Guardians for Property and Conflicts of Interest

February 11, 2016 Umair Estate & Trust, Executors and Trustees, Guardianship, Power of Attorney, Trustees Tags: , , , 0 Comments

A recent decision of the Ontario Superior Court of Justice highlights the real or perceived conflicts of interest that can arise when a guardian for property wears more than one fiduciary hat.

In Taticek v Zeisig, 2016 ONSC 772, Ronald and Peter were appointed as joint guardians for property and personal care for Annemarie in 2012. Annemarie, Ronald and Peter, along with Annemarie’s daughter Sonya, owned a farm property in joint tenancy (the “Farm”). The Honourable Justice Annis had approved the original guardianship order, which included a plan for the management of the Farm.

Ronald and Peter brought an Application to pass their accounts in March 2014, in accordance with Justice Annis’s Order. The Public Guardian and Trustee (“PGT”) objected to the accounts, but subsequently withdrew the objections and initially supported the sale of the Farm.

Ronald passed away on April 23, 2014, with his interest in the Farm passing by right of survivorship to the other joint tenants. The other guardian, Peter, was the sole Estate Trustee for Ronald’s Estate. Peter was also the sole trustee of a family trust (the “Family Trust”), which was settled for the benefit of Ronald’s children.

The Family Trust wanted to purchase Annemarie’s one-third interest in the Farm, and Peter brought an Application to amend the management plan to allow for the joint tenancy in the Farm to be severed. The PGT opposed the Application, and Peter brought a Motion for an Order approving the amended management plan.

On the Motion, Peter argued that he was acting in Annemarie’s best interest, and was not in a conflict of interest because her share of the Farm would be sold at fair market value and the proceeds of sale would be placed in an investment account.

In highlighting deficiencies in the amended management plan, the PGT noted three potential conflicts of interest:

  • Peter had to determine whether Annemarie had to reimburse loans from Ronald, and the amended plan lacked details about Peter’s obligations to the Family Trust.
  • In determining whether the Farm was to be sold to the Family Trust or to a third party, Peter would potentially continue to personally benefit if the one-third share of the Farm was purchased by the Family Trust.
  • Peter’s obligation to maximize the value of Annemarie’s share of the Farm in his capacity as her guardian for property was in conflict with his duty to purchase her share at the lowest possible price on behalf of the Family Trust.

Ultimately, the Honourable Justice Patrick Smith refused to grant Orders dismissing Peter’s Application and appointing the PGT as Annemarie’s guardian for property on the Motion, holding that the PGT’s concerns could be addressed with additional information and an amended management plan. Justice Smith also held that the evidence established that Peter was acting in Annemarie’s best interest.

The Court granted leave for Peter to provide additional details and an amended management plan within 60 days of the judgment, with the matter being returnable before Justice Smith on short notice if the PGT continued to oppose the Application.

Thank you for reading.

Umair Abdul Qadir

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