Marie Sarah Eurig, as Executor of the Estate of Donald ... · To Remove Or Not To Remove, That Is The Question: Removal Of Estate Trustees Kathleen McDormand, Borden Ladner Gervais

Eurig Estate, Re, 1998 CarswellOnt 3950

1998 CarswellOnt 3950, 1998 CarswellOnt 3951, [1998] 2 S.C.R. 565...

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1998 CarswellOnt 3950Supreme Court of Canada

Eurig Estate, Re

1998 CarswellOnt 3950, 1998 CarswellOnt 3951, [1998] 2 S.C.R. 565, [1998] S.C.J. No. 72, [2000]1 C.T.C. 284, 114 O.A.C. 55, 165 D.L.R. (4th) 1, 231 N.R. 55, 23 E.T.R. (2d) 1, 40 O.R. (3d) 160

(headnote only), 40 O.R. (3d) 160 (note), 40 O.R. (3d) 160, 83 A.C.W.S. (3d) 146, J.E. 98-2121

Marie Sarah Eurig, as Executor of the Estate of Donald Valentine Eurig, Appellantv. The Registrar of the Ontario Court (General Division) and the Attorney General

for Ontario, Respondents and The Attorney General of Quebec, the AttorneyGeneral of British Columbia and the Attorney General for Alberta, Interveners

Lamer C.J.C., L'Heureux-Dubé, Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache, Binnie JJ.

Judgment: October 22, 1998Docket: 25866

Proceedings: reversing (1997), 31 O.R. (3d) 777 (C.A.)

Counsel: Peter W. Hogg, Q.C., Peter T. Fallis, and J. Gregory Richards, for the appellant.Tanya Lee, for the respondents.Monique Rousseau, for the intervener the Attorney General of Quebec.George H. Copley, Q.C., for the intervener the Attorney General of British Columbia.Robert J. Normey, for the intervener the Attorney General for Alberta.

Subject: Constitutional; Estates and Trusts; Provincial Tax

Related Abridgment ClassificationsFor all relevant Canadian Abridgment Classifications refer to highest level of case via History.

HeadnoteConstitutional law --- Distribution of legislative powers — Areas of legislation — Taxation — General

Executor of estate unsuccessfully applied for letters probate without payment of probate levy and for declaration thatregulation which required payment was unconstitutional — Executor unsuccessfully claimed that probate levy was indirecttax and thus was unconstitutional — Executor appealed — Probate levy was tax and not fee — Levy was compulsory andtherefore enforceable by law — Levy was imposed under authority of legislature — Payment was levied by public body— Levy was intended for public purpose — Nexus existed between quantum charged and cost of service provided —Executor was not personally liable for levy — Probate levy was direct tax and therefore was intra vires province pursuantto Constitution — Probate levy did not originate in federal legislature and thus was unconstitutional — Probate levy wasnot enforceable under Administration of Justice Act because Act only provided for imposition of fee, not tax — Regulationthat imposed probate levy was unconstitutional — Declaration of invalidity was suspended to enable province to addressissue — Appeal was allowed — Administration of Justice Act, R.S.O. 1990, c. A-6 — Constitution Act, 1867 (U.K.), 30& 31 Vict., c. 3, reprinted R.S.C. 1985, App. II, No. 5 — Ontario Court (General Division) and Court of Appeal-Fees,Ont. Reg. 293/92.

Droit constitutionnel --- Distribution des pouvoirs législatifs — Domaines législatifs — Fiscalité — En général

Demande de l'exécutrice testamentaire d'une succession visant à se faire émettre des lettres d'homologation sans devoirdébourser les frais y afférents et visant l'obtention d'une déclaration d'inconstitutionnalité de la réglementation imposant

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ces mêmes frais a été rejetée — Exécutrice testamentaire a prétendu en vain que les frais d'homologation constituaientune taxe indirecte et, partant, qu'ils étaient inconstitutionnels — Exécutrice testamentaire a formé un pourvoi — Fraisd'homologation étaient une taxe et non des frais — Frais d'homologation étaient obligatoires puisqu'exigés par la loi —Frais d'homologation étaient imposés sous l'autorité de l'assemblée législative — Paiement était perçu par un organismepublic — Frais d'homologation devaient servir à des fins publiques — Lien existait entre le montant exigé et le coûtdes services fournis — Exécutrice testamentaire n'était pas personnellement tenue au paiement des frais d'homologation— Frais d'homologation était une taxe directe et, par conséquent, étaient intra vires de l'assemblée législative — Fraisd'homologation n'étaient pas issus de la législature fédérale et donc étaient inconstitutionnels — Frais d'homologationn'étaient pas exigibles aux termes de la Loi sur l'administration de la justice, puisque la loi exigeait le paiement defrais et non d'une taxe — Réglementation imposant des frais d'homologation était inconstitutionnelle — Déclarationd'inconstitutionnalité a été suspendue pour permettre à la province de remédier au problème — Pourvoi a été accueilli— Loi sur l'administration de la justice, L.R.O. 1990, c. A.6 — Loi constitutionnelle de 1867 (R.-U.), 30 & 31 Vict., c.3, réimprimée L.R.C. 1985, annexe II, No. 5 — Ontario Court (General Division) and Court of Appeal-Fees, Ont. Reg.293/92.

Estates --- Grant of probate or letters of administration — Fees

Executor of estate unsuccessfully applied for letters probate without payment of probate levy and for declaration thatregulation which required payment was unconstitutional — Executor unsuccessfully claimed that probate levy was indirecttax and thus was unconstitutional — Executor appealed — Probate levy was tax and not fee — Levy was compulsory andtherefore enforceable by law — Levy was imposed under authority of legislature — Payment was levied by public body— Levy was intended for public purpose — Nexus existed between quantum charged and cost of service provided —Executor was not personally liable for levy — Probate levy was direct tax and therefore was intra vires province pursuantto Constitution — Probate levy did not originate in federal legislature and thus was unconstitutional — Probate levy wasnot enforceable under Administration of Justice Act because Act only provided for imposition of fee, not tax — Regulationthat imposed probate levy was unconstitutional — Declaration of invalidity was suspended to enable province to addressissue — Appeal was allowed — Administration of Justice Act, R.S.O. 1990, c. A-6 — Constitution Act, 1867 (U.K.), 30& 31 Vict., c. 3, reprinted R.S.C. 1985, App. II, No. 5 — Ontario Court (General Division) and Court of Appeal-Fees,Ont. Reg. 293/92.

Successions --- Homologation ou lettres d'administration — Frais

Demande de l'exécutrice testamentaire d'une succession visant à se faire émettre des lettres d'homologation sans devoirdébourser les frais y afférents et visant l'obtention d'une déclaration d'inconstitutionnalité de la réglementation imposantces mêmes frais a été rejetée — Exécutrice testamentaire a prétendu en vain que les frais d'homologation constituaientune taxe indirecte et, partant, qu'ils étaient inconstitutionnels — Exécutrice testamentaire a formé un pourvoi — Fraisd'homologation étaient une taxe et non des frais — Frais d'homologation étaient obligatoires puisqu'exigés par la loi —Frais d'homologation étaient imposés sous l'autorité de l'assemblée législative — Paiement était perçu par un organismepublic — Frais d'homologation devaient servir à des fins publiques — Lien existait entre le montant exigé et le coûtdes services fournis — Exécutrice testamentaire n'était pas personnellement tenue au paiement des frais d'homologation— Frais d'homologation était une taxe directe et, par conséquent, étaient intra vires de l'assemblée législative — Fraisd'homologation n'étaient pas issus de la législature fédérale et donc étaient inconstitutionnels — Frais d'homologationn'étaient pas exigibles aux termes de la Loi sur l'administration de la justice, puisque la loi exigeait le paiement defrais et non d'une taxe — Réglementation imposant des frais d'homologation était inconstitutionnelle — Déclarationd'inconstitutionnalité a été suspendue pour permettre à la province de remédier au problème — Pourvoi a été accueilli— Loi sur l'administration de la justice, L.R.O. 1990, c. A.6 — Loi constitutionnelle de 1867 (R.-U), 30 & 31 Vict., c.3, réimprimée L.R.C. 1985, annexe II, No. 5 — Ontario Court (General Division) and Court of Appeal-Fees, Ont. Reg.293/92.




The executor of an estate claimed that the probate levy required for a grant of letters probate was an indirect tax and thuswas unconstitutional. She unsuccessfully applied for letters probate without paying the levy and unsuccessfully appliedfor a declaration that the regulation which required payment of the levy was unconstitutional. The executor appealed.

Held: The appeal was allowed. The regulation that imposed the probate levy was unconstitutional.

Per Major J. (L'Heureux-Dubé, Cory, Iacobucci JJ. and Lamer C.J.C. concurring): The levy was actually a direct tax andnot a fee. It was compulsory and therefore enforceable by law. It was levied by the Ontario Court (General Division) whichis a public body. The levy was intended for the public purpose of defraying the costs of court administration. As well, anexus existed between the quantum charged and the cost of the court services provided. As such, the levy was a tax. Theexecutor was not responsible for the payment of the levy personally, therefore the tax was a direct tax that was intra vires theprovince. However, the levy was unconstitutional because s. 53 of the Constitution Act, 1867 required that bills imposingtax originate in the House of Commons. The probate levy originated in provincial legislature. In addition, the probate levywas not enforceable under the Administration of Justice Act. That Act provided for the imposition of fees but not taxes.

Per Binnie J. (McLachlin J. concurring): The probate fee was actually a direct tax imposed by regulation within thelegislative authority of the province. However, the imposition of such as tax was ultra vires the Administration of JusticeAct. The Act authorized the Lieutenant Governor in Council to prescribe fees that had a reasonable relationship to thecost of the provision of that service. The probate levy in question was based on the size of the estate and not the cost ofthe delivery of the service.

Per Bastarache J. (dissenting) (Gonthier J. concurring): The probate fee was actually a direct tax within the legislativeauthority of the province. It was not invalid because it did not originate in the federal legislature. It was introduced in theprovincial legislative assembly and therefore did not violate the Constitution. Section 53 of the Constitution Act, 1867only prohibited bills concerning taxation from originating in the Senate. The provincial legislature was entitled to delegatetaxing powers to the Lieutenant Governor in Council. The probate levy was also authorized pursuant to the Administrationof Justice Act. It was not necessary to determine whether a nexus existed between the levy and the value of the serviceprovided.

L'exécutrice testamentaire d'une succession a prétendu que les frais d'homologation exigés pour l'émission de lettresd'homologation était une taxe indirecte qui, de ce fait, était inconstitutionnelle. Sa demande en vue d'obtenir deslettres d'homologation sans être tenue au paiement des frais a été rejetée, de même que sa demande d'une déclarationd'inconstitutionnalité à l'endroit de la réglementation imposant les frais. L'exécutrice testamentaire a formé un pourvoi.

Arrêt: Le pourvoi a été accueilli. La réglementation imposant les frais d'homologation était inconstitutionnelle.

Major, J. (L'Heureux-Dubé, Cory, Iacobucci, JJ., et Lamer, J.C.C., souscrivant) : Les frais d'homologation étaient en faitune taxe directe et non des frais. Ils étaient obligatoires puisqu'exigibles en vertu de la loi. Ils ont été réclamés par laCour de l'Ontario (Division générale), laquelle est un organisme public. Les frais étaient exigés à des fins publiques,soit pour défrayer les coûts d'administration du tribunal. En outre, un lien existait entre le montant des frais et le coûtdes services judiciaires fournis. À ce titre, les frais d'homologation étaient une taxe. L'exécutrice testamentaire n'étaitpas personnellement tenue au paiement des frais d'homologation, conséquemment la taxe était une taxe directe intravires de l'assemblée législative. Toutefois, les frais d'homologation étaient inconstitutionnels parce que l'art. 53 de la Loiconstitutionnelle de 1867 stipule que les lois imposant une taxe prennent naissance à la Chambre des communes. Or,les frais d'homologation sont issus de l'assemblée législative provinciale. De plus, les frais d'homologation n'étaient pasexigibles en vertu de la Loi sur l'administration de la justice. Cette loi exigeait en effet le paiement de frais et non d'une taxe.




Binnie, J. (McLachlin, J., souscrivant) : Les frais d'homologation étaient effectivement une taxe directe imposée par laréglementation adoptée sous l'autorité de l'assemblée législative provinciale. Toutefois, l'imposition d'une telle taxe étaitultra vires de la Loi sur l'administration de la justice. La Loi autorisait le lieutenant-gouverneur en conseil à établir desfrais ayant un lien raisonnable avec le coût encouru pour fournir le service.

Bastarache, J. (Gonthier, J., souscrivant) : Les frais d'homologation étaient effectivement une taxe directe à l'intérieurde la compétence législative de la provice. Cette taxe n'était pas nulle car elle n'était pas issue de la législature fédérale.Elle a été adoptée à l'assemblée législative provinciale et ne contrevenait donc pas à la Constitution. L'article 53 de laLoi constitutionnelle de 1867 interdisait seulement les lois relatives à des taxes dont l'origine était le Sénat. L'assembléelégislative provinciale avait compétence pour déléguer des pouvoirs de taxation au lieutenant-gouverneur en conseil. Lesfrais d'homologation étaient également autorisés en vertu de la Loi sur l'administration de la justice. Il n'était pas nécessairede déterminer s'il existait un lien entre les frais d'homologation et la valeur des services fournis.

Table of Authorities

Cases considered by/Jurisprudence citée par Major J. (L'Heureux-Dubé, Cory, Iacobucci JJ. and Lamer C.J.C.concurring):

Air Canada v. British Columbia, [1989] 4 W.W.R. 97, [1989] 1 S.C.R. 1161, 59 D.L.R. (4th) 161, 95 N.R. 1, 36B.C.L.R. (2d) 145, 41 C.R.R. 308, 2 T.C.T. 4178, [1989] 1 T.S.T. 2126 (S.C.C.) — considered

Allard Contractors Ltd. v. Coquitlam (District), 85 B.C.L.R. (2d) 257, 35 B.C.A.C. 241, 57 W.A.C. 241, 109 D.L.R.(4th) 46, 18 M.P.L.R. (2d) 1, [1993] 4 S.C.R. 371, 160 N.R. 249, 19 Admin. L.R. (2d) 1 (S.C.C.) — referred to

Cotton v. R., [1914] A.C. 176, 26 W.L.R. 207, 5 W.W.R. 662, 13 E.L.R. 371, 15 D.L.R. 283 (Canada P.C.) —considered

Lawson v. Interior Fruit Committee (1930), [1931] S.C.R. 357, [1931] 2 D.L.R. 193 (S.C.C.) — referred to

Ontario Home Builders' Assn. v. York (Region) Board of Education, 35 M.P.L.R. (2d) 1, 29 O.R. (3d) 320, 4 R.P.R.(3d) 1, 137 D.L.R. (4th) 449, (sub nom. Ontario Home Builders' Assn. v. Board of Education of York Region) 201N.R. 81, 93 O.A.C. 241, [1996] 2 S.C.R. 929 (S.C.C.) — referred to

R. v. National Fish Co., [1931] Ex. C.R. 75 (Can. Ex. Ct.) — considered

Reference re Agricultural Products Marketing Act (Canada), [1978] 2 S.C.R. 1198, 84 D.L.R. (3d) 257, 19 N.R. 361(S.C.C.) — considered

Cases considered by/Jurisprudence citée par Binnie J. (McLachlin J. concurring):

Reference re Secession of Quebec (1998), 161 D.L.R. (4th) 385, 228 N.R. 203 (S.C.C.) — referred to

Cases considered by/Jurisprudence citée par Bastarache J. (dissenting) (Gonthier J. concurring):

Allard Contractors Ltd. v. Coquitlam (District), 85 B.C.L.R. (2d) 257, 35 B.C.A.C. 241, 57 W.A.C. 241, 109 D.L.R.(4th) 46, 18 M.P.L.R. (2d) 1, [1993] 4 S.C.R. 371, 160 N.R. 249, 19 Admin. L.R. (2d) 1 (S.C.C.) — referred to

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Canada (Attorney General) v. Cie de publication La Presse (1966), [1967] S.C.R. 60, 63 D.L.R. (2d) 396, 66 D.T.C.5492 (S.C.C.) — referred to

Hodge v. R. (1883), (sub nom. Canada (Minister of Railways & Canals) v. Quebec Southern Railways) 9 App. Cas.117, 3 Cart. B.N.A. 144 (Ontario P.C.) — referred to

Irving Oil Ltd. v. New Brunswick (Provincial Secretary), [1980] 1 S.C.R. 787, 29 N.B.R. (2d) 529, 66 A.P.R. 529,31 N.R. 291, 109 D.L.R. (3d) 57, 109 D.L.R. (2d) 57 (S.C.C.) — referred to

Ontario Home Builders' Assn. v. York (Region) Board of Education, 35 M.P.L.R. (2d) 1, 29 O.R. (3d) 320, 4 R.P.R.(3d) 1, 137 D.L.R. (4th) 449, (sub nom. Ontario Home Builders' Assn. v. Board of Education of York Region) 201N.R. 81, 93 O.A.C. 241, [1996] 2 S.C.R. 929 (S.C.C.) — referred to

Shannon v. British Columbia (Lower Mainland Dairy Products Board), [1938] 2 W.W.R. 604, [1938] A.C. 708, (subnom. Shannon v. Lower Mainland Dairy Products Board) [1938] 4 D.L.R. 81 (British Columbia P.C.) — considered

Statutes considered by/Législation citée par Major J. (L'Heureux-Dubé, Cory, Iacobucci JJ. and Lamer C.J.C.concurring)

Administration of Justice Act/Administration de la justice, Loi sur l', R.S.O./L.R.O. 1990, c. A.6Generally/en général — considered

s. 5 — considered

s. 5(c) — considered

Constitution Act, 1867 (U.K.)/Loi constitutionnelle de 1867 (R.-U), 30 & 31 Vict, c. 3, reprinted R.S.C 1985, App. II, No.5/réimpriméeL.R.C. 1985, annexe II, No. 5

s. 53 — considered




s. 92 ¶2 — considered

s. 92 ¶14 — considered

Constitution Act, 1982/Loi constitutionelle de 1982, being Schedule B to the Canada Act, 1982 (U.K.), 1982, c. 11/constituantl'annexe B de la Loi de 1982 sur le Canada (R.-U), 1982, c. 11


s. 52(1) — considered

Statutes considered by/Législation citée par Binnie J. (McLachlin J. concurring)

Administration of Justice Act/Administration de la justice, Loi sur l', R.S.O./L.R.O. 1990, c. A.6s. 5 — considered















s. 5(a) — considered

s. 5(b) — considered


Canadian Charter of Rights and Freedoms/Charte canadienne des droits etlibertés, Part I of the Constitution Act, 1982,being Schedule B to the Canada Act,1982 (U.K.), 1982, c. 11/constituant l'annexe B de la Loi de 1982 sur le Canada(R.-U.), 1982, c. 11

Generally/en général — referred to




Court of Probate in this Province, and also a Surrogate Court in every District thereof, Act to establish, S.U.C. 1793(33 Geo. 3), c. 8

Generally — referred to

Estates Act/Successions, Loi sur les, R.S.O./L.R.O. 1990, c. E.21Generally/en général — considered

Statutes considered by/Législation citée par Bastarache J. (dissenting) (Gonthier J. concurring):

Administration of Justice Act/Administration de la justice, Loi sur l', R.S.O./L.R.O. 1990, c. A.6Generally/en général — considered

s. 5 — considered






Regulations considered by/Règlements cités par Major J. (L'Heureux-Dubé, Cory, Iacobucci JJ. and Lamer C.J.C.concurring)

Administration of Justice Act, R.S.O./L.R.O. 1990, c. A.6Ontario Court (General Division) and Court of Appeal-Fees, O. Reg. 293/92

Generallyénéral

s. 2(1)




Ontario Regulation 802/94 made under the Administration of Justice Act, O. Reg. 802/94

s. 1

Regulations considered by/Règlements cités par Binnie J. (McLachlin J. concurring)

Administration of Justice Act/Administration de la justice, Loi sur l', R.S.O./L.R.O. 1990, c. A.6Ontario Court (General Division) and Court of Appeal-Fees, O. Reg. 293/92

Generally/en général

Regulations considered by/Règlements cités par Bastarache J. (dissenting) (Gonthier J. concurring):

Administration of Justice Act/Administration de la justice, Loi sur l', R.S.O./L.R.O. 1990, c. A.6Ontario Court (General Division) and Court of Appeal-Fees, O. Reg. 293/92

Generally/en général

APPEAL by executor from judgment reported at (1997), 31 O.R. (3d) 777 (C.A.).

