ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 11-50448
DATE: 2012/02/08
IN THE MATTER OF THE ESTATE OF PERCIVAIL HECTOR GORDON, DECEASED
BETWEEN:
HELEN GORDON VENABLES
by her litigation guardian, Michael Venables
Applicant
- and -
PETER LOCKHARD GORDON,
Executor and Trustee of the Estate of PERCIVAL HECTOR GORDON
Respondent
COUNSEL: Joseph W.L. Griffiths, for the Applicant
Matthew Estabrooks, for the Respondent
HEARD IN OTTAWA: December 15, 2011
REASONS FOR decision
BEAUDOIN J.
[ 1 ] The Applicant Mrs. Helen Gordon Venables (“Mrs. Venables”) by her litigation guardian, Michael Venables (“Michael”) makes an application for:
an order removing the Respondent Peter Lockhart Gordon (“Peter”) as the Trustee for the Estate of Percival Hector Gordon (the “ PHG Trust” or the “Trust”) pursuant to s. 37 of the Trustee Act , R.S.O. 1990, c. T.23 (the “ Act ”);
an Order appointing Scotia Cassels Investment Counsel Limited as the Trustee for the Trust pursuant to s. 5 of the Act ;
an Order vesting all assets of the Trust in the new Trustee;
an Order requiring the Respondent to deliver all documents and assets in his possession relating to the Trust to the new Trustee;
costs of the application on a substantial indemnity basis plus HST.
[ 2 ] The Applicant seeks to have Peter removed as the Trustee of the PHG Trust for the following reasons:
A. Peter has refused to pay the income of the PHG Trust to Mrs. Venables both in the past and on an ongoing basis;
B. Peter has placed himself in a conflict of interest between his fiduciary duty or the interests of the PHG Trust and his personal interests; and
C. Peter has refused to manage the PHG Trust in accordance with required and agreed protocols.
[ 3 ] In argument, the Applicant’s counsel added that Peter’s removal is justified due to his breach of his duties as Trustee pursuant to the terms of the Trust and the provisions of the Act and pursuant to an agreement he reached with Michael in 2009.
[ 4 ] At the outset, Peter sought to dismiss this application; on the basis of the doctrine of res judicata and abuse of process. To the extent that the application was not barred by the doctrines of res judicata and abuse of process, Peter sought a stay of the application on the basis that Ontario was not the most appropriate forum for the hearing of the application and asked this Court to exercise its discretion to stay the application in favour of the Courts of British Columbia, which is the situs of the Trust at issue and the residence of the respondent Trustee. He also argued that the application is one to which Rule 75.1.05 requiring mandatory mediation applied and as such, the Applicant required leave of the Court to proceed with the application before mediation is concluded. That motion was dismissed with costs of the day to be paid by the Respondent personally after assessment.
Background
[ 5 ] The late Percival Hector Gordon died on Apri1 6, 1975. Mrs. Venables is his daughter. She was born on September 1, 1911 and is now 100 years old. Mrs. Venables had originally married Hugh Lockhart Gordon in 1937. Together they had two sons, the Respondent Peter and Hugh Donald Lockhart Gordon. Hugh Lockhart was killed during the Second World War. Hugh Donald died in 1961. In June 1951, Mrs. Venables married Mr. Kendrick Venables and together they had Michael, their only son. The family moved to Ontario in 1954 and Mr. Venables later passed away at the age of 83. Michael (born on April 9, 1953) continues to reside in Ontario and is the attorney for both property and care for his mother. His step‑brother Peter (born on May 10, 1939) has resided in British Columbia since 2003.
[ 6 ] Percival Hector Gordon’s last Will dated July 25, 1973 was admitted to Probate by the Saskatchewan Court of Queen’s Bench. Mrs. Venables was appointed Executor, with Peter named as an alternate should Mrs. Venables predecease him, or be unable or unwilling to act. The Will called for the payment of specific bequests and created the PHG Trust which called for the residue of the Estate to be invested, with the income paid to Mrs. Venables for her life and the remainder paid equally to Michael and Peter, unless they predecease her. The current value of the PHG Trust is approximately $570,000.00, made up of cash and equivalents, term deposits, bonds and stocks.
[ 7 ] As a result of a fall in December 2003, Mrs. Venables moved out of the family home to an assisted‑living residence, where she resided until November 2005. It was then that she suffered a debilitating stroke, which severely affected her mental capacity and she was hospitalized. She now resides in a nursing home.
