In La Calamita v. La Calamita, 2024 ONSC 4219 (CanLII), the Ontario Superior Court of Justice issued a decision addressing the issues of will interpretation and trustee removal.

The key facts of the matter are as follows:

• Leonardo and Rose had three children: John, Nadine and Diane.

• The father Leonardo left a Will that granted his wife, and the mother of his children, Rose, a life interest in the residue of his Estate.

• The father’s Will further provided that upon his wife’s death, his son John be appointed as Estate Trustee of his Estate, and that the residue of his Estate be divided into equal shares for his children.

• The principal asset of the father’s Estate was a commercial property on Yonge Street in Toronto, which formed part of the residue.

• The father predeceased the mother. The Yonge Street property remained in the family at the time of the mother’s death.

• John applied to the court to interpret his father’s Will such that title to the Yonge Street property would vest in him and his sister Nadine, while his other sister Diane would receive a cash sum for her share.

• Diane submitted that John’s interpretation contravened the terms of their father’s Will, and brought a cross-application seeking that John be removed as Estate Trustee and replaced with a neutral trustee.

John’s Application

• The relevant provisions of the father’s Will are as follows:
  • The Estate Trustee has the power to “partition or appropriate, and distribute in specie” any part of the Estate, including the Yonge Street Property.
  • The children are to agree on the division of assets between themselves. If the children cannot agree, then the Estate Trustee has sole decision-making authority.
  • A neutral trustee is required to conduct any private sale of Estate property in which a beneficiary who is also an Estate Trustee seeks to purchase the property.

• Although the Court found that the father’s intentions were discernible from a plain reading of his Will, they followed the guidance of the Ontario Court of Appeal in Ross v. Canada Trust Company, 2021 ONCA 161 (CanLII), which held that wills shall be construed in the context of all surrounding circumstances present at the time that the will was made (a principle known colloquially as the “armchair rule”).

• The Court concluded that the father’s direction that any private sale of property be conducted by a neutral trustee was specifically a direction to John, as the father knew that the only child who could be both trustee and beneficiary under his Will, and thereby the only child who might be required to defer to a neutral trustee in the event of a private sale, was John.

• Accordingly, the Court found that John could not distribute the Yonge Street property to himself and Nadine because doing so would contravene the provision in the Will that a neutral trustee oversee such a private sale.

Diane’s Cross-Application

• The Court failed to find sufficient grounds that John should be removed or passed over as Estate Trustee and replaced with a neutral trustee, and dismissed Diane’s application accordingly.

• Notably, the Court found that:
  • John had acted properly by seeking the Court’s directions on the interpretation of his father’s Will;
  • there was no evidence that John breached his fiduciary duties or endangered the Estate assets; and
  • that the friction between John and Diane was not, in and of itself, sufficient to replace their father’s chosen Estate Trustee.

Thank you for reading and have a great day.

James

Sources:

Bernise Carolino, “Ontario Superior Court refuses sister’s request to remove brother as trustee of father’s estate”, Canadian Lawyer (15 August 2024), online.