Pourvoi de l'executrice testamentaire à l'encontre d'un jugement publié à (1997), 31 O.R. (3d) 777 (C.A.).

Major J. (L'Heureux-Dubé, Cory, Iacobucci JJ. and Lamer C.J.C. concurring):

1 At issue in this appeal is whether the Province of Ontario acted within its legislative authority in imposing an ad valoremlevy for grants of letters probate.

I. Facts

2 The appellant is the executor of her late husband's estate. The total value of the estate was $414,000 which, pursuant to s.2(1) of O. Reg. 293/92, subsequently amended by O. Reg. 802/94, required payment of $5,710 in probate fees in order to obtainletters probate. The regulation was purported to be under the authority of the Administration of Justice Act, R.S.O. 1990, c. A.6.

3 The appellant applied to the Ontario Court (General Division) for an order that she be issued letters probate withoutpayment of the probate fee and for a declaration that the regulation which required that payment was unlawful. The applicationand subsequent appeal to the Ontario Court of Appeal were both dismissed.

II. Judicial History

A. Ontario Court (General Division) (1994), 20 O.R. (3d) 385 (Ont. Gen. Div.)

4 Morrison J., in assessing the probate charge, held that the difference between a fee and a tax is that a tax is compulsory,while a fee is only required to be paid where one seeks the services for which it is imposed. In concluding that the chargefor probate is a fee and not a tax, he held that probate fees lack the universal application characteristic of a tax. In certaincircumstances, executors can administer and distribute the bequest of a deceased without applying for a grant of probate. Also,living persons can arrange their affairs so that there is no necessity for probate. Morisson J. also held that "sliding scale" feescan be supported as ancillary or adhesive to a valid provincial regulatory scheme.

5 In rejecting the appellant's submission that the Administration of Justice Act does not authorize escalating fees as prescribedby the Regulations, Morisson J. held that the language used in s. 5(c) of the Act, together with the long history of similarly






worded statutes providing for escalating probate fees, demonstrated the intention of the legislature to authorize volumetric fees.He therefore dismissed the application.

B. Ontario Court of Appeal (1997), 31 O.R. (3d) 777 (Ont. C.A.)

6 Morden A.C.J.O. held that, in light of the legislative evolution of the probate fee system in Ontario, the ad valorem feestructure imposed by the Regulations is properly authorized by s. 5(c) of the Administration of Justice Act and is not a revenue-generating device enacted for a purpose not authorized by the Act.

7 He also held that the charge for probate is a fee and not a tax. A tax is a levy which is enforceable by law, imposed underthe authority of the legislature by a public body, and made for a public purpose: Lawson v. Interior Fruit Committee (1930),[1931] S.C.R. 357 (S.C.C.) at p. 363. Although the fee is compulsory and therefore enforceable by law, Morden A.C.J.O. foundthat it is legislation in relation to s. 92(14) of the Constitution Act, 1867 and is not aimed at raising a revenue under s. 92(2).Thus, the charge for probate did not meet all the requirements of a tax.

8 Morden A.C.J.O. held that the question of whether the taxing power could be delegated to the Lieutenant Governor inCouncil pursuant to ss. 53 and 54 of the Constitution Act, 1867 did not arise because the fees in question are not taxes. Heconcluded that even if the fees were considered to be taxes, they were ingredients of a regulatory scheme not covered by ss.53 and 54. The appeal was dismissed.

III. Issues

9 On November 27, 1997, the Chief Justice stated the following constitutional questions:

1. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of theAdministration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it is an indirect tax that is outside thelegislative authority of the province of Ontario under s. 92(2) of the Constitution Act, 1867?

2. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of theAdministration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it was imposed by a body other thanthe Legislature of Ontario in contravention of s. 90 (incorporating by reference ss. 53 and 54) of the ConstitutionAct, 1867?

IV. Relevant Constitutional, Statutory and Regulatory Provisions

A. Constitutional Provisions

10

Constitution Act, 1867

53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the Houseof Commons.

54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for theAppropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been firstrecommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address,or Bill is proposed.

90. The following Provisions of this Act respecting the Parliament of Canada, namely, - the Provisions relating toAppropriation and Tax Bills, the Recommendation of Money Votes, the Assent to Bills, the Disallowance of Acts, and theSignification of Pleasure on Bills reserved, - shall extend and apply to the Legislatures of the several Provinces as if thoseProvisions were here re-enacted and made applicable in Terms to the respective Provinces and the Legislatures thereof,






with the Substitution of the Lieutenant Governor of the Province for the Governor General, of the Governor General forthe Queen and for a Secretary of State, of One Year for Two Years, and of the Province for Canada.

92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes ofSubjects next here-inafter enumerated; that is to say, -

2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.

14. The Administration of Justice in the Province, including the Constitution, Maintenance, and Organization ofProvincial Courts, both of Civil and of Criminal Jurisdiction, and including Procedure in Civil Matters in those Courts.

Constitution Act, 1982

45. Subject to section 41, the legislature of each province may exclusively make laws amending the constitution of theprovince.

B. Statutory Provisions

11

Administration of Justice Act, R.S.O. 1990, c. A.6

5. The Lieutenant Governor in Council may make regulations,

(a) requiring the payment of fees for any thing required or authorized under any Act to be done by any person in theadministration of justice and prescribing the amounts thereof;

(b) providing for the payment of fees and allowances by Ontario in connection with services under any Act for theadministration of justice and prescribing the amounts thereof;

(c) requiring the payment of fees in respect of proceedings in any court and prescribing the amounts thereof.

C. Regulations

12 Ontario Regulation 293/92 (pursuant to the Administration of Justice Act, R.S.O. 1990, c. A.6, s. 5)

2.-(1) The following fees are payable in estate matters:

1. For a grant of probate, administration or guardianship, not being a double probate, cessate grant or administrationde bonis non administratis.

I. on the first $50,000 of the value of the estate being administered, perthousand dollars or part thereof

$ 5.00

ii. on the portion of the value of the estate being administered that exceeds$50,000, per thousand dollars or part thereof

$ 15.00

The above section was re-enacted by O. Reg. 802/94, s. 1, which reads as follows:

2.-(1) The following fees are payable in estate matters:

1. For a certificate of appointment of estate trustee, other than a certificate of succeeding estate trustee or a certificateof estate trustee during litigation,




I. on the first $50,000 of the value of the estate being administered, perthousand dollars or part thereof

$ 5.00

ii. on the portion of the value of the estate being administered that exceeds$50,000, per thousand dollars or part thereof

$ 15.00

V. Analysis

13 In Ontario, letters probate (now referred to as "certificate of appointment of estate trustee with a will") are issued bythe Ontario Court (General Division). The purpose of probate is to certify that a will and codicils have been duly proved andregistered in the court and that administration of the property of the deceased has been committed by the court to the personsnamed in the will as executors. Ontario Regulation 293/92 (subsequently re-enacted as O. Reg. 802/94) sets out a schedule of advalorem charges which must be paid in order to obtain a grant of probate. The appellant challenges the legality of those charges.

A. Is the probate levy a fee or a tax?

14 The appellant contends that the probate levy prescribed by s. 2(1) of O. Reg 293/92 is a tax rather than a fee. Thisdistinction is important because a tax may be either direct or indirect, and pursuant to s. 92(2) of the Constitution Act, 1867,a province only has jurisdiction to impose a direct tax. Conversely, a province may charge a fee, regardless of whether it isan indirect tax, provided that it is validly enacted under a provincial head of power other than the taxing power: see AllardContractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371 (S.C.C.) at p. 412, and Ontario Home Builders' Assn. v. York(Region) Board of Education, [1996] 2 S.C.R. 929 (S.C.C.) at p. 988.

15 Whether a levy is a tax or a fee was considered in Lawson, supra. Duff J. for the majority concluded that the levy inquestion was a tax because it was: (1) enforceable by law; (2) imposed under the authority of the legislature; (3) levied by apublic body; and (4) intended for a public purpose.

16 The first, third and fourth criteria pertain to the nature of the levy, while the second criterion involves a considerationof the manner in which the levy was imposed. In this appeal the first concern is identifying the nature of the probate levy. Themanner in which the levy was imposed will be considered later.

17 The Court of Appeal held that with respect to the first Lawson criterion the probate fee is compulsory and thereforeenforceable by law. I agree. A practical compulsion usually exists for the executor to obtain probate in order to comply with hisor her legal obligations. Although probate is not the foundation of the executor's title but only the authentic evidence of it, thatauthentication is nonetheless a practical and legal necessity in most cases, as illustrated by R. Hull and I. M. Hull in Macdonell,Sheard and Hull on Probate Practice (4th ed. 1996), at p. 188:

Any debtor of the testator is justified in refusing to pay his debt to the executor until probate is produced. All proceedingsin an action by the executor to enforce such payment will be stayed until the plaintiff obtains probate. Similarly an actionto recover possession of the testator's goods, or for damages for their wrongful conversion, brought by the executor, mustfail unless the executor has proved the will. In the absence of special statutory provisions to the contrary, the executor willfail whenever it is necessary to establish title as the personal representative of the deceased.

See also The Solicitor's Guide to Estate Practice in Ontario, by M. E. Rintoul (2nd ed. 1990), at pp. 35-36, wherein protectionfor the executor and administrative efficiency are identified as practical and legal reasons that frequently compel an executorto obtain probate. The fact that in some instances probate may be avoided does not lessen the fact that in Ontario letters probateare the rule in virtually all estate affairs.

18 The criterion that the fee must be levied by a public body is also satisfied here as probate fees in Ontario are levied bythe Ontario Court (General Division).





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19 The probate levy also meets the fourth Lawson criterion for a tax as the proceeds were intended for a public purpose.The Ontario Law Reform Commission concluded in 1991 that it is difficult to discern a principled justification for ad valoremprobate fees, and that "[t]he only rationale for the graduated fee schedule appears to be that it has been regarded as a suitablevehicle for raising revenue" (Report on Administration of Estates of Deceased Persons, at p. 286).

20 Those conclusions are supported by the evidence before this Court which showed that probate fees do not "incidentally"provide a surplus for general revenue, but rather are intended for that very purpose. The revenue obtained from probate feesis used for the public purpose of defraying the costs of court administration in general, and not simply to offset the costs ofgranting probate.

21 Another factor that generally distinguishes a fee from a tax is that a nexus must exist between the quantum charged andthe cost of the service provided in order for a levy to be considered constitutionally valid: see G. V. La Forest, The Allocationof Taxing Power Under the Canadian Constitution (2nd ed. 1981), at p. 72. This nexus was also considered a relevant todetermining the nature of a municipal charge in Allard Contractors, supra. In that case the Court engaged the question ofwhether an indirect tax levied by a province was validly enacted as incidental to a matter of provincial jurisdiction. Addressingthe relationship between a charge and the cost of the underlying service, Iacobucci J. wrote (at p. 411):

A surplus itself is not a problem so long as the municipalities made reasonable attempts to match the fee revenues withthe administrative costs of the regulatory scheme...

22 In determining whether that nexus exists, courts will not insist that fees correspond precisely to the cost of the relevantservice. As long as a reasonable connection is shown between the cost of the service provided and the amount charged, that willsuffice. The evidence in this appeal fails to disclose any correlation between the amount charged for grants of letters probateand the cost of providing that service. The Agreed Statement of Facts clearly shows that the procedures involved in grantingletters probate do not vary with the value of the estate. Although the cost of granting letters probate bears no relation to thevalue of an estate, the probate levy varies directly with the value of the estate. The result is the absence of a nexus between thelevy and the cost of the service, which indicates that the levy is a tax and not a fee.

23 Having determined that the probate levy is enforceable by law, is levied by a public body, is intended for public purposes,and that no nexus exists between the amount of the levy and the cost of the service for granting letters probate, the compellingconclusion is that the probate levy as presently enforced is a tax.

B. Is the probate levy a direct or indirect tax?

24 Section 92(2) of the Constitution Act, 1867 confers upon the provinces the power to raise revenue for provincial purposesonly by means of direct taxation: see Allard Contractors, supra, at p. 394, per Iacobucci J. It therefore has to be determinedwhether the probate levy is a direct or indirect tax.

25 In Principles of Political Economy, Book V, ch. 2, John Stuart Mill defined the distinction between direct and indirecttaxes. That oft repeated definition has not been much improved upon and is frequently referred to by courts in determiningwhether a levy is direct or indirect:

A direct tax is one which is demanded from the very persons who, it is intended or desired, should pay it. Indirect taxesare those which are demanded from one person in the expectation and intention that he shall indemnify himself at theexpense of another ....

26 Applying Mill's definition, the tax would be indirect if the executor was personally liable for payment of probate fees, as theintention would clearly be that the executor would recover payment from the beneficiaries of the estate. However, the legislationdoes not make the executor personally liable for the fees. Payment is made by the executor only in his or her representativecapacity. As a result, this case is readily distinguishable from Cotton v. R., [1914] A.C. 176 (Canada P.C.), where the successionduty was intended to be paid by one person and recouped from another. Here, as the amount is paid out of the estate by the






executor in his or her representative capacity with the intention that the estate should bear the burden of the tax, the probatefees fall within Mill's definition of direct tax. The probate levy does not fall within the more expansive definition of an "indirecttax" in Allard Contractors per Iacobucci J. at p. 396.

27 Thus, although the probate levy is properly characterized as a tax and not a fee, it is a direct tax and therefore intra vires theprovince pursuant to s. 92(2) of the Constitution Act, 1867. As a result there is no need to consider whether it would survive asan indirect tax on the basis that it was ancillary to a valid regulatory scheme. Such a result in any event is doubtful on the facts.

C. Did the implementation of the probate tax violate ss. 53 or 54 of the Constitution Act, 1867?

28 While the Ontario legislature has the authority to implement a direct tax, it must do so in accordance with the requirementsset out in the Constitution. Section 53 of the Constitution Act, 1867 mandates that bills for imposing any tax shall originate inthe House of Commons. By virtue of s. 90 of the Constitution Act, 1867, s. 53 is rendered applicable to the provinces. Thus,all provincial bills for the imposition of any tax must originate in the legislature.

29 To date, s. 53 has been the subject of only limited academic and jurisprudential discussion. It has been suggested thatthe purpose of s. 53 is to prevent the introduction of taxation legislation in the Senate, and that with the abolition of bicamerallegislatures in the provinces it has become redundant: see, e.g., W. H. McConnell in Commentary on the British North AmericaAct (1977), at p. 132.

30 In my view, the rationale underlying s. 53 is somewhat broader. The provision codifies the principle of no taxationwithout representation, by requiring any bill that imposes a tax to originate with the legislature. My interpretation of s. 53 doesnot prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutorydelegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body otherthan the directly elected legislature, from imposing a tax on its own accord.

31 In our system of responsible government, the Lieutenant Governor in Council cannot impose a new tax ab initio withoutthe authorization of the legislature. As Audette J. succinctly stated in R. v. National Fish Co., [1931] Ex. C.R. 75 (Can. Ex. Ct.)at p. 83, "[t]he Governor in Council has no power, proprio vigore, to impose taxes unless under authority specifically delegatedto it by Statute. The power of taxation is exclusively in Parliament."

32 The basic purpose of s. 53 is to constitutionalize the principle that taxation powers cannot arise incidentally in delegatedlegislation. In so doing, it ensures parliamentary control over, and accountability for, taxation. As E. A. Driedger stated in"Money Bills and the Senate" (1968), 3 Ottawa L. Rev. 25, at p. 41:

Through the centuries, the principle was maintained that taxation required representation and consent. The only body inCanada that meets this test is the Commons. The elected representatives of the people sit in the Commons, and not in theSenate, and, consistently with history and tradition, they may well insist that they alone have the right to decide to the lastcent what money is to be granted and what taxes are to be imposed.

33 The conclusion that s. 53 continues to be binding upon the provinces is supported by the fact that the applicability ofs. 53 to the provinces was not removed when the Constitution was amended in 1982, even though bicameral legislatures hadceased to exist at the provincial level by that time.

34 Section 53 is a constitutional imperative that is enforceable by the courts. A contrary opinion was expressed in Referencere Agricultural Products Marketing Act (Canada), [1978] 2 S.C.R. 1198 (S.C.C.), where Pigeon J. for the majority commentedin obiter that ss. 53 and 54 are not entrenched in the Constitution and can be indirectly amended through inconsistent legislation.Those comments, however, were made before the passage of the 1982 amendments to the Constitution.

35 By virtue of s. 45 of the Constitution Act, 1982, the legislature of each province retains the discretion to exclusivelymake laws amending the constitution of the province. That power must be read in association with s. 52(1) of the ConstitutionAct, 1982, which stipulates that any law that is inconsistent with the provisions of the Constitution is, to the extent of the


http://nextcanada.westlaw.com/Link/Document/FullText?findType=Y&pubNum=0100369&cite=3OTTAWALREV25&fi=co_pp_sp_100369_41&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Keycite)#co_pp_sp_100369_41






inconsistency, of no force or effect. Subsection 52(1) effectively requires any provincial legislation that seeks to amend theconstitution of the province to do so expressly: see J. Small in "Money Bills and the Use of the Royal Recommendation inCanada: Practice versus Principle?" (1995), 27 Ottawa L. Rev. 33, at p. 50. Otherwise, the legislation is liable to being struckdown on the basis that it is inconsistent with the Constitution.

36 Nothing in the Administration of Justice Act purports to amend the constitutional requirement for imposing tax legislationset out in s. 53. The Ontario legislature did not delegate to the Lieutenant Governor in Council the authority to impose a tax.Therefore whether it could constitutionally do so does not need to be addressed. The only power conferred by s. 5 of the Actwas to make regulations regarding the payment of fees, not the imposition of taxes. Yet the probate fees in this instance arein substance a tax imposed by the Lieutenant Governor in Council without having originated in the legislature. While thelegislature of Ontario may well be competent to establish probate taxes under the terms of the Administration of Justice Act, s.53 requires that they do so explicitly. Since s. 53 was not expressly amended, the province was obliged to abide by its terms.Its failure to do so renders the probate tax imposed under O. Reg. 802/94 (previously O. Reg. 293/92) unconstitutional. Theunconstitutionality of the impugned legislation is an important reminder of the fact that the imposition of a tax has both politicaland legal dimensions which require the legislature to act carefully if the tax is to be successfully implemented.

