ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 14/5975
DATE: 2015/07/27
B E T W E E N:
Kristen Jean Bunn and
William Simpson-Bunn
J. Brian Gallagher, for the Applicants
Applicants
- and -
Carrie Gordon
Branko J. Kurpis, for the Respondent
Respondent
HEARD at Hamilton, Ontario:
June 24, 2015
The Honourable Mr. Justice P. R. Sweeny
REASONS FOR DECISION
[1] The applicants Kristen Jean Bunn (“Kristen”) and William Simpson-Bunn (“William”) seek to revoke the appointment of Carrie Gordon (“Carrie”) as estate trustee of the Estate of Hazen Allan Simpson, deceased; to remove her (pursuant s.5 and s.37) of the Trustee Act, RSO 1990, c T.23; and to appoint W. Peter Murray as estate trustee.
Background
[2] On December 18, 2013 the testator, Hazen Allan Simpson, made a will (the “Will”) naming his girlfriend of three and a half years, Carrie Gordon, estate trustee. By his Will, the testator gave his principal residence to Carrie and property owned at 5035 #1 Sideroad, Burlington equally to his daughter Kristen and son William to be held in trust until they attained the age of 21. In addition, the residue of the estate was left one third to each of Carrie, Kristen and William, with the children’s shares to be held in trust until they turned 21. Mr. Simpson died on January 30, 2014. On February 3, 2014 the applicants retained their present counsel. It seems from the outset that the administration of the estate would be contentious. The applicants brought this application on July 18, 2014.
Issue
[3] The main issue is whether Carrie should be removed as estate trustee.
The Law
[4] The law with respect to the removal of a trustee has been canvassed by both parties. A very thorough review of the law was undertaken by Tulloch J. (as he then was) in Oldfield v. Hewson, [2005] O.J. No. 375, at paras. 19-23:
19 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.
20 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) 9 APP. CAS. 371 at 385 - 389 (P.C.), where Lord Blackburn stated that the “main guide must be the welfare of the beneficiaries”.
21 Professor Waters in his seminal text on the law of trust in Canada makes the following comments with respect to this 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.
22 This prevailing principle has been followed in Ontario. In the case of Elliott Estate (Re), [1976] O.J. No. 317 at paras. 10 - 12, (H.C.J.) (Q.L.), Justice Learner 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) 9 APP. CAS. 371 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.
23 I am satisfied that the continuance of Hewson as trustee would be detrimental to the execution of the trust. From his past conduct as executor, it is clear that he has been ineffective in administering the Estate in an expeditious manner so that Keith’s wishes can be realized and the beneficiaries can benefit from the bequest. Furthermore, due to the protracted conflict, the hostility and distrust between Hewson and the beneficiaries prevents them from “working in harmony” and which makes it impossible for him to exercise the very wide discretion he is given under the will. This situation is similar to that of the case of Re Davis Estate (1983) 14 E.T.R. 83 at 85 (Ont. C.A.) where the Court held that, regardless of the causes of hostility between the trustee and the beneficiaries, the existence of hostility in and of itself impaired the relationship such that it was appropriate to remove and replace the trustee. The Court stated:
It is apparent to us that an unfortunate but substantial degree of hostility now exists between the executrix and the three beneficiaries.
Regardless of what has brought about the present situation, we are of the view that it is no longer possible for the executrix to exercise in a completely impartial and objective manner the very wide discretion she is given under the will as to payment of income and/or capital to one or all of the beneficiaries. In the circumstances, we think it is desirable that the executrix and trustee be removed as such ...
Analysis
[5] The Will requires the trustee to not only perform the usual functions of an estate trustee but the trustee must also hold the shares of Kristen and William, invest them, and pursuant to para. 3(g)2. of the Will:
“to use the income and capital, or so much thereof as my Trustee considers advisable, to or for the maintenance, education, and other benefit of such beneficiary; …”
Accordingly, the trustee will have an ongoing relationship with the other beneficiaries until 2017 for Kristen (DOB May 7, 1996) and 2021 for William (DOB February 15, 2000).
