As we have seen with many of the cases we cover in our blogs, the best-laid plans of someone preparing their estate can sometimes be derailed, for any number of reasons, by people who have (or think they should have) an interest in the estate. One situation we occasionally run into is when a beneficiary of an estate does not approve of the way a trustee is handling the money of the estate. One way to address this is through what is known as the passing of accounts, which allows for the courts and all parties to have a look at the books and make sure the estate’s finances are being properly administered. In a recent decision from the Ontario Court of Appeal, four siblings sought a passing of accounts from their two other siblings, who had been named as trustees for their parents’ estate.
Events leading up to the dispute
The parents appointed two of their six children (“the respondents”) as attorneys for their property. The other four children (“the appellants”) challenged their appointment, but their application was denied shortly before the parents passed away.
The initial application was made under ss. 42(1) and (4) of the Substitute Decisions Act, which states, “[t]he court may, on application, order that all or a specified part of the accounts of an attorney or guardian of property be passed.” While the act further states that any person may make an application, it doesn’t necessarily follow that any person will be granted leave following the application.
In granting leave, the court must be convinced of the following:
(1) the person or persons seeking leave have a genuine interest in the grantor’s welfare; and,
(2) a court hearing the application under s. 42(1) may order the attorney or guardian to pass his or her accounts.
This second step has evolved to mean that a court may consider a number of factors before approving the application, including whether the applicant has “raised a significant concern in respect of the management of the grantor’s affairs to warrant an accounting.”
The respondents admitted that the first step of the test has been established. The appellants clearly had a genuine interest in their parents’ welfare. Remember, the parents had not died at the time the application was made.
The appellants disagreed with the application judge’s finding that there was a lack of evidence relating to misfeasance or wrongdoing, and as a result, erred in exercising his discretion. They also argued that the application judge failed to properly consider whether the mother had capacity when she made the appointments.
After looking at the history of the family, the court saw no error in the application judge’s finding, writing,
“The uncontested evidence was that (the father) remained capable of managing his and his wife’s intertwined affairs. He continued to receive all bank statements until he and his wife moved into a long-term care facility in October 2016. The respondents helped their father manage his and their mother’s finances, such as paying his bills for him, but kept him apprised of all actions taken on their behalf. Before the appellants commenced their application, the respondents responded to their request to provide copies of documentation and continued to provide documentation in the course of the application. In his reasons, the application judge repeated – and, in our view, reasonably accepted – the respondents’ counsel’s characterization of the respondents as acting either at their father’s request, or with his knowledge and consent.
“Moreover, (the father), who was represented by counsel and participated fully in the application, gave evidence that he had no concerns with the respondents’ involvement in the management of his and his wife’s affairs and wanted the litigation to come to an end.”
The court also added that the value of the estate’s investments rose after the appointments were made.
As a result, the appeal was dismissed and costs of $13,500 were imposed on the appellants.
Contact Derfel Estate Law to speak with an estate lawyer who will guide you through the process of passing of accounts, ensure that your rights and interests are protected, and work with you to achieve the best possible resolution. Call us at 1-844-2-DERFEL or contact us online to schedule a consultation.