Court of Appeal for Ontario
DATE: 20230630 DOCKET: C70563
Hoy, Harvison Young and Favreau JJ.A.
BETWEEN
Ottavio Di Santo Applicant (Respondent)
and
CIBC Trust Corporation, in its capacity as Estate Trustee During Litigation of the Estate of Vincent Di Santo, deceased, and in its capacity as Trustee During Litigation of the Vincent Di Santo 2003 Family Trust, John Di Santo, Carmela Di Santo, Stacy Mitchell, Tony Di Poce, David Sugarman, OCJR Construction Ltd., Anthony Vincent Padula, Andrew Padula, Mia Antoinette Padula, Bianca Di Santo and Madison Di Santo Respondents (Appellants)
Counsel: Ian M. Hull, Doreen Lok Yin So, and John Lo Faso, for the appellants John Di Santo, Carmela Di Santo, Stacy Mitchell, Tony Di Poce, and OCJR Construction Ltd. Matthew Rendely and Nima Hojjati, for the respondent Ottavio Di Santo Kelly Charlebois for CIBC Trust Corporation, in its capacity as Estate Trustee During Litigation of the Estate of Vincent Di Santo, deceased, and in its capacity as Trustee During Litigation of the Vincent Di Santo 2003 Family Trust [1]
Heard: June 8, 2023
On appeal from the order of Justice Cory A. Gilmore of the Superior Court of Justice, dated March 16, 2022, with reasons at 2022 ONSC 1644.
Reasons for Decision
[1] The appellants – John Di Santo, Carmela Di Santo, Tony Di Poce, and Stacy Mitchell (the “Trustees”) – are the trustees under the Public and Private wills (the “Wills”) executed by the late Vincent Di Santo in 2018. John Di Santo, Tony Di Poce and Stacy Mitchell are also the trustees of the Vincent Di Santo 2003 Family Trust. John Di Santo and Carmela Di Santo are two of the deceased’s three adult children.
[2] The respondent, Ottavio Di Santo, is the deceased’s third child.
[3] Ottavio successfully moved for further interim funding of professional fees and personal expenses, and the removal of the Trustees as trustees under the Wills and Family Trust and their replacement by CIBC Trust Corporation.
[4] The Trustees challenge their removal.
[5] Ottavio seeks leave to adduce new evidence about events that have transpired since the motion was heard, which he asserts further demonstrate that it was necessary to remove the Trustees.
Background
[6] Ottavio was 56 years old at the time the motion giving rise to this appeal was heard. He was not gainfully employed. He has had many challenging personal issues, including a heroin addiction. While the deceased was alive, he funded Ottavio’s lifestyle. The motion judge found that Ottavio had been permitted to live where he wanted and lead the life he wanted.
[7] During his lifetime, the deceased built a very successful construction business. He held it through two corporations: Di Santo Holdings Ltd. (“DSHL”) and 1555656 Ontario Inc. (“155”). As a result of an estate freeze in 2003, the then‑outstanding common shares in these entities were transferred to the Family Trust and do not form part of the deceased’s estate. While the value of the estate is significant, the value of the assets in the Family Trust far exceeds the value of the estate.
[8] John and Carmela are involved in the operation of the construction business.
[9] The Family Trust provides for discretionary distributions of income and/or capital to the deceased’s three children and their children and grandchildren. John and Carmela have children. Ottavio does not.
[10] The Wills were executed in 2018. Earlier wills made more generous provisions for Ottavio. He is challenging the Wills, asserting undue influence. Prior to the motion giving rise to this appeal, he secured interim funding orders aggregating more than $450,000 to permit him to pay counsel and pay various personal expenses.
[11] The Wills provide testamentary trusts for Ottavio’s lifetime, with an express provision of $1000 per week (to be adjusted for the increase in the cost of living) in income to Ottavio for life, with the absolute discretion to pay additional income and encroach on capital should the estate trustees “consider it appropriate to do so (but always keeping in mind (i) the difficulties that Ottavio has experienced during his life and (ii) my wish that payment of Ottavio’s share by instalments will prevent Ottavio from spending his inheritance too quickly and unwisely).” A similar provision is not included in the Family Trust.
[12] Under the Wills, Ottavio also received the property located at 104 Home Road, Toronto which was intended to be his primary residence. The motion judge found that the value of that property was between $1.4 and $1.5 M. The deceased also left a 1/3 interest in the family cottage to the testamentary trust for Ottavio.
[13] At the time of the deceased’s death and the motion, Ottavio had some assets: 29 preference shares in 155 Inc., worth a total of $546,650, and one-third of the preference shares of DSHL, worth a total of $317,373.
[14] The deceased died on October 26, 2019. In his Private Will, the deceased expressed his wish that five years after his death, the shares held by the Family Trust would be distributed unequally among his children, with John receiving a 50% interest, Carmela a 40% interest and Ottavio’s testamentary trust receiving a 10% interest. The deceased was clear in his Wills that he wished John to have control of the business.
[15] Except during a brief period, the Trustees paid Ottavio $1000 per week.
Issues on Appeal
[16] The Trustees challenge the order permanently removing them and appointing CIBC Trust Corporation. They do not challenge the further interim funding ordered by the motion judge. They essentially advance two arguments on appeal.
