COURT FILE NO.: 129-2010 (Goderich)
Gravett v. Haines
COURT FILE NO.: 164-2011 (Goderich)
2012 ONSC 1816
DATE: 20120326
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF the Estate of Wilfred Colling Haines, late of the Municipality of Morris-Turnberry, in the County of Huron, deceased.
COURT FILE NO.: 129-2010 (Goderich)
RE: WILLIAM HAINES, Applicant
AND:
JOHN BRUCE HAINES, MARGARET LYNN GRAVETT and JAMES LAURIE HAINES, in their personal capacity as Executors and Trustees of the Estate of Wilfred Colling Haines, and JANET HAINES, BERNIE HAINES and EDWIN HAINES, Respondents
AND COURT FILE NO.: 164-2011 (Goderich)
RE: MARGARET LYNNE GRAVETT and JAMES LAURIE HAINES in their personal capacity and their capacity as Executors and Trustees of the Estate of Wilfred Colling Haines, Applicants
AND:
JOHN BRUCE HAINES, in his personal capacity and in his capacity as Executor and Trustees of the Estate of Wilfred Colling Haines, WILLIAM HAINES, JANET HAINES, BERNIE HAINES and EDWIN HAINES, Respondents
APPLICATION UNDER Rules 14.05(2), (3)(c), 74.15 and 75.06 of the Rules of Civil Procedure, and the Trustee Act, R.S.O. 1990, c.T-23, s. 37
BEFORE: Nolan J.
COUNSEL: D.A. Reid, Counsel for William Haines, applicant in Court File No. 129-2010 and respondent in Court File No. 164-2011
W.R. Clayton, Counsel for Margaret Lynne Gravett and James Laurie Haines, applicants in Court File No. 164-2011 and respondents in Court File No. 129-2010, both in their personal capacity and as Executors and Trustees of the Estate of Wilfred Colling Haines
S. Teal, Counsel for Janet Haines and Edwin Haines, respondents in Court File No. 129-2010 and Court File No. 164-2011
A. Little, Counsel for John Bruce Haines, respondent in Court File No. 129-2010 and 164-2011, both in his personal capacity and as Executor and Trustee of the Estate of Wilfred Colling Haines
No one appearing for Bernie Haines, respondent in Court File No. 129-2010 and Court File No. 164-2011
G.R. Carey, Counsel for non-party Hazel Marie Haines in Court File No. 129-2010 and Court File No. 164-2011
HEARD: March 7, 2012
ENDORSEMENT
[1] There were two applications before the court. The first was an application commenced by a son and beneficiary of the Estate of the late Wilfred Colling Haines, William Haines, for the removal of his three siblings as executors and trustees of the estate and for the appointment of Gregory Stewart, a lawyer in Goderich, as the executor and trustee of the estate.
[2] The second was an application commenced by two of the executors and trustees of the estate, Margaret Lynne Gravett and James Laurie Haines, for the removal of the third executor and trustee appointed in the will, John Bruce Haines, with them continuing as the two executors and trustees.
[3] Hazel Marie Haines, the wife of the late Wilfred Colling Haines who was not named as a beneficiary in the will, was not a named party in either of the applications before me. She is, however, the applicant in a family law proceeding brought under Part I of the Family Law Act for an equalization payment as well as for a declaration that she was and is a partner in the beef farming business of her late husband which is the main asset in the estate. Hazel Marie Haines has also made a claim for support pursuant to the Succession Law Reform Act as a dependant. Those two proceedings were not before me and have not been dealt with even in a preliminary way on their merits. Nevertheless, significant time was expended at the argument of the applications with respect to Hazel Marie Haines’ right to express her opinion as to the merits, as she saw them, of the two applications before me. She has filed affidavits in which she supported the position of William Haines in Court File No. 129-2010 seeking the removal of all three of the existing executors and trustees and the appointment of Gregory Stewart as the replacement estate trustee. She also opposes the application of Margaret Lynne Gravett and James Laurie Haines.
