Removal of an Estate Trustee

March 13, 2017 Ian Hull Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, News & Events, Trustees, Wills Tags: , , , , , 0 Comments

If an estate trustee is not fulfilling their duties and is not acting in the best interests of the estate, it is possible to commence an application for removal.

When seeking to remove an estate trustee in Ontario, anyone with a financial interest in an estate can apply to have an executor passed over or removed, pursuant to s. 37(3) of the Trustee Act. Rule 14.05(3)(c) of the Rules of Civil Procedure, allow an application to be commenced for the purpose of “the removal or replacement of one or more executors, administrators or trustees, or the fixing of their compensation.” The applicable principles for the removal of an executor have been established in Letterstedt v Boers (1884), 9 App Cas 271 (South Africa PC) and have been summarized in Johnston v Lanka Estate, 2010 ONSC 4124:

  • The court will not lightly interfere with the testator’s choice of estate trustee;
  • Clear evidence of necessity for removal is required;
  • The court’s main consideration is the welfare of the beneficiaries; and
  • The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the estate/trust.

A recent British Columbia Court of Appeal decision, Al-Sabah v Al-Sabah, 2016 BCCA 365,  upheld the removal of an estate trustee of an estate on the basis that she did not comply with the notice provisions of the Wills, Estates and Succession Act, and was not acting in the best interests of the estate.

In this case, the deceased died in 2003, intestate, and left 15 beneficiaries, including his two sons, two wives, and seven daughters. One of his daughters was the appellant and the estate trustee of the estate. The respondents on the appeal comprised 79% of the beneficiaries to the estate.

Upon the death of Mr. Al-Sabah, estate litigation was commenced across several countries, as he had held property in many different locations. The appointment of the estate trustee by British Columbia was successful, however, the appellant had also applied to be the estate trustee of the estate in London, and had her position revoked, and she commenced at least 4 actions in Kuwait against other beneficiaries, all of which were unsuccessful.

In chambers, the estate trustee was removed, and appealed that ruling. On appeal, it was upheld that the estate trustee did not exercise reasonable diligence in providing notice to the other beneficiaries of her intention to apply for the position, and that she failed to disclose relevant information to the beneficiaries.

The British Columbia Wills, Estates and Succession Act section 121, and the British Columbia Supreme Court Rules establish the requirements for notice of the beneficiaries. It was established that the estate trustee did not provide notice to the proper addresses required by the rules, as the addresses to which she forwarded notices were almost all incorrect. The judge also noted that the application was made amidst “hotly contested” and “acrimonious” estate litigation, and that when she applied for her grant of administration, she did not disclose that there was significant litigation surrounding the estate in other countries.

If this case were to have taken place in Ontario, it is likely that the Ontario courts may have come to the same decision as the British Columbia court, in applying the principles as established in Letterstedt v Boers. The court would not have been interfering with the testator’s choice of estate trustee as he died intestate, and it is clear that the removal was required due to her dishonesty and her lack of consideration of the welfare of the beneficiaries, thereby endangering the administration of the estate.

Thank you for reading,

Ian M. Hull

Other Articles You Might be Interested In

The High Bar for Estate Trustee Removal

What Should an Estate Trustee do when a Beneficiary Cannot be Located?

Removing an Estate Trustee for Conflict of Interest

 

 

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