Executive summary: Key legal and evidentiary issues

• Kleiman alleges that Innes, acting as attorney under an enduring power of attorney, improperly billed and received over $1.7 million from an elderly and vulnerable client's estate over a two-year period.

• Conflicting fee arrangements — the EPA's Clause 19 versus the separate Fee Agreement and alleged oral agreements — are central to the dispute over whether the transfers were authorized.

• A $400,000 "creation fee" was transferred to Innes in suspicious circumstances, shortly after the EPA was revoked, and Innes refused to answer questions as to the whereabouts of those funds.

• The chambers justice found Kleiman's counsel failed in the duty of full, fair and candid disclosure at the original ex parte hearing but exercised discretion not to terminate the attachment order.

• Kleiman appealed the reduction of the attachment order from covering all exigible property to a $400,000 cap, arguing the chambers justice failed to consider s 17(6) of the Civil Enforcement Act.

• Innes cross-appealed, arguing the attachment order should have been set aside entirely due to the disclosure failures, but the Court of Appeal dismissed both the appeal and the cross-appeal.

The parties and their relationship

Jacob (Jack) Kleiman, a 95-year-old man whose estate is valued at over $22 million, had a longstanding relationship with Malcolm Innes, his long-time financial advisor. On July 20, 2020, Mr. Kleiman signed an enduring power of attorney (EPA) appointing Mr. Innes as his attorney. Clause 19 of the EPA entitled the attorney to "a reasonable fee or compensation," pegged at 60% of what BMO Trust Company would have charged under Mr. Kleiman's previous enduring power of attorney. Just two days earlier, on July 18, 2020, Mr. Kleiman had also signed a separate "Fee Disclosure and Engagement" letter from Innes Wealth Management Ltd (IWM), which contemplated fees for services including advanced estate planning, business owner planning, advanced tax planning, asset diversification, and advanced financial planning at specified hourly rates, with provisions for additional compensation including bonuses, sales commissions, or referral fees.

Mr. Kleiman's incapacity and Innes's assumption of duties

In August 2020, Mr. Kleiman suffered a fall and sustained a brain injury. Mr. Innes then assumed his duties as attorney under the EPA. A December 2021 capacity assessment indicated that Mr. Kleiman did not have the capacity to decide financial matters. During the approximately two-year period from July 2020 to August 2022, while the EPA was in effect, Kleiman alleges that Innes billed and paid to himself approximately $1.7 million from Kleiman accounts. Based on affidavit evidence from a vice president and regional director of BMO, the fees permitted under Clause 19 of the EPA would have resulted in payments to Innes of approximately $210,000 over that period, meaning approximately $1.5 million in transfers were allegedly improper.

The disputed fee arrangements and the Pipeline Tax Strategy

Mr. Innes defended the charges by pointing not to the EPA but to the separate Fee Agreement, which he said allowed for higher charges, and to various oral agreements with Mr. Kleiman. Among these alleged oral agreements was one providing that he would be paid $750 an hour for tax and business planning advice as well as personal care tasks, and another for a significant "creation fee" tied to a tax plan known as the "Pipeline Tax Strategy." According to Innes, the development of this strategy required preparatory work and expertise and about three years to implement. When a favourable Canada Revenue Agency ruling was received, Mr. Innes transferred approximately $400,000 from Mr. Kleiman's holdings to IWM. The chambers justice noted that this transfer occurred on August 15, 2022, shortly after Mr. Kleiman revoked the EPA on August 12, 2022, and appointed BMO as the new attorney for Kleiman.

The ex parte attachment order and its extension

Between August 15, 2022 and October 2022, Kleiman's counsel made several requests that Mr. Innes provide an accounting and records of his dealings with Kleiman's estate, which were not forthcoming. Kleiman applied for and obtained an ex parte attachment order on October 20, 2022, prohibiting Mr. Innes and IWM from dealing with any of their exigible property pending further order of the court. The order was subsequently extended subject to several variations, and the application to formally extend it was ultimately heard on November 7, 2024. The chambers justice, Justice J.R. Ashcroft, granted the extension but capped the attachment at $400,000 — the approximate amount of the creation fee — rather than maintaining it over all of Innes's exigible property.

