Tag: fiduciary accounting
As is often the case, a person who is concerned about a fiduciary’s management of property may wish to compel an accounting. However, it is important to remember that a person’s ability to compel such an accounting may vary depending on whether an accounting is being sought from an estate trustee of a deceased’s estate or, in the alternative, from an attorney for property during the lifetime of an incapable grantor.
The legal framework in Ontario
In Ontario, pursuant to section 50 of the Estates Act, an executor or administrator shall not be required to account by the Court “…unless at the instance or on behalf of some person interested in such property or of a creditor of the deceased….” Further, Rule 74.15(1)(h) of the Rules of Civil Procedure provides for any person who appears to have a financial interest in an estate to move for an order for assistance requiring an estate trustee to pass his or her accounts.
Conversely, the right to compel an accounting from an attorney for property or guardian of property is set out under section 42 of the Substitute Decisions Act. Pursuant to section 42, in addition to the attorney, the guardian and the incapable person, the following persons may apply for the fiduciary’s accounts to be passed:
- The grantor’s or incapable persons’ guardian of the person or attorney for personal care;
- A dependant of the grantor or incapable person;
- The Public Guardian and Trustee;
- The Children’s Lawyer;
- A judgment creditor of the grantor or incapable person; and
- Any other person, with leave of the Court.
This is an important distinction to keep in mind: although a person with a financial interest in the estate may be able to compel an accounting from an estate trustee, such a financial interest on the death of an incapable grantor may not in and of itself be sufficient to compel an accounting from an attorney for property during the lifetime of the incapable.
What is the criteria for obtaining the leave of the Court?
The recent decision of the Honourable Justice LeMay in Groh v Steele, 2017 ONSC 3625, is an important reminder of the high threshold for obtaining the leave of the Court to compel an accounting from an attorney for property under section 42.
In Groh, the Applicant, Ernest, sought a capacity assessment of his mother Gabriella under the Substitute Decisions Act. Ernest also sought an order for the suspension of Gabriella’s attorneys for property ability to act and an order for the attorneys for property to pass their accounts. Ernest’s Application was opposed by Gabriella and her attorneys for property.
On the issue of Ernest’s request that the attorneys pass their accounts, Justice LeMay reviewed section 42 of the SDA and concluded that “it is clear that the only circumstances in which Ernest could ask for a passing of accounts is if he can obtain leave of the Court.”
Justice LeMay went on to make the following statement regarding the circumstances in which leave should be granted by the Court:
In my view, such leave should be granted sparingly. The passing of accounts is a detailed review of the financial affairs of the grantor. As such, it is something that is intrusive, and will reveal private financial information about the grantor. In order to obtain leave, the party applying would have to establish both that he or she had some interest (at least indirectly) in the affairs of the grantor, and that there was at least some evidence that the Attorneys were not properly conducting the affairs of the donor. The Court should also consider the role that the Attorneys are playing in the Grantor’s affairs.
After reviewing the facts before the Court, Justice LeMay concluded that a formal passing of accounts should not be ordered, and Ernest’s Application was dismissed.
Thank you for reading,
Umair Abdul Qadir
This week on Hull on Estates, David Smith and Natalia Angelini talk about the duties an estate trustee he or she is charged with from the moment of a testator’s passing. Duties include locating the will, making funeral arrangements and being responsible to see the intentions of the testator preserved.
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Listen to Fiduciary Accounting
This week on Hull on Estates, Ian Hull and Suzana Popovic-Montag discuss fiduciary accounting. Who is a fiduciary and what is a fiduciary’s duty to account? They cite several cases that illustrate fiduciary accounting rules:
- Re Taerk,  O.R. 482 (C.A.).
- Re Silver Estate, (1999) 31 E.T.R. (2nd) 256.
- Roger Estate v. Leung,  O.J. No. 2171.
- Fair v. Campbell Estate, 2002 3 E.T.R. 3rd 67, Langdon J.
- Fareed v. Wood, 2005 WL 1460361 (Ont. S.C.J.).
- McAllister Estate v. Hudgin, 2008 CanLII 42213 (ON S.C.)
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Listen to "The Hull & Hull website and a Practice Tip"
During Hull on Estates Episode #56, Ian Hull and Suzana Popovic-Montag review the updates on the Hull & Hull LLP website and discuss the available resources such as Hull & Hull TV (streaming videos), the Probator articles, and of course links to the blogpage/podcasts.
Ian discusses a book he has recently read, Getting Things Done by David Allen. Ian heard about this book on the Marketing Monger podcast.
Ian and Suzana’s Practice Tip for this podcast helps the process of fiduciary accounting go smoothly.