37 The appellant also challenges the validity of the probate tax on the ground that it violates s. 54 of the Constitution Act,1867. However, since s. 54 concerns the appropriation of taxes, and not the imposition of taxes (see Small, supra, at p. 40),it is not relevant to this appeal.

D. Is the probate levy authorized by s. 5 of the Administration of Justice Act?

38 Regardless of whether s. 53 was complied with, or even if s. 53 is considered redundant at the provincial level, the probatelevy is not enforceable as it was not authorized by s. 5 of the Administration of Justice Act. Section 5 reads:

5. The Lieutenant Governor in Council may make regulations,




39 While these provisions authorize the Lieutenant Governor in Council to impose fees, they do not constitute an expressdelegation of taxing authority. Whether the province may delegate its taxing authority was not fully argued before this Court,is obiter in the result, and should be considered only when the issue has been raised in the courts below. Of relevance to thisappeal is that the Act clearly does not authorize the imposition of a tax, albeit direct.

40 The constitutional requirement for a clear and unambiguous authorization of taxation within the enabling statute alsoprovides the reply to Bastarache J.'s concerns. Once it has been determined that the probate fees levied by the impugnedregulation are a direct tax, the question is whether the Administration of Justice Act, and the action of the Lieutenant Governorin Council in enacting O. Reg. 293/92, fulfil the legal and constitutional requirements for the imposition of a tax. Section 53constitutionally mandates the court to strictly construct enabling legislation, such as s. 5 of the Administration of Justice Act,when determining whether it properly creates a taxation power. This simply strengthens the general principle of interpretationthat "[i]f Parliament wants to give the Executive or some administrative agency the power to raise a tax by regulation, it mustdo so in a specific and unequivocal provision" ( R. Dussault and L. Borgeat, Administrative Law: A Treatise (2nd ed. 1985),vol. 1. at p. 445).

41 Bastarache J. states that the authorization extended to the Lieutenant Governor in Council in the Administration ofJustice Act to prescribe fees "includes the power to implement a direct tax..."(para 11). With respect, this conclusion cannot be






sustained. The distinction between these two forms of charges cannot be erased by simply interpreting the word "fees" to includetaxes. This distinction is both legally and constitutionally significant to determining the validity of the enactment. As s. 53 ofthe Constitution Act, 1867, Standing Order 54 of the Ontario legislature, and the general law on construction of taxing statutesall demonstrate, the imposition of taxes is an act of unique political significance, subject to special rules and requirements, noneof which the impugned scheme meets. Ontario Reg. 293/92 is both unconstitutional and ultra vires as it seeks to impose a taxwithout clear and unambiguous authorization from the legislature to do so.

42 The appellant also argued that s. 5 does not authorize the imposition of ad valorem probate fees. Given my conclusionthat the probate levy is a tax and not a fee, it is not necessary to address this issue. I would add, though, that the wording ofthe Act does not appear to restrict the type of fee that may be imposed provided that it possesses the characteristics of a fee,including inter alia the existence of a nexus between the amount charged and the cost of the service provided.

E. Disposition and Remedy

43 Section 52(1) of the Constitution Act, 1982 provides that the Constitution is the supreme law of Canada and any law thatis inconsistent with the provisions of the Constitution is, to the extent of the inconsistency, of no force or effect. The probatefee levied by O. Reg. 293/92 is in substance a direct tax which has not been imposed in accordance with the requirements of s.53 of the Constitution Act, 1867. Thus the regulation is invalid and of no force or effect.

44 An immediate declaration of invalidity would deprive the province of the revenue derived from probate fees, with noopportunity to remedy the legislation or find alternative sources of funding. Probate fees have a lengthy history in Ontario,and the revenue derived therefrom is substantial. For example, the evidence presented to this Court indicated that in 1993 and1994, probate fees collected in Ontario totalled $51.8 million and $52.6 million, respectively. This revenue is used to defraythe costs of court administration in the province. An immediate deprivation of this source of revenue would likely have harmfulconsequences for the administration of justice in the province. The declaration of invalidity is therefore suspended for a periodof six months to enable the province to address the issue.

45 The final issue is whether the appellant is entitled to a refund of the probate fees of $5,710 paid by her as executor forher late husband's estate.

46 In Air Canada v. British Columbia, [1989] 1 S.C.R. 1161 (S.C.C.), La Forest J. for three of the six members of theCourt held that there is a general rule against recovery of taxes paid under unconstitutional statutes, with exceptions wherethe relationship between the state and a particular taxpayer resulting in the collection of the tax is unjust or oppressive in thecircumstances.

47 Even if this Court were to adopt the rule articulated by La Forest J., it would not prevent recovery by the appellantin this case. An exception has been recognized where taxes are paid under compulsion or protest: Air Canada, supra, at pp.1209-10. Here, the appellant has challenged the validity of the regulation imposing the probate fee from the outset. She paidthe fee in order to fulfil her legal obligations as executor of the estate only after the Ontario Court (General Division) held thatthe regulation was legally valid. Had the proper decision been rendered at first instance, the appellant would not have paid thefee. It would therefore be inequitable to deny recovery at this stage.

48 The appeal is accordingly allowed with costs and the appellant refunded the $5,710 paid by her.

49 For the reasons given, I would answer the constitutional questions as follows:

1. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of theAdministration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it is an indirect tax that is outside thelegislative authority of the province of Ontario under s. 92(2) of the Constitution Act, 1867?

Answer: No






2. Is the probate fee, which was imposed by Ontario Regulation 293/92, which was made under s. 5 of theAdministration of Justice Act, R.S.O. 1990, c. A.6, invalid on the ground that it was imposed by a body other thanthe Legislature of Ontario in contravention of s. 90 (incorporating by reference ss. 53 and 54) of the ConstitutionAct, 1867?

Answer: Yes

Bastarache J. (dissenting) (Gonthier J. concurring):

50 This appeal concerns the validity of the fees set for probate by the Legislature of Ontario through Regulation 293/92,which was enacted pursuant to s. 5 of the Administration of Justice Act, R.S.O. 1990, c. A.6. The facts and the issues have beenset out in the reasons of Major J. and I will not repeat them.

51 I have read the reasons of my colleagues Major and Binnie JJ. and in a number of aspects, I cannot, with respect,agree with their approaches. I accept Major J.'s characterization of the probate fee as a tax and I accept that it is a direct taxwithin the legislative authority of the province. I do not, however, agree that the probate fee is invalid on the ground that itwas imposed by a body other than the Legislature of Ontario in contravention of s. 90 (incorporating by reference ss. 53 and54 of the Constitution Act, 1867). Moreover, I do not accept Major and Binnie JJ.'s conclusion that the probate fees are notauthorized under s. 5 of the Administration of Justice Act.

Sections 53 and 54 of the Constitution Act, 1867

52 Sections 53 and 54 of the Constitution Act, 1867, which are made applicable to the provincial legislature by virtue ofs. 90 of the Act, provide as follows:


54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for theAppropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been firstrecommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address,or Bill is proposed.

53 The appellant argued that s. 53 of the Constitution Act, 1867 requires that any bill that appropriates public revenue orimposes any tax must originate in the Legislative Assembly. With respect to s. 54, the appellant argued that it prohibits theLegislative Assembly from adopting or passing such a bill unless it has been recommended to the Legislative Assembly bymessage of the Lieutenant Governor.

54 Major J., in his reasons, states that the rationale underlying s. 53 of the Constitution Act, 1867 is to prohibit any bodyother than the legislature from imposing a tax on its own accord. The purpose of s. 53 of the Constitution Act, 1867, in myview, is to provide that bills concerning taxation originate in the House of Commons rather than the Senate. The section wasenacted because of a concern in English history about taxation bills being introduced in the House of Lords rather than in theCommons. With the abolition of bicameral legislatures in the provinces, s. 53 no longer has significance at the provincial level(W. H. McConnell, Commentary on the British North America Act (1977), at pp. 105-6 and 131-32; W. R. Anson, The Lawand Custom of the Constitution (3rd ed. 1897), Part 1, at pp. 265-68).

55 Even if s. 53 of the Constitution Act, 1867 continues to apply to the provinces, the fact that the legislature has authorized theexecutive to prescribe fees in the form of a tax does not violate s. 53 of the Constitution Act, 1867. The tax in the form of probatefees is imposed by s. 5 of the Administration of Justice Act. This Act was introduced in the Legislative Assembly of Ontarioand therefore cannot violate s. 53 of the Constitution Act, 1867. All that the Legislature has done is delegate to the LieutenantGovernor in Council the authority to provide for the details of the tax through regulation. The provincial legislature is entitledto delegate taxing powers to its subordinate bodies, including the Lieutenant Governor in Council (Hodge v. R. (1883), 9 App.





Cas. 117 (Ontario P.C.) at pp. 131-33; Shannon v. British Columbia (Lower Mainland Dairy Products Board), [1938] A.C. 708(British Columbia P.C.) at p. 722; Irving Oil Ltd. v. New Brunswick (Provincial Secretary), [1980] 1 S.C.R. 787 (S.C.C.)).

56 I agree with Major J. that s. 54 of the Constitution Act, 1867 is not relevant to this appeal. Section 54 requires thatbills relating to the appropriation of taxes (supply bills) be accompanied by a royal recommendation. The only bills that areguaranteed to the executive under s. 54 of the Constitution Act, 1867 are true appropriation bills.

Section 5 of the Administration of Justice Act

57 Section 5 of the Administration of Justice Act provides as follows:

5. The Lieutenant Governor may make regulations,




58 Having found that the probate fee enacted pursuant to s. 5 of the Administration of Justice Act is in reality a directtax imposed by the province through its delegate, the Lieutenant Governor in Council, the issue to be decided at this stage iswhether s. 5 of the Administration of Justice Act authorizes the imposition of the fee structure found in Regulation 293/92. Infinding that the probate fee is a direct tax, it has been determined that the probate fee is (1) enforceable by law; (2) levied by apublic body; and (3) intended for a public purpose (reasons of Major J., at paras. 17-20).

59 In determining whether or not the probate fee, as a direct tax, is authorized under the Administration of Justice Act, it is notnecessary to conduct an analysis of whether a nexus exists between the quantum charged and the cost of the service. It is onlybecause variable fees are indirect in their general tendency that the nexus argument is normally raised (see Allard ContractorsLtd. v. Coquitlam (District), [1993] 4 S.C.R. 371 (S.C.C.) at pp. 398 b and 402e; see also Ontario Home Builders' Assn. v. York(Region) Board of Education, [1996] 2 S.C.R. 929 (S.C.C.) at para. 53). In Allard and Home Builders', the nexus between thefee and the value of the service provided arose in the context of indirect taxes, which would only be valid if ancillary to a validregulatory scheme. It is noted in Home Builders', at para. 53, that "[a]ny power of indirect taxation extending beyond regulatorycosts would indeed render s. 92(2) [Direct Taxation] meaningless". It has long been accepted that there is no constitutionalprohibition against a direct tax that is variable and designed to defray the costs of a regulation (see Shannon v. British Columbia(Lower Mainland Dairy Products Board), supra, at p. 721). As Professor La Forest (as he then was) stated in The Allocationof Taxing Power Under the Canadian Constitution (2nd ed. 1981), quoted in Home Builders', supra, at para. 52: "there is nodoubt that direct taxation may be raised under section 92(2) even though it is framed in the form of a licence". The sole issuehere is whether s. 5 of the Administration of Justice Act is broad enough to authorize this direct tax, not whether there is a nexusbetween the tax and the probate service, as would be required if the tax was indirect.

60 In my view, according to the ordinary rules of interpretation, including the legislative history of the impugned provision asthoroughly described by Morden A.C.J.O. in the Court of Appeal, s. 5(c) of the Administration of Justice Act is broad enough toauthorize the Lieutenant Governor in Council to impose a direct tax on persons applying for probate. It authorizes the LieutenantGovernor in Council to prescribe fees in respect of proceedings in any court. This includes the power to implement a direct taxon applications for probate. The language of the section does not require that the fees be in proportion to services rendered.There is no exclusion of an "ad valorem" fee structure (Canada (Attorney General) v. Cie de publication La Presse (1966),[1967] S.C.R. 60 (S.C.C.)).

61 The powers of a provincial legislature cannot be limited except by the Constitution. The province of Ontario authorized theLieutenant Governor in Council, through s. 5 of the Administration of Justice Act, to implement a direct tax in respect of court











proceedings. The Lieutenant Governor in Council validly prescribed the amount for this tax and the method of payment throughthe taxing of applications for letters probate pursuant to Regulation 293/92. Accordingly, I would dismiss the appeal with costs.

Binnie J. (McLachlin J. concurring):

62 I agree with Justice Major's conclusion that Ontario's probate "fee" is in reality a tax, albeit a direct tax within the legislativeauthority of the province. I also agree with his proposed disposition of the appeal. I differ, however, from his conclusion thatthe probate tax imposed under O. Reg. 293/92 (now 802/94) is unconstitutional by virtue of non-compliance with s. 53 of theConstitution Act, 1867. I prefer to rest my conclusion on his alternative ground that O. Reg. 293/92 is ultra vires s. 5 of theAdministration of Justice Act, R.S.O. 1990, c. A.6.

63 The legislative power of the province is sovereign except as limited by the Constitution itself, including limitationsflowing from the federal-provincial division of powers, and the Canadian Charter of Rights and Freedoms. In the absence ofa constitutional prohibition, the legislature has power to authorize a tax structure of its own choosing, and for which it will bepolitically accountable, including a tax to be prescribed by the Lieutenant Governor in Council. I do not construe s. 53 of theConstitution Act, 1867 as constituting such a prohibition.

64 Major J. rightly observes at para. 31 that:

In our system of responsible government, the Lieutenant Governor in Council cannot impose a new tax ab initio withoutthe authorization of the legislature.

It seems to me this leads to a straightforward question of whether the regulation is ultra vires s. 5 of the Administration ofJustice Act. There is no need to look to the constitutional subtleties of s. 53, which provides:


Section 53 appears under the heading "Money Votes; Royal Assent" in a series of five sections dealing with various aspectsof the relationships among the House of Commons, the Senate and the Crown. These provisions are made applicable to theprovinces by s. 90. Section 53 requires that money bills originate in the House of Commons. Regulation 293/92 is not, andnever was, a "bill". It is a regulation that was prescribed by the Lieutenant Governor in Council. Bills arise only as part of thelegislative process in the House of Commons or the Senate.

65 My colleague advances the proposition in para. 32 that:

The basic purpose of s. 53 is to constitutionalize the principle that taxation powers cannot arise incidentally in delegatedlegislation. [Emphasis added.]

66 Again, in para. 40, he argues that s. 53 "constitutionally mandates the court to strictly construct enabling legislation".In my view, respectfully, this analysis reads the word "bills" out of the section, and takes the section out of the context ofthe series of sections of which it forms a part. Section 53 addresses a state of affairs prior to any "legislation" coming intoexistence. It is explicitly related to legislative procedure and there is nothing that I can see in its text to justify concluding that its"basic purpose" is the constitutional entrenchment of a principle of "strict construction" of legislation, delegated or otherwise.Regardless of the attraction of my colleague's broad rationale of promoting "parliamentary control over, and accountability for,taxation" (para. 32), I do not think the Court can facilitate achievement of the objective by rewriting s. 53. As the Court recentlyaffirmed in Reference re Secession of Quebec (1998), 161 D.L.R. (4th) 385 (S.C.C.), implicit principles can and should be usedto expound the Constitution, but they cannot alter the thrust of its explicit text.

67 I do, however, agree with Major J. that O. Reg. 293/92 is ultra vires s. 5 of the Administration of Justice Act, and wouldlike to add a comment about the respondents' use of legislative history to support the government position. The respondentsemphasized the historical evolution of probate fees in Ontario from 1793 until the present, and related the present fee structureto provisions in the Estates Act, R.S.O. 1990, c. E-21, having a bearing on probate fees. It is argued that it would be reasonable





to infer from this historical context that the Legislature of Ontario intended by s. 5 to continue the authority of the LieutenantGovernor in Council to impose escalating ad valorem probate fees. Leaving aside the taxation issue, the difficulty with relyingon legislative history in this case is that the context has changed. The statutory authority no longer exists in an Act dealing witha court exercising a specialized estates jurisdiction. Section 5 of the Administration of Justice Act, unlike sections of the Act toestablish a Court of Probate in this Province, and also a Surrogate Court in every District thereof, S.U.C. 1793, 33 Geo 3, c.8, and subsequent versions of the Surrogate Courts Acts, does not have a narrow focus. Section 5(a) authorizes fees "for anything required or authorized under any Act to be done by any person in the administration of justice" (emphasis added), s. 5(b)allows fees to be prescribed "in connection with services under any Act for the administration of justice" (emphasis added), ands. 5(c) allows fees to be prescribed "in respect of proceedings in any court" (emphasis added). The words "for", "in connectionwith" and "in respect of" are words of very broad signification, and the obligation to pay the prescribed fee can be in relation toan enormous variety of "things", "services", and "proceedings". If s. 5(c), for example, validly authorizes escalating ad valoremfees for probate, it must equally authorize escalating ad valorem type fees "in respect of" other court proceedings. The 200-year legislative history of probate fees does not, therefore, justify an interpretation of the new and more generalized power toprescribe fees in s. 5 of the Administration of Justice Act beyond the sort of "fees" that the text of s. 5 would otherwise support.

68 It is implicit in the notion of "fee for service" that there is, somewhere, a cost base that is somehow connected to theprovision of the relevant service and is to be allocated amongst users. The New Shorter Oxford English Dictionary, vol. 1, atp. 928, includes in its definition of "fee" a "sum payable to a public officer in return for the execution of relevant duties". TheCourt of Appeal accepted as appropriate in this regard the costs of operating the entire Ontario Court (General Division). Therespondents seem to suggest that all users of the Ontario Court (General Division) are being subsidized by the governmenttreasury and that some users cannot complain if they are subsidized less than other users. The record is singularly bare of anyaccounting data in this regard. In any event, as a matter of ordinary statutory interpretation, s. 5 cannot reasonably be construedas authorizing a fee for "things", "services" or "proceedings" based on the size of the bank account of the person seeking themrather than the cost of their delivery — however broadly the cost of such things, services or proceedings may be defined.

69 In short, the Ontario Legislature may delegate the power to prescribe an escalating ad valorem probate tax to the LieutenantGovernor in Council but it must do so in clear and unambiguous language. The present section authorizes the LieutenantGovernor in Council to prescribe fees, and unless and until the section is amended the charge to users for the relevant servicemust have some reasonable relationship to the cost of the provision of that service.

Appeal allowed.

Pourvoi accueilli.

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Chambers v. Chambers, 2013 ONCA 511, 2013 CarswellOnt 11067

2013 ONCA 511, 2013 CarswellOnt 11067, 230 A.C.W.S. (3d) 319, 309 O.A.C. 205...


2013 ONCA 511Ontario Court of Appeal

Chambers v. Chambers

2013 CarswellOnt 11067, 2013 ONCA 511, 230 A.C.W.S. (3d)319, 309 O.A.C. 205, 367 D.L.R. (4th) 151, 90 E.T.R. (3d) 161

In the Estate of Herbert Washington Chambers, deceased

In the Matter of an Application for a Certificate of Appointment of Estate Trustee with a Will

Violet Agatha Chambers, Applicant (Respondent) and Michael Chambers, Clive Oliver Chambers,Marva Chambers, Velma Timol, Mazie May Thomas, Collette Harrison, Jennifer Chang (also

known as Jennifer Chong), Natasha Chambers, Christopher Chambers, Andrea Chambers, AdrianChang, Shara Chang, Michael Nassies Chambers Jr., Rayon Recardo Chambers, Claire Eden

Elizabeth Chambers, Lisa Chambers, Rochelle Antonette Fraser, Kimora Chomas (also knownas Kimora Camela Thomas) and The Office of the Children's Lawyer, Respondents (Appellant)

E.E. Gillese, Gloria Epstein, P. Lauwers JJ.A.

