The Ontario Court of Appeal’s decision in Farmer v. Farmer, 2025 ONCA 442, serves as a stark reminder of the fiduciary obligations borne by attorneys for property and estate trustees.
This case is a dispute between three brothers, Kyrle (the Appellant), and Peter and Robert (the Respondents), over the Appellant’s actions as their aunt, Billie Farmer’s, Attorney for Property and Estate Trustee. The Deceased suffered a severe brain injury from a car accident in 2015 and passed away years later. Her estate was to be divided equally among the three brothers.
The Respondents were concerned about the Appellant’s actions in his fiduciary roles, so brought an application seeking an accounting and various other relief, which was granted by the application judge through an order dated September 16, 2024. The Appellant appealed the decision and the Court of Appeal dismissed the appeal, affirming the lower court’s findings of misconduct.
The Application Judge’s Reasons
The Appellant argued that the application judge’s reasons were inadequate in light of the Court of Appeal decision in Farej v Fellows. However, the Court found that although the application judge’s reasons were sparse, they addressed the issues and permitted appellate review. They also noted that the Appellant did not point them to any information that the application judge had overlooked.
Capacity and Instructions
A central issue was whether the Deceased had the capacity to instruct the Appellant following her 2015 brain injury. The application judge found she lacked capacity, relying on the medical evidence and testimony from her case manager over that of the Appellant’s. Despite the Appellant’s claims of “moments of lucidity,” the court concluded the Deceased could not understand or appreciate the consequences of financial decisions. The Court of Appeal deferred to the application judge’s assessment on this matter.
Credibility and Conduct
The application judge did not find the Appellant to be a credible witness, largely because his approach to his fiduciary roles was rapacious. Notably, he:
- Paid himself and his wife “honorariums” in the amount of $58,694.40. This was based on an alleged agreement with the Deceased wherein he would be paid minimum wage for anything that fell under the purview of his role as Attorney for Property. The application judge rejected this evidence and felt that such payment was never negotiated or at least was not understood by the Deceased;
- Charged expenses for his attendance at the Deceased’s funeral;
- Charged the Deceased’s insurer $47,742.44 for “visitor expenses”;
- Made gifts and preliminary distributions to himself and Eric, excluding Ross, purportedly to avoid estate administration tax; and
- Charged his aunt for unnecessary expenses such as keeping up her home and installing cable TV and high-speed internet even after it was clear she would never return home.
Compensation and Accounting Failures
The application judge found that the Appellant failed to maintain adequate accounts and took issue with the compensation he paid himself.
The Appellant paid himself $26,652.38 for compensation as attorney for property. Additionally, he pre-took executor compensation in the amount of $9,600.97 from the Deceased’s Estate, even though the Deceased’s Will did not allow for this. This compensation was pre-taken even though his role as Estate Trustee was minimal and executed poorly. The Deceased had pre-arranged her funeral and all her assets were in cash, leaving the Appellant with minimal responsibilities. The Will provided for gifts to charities, but the Appellant did not make any.
Repayment and Costs
The application judge found that the Appellant had engaged in dishonest and negligent administration as an attorney and executor which disentitled himself to compensation. The application judge ordered the Appellant to repay just over $206,000 to the Estate, made up of compensation, the honorarium, unauthorized gifts, and unsupported expenses. Finding no error in the application judge’s exercise of discretion to compel repayment in light of the Appellant’s plain misconduct, the Court of Appeal upheld the order. The Appellant was ordered to personally pay $10,000 in costs to the Respondents.
This case outlines the importance of attorneys and executors acting with transparency, avoiding conflicts of interest, and maintaining diligent records.
Thanks for reading!
Darien Murray