[4] John Bruce Haines agrees that he should be removed as an executor and trustee of the estate but sides with William Haines in seeking the removal of Margaret Lynne Gravett and James Laurie Haines as well.
[5] Janet Haines and Edwin Haines support the application of Margaret Lynne Gravett and James Laurie Haines and seek an order removing John Bruce Haines as an estate trustee and leaving Margaret Lynne Gravett and James Laurie Haines as the executors and trustees of the estate. Bernie Haines, who has not formally responded to either application, has, nevertheless, filed an affidavit supporting the application of Margaret Lynne Gravett and James Laurie Haines to remove John Bruce Haines and for Margaret Lynne Gravett and James Laurie Haines to continue as the estate trustees.
[6] After argument, for reasons below, order to issue:
Hazel Marie Haines is not a party in either application and is a witness only.
John Bruce Haines is removed as co-estate trustee of the estate of Wilfred Colling Haines, deceased;
Margaret Lynne Gravett and James Laurie Haines shall continue as the sole Executors and Trustees of the estate of Wilfred Colling Haines and shall proceed to administer the estate;
All the property of the Estate of Wilfred Colling Haines shall vest in the continuing trustees, Margaret Lynne Gravett and James Laurie Haines.
Margaret Lynne Gravett, James Laurie Haines, and John Bruce Haines shall forthwith pass accounts from the date they received the Certificate of Estate Trustees With a Will up to the date of this order;
Margaret Lynne Gravett and James Laurie Haines shall forthwith serve and file an answer on behalf of the Estate in the family law proceeding and any leave necessary for the filing of that document in the family law proceeding is granted;
If the parties are unable to agree on costs and how those costs are to be paid, the parties shall serve on each other cost submissions no longer than two pages in length along with a cost outline and a bill of costs within 30 days of the release of this decision; these submissions shall be forwarded to me through the trial coordinator in Goderich.
REASONS
[7] With respect to the status of Hazel Marie Haines in relation to the two applications before me, there is no basis in law for her to have party status at this time. She filed affidavits with the consent of the parties and as such is a witness. I have considered the contents of her affidavits as they relate to whether one or all of the executors should be removed. I recognize however, that her views are not those of a beneficiary. Her evidence, therefore, is to be given less weight than that of the beneficiaries of the estate, in keeping with the principle that the executors of an estate owe a duty first to the beneficiaries.
[8] With respect to the two applications, courts have the discretion to remove trustees in accordance with the powers granted under the Trustee Act, R.S.O. 1990, c.T. 23 and at common law. At the same time, that discretion should be exercised in a way that does not interfere unnecessarily with a testator’s choice of estate trustee. In Limebeer Estate (Re), [2005] O.J. No. 375 Tulloch J. set out a very thorough review of the law at paragraphs 19 through 22:
Pursuant to s. 37(1) of the Trustee Act, a Court may remove a personal representative upon any ground on which the Court may remove any other trustee and may appoint some other person or persons to act in the place of the executor or administrator so removed. The Courts, however, are reluctant to exercise its discretion to interfere with the discretion exercised by a testator in choosing his or her trustee or executors and thus only in rare circumstances will the Courts intervene to remove a trustee.
The governing principle on which the Courts have relied to determine whether or not a trustee should be removed is the welfare of the beneficiaries. This principle was established in the case of Letterstedt v. Broers (1884), (1883-84) L.R. 9 App. Cas. 371 (South Africa P.C.), at 385 – 389, where Lord Blackburn stated that the “main guide must be the welfare of the beneficiaries”.
Professor Waters in his seminal text on the law of trust in Canada makes the following comments with respect to his principle:
The law of trust in Canada, in reference to Lord Blackburn’s guidelines, states:
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.
D.W.M. Waters, Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984) at 683.