Heard: April 26, 2013Judgment: August 12, 2013

Docket: CA C56024, C56025

Counsel: A. Sean Graham, Christopher M.B. Graham, for AppellantMichael Kerr, for Respondent, Violet Agatha ChambersDavid Lobl, for Bank of Nova Scotia Trust Company

Subject: Estates and Trusts; Civil Practice and Procedure

Related Abridgment ClassificationsFor all relevant Canadian Abridgment Classifications refer to highest level of case via History.

HeadnoteEstates and trusts --- Estates — Personal representatives — Executor under will — Renunciation

Deceased executed "primary will," which disposed of all his assets except for shares in private corporations; and "corporatewill," which disposed of his corporate assets, significantly, shares in nursing home he jointly owned with his wife V —Both wills named V and daughter C as estate trustees — Corporate will named son M as alternate trustee with C — Crenounced her right to serve as trustee and V began acting as trustee under both wills — Renunciation order was maderequiring V to apply for certificate of appointment as estate trustee and produce testamentary documents, and permitting P,nursing home employee, to sell property she held jointly with deceased and retain portion of sale proceeds — V applied tobe removed or permitted to resign as trustee and to have bank named as sole succeeding trustee — M applied for order thathe and bank be named as co-estate trustees of both wills — Applications judge ordered V to be removed as estate trustee,M to be removed or passed over as trustee, and bank to be appointed as sole succeeding trustee — M appealed — Appealsdismissed — Renunciation is generally not available if party is "intermeddled" with estate — There was no question thatC had renounced but at time of renunciation order, V was already administering estate — V was unable and unwilling tocontinue to act as estate trustee, and had claims against estate and was in conflict of interest — Assuming that renunciationorder was effective, V's right to serve as named estate trustee would have ceased, but role of estate trustee would havedevolved to her on basis of intermeddling or trustee de son tort principle — V could be relieved only through appropriate





process — Fact that M was named alternate trustee in corporate will did not affect outcome — Properly understood,applications judge passed over M as estate trustee under corporate will — Applications judge concluded that welfare ofbeneficiaries would be best served if bank were appointed successor estate trustee — There was no reason to interfere withconclusion that bank alone should be appointed as successor estate trustee.

Estates and trusts --- Estates — Personal representatives — Special representatives — Executor de son tort

Deceased executed "primary will," which disposed of all his assets except for shares in private corporations; and "corporatewill," which disposed of his corporate assets, significantly, shares in nursing home he jointly owned with his wife V —Both wills named V and daughter C as estate trustees — Corporate will named son M as alternate trustee with C — Crenounced her right to serve as trustee and V began acting as trustee under both wills — Renunciation order was maderequiring V to apply for certificate of appointment as estate trustee and produce testamentary documents, and permitting P,nursing home employee, to sell property she held jointly with deceased and retain portion of sale proceeds — V applied tobe removed or permitted to resign as trustee and to have bank named as sole succeeding trustee — M applied for order thathe and bank be named as co-estate trustees of both wills — Applications judge ordered V to be removed as estate trustee,M to be removed or passed over as trustee, and bank to be appointed as sole succeeding trustee — M appealed — Appealsdismissed — Renunciation is generally not available if party is "intermeddled" with estate — There was no question thatC had renounced but at time of renunciation order, V was already administering estate — V was unable and unwilling tocontinue to act as estate trustee, and had claims against estate and was in conflict of interest — Assuming that renunciationorder was effective, V's right to serve as named estate trustee would have ceased, but role of estate trustee would havedevolved to her on basis of intermeddling or trustee de son tort principle — V could be relieved only through appropriateprocess — Fact that M was named alternate trustee in corporate will did not affect outcome — Properly understood,applications judge passed over M as estate trustee under corporate will — Applications judge concluded that welfare ofbeneficiaries would be best served if bank were appointed successor estate trustee — There was no reason to interfere withconclusion that bank alone should be appointed as successor estate trustee.

Estates and trusts --- Estates — Personal representatives — Executor under will — Alternative appointment

Deceased executed "primary will," which disposed of all his assets except for shares in private corporations; and "corporatewill," which disposed of his corporate assets, significantly, shares in nursing home he jointly owned with his wife V —Both wills named V and daughter C as estate trustees — Corporate will named son M as alternate trustee with C — Crenounced her right to serve as trustee and V began acting as trustee under both wills — Renunciation order was maderequiring V to apply for certificate of appointment as estate trustee and produce testamentary documents, and permittingP, nursing home employee, to sell property she held jointly with deceased and retain portion of sale proceeds — V appliedto be removed or permitted to resign as trustee and to have bank named as sole succeeding trustee — M applied for orderthat he and bank be named as co-estate trustees of both wills — Applications judge ordered V to be removed as estatetrustee, M to be removed or passed over as trustee, and bank to be appointed as sole succeeding trustee — M appealed— Appeals dismissed — Assuming that renunciation order was effective, V's right to serve as named estate trustee wouldhave ceased, but role of estate trustee would have devolved to her on basis of intermeddling or trustee de son tort principle— M was named alternate in event that was V was unwilling — M could not accept appointment as estate trustee undercorporate will because condition precedent to his appointment was not met until V brought her application — Properlyunderstood, applications judge passed over M as estate trustee under corporate will — When applications were heard, Mwas not estate trustee and could not have been removed — Applications judge concluded that welfare of beneficiarieswould be best served if bank were appointed successor estate trustee — M held strong animosity towards V which wouldcompromise administration of corporate estate were he appointed co-estate trustee — There was no reason to interferewith conclusion that bank alone should be appointed as successor trustee.

Estates and trusts --- Estates — Powers and duties of personal representatives — Supervision of personalrepresentatives by court — Removal — Practice and procedure

Deceased executed "primary will," which disposed of all his assets except for shares in private corporations; and "corporatewill," which disposed of his corporate assets, significantly, shares in nursing home he jointly owned with his wife V —





Both wills named V and daughter C as estate trustees — Corporate will named son M as alternate trustee with C — Crenounced her right to serve as trustee and V began acting as trustee under both wills — Renunciation order was maderequiring V to apply for certificate of appointment as estate trustee and produce testamentary documents, and permittingP, nursing home employee, to sell property she held jointly with deceased and retain portion of sale proceeds — V appliedto be removed or permitted to resign as trustee and to have bank named as sole succeeding trustee — M applied for orderthat he and bank be named as co-estate trustees of both wills — Applications judge ordered V to be removed as estatetrustee, M to be removed or passed over as trustee, and bank to be appointed as sole succeeding trustee — M appealed— Appeals dismissed — Assuming that renunciation order was effective, V's right to serve as named estate trustee wouldhave ceased, but role of estate trustee would have devolved to her on basis of intermeddling or trustee de son tort principle— M was named alternate in event that was V was unwilling — M could not accept appointment as estate trustee undercorporate will because condition precedent to his appointment was not met until V brought her application — Properlyunderstood, applications judge passed over M as estate trustee under corporate will — When applications were heard, Mwas not estate trustee and could not have been removed — Applications judge concluded that welfare of beneficiarieswould be best served if bank were appointed successor estate trustee — M held strong animosity towards V which wouldcompromise administration of corporate estate were he appointed co-estate trustee — There was no reason to interferewith conclusion that bank alone should be appointed as successor trustee.

Table of Authorities

Cases considered by E.E. Gillese J.A.:

Bowerman, Re (1978), 1978 CarswellOnt 1458, 20 O.R. (2d) 374, 87 D.L.R. (3d) 597 (Ont. Surr. Ct.) — referred to

Brown v. Agnew (1941), [1941] 3 W.W.R. 723, [1941] 4 D.L.R. 653, 1941 CarswellSask 84 (Sask. C.A.) — referred to

Carmichael v. Carmichael Estate (2000), 2000 CarswellOnt 71, 184 D.L.R. (4th) 175, 31 E.T.R. (2d) 33, (sub nom.Carmichael Estate, Re) 46 O.R. (3d) 630 (Ont. S.C.J.) — considered

Charles J. Ellison Ltd. v. Murray (1949), [1949] O.W.N. 398, 1949 CarswellOnt 215 (Ont. C.A.) — referred to

Coleman v. Ryan (1923), 55 O.L.R. 182 (Ont. C.A. [In Chambers]) — referred to

Crawford v. Jardine (1997), 20 E.T.R. (2d) 182, 1997 CarswellOnt 4962 (Ont. Gen. Div.) — referred to

Crompton v. Williams (1938), 1938 CarswellOnt 41, [1938] O.R. 543, [1938] 4 D.L.R. 237 (Ont. H.C.) — referred to

Evans v. Gonder (2010), 54 E.T.R. (3d) 193, 2010 ONCA 172, 2010 CarswellOnt 1240, (sub nom. Gonder v. GonderEstate) 259 O.A.C. 295 (Ont. C.A.) — referred to

Harris v. Gallimore (1925), [1925] 4 D.L.R. 851, 1925 CarswellOnt 222, 57 O.L.R. 673 (Ont. C.A.) — referred to

Holder v. Holder (1968), [1968] Ch. 353, [1968] 1 All E.R. 665 (Eng. C.A.) — referred to

MacDonald v. MacIsaac (1983), 1983 CarswellNS 423, 58 N.S.R. (2d) 199 (N.S. C.A.) — referred to

Moorhouse, Re (1946), [1946] O.W.N. 789, [1946] 4 D.L.R. 542, 1946 CarswellOnt 301 (Ont. H.C.) — considered

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O'Reilly (No. 2), Re (1980), 28 O.R. (2d) 481, 1980 CarswellOnt 531, 7 E.T.R. 185, 111 D.L.R. (3d) 238 (Ont. H.C.)— considered

O'Reilly (No. 2), Re (1981), 123 D.L.R. (3d) 767n, 1981 CarswellOnt 1306, 33 O.R. (2d) 352 (Ont. C.A.) — referred to

Pickering v. Thompson (1911), 19 O.W.R. 697, 1911 CarswellOnt 396, 24 O.L.R. 378 (Ont. Div. Ct.) — referred to

Selangor United Rubber Estates Ltd. v. Cradock (1968), [1968] 2 All E.R. 1073, [1968] 2 Lloyd's Rep. 289, [1968]1 W.L.R. 1555 (Eng. Ch. Div.) — referred to

Stadelmier v. Hoffman (1986), 25 E.T.R. 174, 1986 CarswellOnt 667, (sub nom. Becker, Re) 57 O.R. (2d) 495 (Ont.Surr. Ct.) — referred to

Stordy v. McGregor (1986), 1986 CarswellMan 231, 42 Man. R. (2d) 237 (Man. Q.B.) — considered

Thomasson Estate, Re (2011), 2011 BCSC 481, 2011 CarswellBC 915 (B.C. S.C.) — referred to

Weil, Re (1961), [1961] O.R. 888, 30 D.L.R. (2d) 91, 1961 CarswellOnt 152 (Ont. C.A.) — referred to

Windsor v. Mako (2008), 2008 CarswellOnt 6442, 43 E.T.R. (3d) 255 (Ont. S.C.J.) — considered

Wolfe, Re (1957), 7 D.L.R. (2d) 215, 21 W.W.R. 85, 1957 CarswellBC 11 (B.C. C.A.) — referred to

Statutes considered:

Estates Act, R.S.O. 1990, c. E.21s. 25 — considered


Trustee Act, R.S.O. 1990, c. T.23s. 5 — considered


Words and phrases considered:

intermeddling

Intermeddling is the term used to describe the acts of a person who deals with an estate without having been formallyrecognized as the estate trustee.

APPEALS by son of deceased from orders that he be removed or passed over as estate trustee and that bank be appointed assole succeeding trustee.

E.E. Gillese J.A.:
















1 These two appeals arise from applications brought in respect of Herbert Washington Chambers' ("Mr. Chambers") personaland corporate estates (the "Estate"). To resolve the appeals, this court must distinguish among a number of related concepts

respecting estate trustees 1 : renunciation, resignation, removal, and passing over.

2 Because the appeals arise from the same set of facts, this single set of reasons disposes of them both.

Overview

3 On April 8, 2008, Mr. Chambers executed two wills. In the first will (the "Primary Will"), Mr. Chambers disposed of allof his assets, except shares in private corporations that he owned at the time of his death. In the second will (the "CorporateWill"), he disposed of those shares (the "Corporate Assets").

4 Michael Chambers ("Michael Chambers" or the "appellant") is Mr. Chambers' son. He brought an application asking thathe and a trust company be named as co-estate trustees of both wills.

5 Agatha Violet Chambers ("Mrs. Chambers") is the deceased's widow. After her husband's death, she acted as the estatetrustee under both wills. She brought an application asking to be removed, or permitted to resign, as the estate trustee underboth wills, and seeking to have a trust company named as sole succeeding estate trustee.

6 The two applications were heard together. By two judgments dated August 21, 2012 (the "Judgments"), the applicationsjudge ordered:

• Mrs. Chambers be removed as the estate trustee of both wills;

• Michael Chambers be removed or passed over as estate trustee; and,

• the Bank of Nova Scotia Trust Company (the "Bank") be the sole succeeding estate trustee in Mrs. Chambers' stead.

7 Michael Chambers appeals.

8 For the reasons that follow, I would dismiss the appeals.

The Background Facts

The Primary Will

9 In the Primary Will, Mr. Chambers appointed two trustees: Mrs. Chambers and his daughter, Collette Harrison. He didnot name any alternate trustees.

10 Under the Primary Will, Mrs. Chambers was to receive Mr. Chambers' personal effects, and his interest in the furniture andfurnishings in the matrimonial home. Apart from that, the estate was bequeathed to his children, including Michael Chambers,grandchildren, relatives, and friends.

Pansy Miller

11 In the Primary Will, Mr. Chambers directed his trustees to give Pansy Miller the option to purchase his interest in 7Elderwood Drive, Richmond Hill (the "Elderwood property"), within one year of his death, at fair market value less 6 percent, "the commission payable if sold on the open market." The Elderwood property was registered in the joint names of Mr.Chambers and Ms. Miller. In the Primary Will, Mr. Chambers also made a bequest of $75,000 to Ms. Miller.

12 Ms. Miller had been an employee of Fairview Nursing Home Limited ("Fairview"), a 108-bed nursing home in Torontothat Mr. Chambers and Mrs. Chambers had founded.





13 She brought a wrongful dismissal lawsuit against Fairview. Judgment in the matter was issued, on consent, on June 7,2012, requiring Fairview to pay her $113,952.52.

The Corporate Will

14 In the Corporate Will, Mr. Chambers again named Mrs. Chambers and Collette Harrison as his estate trustees. However,he provided that if Mrs. Chambers predeceased him or was, at any time, unable or unwilling to act or continue as estate trustee,Michael Chambers was to serve as estate trustee, together with Collette Harrison.

15 In the Corporate Will, Mr. Chambers directed his trustees to distribute the net proceeds of the Corporate Assets equallyamong his seven named children, one of whom is Michael Chambers.

16 Mr. Chambers' shares in Fairview are the most significant of the Corporate Assets. He owned 50 per cent of the shares inFairview and served as an officer and director of the company. Mrs. Chambers owns the other 50 per cent of Fairview's sharesand continues to serve as an officer and director.

Administration of the Estate before the Applications

17 Mr. Chambers died on October 3, 2011. His Estate is worth millions of dollars. As will become evident over the courseof these reasons, the Estate is complex and its administration is rife with problems.

18 On December 13, 2011, Collette Harrison renounced her right to serve as estate trustee under both of his wills. Shedid not carry out any estate duties prior to renouncing, other than to attend at the bank with her mother in an attempt to learnabout the bank accounts.

19 Mrs. Chambers, on the other hand, assumed her role as estate trustee upon her husband's death, and began performingunder both wills.

The Renunciation Order

20 In March of 2012, Ms. Miller served Mrs. Chambers and Collette Harrison with motion material in which they were namedas respondents. Through the motion, Ms. Miller sought to require Mrs. Chambers and Collette Harrison to file an applicationfor a certificate of appointment as estate trustee with a will and produce all of Mr. Chambers' testamentary documents. As well,she sought an order permitting her to sell the Elderwood property and retain 25 per cent of the sale proceeds.

21 On the advice of her then-solicitor, Mrs. Chambers did not respond to the motion. He told her it was not necessary.

22 When Ms. Miller's motion was heard, no one appeared for the respondents.

23 On April 4, 2012, the motion judge issued three orders.

24 In the first order of that date (the "Renunciation Order"), Mrs. Chambers and Collette Harrison were required to file anapplication for a certificate of appointment of estate trustee with a will within 30 days, failing which they "shall be deemed tohave renounced [their] right to be appointed."

25 In the second order, Mrs. Chambers and Collette Harrison were ordered to produce all of Mr. Chambers' testamentarydocuments in their possession or under their control, within 30 days of the date of service of the order.

26 The third order gave Ms. Miller the unilateral right to sell the Elderwood property and retain one quarter of the saleproceeds.

After the Renunciation Order





27 Neither Mrs. Chalmers nor Collette Harrison filed an application for certificate of appointment as estate trustee, asrequired by the Renunciation Order.

28 Mrs. Chambers attempted to comply with the deadline established by the second order but could not locate the originalwills until May 31, 2012. On June 4, 2012, she presented the wills to the Registrar.

29 The third order led to the Elderwood property being sold for $1,540,000 on May 31, 2012.

Michael Chambers

30 Michael Chambers - formerly Michael Christie - is Mr. Chambers' son. He is 56 years of age and now a Canadian citizen.He is a discharged bankrupt.

31 Under an arrangement with his father, Michael Chambers lived rent free at a farm property located on the Guelph Linein Milton (the "Guelph property"). Mr. Chambers and Mrs. Chambers jointly owned the Guelph property. They purchased itin 2008 for $2,650,000.

32 Michael Chambers worked for his father from 2004 onwards. He primarily worked at the Guelph property but, from timeto time, he also did maintenance work for Fairview.

33 Mr. Chambers paid Michael Chambers $1,000 a month to look after the Guelph property. While Mr. Chambers and MichaelChambers were managing the horse operation on the Guelph property, the employees made numerous successful complaintsto the Ministry of Labour.

34 After his father's death, Michael Chambers continued to live on the Guelph property. Mrs. Chambers eventually advisedhim that the arrangement he had with his father was ended and that she intended to sell the Guelph property. She told himthat he had to vacate.

35 Michael Chambers did not accept that Mrs. Chambers had the right to require him to vacate the Guelph property. Heinterfered with the real estate agent's attempts to market the property to prospective purchasers. After he left the property, Mrs.Chambers and the real estate agent discovered that the keypad for the security system had been torn out of the wall and thehouse was "in a complete mess."

36 Michael Chambers accused Mrs. Chambers (and her daughter Lisa Chambers and her husband) of breaking into hisresidence on the Guelph property, and taking documents and $1,150 in cash. He made the accusation repeatedly, including tothe Ontario Provincial Police. The authorities investigated and chose to not act on the accusation.

37 Further, Michael Chambers did not accept that Mrs. Chambers was the estate trustee. His lawyer sent Mrs. Chambers'lawyer a notice of objection to the issuance of a certificate of appointment of estate trustee to her, dated May 8, 2012.

