Estate executors and trustees are appointed by a testator to carry out the testator’s wishes and administer their estate (as per their Will) after their death. As estate representatives, executors and trustees owe significant fiduciary duties to the estate and its beneficiaries. Failure to act in the estate’s best interests can have serious legal implications for the representative.
Beneficiaries, co-executors/trustees, or any other person with an interest in an estate can bring an action to remove and replace an executor or trustee if they feel they are mishandling the administration of the estate. However, removing an executor or trustee can create substantial delays in winding up an estate and involve costly litigation.
In the recent decision of Di Santo v. Di Santo Estate, the Ontario Court of Appeal emphasized the seriousness of removing an estate executor or trustee from their duties.
Appellants ask court to halt their removal as estate trustees
Di Santo v. Di Santo Estate involved an appeal of an application judge’s removal of the appellants as trustees of the testator’s estate and family trust. In their place, CIBC Trust Corporation was named as the estate trustee and trustee of the family trust. While waiting for their appeal to be heard, the appellants applied to the Court for a stay of their removal and replacement as estate trustees.
The Supreme Court of Canada’s decision in RJR-MacDonald Inc. v. Canada (Attorney General) is the leading case on the legal test for staying a court order. RJR-MacDonald set out three factors to be considered:
- There is a serious issue to be determined on the appeal;
- The moving party will suffer irreparable harm if the stay is not granted; and
- The balance of convenience favours a stay.
In considering whether there was a serious issue to be determined, the Ontario Court of Appeal emphasized the seriousness of removing an estate trustee, stating:
“Removing trustees whom a deceased has specifically chosen is a serious matter. The concerns surrounding such an intrusion on the deceased’s intention are magnified in a situation such as this where the Estate, the Family Trust, and their underlying business … have a complex interrelationship and, together, have assets worth over $70 million.”
As a result, the Court of Appeal found that it was “beyond dispute” that the appeal raised a serious issue for determination.
The Court then moved onto the second factor from RJR-MacDonald, concerning whether the appellants would suffer irreparable harm if a stay were not granted.
The Court found that irreversible decisions could be made regarding the estate and family trust if the appellants were removed. This harm could not later be addressed through monetary damages. As a result, the Court found that the only way to ensure that the estate would suffer no irreparable harm was to allow a stay of the estate trustees’ removal.
Turning to the last factor, which looks at the balance of convenience, the Court noted that the appeal is scheduled to be heard in December 2022. The appellants had been making interim support payments as required under the court order and had taken steps to comply with other elements of the order that were not appealed, such as the passing of accounts.
Overall, the Court of Appeal found that the appellants’ compliance with the other terms of the order addressed any concern of prejudice against the respondents. As a result, the balance of convenience favoured a stay.
Court of Appeal denied respondents’ request to quash appeal
The respondents in this case consisted of CIBC and multiple family members. Together, the respondents filed a motion to quash or stay the appeal entirely. The respondents argued that the proper avenue of appeal was to the Divisional Court and that the appellants had “flagrantly” disregarded the court order.
The Court noted that the appellants were not challenging all aspects of the earlier order, but only the parts relating to their removal as trustees of the estate and family trust. As those parts of the order were final, the Court of Appeal had jurisdiction to hear them. Further, the appellants had filed appeals to the Division Court relating to other aspects of the order. As a result, the respondents’ motion to stay or quash the appeal was dismissed.
The knowledgeable estate litigation lawyers at Derfel Estate Law provide trusted legal solutions to beneficiaries or other parties with concerns about an executor or trustee’s handling of an estate. We take swift, decisive action to ensure all decisions are made in the estate’s best interests and represent clients in actions to remove an executor. We also provide skilled representation in other executor and trustee disputes and advise estate representatives on their obligations. To schedule a confidential consultation, call us at 416-847-3580 or reach out online.