- This prevailing principle has been followed in Ontario. In the case of Elliott Estate, Re, [1976] O.J. No. 317 (Ont. S.C.J.) at paras. 10-12, Justice Lerner reiterated the law as enunciated by Lord Blackburn:
Historically, the courts do not take lightly the wishes of the deceased as expressed in testamentary documents. This includes naming of those who shall administer the Estate. The Judicature Act, R.S.O. 1970, c. 228, was amended giving the High Court of Justice the power to remove an executor or administrator by (1896) 59 Victoria, c. 18, s. 4. Essentially, this power has been continued and presently is found in The Trustee Act, R.S.O. 1970, c. 470, s. 37(1).
It is stated in Letterstedt v. Broers (1884), (1883-84) L.R. 9 App. Cas. 371 (South Africa P.C.) at 387:
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.
In MacDonell, Sheard and Hull, Probate Practice 2nd Edition, at p. 133, it is stated that Lord Blackburn’s remarks have been repeatedly referred to but the basic principles therein stated have neither been enlarged or qualified. Subsequent cases simply illustrate the application of those principles to various sets of circumstances. In each case, it seems to be necessary to convince the court that continuance in office of a particular executor, trustee or administrator would be likely to prevent the trust being properly carried out. Re Anderson (1928), 35 O.W.N. 7; Re Thorpe (1929), 35 O.W.N. 325.
[9] In Mailing v. Conrad (2003), 48 E.T.R. (2d) 238 (Ont. S.C.) at para. 14 Dunn J. confirmed the principle that a trustee should be removed in circumstances in which “a trustee prevents the trust or estate from being properly executed”.
[10] In Johnson v. Lanka, 2010 ONSC 4124, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:
(1) the court will not lightly interfere with the testator’s choice of estate trustee;
(2) clear evidence of necessity is required;
(3) the court’s main consideration is the welfare of the beneficiaries; and
(4) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.
[11] At paragraph 32 of the same case, Pattillo J. addressed the issue of hostility between executors and beneficiaries which, along with hostility between the executors themselves, is at the root of the applications before me. Courts will remove executors when the level of hostility is such that it is “no longer possible for the estate trustee to exercise his or her duties in a completely impartial and objective manner”.
[12] When considering the issue of hostility and its impact on the administration of the estate, Beaudoin J. pointed out in Venables v. Gordon Estate, 2012 ONSC 956 at para. 31 that the case law distinguishes circumstances in which there is hostility between the executors themselves and where hostility is between the executors and the beneficiaries. Courts will more readily intervene to remove an executor in circumstances in which the hostility is between the executors.
[13] I have applied those principles to the facts set out in the affidavit evidence of the parties as well as the affidavits of Hazel Marie Haines. There is no question that a significant level of dissention has developed between the executors themselves, between some of the executors and some of the beneficiaries and between some of the executors and some of the beneficiaries in relation to the claims made against the estate by Hazel Marie Haines.
[14] John Bruce Haines cites what could be colloquially termed “irreconcilable differences” between himself and his co-executors as the reason that no concrete steps have been taken to effectively deal with the estate since 2007. He is a farmer and on a day-to-day basis has been operating the farm along with William Haines who is also a farmer. They both say that they have operated the business in “partnership” with Hazel Marie Haines and that she continues in the role she had prior to the death of her husband and their father. This is also the evidence of Hazel Marie Haines.
[15] These three members of the Haines family who have been self-styled as “the farm group” support the application of William Haines to remove all of the current executors and appoint Gregory Stewart. They express the view that because the other two executors are aligned with the beneficiaries who the “farm group” refer to as the “non-farm group”, the remaining executors Margaret Lynne Gravett and James Laurie Haines have a conflict with the beneficiaries and that all three of them should be removed. They point to the failure of Margaret Lynne Gravett and James Laurie Haines to arrange alternate financing to continue the farming operation when TD gave notice that it was no longer willing to continue its financing arrangement. They say this is an example of attempting to thwart the operation of the farm so that it can be sold. Because of that failure, they say that it was necessary for Hazel Marie Haines to obtain new financing which she has personally guaranteed. They say that but for her quick action, the farm business would have shut down.