Mrs. Chambers

38 At the time the applications were brought, Mrs. Chambers was 81 years of age, partially deaf and suffering from significantmobility problems. She is not in the best of health. She has been devastated by the death of her husband and from "discoveringsome of his undisclosed personal life." While she had attempted to administer the Estate, she deposed that "the nature andextent of the issues arising on his death have overwhelmed [her]." She was unable and unwilling to continue to act as estatetrustee. Further, she had been advised by her solicitor that she had claims against the Estate and was, therefore, in a positionof conflict of interest.

39 The conflict of interest arose, in part, from events relating to Fairview.

40 After Mrs. Chambers partially retired from Fairview in 1996, Mr. Chambers mismanaged it. As a result, in 2008, theMinistry of Health put Fairview into "enforcement". In order to continue operating the business, Mr. Chambers was obliged to





agree to retain professional managers. The Ministry of Health took the position that Fairview owed it $800,000 and deducted$35,000 per month from its operating payments to Fairview.

41 While serving as estate trustee of her late husband's estate, Mrs. Chambers learned that he had diverted Fairview funds tohis own benefit and to the benefit of others, without her knowledge and approval. For example, for many years the dividendson the Fairview shares had been paid to Mr. Chambers and her on a 65/35 basis, instead of the 50/50 basis required becausethey each owned 50 per cent of the shares. There were also tax arrears claimed in respect of Fairview and various lawsuitsfiled against it.

42 On August 7, 2012, the Toronto Dominion Bank made a demand on Fairview for the immediate payment of its loansof $1,160,914.88. It asserted that Mr. Chambers had personally guaranteed the debt. Mrs. Chambers advanced $115,000 of herown money to forestall a receivership.

43 Mrs. Chambers is also exposed to liabilities that her late husband incurred, for which she will seek indemnity fromthe Estate.

44 Mrs. Chambers has a poor relationship with Michael Chambers and wishes to have no contact with him.

Michael Chambers' Application

45 In June 2012, Michael Chambers brought an application in which he sought an order appointing him and a trust companyas co-estate trustees of both the Primary Will and the Corporate Will. He swore an affidavit, dated June 19, 2012, in supportof the application.

46 Certain factual aspects of Michael Chambers' affidavit are worthy of note. First, in it, he repeated his accusation that Mrs.Chambers broke into his home at the Guelph property, after which he discovered documents and cash were missing. He saidthat "[a]pparently [Mrs. Chambers] felt entitled to [break into his home] because she and [Mr. Chambers] were joint owners."He acknowledged that the Guelph property passed to Mrs. Chambers by right of survivorship, but deposed that her conduct"underscores that it may be to the Estate's benefit that [Mrs. Chambers and Collette Harrison] renounced." Second, he alsoaccused Mrs. Chambers of having given away or sold horses that had been housed on the Guelph property, and of having keptthe sale proceeds, despite the fact that the money belonged to the Estate, not her.

47 In his affidavit, Michael Chambers also set out his belief as to the legal foundation for his application. He deposedthat as a result of non-compliance with the Renunciation Order, both Mrs. Chambers and Collette Harrison had renouncedtheir appointments as estate trustees, and he was therefore the estate trustee under the Corporate Will, having accepted hisappointment under that will.

48 Michael Chambers further deposed that he believed it was in the Estate's best interests that a trust company be appointedto act as his co-estate trustee. In his view,

a co-estate trustee arrangement respects [Mr. Chambers'] testamentary wish that I be estate trustee of his Corporate Willwhile ensuring the highest level of administrative expertise, especially when it comes to helping me fulfill my duties toadminister [Mr. Chambers'] shares.

49 Finally, on the basis that Mrs. Chambers and Collette Harrison had renounced under the Primary Will and no substitutetrustee was in place, he deposed that it would be more efficient for him and the trust company to act as co-estate trustees inrespect of the Primary Will, as well as the Corporate Will.

Mrs. Chambers' Application

50 By the time that Michael Chambers served his application, Mrs. Chambers had decided to resign as estate trustee andseek to have an institutional trustee appointed in her stead. She brought an application asking to be removed, or permitted toresign, as estate trustee. Her affidavit filed in support was sworn on June 27, 2012.





51 Mrs. Chambers deposed that she supported the appointment of an institutional trustee because the Estate is large, complexand in some disarray, and the appointment of a professional trustee would be in the best interests of all beneficiaries.

52 Mrs. Chambers does not view Michael Chambers as suitable or qualified to assist in the administration of the Estate.

53 Two of the Chambers' children opposed Michael Chambers appointment as the co-estate trustee. All consented to theBank's appointment as succeeding estate trustee.

The Decision Below

54 The applications judge described the Estate's assets and debts as follows. The assets of the primary estate are approximately$3,000,000, against which there are debts for unknown income tax and known tax liabilities of approximately $420,000. Theassets in the corporate estate were estimated to be worth about $1,000,000 and the debts at approximately $240,000. In addition,Fairview might be worth as much as $5,000,000, against which there are registered mortgages of $3,200,000.

55 The applications judge noted that Mrs. Chambers might make claims against the Estate in relation to: real propertyheld solely in Mr. Chamber's name at 98 Concorde Avenue, Toronto; income distributions made from Fairview: and, liabilitiesincurred by her late husband for which Mrs. Chambers stands exposed and for which she will seek indemnity from the Estate.

56 The applications judge identified concerns about the administration of the Estate, most notably the preservation ofthe Fairview asset, adding that: (1) to forestall a receivership, Mrs. Chambers advanced $115,000 of her own money; (2)the mortgagee had delivered a notice to enforce security; and (3) historically, Mr. Chambers' management of Fairview was"problematic."

57 The applications judge set out Michael Chambers' position: Mrs. Chambers and Collette Harrison were deemed to haverenounced, as a result of the Renunciation Order; he had accepted the appointment as estate trustee of the Corporate Will; and,as estate trustee, he could be removed only in exceptional circumstances, which did not exist.

58 The applications judge acknowledged that the appointment of an estate trustee under a will ought not to be lightlyinterfered with but noted that Michael Chambers was a named alternate trustee under only one of the two wills, that two ofthe beneficiaries did not consent to his appointment, and that all beneficiaries consented to the appointment of the Bank assucceeding estate trustee.

59 The applications judge also commented on the complexities of the Estate, adversity of interest between Mrs. Chambersand the Estate, and the need for Fairview's proper management and disposition so that the best value would be realised for thebeneficiaries and the burden on Mrs. Chambers, as the owner of the other 50 per cent of Fairview's shares, would be eased.

60 The applications judge concluded that the welfare of the beneficiaries would be best served if a trust company acted as soleestate trustee given its expertise and credibility, and the economies associated with having a single estate trustee for both wills.

The Issues

61 Michael Chambers submits that Mrs. Chambers' application should have been dismissed. He contends that she couldnot be removed because she had already been deemed to have renounced. Furthermore, he says, there was no basis on whichto remove him as the estate trustee of the Corporate Will or pass him over. He does not appeal the appointment of the Bankas the sole estate trustee under the Primary Will.

62 Specifically, the appellant submits that the applications judge erred in failing to:

(1) find that Mrs. Chambers had renounced;

(2) interpret the wills in light of the purported renunciation;





(3) apply the proper test for his removal; and

(4) apply the proper test for his passing over.

Renunciation

63 Michael Chambers' application to be named the estate trustee (in conjunction with a corporate trustee) was based, inpart, on his submission that the Renunciation Order deemed Mrs. Chambers to have renounced and that order had never beenoverturned or varied. He complains that while the applications judge noted this submission, she did not address it. He renewsthis submission on appeal, saying that Mrs. Chambers must be found to have renounced and suffer the statutory consequencesof renunciation dictated by ss. 25 and 34 of the Estates Act, R.S.O. 1990, c. E.21.

64 I acknowledge that the applications judge did not expressly deal with this submission. Nonetheless, I would not giveeffect to this ground of appeal.

65 Renunciation is defined as "[t]he formal act whereby an executor entitled to a grant of probate (or person having theright to a grant of administration) renounces such right": James MacKenzie, Halsbury's Laws of Canada, Wills and Estates,1st ed. (Reissue) (Markham: LexisNexis Canada Inc., 2012), at p. 537; James MacKenzie, Feeney's Canadian Law of Wills,loose-leaf, 4th ed. (Markham: LexisNexis Canada Inc., 2000), at para. 7.26; and MacDonald v. MacIsaac (1983), 58 N.S.R.(2d) 199 (N.S. C.A.), at para. 22.

66 Renunciation is generally not available if a party has already "intermeddled" with the estate. Intermeddling is the termused to describe the acts of a person who deals with an estate without having been formally recognized as the estate trustee.As Kennedy J. explained, "while executors may renounce at any time, (a right which is usually exercised before applying toprobate) the courts have been reluctant to allow an executor to renounce after having intermeddled in the estate, or after havingapplied for probate": Stordy v. McGregor (1986), 42 Man. R. (2d) 237 (Man. Q.B.), at para. 9. Even a slight act of intermeddlingwith a deceased's assets may preclude an executor from afterwards renouncing: see Cummins v. Cummins 8 I. Eq. R. 723 (Ch.),at pp. 737-38. However, this rule has been applied with some flexibility: see e.g. Holder v. Holder, [1968] Ch. 353 (Eng. C.A.).

67 In Waters' Law of Trusts in Canada, 2 the authors explain:

Once a trustee has accepted the office, he cannot refuse, or to use the correct terminology, disclaim it. He can then onlyresign, his acts between acceptance and resignation being those of a duly appointed trustee. Disclaimer is available to allthose who have been appointed trustees, whether as original trustees, new trustees, or additional trustees, but who havenot expressly accepted and who have done no act which is deemed implied acceptance.

68 In respect of Collette Harrison, there is no question that she renounced. She did so expressly on December 13, 2011,without having carried out any estate duties. Her renunciation was effective when made. The Renunciation Order, in deemingCollette Harrison to have renounced, changed nothing.

69 What then is Mrs. Chambers' position as a result of the Renunciation Order? At the time that the Renunciation Orderwas made, Mrs. Chambers was already administering the Estate under both wills. It is self-evident that she could not renounce,given that renunciation can take place only prior to any act of administration having been performed.

70 However, for the purpose of deciding this issue and in light of the collateral attack doctrine, I will assume thatthe Renunciation Order had effect and Mrs. Chambers is deemed to have renounced. On that assumption, what are theconsequences?

71 In my view, pursuant to s. 25 of the Estates Act, Mrs. Chambers' right to serve as the named estate trustee would haveceased, but because of her continued administration of the Estate, the role of estate trustee would nonetheless have devolvedto her on the basis of intermeddling, or the trustee de son tort principle.




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72 Section 25 reads as follows:

25. When an executor survives the testator, but dies without having taken probate, and when an executor is summoned totake probate, and does not appear, the executor's right in respect of the executorship wholly ceases, and the representationto the testator, and the administration of the testator's property, without any further renunciation, goes, devolves, and iscommitted in like manner as if such person had not been appointed executor. [Emphasis added.]

73 The Renunciation Order required Mrs. Chambers to make an application for a certificate of appointment with a will -in effect, she was summoned to take probate. She did not appear, within the meaning of s. 25, in that she did not make theapplication. Consequently, s. 25 provides, her right to serve as estate trustee ceased.

74 However, s. 25 goes on to provide, administration of the Estate "goes, devolves and is committed" as if Mrs. Chambershad not been appointed executor. To whom does it devolve? In my view, it would devolve on Mrs. Chambers. Why? BecauseMrs. Chambers alone continued to administer the Estate, the intermeddling or trustee de son tort principle would apply, withthe result that the office would devolve to her. Consequently, and contrary to the appellant's submission, she could be relievedof that role only through following the appropriate process for removal or resignation.

75 Under the trustee de son tort principle, a person who is not appointed a trustee, but who "take[s] upon [himself or herself]to act as such and to possess and administer trust property" may nonetheless be treated as one: Selangor United Rubber EstatesLtd. v. Cradock, [1968] 2 All E.R. 1073 (Eng. Ch. Div.), at p. 1095; see e.g. Coleman v. Ryan (1923), 55 O.L.R. 182 (Ont.C.A. [In Chambers]); Pickering v. Thompson (1911), 24 O.L.R. 378 (Ont. Div. Ct.); and Charles J. Ellison Ltd. v. Murray,[1949] O.W.N. 398 (Ont. C.A.).

76 As Rutherford J. explained in O'Reilly (No. 2), Re (1980), 28 O.R. (2d) 481 (Ont. H.C.), at p. 486, aff'd (1981), 33O.R. (2d) 352 (Ont. C.A.):

[i]t is trite law that a person not lawfully appointed an executor or administrator may by reason of his intrusion upon theaffairs of the deceased be treated for some purposes as having assumed the executorship, as having constituted himselfan executor de son tort.

77 In this case, Mrs. Chambers' continued administration of the Estate is "indicative of an intention to usurp the functionsor authority" of a trustee, and the trustee de son tort principle applies: O'Reilly (No. 2), Re, at p. 486. Consequently, as I havesaid, as a result of Mrs. Chambers' "intermeddling" after the deemed renunciation, the administration of the Estate would havedevolved to her pursuant to s. 25.

78 A consideration of s. 34 of the Estates Act leads to a similar analysis and conclusion. Section 34 reads as follows:

34. Where a person renounces probate of the will of which the person is appointed an executor, the person's rights inrespect of the executorship wholly cease, and the representation to the testator and the administration of the testator's

property, without any further renunciation, goes, devolves and is committed in like manner as if such person had not beenappointed executor.

[Emphasis added.]

79 On a plain reading of s. 34, assuming that the Renunciation Order is treated as having the effect of a renunciation ofprobate, Mrs. Chambers' right to administer the Estate by virtue of being the named estate trustee ceased. Administration of theEstate would devolve as if she had not been appointed executor. However, after the Renunciation Order, Mrs. Chambers alonecontinued to carry out the duties of the estate trustee. Therefore, under s. 34, in the circumstances of this case, administrationof the Estate devolved to her, pursuant to the intermeddling or trustee de son tort principle.










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80 This ends the analysis of renunciation in respect of the Primary Will. An additional question remains in respect of theCorporate Will, however. Does the fact that Michael Chambers was named as an alternate estate trustee in the Corporate Willaffect the foregoing analysis? In my view, it does not.

81 By the express terms of the Corporate Will, Michael Chambers is named as alternate estate trustee in the event that Mrs.Chambers is unable or unwilling to act or continue to act. However, that condition precedent to Michael Chambers' appointmentwas not met until Mrs. Chambers brought her application. The deemed renunciation, assuming it could operate, did not renderMrs. Chambers unable to act - it simply caused her right to administer the Estate, based on having been the named estate trustee,to cease. And, Mrs. Chambers only became unwilling to act at the time that she brought her application.

82 Thus, although Michael Chambers purported to accept an appointment as the estate trustee under the Corporate Will,prior to the hearing of the applications, he was not able to because the condition precedent to his appointment had not been met.

83 Moreover, and contrary to the appellant's assertion, the applications judge committed no error in deciding Mrs. Chambers'application. It was necessary for Mrs. Chambers to bring such an application in order to be relieved of the role of estate trustee.

Interpretation of the Will

84 Michael Chambers submits that ss. 25 and 34 of the Estates Act required the applications judge to interpret the wills as ifneither Mrs. Chambers nor Collette Harrison had been named as the estate trustees. Thus, he says, he is the only named trusteein the Corporate Will and there was no named trustee in the Primary Will at all.

85 I see nothing in this submission. Neither ss. 25 nor 34 says anything about the interpretation of the will. There is no basisfor reading into the legislation the requirement that if a court finds that either provision applies, the will in question must beinterpreted as if the named estate trustee had never been named.

86 This ground of appeal must fail.

Removal

87 Michael Chambers complains that the applications judge did not distinguish between removal and passing over, and thatit is unclear on what basis she refused to appoint him as the estate trustee under the Corporate Will. He submits that the mostaccurate characterization is that he was removed as the estate trustee.

88 I accept that the applications judge does not explain whether she removed Michael Chambers as the estate trustee or passedhim over. This is evident from para. 5 of the Judgment rendered in Michael Chambers' application, which reads as follows:

THIS COURT ORDERS that the relief sought to have Michael Chambers 'removed' or 'passed over' however it mightbest be expressed, is hereby granted.

89 In my view, properly understood, the applications judge passed over Michael Chambers as estate trustee under theCorporate Will.

90 An estate trustee is removed after he or she has received a certificate of appointment, whereas an executor is passed overbefore the issuance of such a certificate: see Windsor v. Mako (2008), 43 E.T.R. (3d) 255 (Ont. S.C.J.), at para. 35. Put anotherway, a person is removed as estate trustee after he or she has assumed authority to administer the estate, whereas a person ispassed over as estate trustee prior to having assumed authority to administer the estate.

91 At the time the applications were heard, Michael Chambers was not the estate trustee and, therefore, could not have beenremoved. He had not received a certificate of appointment nor had he been acting as estate trustee. Although he purported tohave accepted an appointment as the named alternate estate trustee under the Corporate Will on the basis that Mrs. Chambers






was unable or unwilling to act, as I have explained, he could not accept such an appointment as, prior to the applications, Mrs.Chambers was neither unable nor unwilling to act as the estate trustee.

92 Accordingly, the question of Michael Chambers' removal does not arise and this ground of appeal fails.

Passing Over

93 Michael Chambers submits that if the applications judge passed him over as the estate trustee under the Corporate Will,she did so in error and without considering or applying the proper legal test.

94 I do not accept this submission.

95 The applications judge was fully alive to the legal principle that the court should not lightly interfere with a testator's choiceof the person to act as his or her estate trustee: Weil, Re, [1961] O.R. 888 (Ont. C.A.), at p. 889. Just as a court should removean estate trustee only on the "clearest of evidence", so too they should be reluctant to pass over a named executor unless "thereis no other course to follow": Windsor, at para. 41, citing Crawford v. Jardine (1997), 20 E.T.R. (2d) 182 (Ont. Gen. Div.)), atpara. 18. As Wright L.J. explained, "passing over of an executor and granting administration to other parties is an unusual andextreme course, though it is within the discretion of the Probate Court": Re Leguia (No. 2) 155 L.T.R. 270 (C.A.), at p. 276.

96 Thus, the wishes of the testator will generally be honoured, "even if the person chosen is of bad character": Carmichaelv. Carmichael Estate (2000), 46 O.R. (3d) 630 (Ont. S.C.J.), at para. 17. In fact, an executor named in a will should not bepassed over simply because he or she is of bad character or bankrupt, or there is likely to be friction between co-executors: seeHarris v. Gallimore (1925), 57 O.L.R. 673 (Ont. C.A.), at p. 678; Brown v. Agnew, [1941] 4 D.L.R. 653 (Sask. C.A.), at p.657; Wolfe, Re (1957), 7 D.L.R. (2d) 215 (B.C. C.A.), at p. 221; and Crompton v. Williams, [1938] O.R. 543 (Ont. H.C.), atpp. 586-87. That being said, courts have passed over an executor because he was in a conflict of interest with the estate (e.g.Stadelmier v. Hoffman (1986), 57 O.R. (2d) 495 (Ont. Surr. Ct.), at pp. 498 -99; Thomasson Estate, Re, 2011 BCSC 481, [2011]B.C.W.L.D. 4762 (B.C. S.C.), at paras. 29-30) or because she had a conflict and was in poor health (e.g. Bowerman, Re (1978),20 O.R. (2d) 374 (Ont. Surr. Ct.), at p. 377).

