In Munro v. Thomas, 2021 ONSC 3320, the Court found that the relief sought by the Applicant under rule 74.15 was outside the scope of the rule, and that the Applicant should have more appropriately sought to compel a passing of accounts under the rule. Further, the relief sought by the Applicant was viewed by the court as not only outside the scope of the rule, but more appropriately pursued as objections in a passing of accounts.
In Munro, the Applicant issued a Notice of Application that sought a broad range of disclosure (though, notably, did not seek to compel a passing of accounts) including:
- that the Respondent Estate Trustee produce full bank records of the deceased, including those from April 1, 2013 to present;
- that the Respondent produce the Deceased’s full and complete medical records;
- the Respondent provide a sworn affidavit explaining as to all gifts he claims the deceased made during her lifetime,
- the Respondent submit to an examination under oath, and
- the Respondent submit to cross-examination.
At no point during the Deceased’s lifetime, did she require the use of a Power of Attorney for Care or Property. The Deceased at all times made her own medical and financial decisions. However, the Applicant alleged that the Deceased experienced dementia during her latter phase of life, yet provided no evidence to support this claim. Further, the Applicant did not seek to challenge the Will, nor were any formal claims commenced challenging the validity of the gifts described below.
Many years prior to her death, the Deceased disposed of two pieces of real property (a home and a cottage). The Cottage was transferred to two of her children (one being the Respondent), and, an agreement was entered into such that $33,333.33 would be transferred by the two children to the Applicant on the Deceased’s death, representing approximately 1/3 of the value of the cottage. This transfer was completed on the Deceased’s death. The home was sold to a third-party.
The Applicant was provided with a fulsome accounting of all of the assets that fell into the Estate. The Respondent had attempted to bring a formal passing of accounts but had been advised that a Certificate of Appointment would be required to do so, despite the fact that probate was not required for the administration of the Estate.
The Respondent sought a dismissal of the Application, submitting that the relief sought by the Applicant and the demands made were not consistent with his obligations to account for his dealings with the estate, as the assets in which the Applicant raised inquiry about either passed outside of the estate, or, were distributed by the Deceased prior to her death. The Respondent further submitted that the issues of capacity and undue influence raised by the Applicant all fell outside the scope of the Application under Rule 74.15. Ultimately, the Respondent submitted that the scope of demands pursued by the Applicant would be more appropriately pursued as objections in a passing of accounts, such that the proper course of relief for the Applicant to have pursued would have been to compel a passing of accounts.
The court ultimately agreed with the Respondent. In noting an Estate Trustee’s duty to account, the court turned to Rule 74.17 which sets out the assets required to be accounted for in a proper estate accounting. The court noted that there is no requirement under the Rules for an Estate Trustee to account for assets falling outside of the estate that were passed inter vivos, for tax planning, estate planning, or other purposes.
The Court concluded that the demands made by the Applicant fell outside of the Respondent’s accounting obligations, and the Applicant’s rights as a beneficiary to the Estate. The court furthered that “there are reasonable limits to the extent of an Order that should be made pursuant to Rule 74.15(1). Such an Order is discretionary. It should not be made an instrument of potential abuse of a party arising from the hostility, suspicion or paranoia of another party.”
The Court held that the extent of the relief sought by the Applicant was excessive and not warranted by the facts. In dismissing the Application, and ordering a formal court passing, the Court warned that “where a Trustee has given reasonable explanation to the beneficiaries of the assets falling inside and outside of the Estate, has provided legal explanation for their position, and where there is evidence of the Testator’s intentions, beneficiaries who challenge such a Trustee’s accounting without good reason, or who try to force them to pursue assets that lawfully fall outside of the Estate, can be held liable for the Executor’s costs.”
For more on this decision, see Paul Trudelle’s blog here.
For more on how to avoid a passing of accounts, see Natalia Angelini’s blog here.
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