[17] First, the motion judge granted relief not sought by Ottavio. They say that Ottavio had not sought their permanent removal. Rather, he had only sought their removal pending final resolution or settlement of his application challenging the Wills and seeking a declaration that he is a dependant of the deceased, for the purpose of Part V of the Succession Law Reform Act, R.S.O. 1990 c. S. 26.
[18] Second, the motion judge erred at law by failing to consider whether it was necessary to order their replacement. They argue that, given the further interim funding ordered by the motion judge, it was unnecessary to replace them.
Analysis
[19] We are not persuaded to interfere with the motion judge’s order on the basis that Ottavio had not sought the Trustees’ permanent removal.
[20] After the motion judge released her reasons, the parties sought the assistance of the motion judge to settle the form of the order. The Trustees argued that the order should not provide that they were permanently removed as Trustees; they should be removed only until the litigation is resolved. The motion judge rejected that argument, writing in her endorsement of April 6, 2022 that, “[a] permanent removal of the Trustees has always been sought”.
[21] On appeal, the Trustees renew their argument that Ottavio had not sought their permanent removal, and that the motion judge accordingly erred in ordering such relief.
[22] In response, Ottavio points to his factum below where he sought the “removal” of the Trustees. He submits that “removal means removal”. In other words, it is implicit that the removal was to be permanent.
[23] In the absence of a transcript of the parties’ submissions before the motion judge making it clear that a permanent removal was not sought, we are not persuaded that the motion judge made a palpable and overriding error about the nature of the relief sought. Moreover, the Trustees did not submit that they would have adduced different evidence, or made different submissions, had they believed that Ottavio sought their permanent removal. We also note that the Trustees acknowledge that although the order provides for their “permanent” removal, that order could be varied, with Ottavio’s consent, upon the resolution or settlement of the litigation.
[24] Nor do we agree that the motion judge failed to consider whether it was necessary to replace them.
[25] The Trustees concede that the motion judge cautioned herself that the threshold for the removal of a trustee is a high one: the court will not lightly interfere with the testator’s choice of estate trustee.
[26] The Trustees also acknowledge that the motion judge specifically adverted to the several relevant considerations when the court is asked to remove a trustee, as summarized in Virk v. Brar Estate, 2014 ONSC 4611, 1 E.T.R. (4th) 241. As the motion judge noted, those factors include that “there must be a “clear necessity” to interfere with the discretion of the testator”.
[27] The motion judge’s order for interim funding resolved the funding issues then before her, but there will inevitably be further issues requiring the trustees to exercise their discretion in relation to Ottavio’s interest as a beneficiary of the estate and the Family Trust as they are administered. Ottavio may have further financial needs. And he will require further disclosure to understand how much income is available to fund his income for the balance of his life. A significant business is involved and the interplay of the Wills and the Family Trust is complex.
[28] The motion judge detailed the requests made by Ottavio for disclosure and funding and found that the mindset of the Trustees “with respect to any requests made by [Ottavio] has become intractable”. Motions were required to obtain what should have been straightforward requests for estate and Family Trust related documents. She characterized the Trustees as having exercised their discretion to pay additional income to Ottavio in a “minimalist manner”. They failed to consider the lifestyle that Ottavio was leading immediately before the deceased’s death, which could not be funded by $1000 per week. She found that the views of the Trustees were entrenched and unlikely to change.
[29] The motion judge concluded that “the Trustees are either in a position of conflict, have acted unilaterally or cannot objectively exercise their discretion”. Summarizing her reasons for this conclusion:
- Ottavio has no children, so John and Carmela will benefit from any gift over from the Family Trust.
- Ottavio’s claim of undue influence in relation to the Wills puts the Trustees in conflict of interest.
- The Trustees have not exercised their discretion to pay any additional amounts to Ottavio since the deceased’s death.
- John and Carmela are influenced by their views on Ottavio’s lifestyle choices and his behaviour and have a level of animus towards Ottavio.
- The Trustees have not provided important information to Ottavio.
- The removal of the Trustees is necessary to ensure a level playing field in the litigation.
[30] The motion judge considered the relevant factors. Her reasons explain why, in her view, it was clearly necessary to remove the Trustees. Essentially, the Trustees disagree with the motion judge’s conclusion and ask this court to re-weigh the evidence before her. They have not identified any error of law or palpable and overriding error. There is no basis for this court to interfere with the motion judge’s exercise of discretion in removing the Trustees.
The proposed new evidence
[31] We decline to admit the proposed new evidence. Among other reasons, it would not affect the disposition of this appeal.
Disposition
[32] Accordingly, the appeal and Ottavio’s motion to admit new evidence are dismissed. In accordance with the agreement of the parties, the respondents, on the one hand, and Ottavio, on the other, shall each be entitled to $80,000 in costs, inclusive of disbursements and HST, payable out of the estate and the Family Trust.
“Alexandra Hoy J.A.”
“A. Harvison Young J.A.”
“L. Favreau J.A.”
[1] Kelly Charlebois appeared but made no written or oral submissions on behalf of CIBC Trust Corporation.