97 In this case, Michael Chambers is correct when he says that the applications judge failed to implement the provisions ofthe Corporate Will appointing him as the alternate estate trustee. And, I accept that Mr. Chambers knew that Michael Chamberswas a discharged bankrupt at the time he made his wills. Nonetheless, in my view, the applications judge made no error inpassing Michael Chambers over as the estate trustee under the Corporate Will.

98 It is clear from the record that Michael Chambers holds a strong animosity towards Mrs. Chambers. I need not repeatthe facts around the allegations he has made in respect of Mrs. Chambers to justify this statement. His animosity rises abovemere friction and satisfies me that due administration of the corporate estate would be compromised were he to be appointeda co-estate trustee with the Bank as he wishes.

99 It is trite law that trustees must act jointly. The central task of the estate trustee in respect of the Corporate Will is to ensurethat Fairview is properly managed and sold. Given that Mrs. Chambers owns 50 per cent of Fairview's shares and the Estateowns the other 50 per cent, there is every reason to believe that Michael Chambers' strong animosity towards Mrs. Chamberswould create a deadlock in relation to the management and sale of Fairview if he were appointed a co-estate trustee with theBank. His decisions in respect of Fairview could not fail to be coloured by his overriding animosity towards Mrs. Chambers.

100 Mrs. Chambers is a founder and one-half shareholder of Fairview. She has injected personal funds to stave offreceivership. These are not irrelevant considerations, as the appellant would have it. They are very much tied up with Fairview'sproper management and disposition. Decisions regarding the preservation and sale of Fairview must be made with care anddispatch. The risk of deadlock between Michael Chambers and the Bank is real. For this reason, and having regard to thebeneficiaries' best interests, the applications judge, in my view, made no error in passing over Michael Chambers.

Conclusion




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101 Despite the Renunciation Order, because Mrs. Chambers continued to administer the Estate, she required a court orderin order to be released from the position of estate trustee. Sections 5 and 37 of the Trustee Act, R.S.O. 1990, c. T.23 give the

court the authority to remove a trustee and appoint another trustee in his or her place. 3 In addition, the court has an inherentpower of appointment and removal: see Evans v. Gonder, 2010 ONCA 172, 259 O.A.C. 295 (Ont. C.A.), para. 42. Therefore,when deciding Mrs. Chambers' application, the applications judge had the power both to remove her as estate trustee and toappoint her successor.

102 I see nothing in Michael Chambers' contention that Mrs. Chambers sought to resign conditionally on the appointmentof her chosen successor, as in Moorhouse, Re, [1946] 4 D.L.R. 542 (Ont. H.C.), at p. 544. Her wish to be removed wasunconditional. She did not attempt to dictate whom the court should appoint as her successor. Rather, she offered her views onthe needs of the Estate and the qualities her successor should possess.

103 It was clear from Mrs. Chambers' application that she sought to have Michael Chambers passed over. Thus, there isalso nothing in the appellant's submission that the applications judge gave relief that had not been sought and was not properlyin issue.

104 As I have already noted, the applications judge was fully alive to the legal principle that a court ought not to lightlyinterfere with a testator's choice of estate trustee. However, she concluded that the welfare of the beneficiaries would be bestserved if a trust company were appointed the successor estate trustee because of its expertise and credibility, and the economiesassociated with a single trustee for both wills. She considered the complexity of the Estate administration, including the problemsassociated with Fairview, which all parties acknowledged. She also considered Michael Chambers' suitability before arrivingat this conclusion.

105 Importantly, although the applications judge did not allude to this, as I have already explained, there is the very realpossibility that the appellant's appointment as co-estate trustee with the Bank would have led to a deadlock situation. In orderto avoid that, as well as for the reasons articulated by the applications judge, I see no error in her conclusion that the Bank aloneshould be appointed as the successor estate trustee.

Disposition

106 Accordingly, I would dismiss the appeals with costs to the respondent payable from the Estate, fixed in the amountof $10,000, all inclusive.

Gloria Epstein J.A.:

I agree

P. Lauwers J.A.:

I agreeAppeals dismissed.

Appendix A

Trustee Act, R.S.O. 1990, c. T.23

Power of court to appoint new trustees

5. (1) The Superior Court of Justice may make an order for the appointment of a new trustee or new trustees, either insubstitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. R.S.O. 1990, c.T.23, s. 5 (1); 2000, c. 26, Sched. A, s. 15 (2).







Limitation of effect of order

(2) An order under this section and any consequential vesting order or conveyance does not operate as a discharge fromliability for the acts or omissions of the former or continuing trustees. R.S.O. 1990, c. T.23, s. 5 (2).

. . . . .

Removal of personal representatives

37. (1) The Superior Court of Justice may remove a personal representative upon any ground upon which the court mayremove any other trustee, and may appoint some other proper person or persons to act in the place of the executor oradministrator so removed. R.S.O. 1990, c. T.23, s. 37 (1); 2000, c. 26, Sched. A, s. 15 (2).

Security by person appointed

(2) Every person so appointed shall, unless the court otherwise orders, give such security as would be required to be givenif letters of administration were granted to the person under the Estates Act. R.S.O. 1990, c. T.23, s. 37 (2).

Who may apply

(3) The order may be made upon the application of any executor or administrator desiring to be relieved from the dutiesof the office, or of any executor or administrator complaining of the conduct of a co-executor or co-administrator, or ofany person interested in the estate of the deceased. R.S.O. 1990, c. T.23, s. 37 (3).

When new appointment unnecessary

(4) Where the executor or administrator removed is not a sole executor or administrator, the court need not, unless it seesfit, appoint any person to act in the place of the person removed, and if no such appointment is made the rights and estateof the executor or administrator removed passes to the remaining executor or administrator as if the person so removedhad died. R.S.O. 1990, c. T.23, s. 37 (4).

Chain of representation

(5) The executor of any person appointed an executor under this section shall not by virtue of such executorship be anexecutor of the estate of which his or her testator was appointed executor under this section, whether such person actedalone or was the last survivor of several executors. R.S.O. 1990, c. T.23, s. 37 (5).

Copy of order to be filed

(6) A certified copy of the order of removal shall be filed with the Estate Registrar for Ontario and another copy with thelocal registrar of the Superior Court of Justice, and such officers shall, at or upon the entry of the grant in the registers oftheir respective offices, make in red ink a short note giving the date and effect of the order, and shall also make a referencethereto in the index of the register at the place where the grant is indexed. R.S.O. 1990, c. T.23, s. 37 (6); 2000, c. 26,Sched. A, s. 15 (2).

Endorsement

(7) The date of the grant shall be endorsed on the copy of the order filed with the Estate Registrar for Ontario. R.S.O.1990, c. T.23, s. 37 (7).

Footnotes1 Different terms are used to describe the person who administers an estate: executor, executrix, trustee, and estate trustee, to name but

a few. For ease of reference, the term "estate trustee" is used in these reasons.





2 Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters' Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters

Canada Limited, 2012), at p. 884.

3 The full text of ss. 5 and 37 is included in Appendix A to these reasons.

End of Document Copyright © Thomson Reuters Canada Limited or its licensors (excluding individual court documents). All rights

reserved.

To Remove Or Not To Remove, That Is The Question: Removal Of Estate Trustees

Kathleen McDormand, Borden Ladner Gervais LLP

Introduction

Many of us have been faced with the difficult task of advising clients on the issue of

whether or not sufficient grounds exist to remove an estate trustee. As an estate litigator,

beneficiaries will often attend in my office and describe their frustrations with the manner in

which their loved ones' estates are being administered. Complaints range from failure to provide

timely information to beneficiaries to particularly egregious conduct such as misappropriation of

trust property. Some conduct is so reprehensible that it is clear that removal is warranted and

we can advise our clients accordingly. Difficulty arises in those gray areas where the behaviour

is improper but not a blatant breach of trust. How do we advise beneficiaries when they arrive

at our doorstep with stories of questionable behaviour that falls in those gray areas? When will

the courts intervene and find that removal is an appropriate remedy? How do we manage

beneficiaries' expectations regarding the inherent risks in seeking removal of estate,trustees who

have exhibited behaviour coming within those gray areas?

We may also be called upon to represent estate trustees facing frivolous applications

seeking their removal simply because a beneficiary is disgruntled or upset with the provisions of

the Will or the manner in which the estate is being administered. Trustees who are acting in the

best interest of the estate and administering the estate appropriately are not immune from

litigation seeking their removal. In certain circumstances, beneficiaries bring baseless removal

applications for strategic reasons or merely to stall administration of the estate. How do we

advise trustees who are the subjects of meritless removal applications? What risks are there for

trustees who are defending applications seeking their removal? Do the trustees face the

possibility of adverse costs consequences, in their personal capacities, if they are removed from

the role of trustee?

This paper will examine the above questions in detail and will hopefully provide some

assistance to practitioners who are struggling with these very issues as they advise their clients.

In this paper, I will provide a brief overview of the authority for removal and the procedure that

1

is required. I will then review the Ontario jurisprudence on the issue of removal of estate

trustees. As expected, case law reveals that Courts are reluctant to interfere with a testator's

intention to appoint a particular trustee but will do so in exceptional circumstances. This paper

will canvas relevant jurisprudence to provide an overview as to what grounds are sufficient to

justify removal and those grounds which the court has found to be insufficient. I will also briefly

examine some court decisions in other provinces on the issue of removal of trustees.

Authority For Removal/Procedure

Rule 14.05(3)(c) of the Rules of Civil Procedure; states that an Application can be brought

to remove or replace an executor, administrator or trustee.2 The Application may be brought by

anyone having a financial interest in the estate, or by an estate trustee desiring to be removed.

Rule 9.01 of the Rules of Civil Procedure requires the Applicant to name all of the beneficiaries as

parties to the proceeding, and therefore to serve them, as well as the trustees, with the

Application record.3 The evidentiary onus is on the Applicant seeking to remove the estate

trustee. Given that each removal case is often determined based on its factual context, it will be

important to have a strong supporting affidavit setting out the facts establishing that removal is

required. Likewise, the trustee who is resisting removal should file a detailed responding

affidavit.

The Application process described above applies even if a trustee has not obtained a

Certificate of Appointment.' A trustee can choose to renounce only if he or she has not been

issued a Certificate of Appointment and the trustee has not taken any steps to administer the

estate. A trustee cannot choose to simply renounce if he or she has already started to administer

the estate. In those circumstances, a court Order removing the estate trustee should be

obtained. Once the removal Order is obtained, it must be filed with the Estate Registrar for

Ontario and with the local Registrar of the Superior Court of Justice. Should the trustee wish to

1 RRO 1990, Reg 194. 2 lbid at Rule 14.05(3)(c). 3 Ibid at Rule 9.01.

4 Carmichael Estate (re), [2000] 46 OR (3d) 630.

2

11-2

appeal an order of removal, a notice of appeal must be filed with the Court of Appeal within thirty

days of the making of the order.5

The Ontario Superior Court of Justice has inherent jurisdiction to remove a trustee,

however, there are is also statutory authority for removal. Section 5 of the Trustee Act provides

the Court with authority to appoint new trustees and section 37 of the same legislation

authorizes the Court to remove trustees:6

Power of court to appoint new trustees 5. (1) The Superior Court of Justice may make an order for the appointment of a

new trustee or new trustees, either in substitution for or in addition to any existing

trustee or trustees, or although there is no existing trustee.'

Removal of personal representatives 37. (1) The Superior Court of Justice may remove a personal representative upon

any ground upon which the court may remove any other trustee, and may appoint

some other proper person or persons to act in the place of the executor or

administrator so removed.8

In a removal proceeding, the Applicant should seek removal of the trustee as both

executor of the estate and trustee of any testamentary trust. The Applicant should also seek an

Order, under section 10 of the Trustee Act, that all assets of the estate vest in the remaining

trustee or in the substitute trustee.9 If the Applicant wishes, an Order can be sought waiving or

requiring the posting of a bond by the new trustee, pursuant to sections 35 and 37(2) of the

Estates Act.1° The Applicant should also request an Order requiring the removed estate trustee

to pass his or her estate accounts for the period up to and including the date of removal.11 Lastly,

approval of any compensation for the replacement trustee should be included in the Order.12

5 Supra note 1 at Rule 61.04 (1). 6 RSO 1990, c. T. 23.

!bid at s. 5 (1). 8 lbid at s. 37(1).

9 !bid at s. 10 18 R.S.O. 1990, c. E. 21 11 Supra note 6 at s. 23 and !bid at s. 48 and 49. 'Supra note 6 at s. 61

3

11-3

General Principle from Letterstedt

Canadian courts have consistently followed the decision of the South African Privy Council

in Letterstedt v Broers, finding that "The Court's main guide must be the welfare of the

beneficiaries".13 In Letterstedt, Lord Blackburn made the following observations, which have

been adopted by Canadian Courts:

In exercising so delicate a jurisdiction as that of removing trustees, their Lordships

do not venture to lay down any general rule beyond the very broad principle

above enunciated, that their main guide must be the welfare of the beneficiaries.

Probably it is not possible to lay down any more definite rule in a matter so

essentially dependent on details often of great nicety. But they proceed to look

carefully into the circumstances of the case.14 [Emphasis added].

This basic principle from Letterstedt was considered by leading authors, Donovan W.M.

Waters, Mark R. Gillen, and Lionel D. Smith in their text Waters' Law of Trusts as follows:

If persons having an express or statutory power to appoint new trustees purport

to replace a trustee on the grounds that he refuses to act, is unfit to act, or is

incapable of acting, and the trustee disputes that he falls into the category alleged,

the court can be asked to determine what constitutes unfitness or incapability.

The court will have to make a similar decision if it is asked to remove a trustee,

whether or not it is also asked to make a new appointment. The question

therefore arises as to what circumstances justify this removal.

Canadian courts have consistently followed the general guidelines set out by Lord

Blackburn in Letterstedt v. Broers where he said that the courts' "main guide must

be the welfare of the beneficiaries." If it is clear that the continuance of the trustee

would be detrimental to the execution of the trust, and on request he refuses to

retire without any reasonable ground for his refusal, the court might then consider

it proper to remove him. He went on to quote from Story that "the acts or

omissions must be such as to endanger the trust property, or to show a want of

honesty, or a want of proper capacity to execute the duties, or a want of

reasonable fidelity. [Emphasis added]ls

is (1884), 9 App Cas 371 (South Africa PC).

14 Ibid at 387. is Canada, 3rd ed., (Toronto: Thomson Carswell, 2005) at pg. 845.

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Many Canadian courts have cited the above with approval and confirm that Canadian

courts employ a stringent test to remove estate trustees. Some courts have interpreted the

Waters text to mean that the trust property must be endangered in order to justify the removal

of an estate trustee.

Ontario's Guiding Principles

Ontario has developed guiding principles that have expanded on the foundation

established by Letterstedt. In Radford v Radford Estate16 , the testator was the biological father

of the applicants, Brian and Richard, and stepfather to the respondent, Martha. The testator's

original Will named Brian as the estate trustee, however, shortly before the testator's death, he

signed a new document that appointed Martha as trustee. The parties attended at mediation

and entered into a partial settlement agreement that required Martha to list the testator's house

at the market price recommended by their realtor. Martha breached this agreement by listing

the home at a price that was $110,000 over the appraised value and ignoring offers to purchase

the house.'' Brian and Richard brought an application to remove Martha as an estate trustee.

In Radford, the Court noted that it has inherent jurisdiction to remove an estate trustee;

however, the court should not lightly interfere with the testator's choice of estate trustee.18 As a

result, the Court found that clear evidence of the necessity for removal must be established, and

there must be no other course of action available. The Court reiterated that the main

consideration for the removal of an estate trustee is the welfare of the beneficiaries and the

estate trustee's acts or omissions must be of such a nature as to endanger the administration of

the estate:

It is not indeed every mistake or neglect of duty, or inaccuracy of conduct of

trustees, which will induce Courts of Equity to [remove trustees]. But the acts or

omissions must be such as to endanger the trust property or to shew a want of

honesty or a want of proper capacity to execute the duties, or a want of

reasonable fidelity".19

16 [2008)0J No 3256 (Ont SCJ).

17 Ibid at para 45.

18 Ibid at para 100. is Ibid at paras 100-105.

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Generally, the emphasis is on the future administration of the estate rather than as punishment

for the past misconduct of the trustee.2° In other words,lhe Court's primary concern is to ensure

that the future administration proceeds appropriately and that the estate is not jeopardized

further.

The Court observed in Radford, that when delay by the trustee is the main complaint, the

question becomes "whether the delay has compromised the estate is any manner and whether

it will be repeated."21 The Court asked whether the delay in selling the house had compromised

the proper execution of the estate and whether it was likely that Martha's conduct would be

repeated. Lastly, the Court found that friction between the beneficiaries and the estate trustee,

on its own, is not a sufficient ground for removal of an estate trustee. While friction between co-

estate trustees is likely to warrant removal of either trustee or both of them, due to the possibility

of negatively impacting the decision-making process, there is a lesser chance of removal when

the friction is between a trustee and a "truculent beneficiary."22 In Radford, the Court ruled that

the trustee's conduct did not warrant removal, as neither the assets, future administration of

estate, nor beneficiaries were imperiled or endangered. While Martha may not have functioned

perfectly or ideally in the execution of her duties; this was not the test for removal.

Guiding Principles — Other Provinces

Other Canadian provinces have also accepted principles similar to those in Radford. In

Manitoba, the Court of Appeal adopted the following guidelines:

(i) [Ajn estate trustee is a fiduciary and he or she holds title to and control of property for the exclusive benefit of the beneficiaries of the trust;

(ii) A court will not lightly remove an executor chosen by a testator; and

(iii) An executor may be removed where the executor is in a conflict of interest, where the executor fails to put the interests of the trust and the beneficiaries first in his

20 Ibid at para 106. 21 Ibid at para 108. 22 Ibid at para 111-113.

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thinking and ahead of any other interest, or where the attitude and conduct of the executor is "purely obstructive'.23

Bereskin and Radford are only two of the many cases which illustrate the court's hesitance

to remove an estate trustee that has been chosen by the testator. Most provinces set the

threshold for removal of an estate trustee very high and the burden is on the person seeking

removal of the trustee. The high threshold for removal was recognized by the British Columbia

Court of Appeal in the case of Conroy v Stokes, where the Court found that a trustee should only

be removed where he or she commits acts or omissions that "endangered the trust property, or

show a want of honesty or of proper capacity to execute the duties, or a want of reasonable

fidelity". 24 Similarly in Newfoundland and Labrador, the question in each case is whether the

circumstances are such that the continuance in office of the trustee would be detrimental to the

trust.25 The decision in Dicks v. Dicks Estate cited the findings made by the Ontario Superior Court

of Justice in Crawford v. Jardine that it "must be demonstrated that it is the animosity which has

motivated the trustee, and that as a result there is a likelihood that the trust cannot be carried

out in accordance with the wishes of the deceased as expressed in the will."26

Just as the Ontario Court, in Radford, found that friction between beneficiaries and the

trustee is insufficient to warrant removal, the British Columbia Supreme Court, in McLeod v

Atchison, found that delay and friction with the beneficiaries is usually not enough to warrant

the removal of an estate trustee.27

From a survey of jurisprudence, it is evident that there are many commonalities between

the Radford principles adopted in Ontario and those recognized by the other provinces.

