is hard not to wish that the Carroll’s had chosen better, or that the law had clearer mechanisms to prevent those who commit theft using powers of attorney from inheriting.

Thanks for reading!