If an executor named in a will renounces the role and a third party applies to serve as estate trustee, is the court required to appoint that third party if their application is supported by the beneficiaries of the estate and there are no competing applications? Or does the court have inherent discretion to refuse the application, even if it is unopposed? This issue was recently addressed by the Ontario Court of Appeal in James Estate (Re), 2024 ONCA 623, an appeal from a lower court decision denying a disbarred lawyer’s application to be appointed estate trustee. In a landmark decision, the Court of Appeal confirmed that the Superior Court of Justice has inherent jurisdiction to refuse to grant an application to appoint an estate trustee. 

This jurisdiction is in keeping with the court’s inherent or equitable jurisdiction to remove a trustee when circumstances require it, which was confirmed by the court over a decade ago in Gonder v Gonder Estate, 2010 ONCA 172. In James, the Court of Appeal explained:

… this inherent jurisdiction also empowers a Superior Court judge to refuse to grant an application to appoint a trustee. It would be illogical if the court had the power to terminate a trustee’s appointment in appropriate circumstances but did not have the power to prevent an inappropriate appointment.

The Court of Appeal also held that the court’s equitable jurisdiction over the appointment and removal of trustees runs parallel with legislative provisions governing the removal and appointment of trustees, and will not be supplanted “absent clear and unambiguous language to that effect.” 

On this basis, the Court of Appeal dismissed the appellant’s argument that the lower court had to appoint him as estate trustee pursuant to subsection 29(2) of the Estates Act. If a named executor renounces the role of estate trustee, this subsection permits the beneficiaries of an estate to request that another person be appointed. After reviewing the impugned legislative provision, the Court of Appeal held:

The language of s. 29 does not compel a court to grant a certificate of appointment to any particular applicant. On the contrary, s. 29(1) states that the administration of the property of the deceased “may” (as opposed to “shall”) be committed by the Superior Court of Justice to the persons indicated “as in the discretion of the court seems best”. Subsection (2) gives those entitled to apply for administration under subsection (1) the right to request the appointment of another person in their stead, but this delegate’s ‘right’ is not greater than those enjoyed by the requesting parties. The delegate may apply for a certificate of appointment, but the court has the discretion to deny the application.

Given “the inquisitorial nature of the court’s role in estate proceedings, and its gatekeeping and oversight functions with respect to the appointment of trustees,” the Court of Appeal concluded that the lower court has the power to refuse an application to appoint an estate trustee, even if it is unopposed. 

The Court of Appeal also found that Justice Mew did not err in how he exercised his discretion during the original application, reported at Re James Estate, 2023 ONSC 6432. The material before the court established that the appellant had been involved in the deceased’s estate planning, despite his disbarment, and had even assisted with the execution of the deceased’s will as a “consultant”. It was not erroneous to take this information into consideration when deciding whether or not to appoint the appellant as estate trustee, in addition to considering other factors, including the wishes of the beneficiaries, and the potential damage to the rule of law and public loss of confidence that the justice system could suffer if the appellant’s application were granted. While the welfare of estate beneficiaries is usually the central focus when appointing and removing estate trustees, the Court of Appeal confirmed that the lower court may also identify and weigh other competing considerations, given the “breadth of discretion afforded” the court when appointing an estate trustee. 

Another argument raised by the appellant, which was also dismissed, was that Justice Mew’s decision gave rise to a reasonable apprehension of bias. There was no bias, however, since the registrar had no choice but to refer the application to a judge, since the appellant had asked for the bond requirement for the estate to be waived but did not comply with the rules in seeking this relief.

Moreover, the Court of Appeal found that Justice Mew’s reasons did not demonstrate or suggest bias. Given the appellant’s professional history, the Court of Appeal recognized that the lower court could “bring a higher level of scrutiny to bear on the application.” However, there was no basis to conclude that Justice Mew had predetermined that the appellant was not fit to act as an estate trustee because of his disbarment. Rather, Justice Mew considered and weighed factors for and against the appointment before deciding to dismiss the application. The court’s decision was also reasonable in light of the fact that there was no evidence or argument that the appellant was not engaged in an unlicensed practice of law, even though Justice Mew had invited submissions on this very point before determining the application. 

If you are interested in learning more about the lower court’s original decision dismissing the appellant’s application to be appointed as estate trustee, please see our blog post published earlier this year, “Professional Regulation and the Appointment of an Estate Trustee”.

Thank you for reading and have a great day!

Ian.