The testator's will directed his two children, appointed as co-executors and trustees, to set aside $100,000 in a trust fund for the benefit of their brother.
The brother was to receive $500 monthly, with the remainder to the testator's grandchildren.
The co-trustees transferred the funds to a non-registered investment plan in one trustee's name, who subsequently misappropriated the funds.
The application judge found both trustees jointly and severally liable for the breach of trust.
The appellant co-trustee appealed, arguing she had no active role in the misappropriation and should be relieved of liability under s. 35(1) of the Trustee Act.
The Court of Appeal dismissed the appeal, holding that a co-trustee cannot passively acquiesce to another trustee's actions and that her failure to ensure the trust was properly established constituted an unreasonable breach of fiduciary duty.