23 Bereskin Estate, Re, 2014 MBCA 15 at para 13. 24 [1952], 4 DLR (BCCA) at paras 7 (citing Lord Blackburn in Letterstedt) and 10. 25 Dicks v Dicks Estate, 2010 NLCA 35 at para 50, 298 Nfld & PEIR 1. 26 Ibid at para. 49; and Crawford v. Jardine, [1997] O.J. No. 5041 at para 20. 27 2006 BCSC 368.

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When Will Courts Remove?

The need for removal is obvious where the trustee has misappropriated trust property;

cannot account for the trust property; or has committed any other substantial breach of trust.28

The courts have also found the following to be sufficient to justify removal: the trustee being

recently convicted of a criminal offence29; undue delays30; conflict of interest31; bankruptcy of

the trustee32; incapacity of the estate trustee33; lack of "appreciation" by the trustee of the

responsibilities of an executor and "the necessity of due and prompt fulfilment of the duties

thereof"34; significant disagreement or hostility between co-trustees35; and improper behaviour

which may jeopardize the estate.36 The above is not meant to be an exhaustive list, as other

grounds for removal will no doubt be developed in the future. Likewise, the case law which I will

be reviewing is intended to provide a good starting point for any lawyer who is arguing a case

seeking removal of an estate trustee, however, it is not meant to be an all-encompassing review.

In many cases, the decision as to whether or not to remove an estate trustee turns on the facts.

As such, it is very important for counsel to conduct research to locate cases which are factually

similar to the one which he or she will be presenting.

In Bergmann v Amis Estate," the beneficiaries sought to remove the trustee of their

mother's estate. The only significant asset of the estate was the deceased's house, and the

Municipality indicated an intention to launch a tax sale of the house because the trustee had

failed to pay the property taxes. The beneficiaries argued that the trustee was indifferent to their

best interests and his acts or omissions endangered the estate's major asset. The Court referred

to the general principles established in the Radford case, finding that the trustee was

incompetent and indifferent to the interests of the beneficiaries. Further, the Court opined that

the trustee would not take steps in the future to preserve and protect the house from sale:

28 See McLaren, Re (1922), 69 DLR 599 (Ont CA). 29 See Re Haggerty, [1967] 62 D.L.R. (2d) 228 (B.C.S.C.) ' See Oldfield v Hewson, 2005 CarswellOnt 3146, [2005] OJ No 3076. 31 See Chambers Estate v. Chambers, 2013 ONCA 511. 32 See Hiebert, Re, [1934] 4 DLR 799 (Sask KB) and Foster's Trusts, Re (1886), 55 LT 479 33 See Galbrait, Re, [1951] 2 All ER 470. ' See Derrick, Re, [1936] OWN 223 (Ont HC) at 225. 35 See Shepard v Shepard (1911), 20 OWR 810 (Ont CA). 36 See Scime v. Murphy, 2012 ONSC 974. 57 (2009) 54 ETR (3d) 35 (Ont SO); affirmed by 2010 ONCA 377.

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The estate trustee cannot simply stand by and allow the Estate Home to be sold,

perhaps improvidently, on a tax sale, to the detriment of the beneficiaries. It is

most clear, that McMahon will allow the status quo to continue. He offers no

evidence of any intention to take steps to preserve the value of the asset by, for

example, selling the Estate Home, and after receiving a fair market value for the

property, placing the proceeds in court pending the resolution of the claims

outstanding.38

As a result, the estate trustee was removed. The Court of Appeal upheld the conclusion and

reasoning of the court of first instance.

The Court of Appeal considered the related concepts of removal, resignation and passing

over of estate trustees in Chambers Estate v. Chambers.39 The facts of this case are quite unique

and I would encourage the reader to refer to the decision for a full discussion of the facts. Two

Wills were executed by Mr. Chambers. The Primary Will disposed of all of Mr. Chambers' assets,

except shares in a private corporation. The Secondary Will disposed of Mr. Chambers' shares in

the private corporation. Both the Primary Will and the Secondary Will appointed two trustees,

being the deceased's wife and daughter. No alternate trustees were named in the Primary Will

but the Secondary Will named the deceased's son as the alternate trustee. The deceased's

daughter renounced before taking any steps to administer the estate. The deceased's wife began

administering the estate, under both Wills, but then decided that she no longer wished to do so

as her relationship with her son, one of the beneficiaries, was quite strained and she had other

personal issues including a possible conflict of interest with the Estate. The deceased's wife

brought an application seeking her own removal as estate trustee and appointment of a trust

company in her place, for the both the Primary and Secondary Will. The deceased's son brought

an application seeking to be appointed as trustee under both the Primary and Secondary Will.

The Court ordered that the deceased wife be removed as estate trustee of both the Primary and

Secondary Will and that the trust company be appointed in her place. The Court of Appeal made

the following observation:

38 lbid at at para 45.

33 Supra note 35.

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The applications judge acknowledged that the appointment of an estate trustee under a will ought not to be lightly interfered with but noted that Michael Chambers was a named alternate trustee under only one of the two wills, that two of the beneficiaries did not consent to his appointment, and that all beneficiaries consented to the appointment of the Bank as succeeding estate trustee.4°

The Court of Appeal held that Mrs. Chambers could not renounce as estate trustee because she

had already began to administer the estate under both Wills. As such, a court Order was required

to remove her. The deceased's son, although named as the alternate trustee of the Secondary

Will, was passed over because "there was no other course to follow" as he was an undischarged

bankrupt and he was in conflict with the other beneficiaries and with the deceased's wife who

was a 50% owner of the corporation.41

The court had an opportunity to consider whether an estate trustee should be removed

for failure to account and for using estate funds for personal matters in Scime v Murphy.42 A

dispute arose between the late Mrs. Murphy's natural children and step-children as to the

disposition of her estate. In her Will, preference was given to two of her natural children over her

step-children. One of the step children brought an application to remove Michael, the natural

son, as the estate trustee. Michael failed to account for a bill and spent money from the estate

on his own personal expenses, without paying it back. The Court considered the welfare of the

beneficiaries and found that Michael should be removed as trustee because he had not repaid

the estate, demonstrating his indifference to the interests of the beneficiaries.43 Michael's step-

sister, Kelly, was appointed as the replacement trustee.

In Venables v Gordon Estate, conflict arose between two brothers over the administration

of their grandfather's trust." One son, Peter, was the trustee, while Michael, the other son, was

a beneficiary of the trust. The sons' hostility led to mediation and a settlement was reached

whereby Michael was granted co-management powers over the assets of the trust (similar to,

but not exactly, a co-trustee appointment). Following mediation, the relationship fell apart again

and Michael sought to have Peter removed as a trustee pursuant to section 37 of the Trustee Act.

40 Ibid at para. 58 41 Ibid at paras 95-99 42 Supra note 36 43 Ibid at paras 48-49. " 2012 ONSC 956.

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The Court stated that it would intervene if there was conflict between co-trustees, as opposed

to conflict between a trustee and a beneficiary. The Court ordered Peter's removal as a trustee

because there was ample evidence that the conflict interfered with Peter's proper exercise of his

discretion under the Will and payments were not being made to their mother without a

legitimate reason. Thus, Peter was removed as trustee.'"

The court considered animosity between trustees in Kar v McCarvell.46 The testator died

in 2004 and named two of her sons as estate trustees. An application seeking the removal of both

trustees was brought by the beneficiaries because the animosity between the trustees prevented

the distribution of the estate to the beneficiaries. The Court found fault on the part of both

trustees, as well as a complete failure to compromise. The Court ordered the removal of both

trustees to ensure that the welfare of the beneficiaries would no longer be at risk and the trust

could be properly executed in the future. The Court described the level of animosity between the

trustees as resulting in "a state of paralysis" between the co-trustees.'"

In Zucker v Zucker Estate, the beneficiaries of the estate (the son and daughter of the

deceased), brought a motion to remove the sole executor of their father's estate." The

beneficiaries argued that the removal was in the best interests of the beneficiaries because the

executor was impecunious and had pre-taken compensation without consent and without a

passing of accounts. The Court warned that not all courts would agree that an executor should

be removed when the only issue relates to pre-taking of compensation. The Court, however,

ordered that removal was warranted in this case because the executor was now impecunious

and pre-took compensation without good explanation.'" The executor was also ordered to

explain why the money went into his personal bank account and where it was spent.

Lastly, in the recent case of Haines v Haines Estate50, Justice Nolan made the following

observation regarding removal Applications:

46 !bid at para 32. 46 2012 ONSC 394. 47 Ibid at para 3. 48 2011 ONSC 7165. 46 Ibid at para 23. 5° 2012 ONSC 1816.

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It is a trite observation that the longer estate related litigation continues, the more that bitterness and resentment festers. As well, all the parties, ...would do well to keep in mind the experience of the beneficiaries in Charles Dickens' Bleak House - by the time the long, bitter litigation ended, all of the assets of the estate had been used up in legal costs and there was nothing left for the beneficiaries.51

In Haines, the primary asset of the estate was a farm. The testator's beef farming business

was managed by his two sons; one an executor, and the other a beneficiary. The beneficiary son

brought an Application for the removal of his three siblings as executors and trustees, and

replacement by a lawyer as estate trustee. The beneficiary son's mother and brother (with whom

he co-managed the farm and who was one of the executors) agreed with his Application and

referred to themselves as the "Farm Group". The "Non-Farm Group" (consisting of the other two

executors) was in opposition to the Farm Group, causing much dissension between the

executors, and between some executors and some beneficiaries. The Farm Group alleged that

the Non-Farm Group had not carried out their duties to the estate because they failed to secure

financing for the farm, while the Non-Farm Group alleged that the executor in the Farm Group

had a clear conflict of interest as he wanted to acquire the farm for himself. The Court decided

that the Farm Group executor was primarily responsible for creating the climate of distrust that

existed between the parties and that he did, in fact, have a conflict of interest. Justice Nolan's

warning, as described above, applied in this case as the one asset of the estate (the farm) was

likely depleted after the prolonged litigation.

When Will Courts Refuse To Remove?

The Courts have refused to remove estate trustees in the following circumstances:

technical breaches of trust done with the best interests of the beneficiaries in mind; a mere desire

of some or all the beneficiaries to remove a trustee; an isolated mistake in the exercise of the

trustee's powers; and disagreement, friction or hostility between the trustees and the

beneficiaries without other grounds. There are a number of recent Ontario cases that

demonstrate that the Courts are disinclined to intervene in a testator's choice of trustee, except

in cases of absolute necessity.

51 Ibid at para 23.

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In Hawkins v Hawkins Estate', two siblings sought to remove two other family members

as estate trustees on the basis of conflict of interest. The two siblings had advanced claims against

the estate trustees regarding the ownership of three parcels of land, and there was long-standing

personal animosity between one of the trustees and the sibling beneficiaries. Both estate

trustees had a personal interest in defeating the claims of the siblings but that, on its own, was

insufficient to justify removal. For removal, the evidence must persuade the court that the estate

trustees cannot properly carry out their duties to the estate. In his analysis, Master MacLeod

stated,

In short it is the duty of the court to ensure the purpose of the trust is carried out and the testator's choice of trustees should not be lightly disturbed. Removal is essentially a last resort in cases where it can be shown that continuation in office will inevitably impede proper administration. There is no evidence before the court at the moment that any aspect of the day to day administration of the estate has been mishandled or neglected. All of the evidence focuses on the litigation.53

Master MacLeod noted that if the court were to remove an estate trustee every time a

beneficiary brought forth a claim against an estate, such relief would be sought in almost every

case. The Court found that the evidence did not support the conclusion that the estate trustees

must be removed. Although it was necessary to properly supervise the proceedings, removing

the trustees was too drastic a means of ensuring control over a potential conflict of interest. In

contrast, the Court stated that if the estate trustee were to engage in frivolous or protracted

litigation that would magnify the cost and delay, this could be considered be a sufficient reason

to remove the estate trustee.

Two beneficiaries brought an application to remove the estate trustees for conflict of

interest, hostilities between themselves and the trustees, and failure to fulfill the duties of the

trustees, in Johnston v Lanka54. The basis for the conflict of interest argument was that one of

the trustees had purchased shares owned by the Estate. The share purchase was pursuant to a

shareholder's agreement which was entered into with the deceased. The trustee hired her own

counsel to complete the transaction and did not participate in any decisions regarding the

52 2013 ONSC 661. 53 Ibid at para 37. 54 [2010] 0.1 No 3237 (Ont SCJ).

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Estate's sale of the shares.55 As a result, the Court found that there were insufficient grounds to

warrant removal and there was no conflict of interest. The hostility between trustee and

beneficiary existed but was not interfering with the proper administration of estate, and thus the

trustees were not failing to fulfill their duties.56 Lastly, the court found that the trustees in

question were fulfilling their duties, including retaining the deceased's solicitor and accountant

to act for the estate and by collecting various records needed to administer the estate properly.

In Grafton Estate v Canada Trust Co., the daughter of the testator brought an application

to remove her co-executor, Canada Trusts' The Will provided for a life interest in a large and

valuable cottage to the daughter and the daughter's deceased sister, and it gave the trustees and

executors the right to list and sell the cottage where it was advisable in the case of unforeseen

events. The dispute revolved around Canada Trust's wish to sell the cottage property, and its

decision not to approve the daughter's request for funds to maintain and improve the property.

The Court considered the factors in Radford and found that the daughter did not meet the onus

of satisfying the court that the removal of Canada Trust was logical and the only course to

follow.58 The Court reasoned that the daughter's course of action with the property was

misguided, as her attachment to the cottage was in direct conflict with her duty as an estate

trustee to preserve the trust assets.59 The application for removal of the estate trustee was

dismissed.

The Court considered whether delay by an executor was a sufficient ground for removal

of a trustee in Sentineal v Sentinea1.6° In this case, a settlement had been reached between the

parties which required the trustee to sell the estate's properties, together with the division of

the proceeds equally between the trustee and his brother. While the trustee listed the properties

for sale, they had not been sold after approximately two years. As a result, the trustee's brother

brought an application to remove the executor of their father's estate. The Court held that

"removal of an estate trustee should only occur on the clearest evidence that there is no other

' Ibid at paras 18 and 20. 56 Ibid at paras 32-33. ' 2012 ONSC 6955. 58 Ibid at para 31. 59 Ibid at para 29. 60 2011 ONSC 6007.

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course to follow".61 The Court ordered that the property be sold within a strict timeline, but

refused to remove the estate trustee as it was not necessary.

In the recent case of Sekulich (Litigation Guardian of) v Sekulich Estate62, the testator's

Will appointed his brother as an estate trustee and named his children the sole beneficiaries. The

estate trustee delayed in applying for a certificate of appointment and continually failed to

provide full accounting of the nature and value of assets with supporting documentation, and

gave the beneficiaries information that was confusing and inaccurate. The estate trustee paid

$2,500.00 from estate funds to a solicitor as a retainer. The beneficiaries brought an application

seeking the removal of the estate trustee, a passing of accounts, and an Order denying the estate

trustee compensation. The Application was dismissed in part. Most issues were settled before

the Application was heard by the Court, and the estate trustee was not removed because the

only step remaining was distribution of the estate funds to the beneficiaries. Furthermore, the

estate trustee was not required to personally pay the retainer for the solicitor's legal services. It

was not unreasonable for the services obtained to be conducted by a solicitor as they were

services for which the average estate trustee would typically require assistance.

In St. Joseph's Health Centre v Dzwiekowski63, the Applicant, St Joseph's Health Centre,

was the residual beneficiary under the Will. St Joseph's sought an order to replace the estate

trustee, Ms. Dzwiekowski, a sole practitioner, alleging that she had committed breaches of trust

in failing to attend to the administration of the estate in a proper and timely manner. Ms.

Dzwiekowski did very little to perform her obligations as the estate trustee for approximately

nine months after the death of the testator, in part due to a series of unfortunate events which

occurred in her personal and work life, not the least of which included a tree falling on her roof

at home. The estate trustee failed to inform St. Joseph's of its entitlement under the Will in a

timely manner. After the commencement of the proceeding to remove Ms. Dzwiekowski,

however, she diligently performed her duties as an estate trustee and took steps to protect the

estate. In the Court's reasons, Justice Cullity distinguished this case from other undue delay cases

for removal of estate trustees, since in other cases, it was clear that the injurious delays were

61 Ibid at para 11. 62 2012 ONSC 1594. 63 (2007) 162 ACWS (3d) 348.

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likely to continue. The Court believed that while Ms. Dzwiekowski had caused a delay in the

execution of the estate, they were to "an appreciable extent explained by the combination of

mishaps and misfortunes suffered by Ms. Dzwiekowski during the relevant period."64 The estate

had suffered no loss, and there were no other factors of dishonesty or conflict of interest on the

part of the trustee that would cause the estate to suffer in the future. In keeping with the basic

principles which flowed from Radford, the court again emphasized the future well-being of the

estate over the past misconduct of the estate trustee. The Court found that there was no "clear

necessity" to remove the trustee.

Two executors brought a motion in Gonder v Evans seeking their own removal as estate

trustees.65 The trustees argued that they were no longer able to act as executors due to their

personal circumstances, such as age, poor health and financial constraints. Furthermore, the

executors stated that they were in a conflict of interest as they had spent a lot of money

defending an action commenced by a beneficiary who claimed a beneficial interest in the only

asset of the estate, and therefore were simultaneously creditors of the estate as well. The

beneficiary who started the action opposed the removal motion. The trial judge found that

section 37 (4) of the Trustee Act did not require a trustee to arrange for a replacement trustee

before applying to be removed. Accordingly, the court granted the executors' motion for

removal.

On appeal, the Ontario Court of Appeal held that while it is open to the Court to not

appoint a replacement, the Court at first instance erred by not making alternate arrangements

for the administration of the estate and returned the matter to the Superior Court:

The motion judge erred not because he removed the respondents as trustees

without appointing a replacement. Rather, the error was to remove them without

making alternate provisions for the proper administration of the estate. It is for

this reason alone that the matter must return to the Superior Court to be

reconsidered. 66

64 Ibid at para 33.

65 2010 ONCA 172, 54 ETR (3d) 193.

66 Ibid at para 25.

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The Court of Appeal found that the motions Judge ought to have considered and

addressed the following objectives: "(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 estate disputes".67 The Court also stipulated that removing a trustee

without appointing a replacement is an "extreme remedy and will be inappropriate in most

cases."68 The Court of Appeal found that removal of an estate trustee was acceptable only when

there is no other choice available. The Court of Appeal determined that this was an exceptional

case, where removal was warranted, given that the estate trustees were creditors of the estate,

the potential conflict in interest, the limited value of the estate, and there were no viable

replacement trustees. However, the Court of Appeal noted that the motions judge should have

crafted a mechanism and a practical solution by which the estate could continue to be

administered, thus the appeal was allowed.

Interestingly, the Court of Appeal commented that the Trustee Act was not a complete

system for the administration of trusts. The Court clarified that the superior courts of equitable

jurisdiction have an inherent power of appointment and removal that is meant to exist in parallel

with the Trustee Act. Thus, section 37(4) does not constrain the court from providing an

alternative mechanism for administering the trust where there is no replacement trustee

available.69

RECENT ENGLISH CASE LAW

Recent jurisprudence emerging from the United Kingdom demonstrates a consistent

application of the principles for removal of estate trustees, referring to the Letterstedt case in

most, if not all, cases. In Angus v Emmott70, there was a dispute between the three executors of

an estate and one executor brought an application to remove the other two executors. The Court

found that the degree of animosity between the executors had reached a point where

67 Ibid at para 23.

68 Ibid at para. 68.

69 Supra note 65 at paras 41-43.

70 [2010] EWHC 154 (Ch).