[16] As a result of what the members of “the farm group” say is the inability of Margaret Lynne Gravett and James Laurie Haines to understand the farming business and thus to properly ensure the continuation of the main asset of the estate for all of the beneficiaries including the two who want to continue and possibly purchase the asset, they should be removed and Gregory Stewart appointed in their place.
[17] The late Wilfred Colling Haines chose as his executors two of his children who did not farm and one who did. John Bruce Haines has an interest in purchasing the farm. While he is not entirely at fault for the failure of the three executors to administer the estate, his position and that of William, along with their mother, that they are the only ones who understand the nature of the main asset of the estate and that it is Margaret Lynne Gravett and James Laurie Haines who are impeding the administration of the estate is not established on an objective analysis of all of the affidavit evidence. I find that his own interest and that of one of the beneficiaries, William Haines, supported by Hazel Marie Haines who is not a beneficiary, has interfered with the efficient or indeed any administration of the estate. The allegation that Margaret Lynne Gravett and James Laurie Haines deliberately refused to arrange alternate financing so that the farm business would fail and would have to be sold is less than compelling. An equally plausible view is that John Bruce Haines deliberately approached TD in a manner designed to have TD withdraw its financing so that Hazel Marie Haines could step in and arrange financing with another institution with which the family has some personal connection as a way of bolstering her claim that she is a 50 percent partner in the farm operation.
[18] While I am not concluding that Margaret Lynne Gravett and James Laurie Haines have played no role in the dissension that has resulted between them and John Bruce Haines, I find that it is John Bruce Haines who has been the executor primarily responsible for creating the climate of distrust that has been the root cause of the failure of the executors to effectively carry out their duties to all of the beneficiaries. John Bruce Haines has an obvious conflict because he wants to acquire the farm. That possibility is recognized in the will but there is no provision in the will that he or “any other son of mine” should acquire it at a price that would disadvantage the rest of the beneficiaries.
[19] I am satisfied on the basis of the affidavit material provided by Margaret Lynne Gravett and James Laurie Haines that they understand their obligations to the beneficiaries of the estate. It is clear that in order for all of the beneficiaries to receive their entitlement under the estate that the assets or possibly the shares of the corporation will need to be sold. Margaret Lynne Gravett and James Laurie Haines appreciate that fact. I am further satisfied on the basis of their affidavit material that they are not averse to a sale to John Bruce Haines and/or William Haines or any combination which may include Hazel Marie Haines. I accept as legitimate, however, their concern that they have obligations to all of the beneficiaries and that any sale should be conducted in a way that assures the fair market value is received for the estate assets. The applicant William Haines has failed to establish on the evidence that all three beneficiaries should be removed and Gregory Stewart should be appointed. Margaret Lynne Gravett and James Laurie Haines have established that John Bruce Haines should be removed as an executor and that they should continue.
[20] I am also satisfied on the basis of their affidavit material that Margaret Lynne Gravett and James Laurie Haines understand that there can be no liquidation of any assets until the claims asserted by Hazel Marie Haines are dealt with on a final basis. It is for that reason that I have provided certain direction with respect to the serving and filing of an answer in that proceeding. Until that claim is determined, there can be no effective administration of the estate including sale of the farm and other assets to anyone.
[21] I have also ordered that the three trustees who originally were granted the certificate of estate trustees with a will pass their accounts from the date they assumed responsibility until the date of this order. To do otherwise would make it impossible when the estate is finally distributed for Margaret Lynne Gravett and James Laurie Haines to have accurate records for the purpose of passing their accounts back to 2007.
[22] This is a case that might well benefit from further directions from the court with regard to timelines for Hazel Marie Haines application before the court as well as the timing of steps to be taken in the administration of the estate once the claim in the family law proceeding and the Succession Law Act proceeding is finally determined.
[23] It is a trite observation that the longer estate related litigation continues, the more that bitterness and resentment festers. As well, all the parties, as well as Hazel Marie Haines, 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.
Original signed by “Justice Mary Jo Nolan”
Mary Jo M. Nolan
Justice
Date: March 26, 2012