[ 8 ] Prior to her stroke, Mrs. Venables involved herself in a minimal fashion in managing the assets of the PHG Trust. After carrying out the initial duties of an Executor and fulfilling the specific bequests, she invested the assets with what is today called Scotia Cassels Investment Counsel Limited (“Scotia Cassels”). Scotia Cassels is licensed as an “Investment Counsel and Portfolio Manager” and, therefore, had authority to manage the PHG Trust on a day‑to‑day basis.
[ 9 ] Monthly amounts paid to Mrs. Venables were determined based on the level of income generated and there were separate capital and income accounts. Mrs. Venables received interim payments of approximately $3,000.00 a quarter (based on an estimate of the actual income), which represented approximately 20% of her annual income. When the annual tax return was filed, Scotia Cassels would pay the remainder of the income to her after deducting two‑thirds of the income tax payable. The other one‑third of the income tax was charged to the capital account. Scotia Cassels deducted their monthly management fees from the capital account.
[ 10 ] After Mrs. Venables’ stroke, there was effectively no Trustee from November 2005 to September 2006. In mid‑September 2006, Michael received a letter from Peter notifying him that he was now taking over as Trustee of the PHG Trust, as per the terms of their grandfather’s Will. In mid‑February 2007, Peter advised that he would be transferring the PHG Trust assets from Scotia Cassels to MD Management.
[ 11 ] There is no dispute that there has been longstanding friction and conflict between Peter and Michael. That history is fully detailed in Michael’s affidavit. When Peter became Trustee, Michael was concerned about the transfer of assets to MD Management as it is only licensed as an “Investment Dealer” and this meant that Peter would be executing day‑to‑day management duties. Peter, along with Mrs. Venables’ other attorneys, sought legal representation to protect Mrs. Venable’s interests as there were a number of concerns related to the management and transfer of the assets. Eventually, Peter promised regular reporting, assured the others that the assets would be in conservative, low‑risk investments and that he would not be directing the day‑to‑day investment decisions of the Trust as he did not have the expertise. He also gave assurances as to the amount of his fees.
[ 12 ] In January 2008, after receiving an invoice from Peter for Trust management fees that was in excess than what Scotia Cassels would have charged, Michael filed an application in Ontario to have Peter removed as Trustee and have the Trust assets returned to Scotia Cassels. After two attempts by Peter to have the venue moved to B.C. had failed, the parties reached a mediated settlement on February 18, 2009. The relevant provisions of their agreement are set out below:
MINUTES OF SETTLEMENT
The parties herein hereby agree to settle the within App1ication on the following basis:
Peter Lockhart Gordon (“Peter Gordon”) shall remain as Trustee of the Percival Hector Gordon Trust (the “Trust”) on the following conditions:
a. monthly statements shall continue to be provided directly to Michael Venables from M.D. Management;
b. Peter Gordon shall provide monthly bank statements for funds held in the Scotia Bank account at Duncan. B.C. to Michael Venables, upon receipt;
c. all Trust funds shall remain with MD. Management or the Scotia Bank at Duncan, B.C. until distribution in accordance with the last Will and Testament of Percival Hector Gordon;
d. there shall be agreement between Michael Venables and Peter Gordon with respect to any changes in the investments held with M.D. Management. In the absence of agreement, the dispute(s) shall be arbitrated by Steven Gaon. The parties agree to execute any indemnity or other agreements required by Steven Gaon and agree to personally pay an Steven Gaon’s costs on an equal basis. The parties agree that any decision by Steven Gaon is final and determinative and that no appeal may be taken for any such decision;
- With respect to compensation:
a. Peter Gordon shall be paid $750 per month as compensation for acting as Trustee, inclusive of GST, PST and disbursements effective March 15, 2007;
b. There shall be a credit for amounts previously withdrawn by Peter Gordon as compensation from the Trust in the amount of $9,500 ;
c. Peter Gordon shall reverse all accounts rendered to date and submit new accounts in accordance with sub-paragraph 2.a. above;
d. the only withdrawals from the Trust accounts, as set out in paragraph 1, will be for Peter Gordon’s fees, M.D. Management’s fees, Chartered Accountant’s fees for the preparation and filing of tax returns, income payments to Helen Venables and any other payments made to Helen Venables as agreed upon by Peter Gordon and Michael Venables.
[13]–[38] (remaining paragraphs reproduced exactly as in the source text)
Mr. Justice Robert N. Beaudoin
Released: February 8, 2012