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administration of the estate was negatively affected and the interests of the beneficiaries may

be compromised. The Court removed all three executors.

The Court considered whether removal was appropriate in Kershaw v Micklethwaite.71

Mrs. Kershaw named her two daughters as executors of her estate, together with her accountant.

The beneficiary son, who was not named an executor, brought an application to remove all of

the executors. The judge rejected all of the reasons for removal put forward by the son. The Court

expressly found that friction and hostility between an executor and beneficiary alone was not a

sufficient reason to remove the executor. Mrs. Kershaw's choice of executors had to be respected

and the application was therefore dismissed.

In Alkin v Raymond, the court commented that removal is only justified in rare

circumstances, however, clear evidence of misconduct compelled the court to remove in the

specific facts of the Alkin case.72 An Application was brought by the widow and her daughter

seeking to remove the executors, who were the deceased's former business associates and

friends. The judge dismissed all of the grounds for removal advanced except one relating to

improper invoices. The executors had approved payments of invoices rendered after death which

had been back-dated to when the testator was alive. The judge found that the invoices were

unsubstantiated and had not been approved for payment before the date of death, and this was

clear evidence of misconduct. The judge directed that both executors be replaced.

COSTS IN APPLICATIONS SEEKING REMOVAL

In any case, a significant consideration is whether a party's costs will have to be paid by

the estate, or by the party himself or herself. The manner in which the Court has treated the

issue of costs has changed substantially recently. Historically, Courts hearing contested estate

matters ordered that costs be paid out of the estate. Recently, the Court has been shifting to a

costs analysis that mirrors that employed in regular civil litigation matters. In this modern

approach, the Court now considers who has been successful in the estate litigation matter and,

generally, adheres to an approach that the loser pays the costs of the successful party. This is

71 [2010) EWHC 506 (Ch) 72 [2010) WTLR 1117.

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the case so long as there are no public policy considerations that would require a different

approach to the costs issue.

In determining who should bear the costs of an estate litigation matter, the Courts often

cite Rule 57.01 of the Rules of Civil Procedure and section 131 of the Courts of Justice Act.73 Rule

57.01 sets out the factors considered by the Court on the issue of costs, including such things as

the importance of the issues in the proceeding, the conduct of the parties and the complexity of

the proceeding. Section 131 confirms that the court has discretion in determining who should

bear the costs of litigation.

Since January 1, 2010, the Courts have also expressly considered proportionality on issues

of costs. On that date, changes to the Rules of Civil Procedure came into force, including Rule

1.04(1.1):

In applying these rules, the court shall make orders and give directions that are

proportionate to the importance and complexity of the issues, and to the

amount involved, in the proceeding.

!This Rule applies to civil litigation matters and estate litigation proceedings.

The modern approach to the issue of costs in estate litigation matters was described by

the Ontario Court of Appeal as follows:

The modern approach to fixing costs in estate litigation is to carefully scrutinize

the litigation and, unless the court finds that one or more of the public policy

considerations set out above applies, to follow the costs rules that apply in civil

litigation.74

In McDougald Estate v. Gooderham, two residual beneficiaries appealed a lower court's

decision to the Ontario Court of Appeal. At the appellate level, the beneficiaries were

unsuccessful. The beneficiaries sought their costs of the appeal from the estate, in any outcome

of the appeal. The appellate Court noted that the modern approach to fixing costs in estate

litigation is to apply the usual civil litigation costs considerations. The Court of Appeal described

the Court's role as being to carefully examine the litigation, recognizing the need to limit

unwarranted litigation and prevent estates from being exhausted by it. The Court expressly

found that to require the estate to bear all parties' costs of the appeal would mean that all

73 Supra note 1 at Rule 57.01 and Courts of Justice Act, R.S.O. 1990, c. C. 43, s. 131. ' McDougald Estate v. Gooderham, [2005] O.J. no. 2432 (C.A.) at para. 80.

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residuary beneficiaries would be paying for much of the appeal when only the appellants

embarked on the litigation.75 The Court required the appellants to pay costs to the estate on a

partial indemnity scale.76

The Ontario Court of Appeal recently considered the issue of costs in an estate matter

(relating to joint bank accounts) in the case of Sawdon Estate v. Watch Tower Bible and Tract

Society of Canada!' The deceased held seven bank accounts, totalling approximately $1 million,

jointly with two of his five children. The two children with whom the deceased was a joint owner

were instructed by their father to divide the money equally amongst the five children. The joint

owners agreed. When the deceased made the accounts joint with his sons, he also executed a

Will dividing his estate five ways for each of his five children and their respective children. If any

of his children died without any issue, his or her share was to be paid to the Watch Tower Bible

and Tract Society of Canada (the "Watch Tower"). Later, a new Will was executed directing the

transfer of certain corporate shares and the residue of the estate to the Watch Tower.

The joint owners claimed that the funds in the accounts had been gifted to them and

therefore did not form part of the estate. The Watch Tower argued that the joint owners were

holding the funds in trust for the estate and, as residuary beneficiaries, they were entitled to

same. The court of first instance found that the sons had rebutted the presumption of resulting

trust and that the deceased gifted the funds to the joint owners. The court also commented that,

in the alternative, the deceased had made a gift of the funds to the joint account holders, subject

to them holding the funds in trust for all five of the deceased's children. The Court ordered the

Watch Tower to pay the estate trustee's partial indemnity costs, but refused the estate trustee's

request for indemnity from the Estate for the remainder of the costs.

75 Ibid at para. 92. 76 Please see the decisions of Justice Newbould in GB/Plasman Investors' Limited Partnership v. APP Holdings Limited Partnership, 2013 ONSC 6401 (Ont. SO.) and Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc. (2013) ONSC 5213 (Ont. SO) indicating that the Court is willing to award partial indemnity rates of 60% of the actual costs incurred and substantial indemnity rate of 90% of the actual costs incurred. Although not estate cases, these cases can be relied upon when asking the court to make costs awards based on the actual costs incurred by the parties. These cases considered and rejected a request that the costs be limited to the rates recommended by the Costs Subcommittee of the Civil Rules Committee. 77 2014 ONCA 101.

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The Watch Tower appealed the main decision and the estate trustee appealed the costs

Order. The Court of Appeal agreed that all of the deceased's children had a beneficial ownership

interest in the funds, however, they did so on different grounds than those applied by the court

of first instance. The Court of Appeal held that when the accounts were opened, legal ownership

was shared between the joint account owners but the father also made an immediate inter vivos

gift of the beneficial right of survivorship to his five children. The Court of Appeal allowed the

estate trustee's appeal on the issue of costs, and ordered that the estate trustee be indemnified

by the estate, citing the following public policy reasons:

(1) The need to give effect to valid wills that reflect the intention of competent

testators; and (2) the need to ensure that estates are properly administered. In

terms of the latter consideration, because the testator is no longer alive to rectify

any difficulties or ambiguities created by his or her actions, it is desirable that the matter be resolved by the courts. Indeed, resort to the courts may be the only

method to ensure that the estate is properly administered.78

, As such, the Watch Tower was required to pay the estate trustee's costs on a partial indemnity

basis and the estate was required to pay the trustee's remaining costs.

In Gicas Estate v. Gicas, the court of first instance awarded costs personally against the

estate trustees.79 The issue in Gicas was whether certain assets formed part of the estate or

were part of a separate trust. The estate trustee applied to the court for directions, seeking an

order that the assets formed part of the estate, while the trustees of the separate trust argued

that the assets were part of the separate trust. The trial court found that the assets were not

part of the estate and ordered costs against the estate trustee personally because she had been

unsuccessful on the merits. On appeal, the Court agreed with the court of first instance that the

assets were not estate assets, however, it directed that the trustee's costs be fully indemnified

by the estate. The Court of Appeal found that the estate trustee had acted properly in bringing

the application for directions and that the testator's own actions caused the problem because

the instructions were unclear.

78 Ibid at para 85.

79 2014 ONCA 490

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In recent times, the Courts have consistently applied the principle that the unsuccessful

party should bear the costs in an Application seeking the removal of an estate trustee, unless

public policy required otherwise. A beneficiary brought an application to remove his brother as

the trustee of their father's estate in Susin v. Susin.8° The Court found that the estate trustee had

not done anything wrong and had been reasonable in his administration of the estate. As such,

the Court ordered the beneficiary to pay the trustee's costs on a partial indemnity scale.

In Beatrice Watson-Acheson Foundation v Polk, a testator appointed multiple trustees to

administer the estate, and the residual beneficiary sought removal of one of them because she

clashed with the other trustees, and had ceased making payments on a loan made to her by the

deceased.81 The trustee vigorously opposed the Application. The Court found that the trustee

was unable to fulfill her fiduciary duty and ought to have stepped aside. As such, the Court

awarded the residual beneficiary costs on a partial indemnity basis, as against the estate trustee

personally:

there:is no compelling reason for awarding the removed trustee her costs out of

the estate and to do so would be tantamount to rewarding the trustee for her own

misconduct. The second part of the question is whether there is any compelling

reason why costs ought not to be awarded against the unsuccessful party.82

The Court found that the issues were not related to any problem caused by the testator (i.e. there

was no issue as to interpretation of the Will or lack of clarity). As such, the case offered no

compelling reason to depart from the rule that costs should follow the event.83 Notably, a second

executor who defended the actions of the removed estate trustee did not have costs awarded

against her, and her costs were ordered to be paid by the estate, since the Court found that she

was attempting to be conciliatory in an effort to resolve the situation.

The case of Oldfield v Hewson concerns a trustee who failed to administer the estate in a

timely manner." Over seven years had passed after the death of the testator, and the estate was

still not administered. A sister of the deceased therefore applied to have the executor removed.

80 (2007), 34 E.T.R. (3d) 294 81 Beatrice Watson-Acheson Foundation v Polk, 2006 CarswellOnt 7385, [2006] OJ No 4664 82 Ibid at para 21.

Ibid at paras 24-25. 84 Supra note 34.

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The Court ordered removal of the estate trustee and ordered that approximately 2/3 of the costs

be paid by the estate trustee personally, with the remainder to be paid by the Estate.

In Borisko v Borisko, the court ordered removal of the estate trustee:

[The] estate trustee should have stepped aside as soon as he lost the trust and confidence of the beneficiaries. Instead the trustee prolonged the dispute and caused needless and costly litigation.85

The Court awarded costs according to the modern approach discussed in McDougald Estate

finding that no public policy considerations were engaged in the case.86 The Court noted that

partial indemnity costs were warranted in this case, and that merely rude, insulting and

belligerent behavior is insufficient to attract a greater costs consequence.

In Beretta v Beretta Estate, there were two estate trustees, being the husband of the

deceased and a trust company." The husband and the deceased wife had a son with whom the

husband did not get along. The husband wanted to sell an estate asset (a cottage) to a third

party. The son Wanted the cottage and obtained an injunction to halt the sale. The father

entered into a lease with the same third party in his personal capacity, without consulting with

the other co-trustee. The court removed the father as a co-trustee, citing conflict of interest, a

lack of regard for his duties as a trustee, and an inability to work with his son. For these reasons,

and for breaches of his fiduciary duty to the estate, the father was ordered to pay costs to both

the son and the co-trustee without contribution from the estate. The court made the following

comments:

It would be inappropriate and unfair to deprive the beneficiaries of estate assets because of the actions of [the father], which were found to be knowingly improper, reckless or the result of a fundamental failure to understand the role and functions of a trustee.88

In addition, the fact that the father opposed the motion to remove him as a trustee was found

to weigh heavily against him, with the Court finding that it was unnecessary, unreasonable,

85 Borisko v Borisko, 2010 ONSC 2670, 2010 CarswellOnt 2809 at para 10. 86 Ibid at para 5. 87 Beretta v Beretta Estate, 2000 CarswellOnt 5053, [2000] OJ No 5016. 88 Ibid at para 17.

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reprehensible and disdainful.89 Nonetheless, costs were only awarded on a partial indemnity

scale.

In Alberta, the courts have also employed the modern day approach to costs in estate

litigation. Dansereau Estate v. Vallee, was an Application seeking removal of Dansereau as a co-

executor of his mother's Estate because he had wasted or misappropriated estate assets.99 An

argument was also asserted that Dansereau could not work with his co-trustees given the high

level of personal animosity that existed between them. Dansereau opposed the Application

seeking his removal. The Applicants sought costs against Dansereau on a substantial indemnity

basis. Dansereau sought payment of his costs from the estate. The estate was valued at

approximately $6,000,000. The Court ordered that Dansereau be removed as estate trustee and

awarded costs against him on a partial indemnity basis. The Court found that the level of

animosity between the executors was such that it would be unrealistic to expect them to be able

to work together to administer the estate. The Court commented that there was no estate

litigation rule requiriAg everyone's costs, including the loser's costs, to be paid by the estate

unless the litigation was the testator's fault and direction from the Court was required. The Court

ordered that the Applicants' costs be paid by Dansereau personally rather than by the estate, but

found that costs on a substantial indemnity basis were not warranted.

Also in Alberta, the Court had the opportunity to consider costs in an appeal relating to

removal of the trustees, as well as a request to be added as parties to the Appeal. In Rufenack v.

Hope Mission, two interlocutory appeals were brought in a dispute over the validity of a Will.91

The court of first instance found that the trustees, who were also the sole beneficiaries, held the

estate in a secret trust for unspecified charities. The Court, however, refused to remove the

trustees for conflict of interest. Some charities who were denied party status at the trial level

appealed and requested to be added as parties at the appellate level. A second appeal was

brought by other charities claiming to be beneficiaries from the denial of their initial application

seeking removal of the estate trustees. Both appeals were allowed. The charities sought to have

89 !bid at paras 18-19. 90 [2000] A.J. No. 533 (QL). 91 [2005] A.J. No. 620.

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their costs of first instance and of the appeal on a substantial indemnity basis. The Court agreed

and granted the charities their costs, payable by the estate. The trustees sought to have their

costs paid from the estate but the court refused, ordering that the trustees were not entitled to

any costs.

CONCLUSION

While case law can be of assistance in removal applications, each Application is ultimately

determined on its own unique facts. The key consideration in each case is the welfare of the

beneficiaries. While the Courts are loathe to interfere with the testator's choice of trustee, they

will do so if the trust property is endangered by the trustee's acts or omissions.

Returning to the questions posed in the introduction to this paper, I am of the view that

we must advise our clients (whether they be beneficiaries or trustees) as to the inherent risks

associated with Applications to remove trustees. If the trustee's questionable behaviour falls

within a gray area where it is not obvious that the trust property is in jeopardy, the Courts will

likely adhere to the testator's choice of executor. In order to manage beneficiaries' expectations

regarding requests for removal of estate trustees, counsel should advise beneficiaries that

removal will not result from minor squabbles or disagreements.

Trustees who are the subject of meritless removal Applications should defend same and

should seek their costs as against the beneficiaries who brought the Applications, together with

indemnity from the Estate for any costs not ordered against the beneficiaries. Beneficiaries and

trustees should both be advised regarding the possible costs consequences associated with

Applications to remove. In particular, both beneficiaries and trustees should be informed that

they risk the possibility of adverse costs consequences against themselves personally as the

courts have demonstrated that they will not always order that the costs be borne by the estate.

As expected, case law reveals that Courts are reluctant to interfere with a testator's

intention to appoint a particular trustee but will do so in exceptional circumstances. It is our job,

as counsel, to determine if the facts of any specific case fall within those "exceptional

circumstances".

TABLE OF AUTHORITIES

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LEGISLATION

Estates Act, RSO 1990, c E 21.

Rules of Civil Procedure, RRO 1990, Reg 194.

Trustee Act, RSO 1990, c T23.

Trustee Act, RSBC 1996, c 464.

JURISPRUDENCE

Alkin v Raymond, [2010] WTLR 117.

Angus v Emmott, [2010] EWHC 154 (Ch).

Bartel Estate, Re, 2006 MBCA 139.

Beatrice Watson-Acheson Foundation v Polk, 2006 CarswellOnt 7385, [2006] OJ No 4664.

Bergmann v Amis Estate, (2009) 54 ETR (3d) 35 (Ont SCJ); affirmed by 2010 ONCA 377.

Bereskin Estate, Re, 2014 MBCA 15.

Beretta v Beretta Estate, 2000:CarswellOnt 5053, [2000] OJ No 5016. ,

Borisko v Borisko, 2010 ONSC 2670, 2010 CarswellOnt 2809.

Carmichael Estate (re), [2000] 46 OR (3d) 630.

Chambers Estate v Chambers, 2013 ONCA 511.

Conroy v Stokes, (1952) 4 DLR (BCCA).

Crawford v. Jardine, [1997] O.J. No. 5041

Dansereau Estate v Vallee, [2000] AJ No 533 (QL).

Derrick, Re, [1936] OWN 223 (Ont HC).

Dicks v Dicks Estate, 2010 NLCA 35, 298 Nfld & PEIR 1.

Galbrait, Re, [1951] 2 All ER 470.

Gonder v Evans, 2010 ONCA 172, 54 ETR (3d) 193.

Grafton Estate v Canada Trust Co., 2012 ONSC 6955.

Foster's Trusts, Re, (1886), 55 LT 479.

GB/Plasman Investors' Limited Partnership v APP Holdings Limited Partnership, 2013 ONSC 6401

(Ont SO).

Gicas Estate v Gicas, 2014 ONCA 490.

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Re Haggerty, [1967] 62 D.L.R. (2d) 228 (B.C.S.C.)

Hawkins v Hawkins Estate, 2013 ONSC 661.

Haines v Haines Estate, 2012 ONSC 1816.

Hiebert, Re, [1934] 4 DLR 799 (Sask KB).

Johnston v Lanka, [2010] OJ No 3237 (Ont SO).

Kar v McCarvell, 2012 ONSC 394.

Kershaw v Micklethwaite, [2010] EWHC 505 (Ch).

Letterstedt v Broers, (1884), 9 App Cas 371 (South Africa PC).

McDougald Estate v. Gooderham, [2005] OJ no 2432 (CA).

McLaren, Re, (1922), 69 DLR 599 (Ont CA).

Oldfield v Hewson, 2005 CarswellOnt 3146, [2005] OJ No 3076.

Radford v Radford Estate, [2008] OJ No 3256 (Ont SO).

Rufenack v Hope Mission, [2005] AJ No 620.

St. Joseph's Health Centre v DzwieRowski, (2007) 162 ACWS (3d) 348.

Sawdon Estate v Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101.

Scime v Murphy, 2012 ONSC 974.

Sekulich (Litigation Guardian of) v Sekulich Estate, 2012 ONSC 1594.

Sentineal v Sentineal, 2011 ONSC 6007.

Shepard v Shepard (1911), 20 OWR 810 (Ont CA).

Stetson Oil & Gas Ltd %/Stile' Nicolaus Canada Inc, (2013) ONSC 5213 (Ont SO).

Venables v Gordon Estate, 2012 ONSC 956.

Zucker v Zucker Estate, 2011 ONSC 7165.

SECONDARY MATERIALS

Waters, Donovan WM & Mark R Gillen, and Lionel D Smith, Waters' Law of Trusts in Canada, 3rd ed, (Toronto: Thomson Carswell, 2005).

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Documents

Marie Sarah Eurig, as Executor of the Estate of Donald ... · To Remove Or Not To Remove, That Is The Question: Removal Of Estate Trustees Kathleen McDormand, Borden Ladner Gervais