As part of my continuing series of blogs this week regarding recent trust law cases, today’s blog looks at the case of Gonder v. Gonder Estate, 2010 ONCA 172 (CanLII). The issue is this case dealt with whether an estate trustee of an estate could be removed without providing for the appointment of an alternate estate trustee or otherwise providing for the orderly administration of the estate.
In this case the estate trustees brought a motion under section 37 of the Trustee Act (Act) for an order removing them as estate trustees of the Deceased’s estate on the basis of their personal circumstances, their location and other responsibilities and financial stress. They had also become creditors of the estate and were in a conflict of interest situation.
The deceased died in January 2008, leaving an estate consisting of some cash or a cash equivalent, and a modest home in Ontario.
Under the Deceased’s Will, the named beneficiaries were the testatrix’s sister, her mother, and her brother. More specifically, the testatrix left a life estate in the Ontario property to her mother, who was still living but was no longer able to stay in the house. The will further directed that the residue of the estate was to be divided equally among the testatrix’s mother, sister and brother.
In February 2008, the Deceased’s brother commenced an action against the estate, claiming that he was the beneficial owner of the property.
The Estate Trustees, who lived in British Columbia, agreed to undertake the role of estate trustees and a Certificate of Appointment of Estate Trustee with a Will was issued to them.
The Estate Trustees had been unable to sell the property or to distribute the residue of the estate because of the deceased’s brother’s certificate of pending litigation registered on title to the property. The Estate Trustees alleged that, as a result, they had been required to spend their own money to defend the brother’s lawsuit against the estate.
At the time of the removal motion, the Estate Trustees moved for directions seeking, among other forms of relief, an order that the property be sold and the proceedings of the sale be paid into court pending the resolution of the competing interests. The Public Guardian and Trustee indicated that it did not intend to become involved in the estate.
The motions judge found that the continued service as Estate Trustees would cause substantial physical and financial hardship on the Estate Trustees and they had become creditors through no fault of their own. Furthermore, the motions judge found that section 37 of the Act did not require a trustee to provide a replacement before applying to be removed and allowed the motion.
Interestingly, the Ontario Court of Appeal found that the motion judge erred not in removing the trustees without appointing a replacement, but rather in removing them without making alternate provisions for the proper administration of the estate.
The Court of Appeal found in the specific circumstances of this case there were three objectives that ought to have been considered and addressed by the motion judge: (1) ensuring the orderly administration of the estate in the interests of the beneficiaries; (2) recognizing the plight of the respondents; and (3) providing for the timely resolution of the disputes concerning the estate.
The Court of Appeal held that section 37(4) of the Act does not constrain the power of the court to remove a sole remaining trustee and provide for an alternative mechanism for administering the trust.
Thanks for reading.
Craig R. Vander Zee – Click here for more information on Craig Vander Zee.
www.hullandhull.com/Lawyers/Craig-R-Zee.shtmlIn yesterday’s blog, I mentioned that my blogs for the balance of this week would focus on a selection of recent trust law cases. A case that merits mentioning in the category of foreign trustees is Herring Estate (Re), 2009 CanLII 44707 (ON. S.C). This is a decision by the Honourable Justice D.M. Brown that provides clear and helpful guidance as to the circumstances under which a foreign trustee can act as ancillary estate trustee.
In this case, the Deceased was a US resident who created an inter vivos trust in North Carolina naming a licensed trust company (the “trust company”) there as the sole trustee. The trust company was also named executor of his Will. The Deceased’s wife was the sole beneficiary of the trust and the trust was the sole beneficiary of his residuary estate. Probate of the Deceased’s Will was issued in North Carolina for the estate, which was substantial in value.
The Deceased owned a new condo unit in Toronto worth $360,000 but with respect to which the estate would owe $126,831 on occupancy date, which had not yet occurred. There were no debts owing in Ontario at the time of the application.
Listen to "Family Cottage Cases of Ownership Transfers"
Read the transcribed version of "Family Cottage Cases of Ownership Transfers"
In this week’s episode of Hull on Estate and Succession Planning, Ian and Suzana share a few stories involving cases of ownership and the family cottage.