One of an estate trustee’s essential duties when administering an estate is maintaining proper accounts. While estate accounts are often relatively straight-forward, if an estate is particularly large or complex, making the accounts complicated, it may be appropriate to ask the court to initiate an investigation or inquiry into the accounts. Such relief may also be sought if there are concerns that estate assets have been hidden or stolen.

A number of provisions in the Estates Act bestow authority on the court to investigate an accounting. For example, subsection 49(2) gives the court “jurisdiction to enter into and make full inquiry and accounting of and concerning the whole property that the deceased was possessed of or entitled to, and its administration and disbursement” on a passing of accounts. Subsection 49(10) is similar, but more specialized, permitting the court to appoint either an accountant or another “skilled person” to investigate and assist with auditing the accounts so long as the accounts “are of an intricate or complicated character and in the judge’s opinion require expert investigation.”

Case law interpreting subsection 49(10) is relatively limited, although Justice Gilmore considered its application recently. In Mayer v Rubin, 2023 ONSC 4214, a court-appointed estate administrator brought an application to have an investigator appointed. The deceased in this case had been predeceased by her husband, whose estate had significant business holdings. An investigation was sought because the contents of the wife’s estate depended on deciphering what property had been left to her by her husband through a family trust and a spousal trust. The value of the assets held by the husband’s estate was unclear, as shares held either directly or beneficially by the estate were controlled by extended family members and their affiliates. The value of dividends or income that had been generated by the estate’s holdings was also unclear.

To make matters more complicated, because the wife had also settled a trust while she was alive and had appointed herself and two daughters as trustees, an investigator was also sought to review the property distributed through her trust. It was argued that the accounts of the wife’s estate could not be passed without such an investigation.

Despite the confusion as to the extent of the wife’s estate, the application was hotly contested by the estate beneficiaries. Arguments presented in opposition to the appointment of an investigator included:

• such an appointment would result in further delay, particularly if the parties obtained expert reports to respond to the investigator;  
• such an appointment is an extraordinary remedy, and should only be granted if other, less drastic means of achieving the same result are not available;
• the cost of appointing an investigator would outweigh the benefits; and
• appointing an investigator would not narrow the issues or assist the parties with reaching a settlement, given the mistrust between them.

Ultimately Justice Gilmore granted the application, finding that a neutral and impartial investigation was necessary to put an end to allegations and denials about the wife’s entitlements under the husband’s estate, and whether any beneficiary had improperly profited or received a disproportionate share of those entitlements. Despite the expense that would be incurred by appointing an investigator, the court found that it was “the only way to move forward.” Contrary to the claim that the relief sought was extraordinary, the court also affirmed that appointing a forensic investigator to pass accounts is not unique, citing Jones v. Warbick, 2019 ONSC 88.

In granting this relief, Justice Gilmore utilized the test for appointing an investigator set out in Khavari v. Mizrahi, 2016 ONSC 4934, even though that case dealt with the appointment of an investigator under section 161 of the Ontario Business Corporations Act. When considering the appropriateness of appointing an inspector, factors that the court may consider include:

1. Whether the applicant needs access to the information;
2. Whether there are better, less expensive means to acquire the information;
3. Whether the proposed investigation would give a tactical advantage to the applicant; and
4. The expense of the investigation as compared to the benefits.

Justice Gilmore also made it clear that the court would ultimately determine what weight to give to the investigator’s report, once the investigation was complete:

“It is clear from the wording of s. 49(10) that any report produced by the Investigator would be an expert report for the Court’s purposes as opposed to an expert report offered by one of the parties. As such, the Court has the authority to decide what weight the report is to be given and to accept or reject any portion of the report. The objectivity of the Investigator is key in this case given the discord amongst the beneficiaries. The Investigator will provide the Court with a much-needed unbiased analysis.”

For any party trying to decipher a complicated set of estate accounts, or who thinks that an investigation is needed to ensure that an estate accounting is complete, it may be worthwhile to apply to the court for relief under section 49 of the Estates Act. 

Have a great rest of your day!

Suzana.