The chambers justice's reasoning on the statutory test

The chambers justice applied sections 17 and 18 of Alberta's Civil Enforcement Act. On the first element — whether there was a reasonable likelihood that Kleiman's claim would be established — she found the inconsistencies between the EPA and the Fee Agreement, the lack of documentation for the oral agreements, the fact that the Fee Agreement does not contemplate personal care, the potential conflict with the EPA's conflict of interest provision precluding the attorney from hiring advisors from the attorney's own company, and the little evidence to justify the $400,000 creation fee for what the chambers justice described as "simply doing his job, namely providing tax advice as a financial planner" all pointed toward possible breach of fiduciary duty and misappropriation of funds. On the second element — whether Innes was dealing with exigible property in a manner that would hinder enforcement of a judgment — the chambers justice was troubled by the transfer of $400,000 around the time of the EPA's revocation, Innes's refusal to answer questions as to the whereabouts of those funds, his reluctance to provide a full accounting until there was a court order, and his failure to complete a statement of debtor as directed by the court.

The disclosure failures at the ex parte hearing

The chambers justice found that Kleiman's counsel failed in his duty of full, fair and candid disclosure during the original without-notice hearing. Counsel had not drawn the court's attention to the Fee Agreement, had not brought the capacity assessment and Mr. Innes's reliance thereon to the court's attention, had not disclosed that the BMO affiant was the spouse of Kleiman's hearing counsel, and had not taken sufficient care in characterizing the $85,000 that Mr. Kleiman paid to Mr. Innes or in advising that Mr. Kleiman's will contemplated gifts to other beneficiaries similar to the one to Mr. Innes's wife. However, the chambers justice compared these breaches to the circumstances in Tiger Calcium and Bank of Nova Scotia v Five Star Motor Group, concluding that both of those cases involved "more serious breaches of the duty of full and fair disclosure" than the instant case. The nature of the information that was undisclosed or under-emphasized did not alter her assessment that the tests for an attachment order were satisfied.

The appeal and cross-appeal at the Court of Appeal of Alberta

Kleiman appealed the reduction of the attachment order to $400,000, arguing that once the statutory test for an attachment order was satisfied, the chambers justice did not have the discretion to reduce the amount of property covered to something less than the total amount of the claim — over $1.7 million — and that her approach was inconsistent with s 17(6) of the Civil Enforcement Act. Innes cross-appealed, contending that the entire attachment order should have been set aside given the finding that Kleiman's counsel failed in the duty of full, fair and candid disclosure. The Court of Appeal of Alberta, comprising Justices Ho, de Wit, and Fagnan, applied the standard of review affording considerable appellate deference to discretionary decisions and dismissed both the appeal and the cross-appeal.

The ruling and outcome

On the cross-appeal, the Court of Appeal held that the chambers justice properly considered the relevant factors and evidence in exercising her discretion to extend the attachment order, made no error in principle, and considered and applied the appropriate test. On the main appeal, the Court rejected Kleiman's argument that s 17(6) mandates an attachment in the full amount of the claim, clarifying that the provision sets an upper limit but does not mandate the court impose an attachment order in that amount if the circumstances do not warrant it. The Court found the $400,000 cap was not arbitrary, as it was anchored to the specific creation fee transfer and the suspicious circumstances surrounding it that formed a focus of the chambers justice's reasoning. Both the appeal and cross-appeal were dismissed, thereby upholding the chambers justice's order continuing the attachment capped at $400,000. No exact final monetary award to either party was determined, as the underlying action has yet to proceed to trial, which the chambers justice noted is still some years away.