[6] The applicants retained counsel at the outset and the trustee was aware that her actions would be scrutinized. This is a very difficult position in which to be placed but the beneficiaries are entitled to retain counsel and the trustee has a fiduciary obligation to administer the trust in accordance with its terms.
[7] The applicants raise four issues which they say should lead to the removal of the trustee:
(1) The failure to provide the Funeral Director’s Proof of Death Certificate;
(2) The Kodiak trailer removal;
(3) The conduct with respect to the antique secretary’s desk (the “desk”) and carpenter’s cupboard (the “cupboard”); and
(4) The sale of the Burlington property.
[8] I shall address each issue.
(1) Failure to Provide Proof of Death
[9] After the death of Mr. Simpson, Kristen requested a copy of the death certificate. It was never provided to her. On April 3, 2014 in correspondence from counsel retained by Carrie, counsel advised, “that we have not been authorized to provide a copy of the Funeral Director’s Proof of Death”. They were advised that if one was required, it may be obtained on-line through ServiceOntario. No explanation was given for the refusal to provide the Proof of Death. This unexplained failure to cooperate by the respondent had an influence on the future of the relationship. This conduct, in and of itself, is not grounds to remove a trustee. It is not even clear that a trustee has an obligation to provide the death certificate. However, it did increase the animosity between the respondent and the applicants.
(2) The Kodiak Trailer
[10] There was a Kodiak trailer on the Burlington property. It was an asset of the estate. Carrie’s evidence is that it was purchased by Mr. Simpson for $2,500 and it had no value because it had been damaged by a branch falling on it. The applicants arranged for a private investigator to look at it and saw no visible roof damage. The applicants assessed it with a value of $11,500 based on an advertisement in a trailer trading magazine for a similar make and model. Carrie has provided no third party appraisal.
[11] The trailer was removed from the Burlington property. Carrie asserted that it had no value. Someone agreed to transport it at no cost. It was taken to Carrie’s site at Pine Valley Campground and put there adjacent to a deck which she had used for her trailer which she had removed. The applicants located the trailer at her site. In May 2014 the applicants reported the issue of the trailer to the police and requested that Carrie be found criminally responsible for the conversion of an estate asset to her use. Carrie says that she was just storing it there and she had not used it. It was removed from the Burlington property to prepare the property for sale. The trailer is still at Carrie’s property. It can be appraised and sold. The proceeds, if any, would form part of the residue of the estate.
[12] In my view, the criminal charges were excessive and unwarranted. There is no doubt that Carrie should have accounted for the trailer. She has no right to simply take it. The estate was worth almost $1,000,000 and Carrie says this is just not that big a deal. The Kodiak trailer issue shows that Carrie was not being careful with the estate assets.
(3) Desk and Cupboard
[13] The circumstances regarding the desk and cupboard added to the animosity between the applicants and the respondent. The Will provided the children the right of first refusal for the contents of both properties. The applicants wanted the desk and cupboard. Carrie asserted that the desk and cupboard were gifts given to her by Mr. Simpson during his lifetime. She produced no corroborating evidence, although she said she had birthday cards which specifically referred to the gifts.
[14] Carrie did not, in fact, keep the desk and cupboard. She sold them at an auction to raise money for the estate. This conduct is difficult to understand. She asserts the sale raised $1,349.25. Given these items had some sentimental value, they belonged to Kristen’s and William’s grandmother, one would have thought an attempt would be made to preserve them rather than sell them. This conduct evidences an enmity toward the beneficiaries which is problematic for the continued administration of the trust by the trustee. The trustee has a fiduciary obligation. The relationship seems to have deteriorated such that Carrie does not want to do anything to assist the beneficiaries. Even if it was her property, the circumstances surrounding the sale seems to show a disregard for the interests and wellbeing of the other beneficiaries.
(4) The Sale of the Burlington Property
[15] The applicants raised the issue of failure to report on the sale of the Burlington property as an example of the breach of the duty to communicate and account. There is no obligation to account at every moment on every transaction. The failure to report on the sale is not, in and of itself, sufficient to call for the removal of the Trustee.
Conclusion
[16] The trustee has a duty to account and to care for the assets and to administer the trust properly. In this case, the trustee was challenged at the outset and was under intense scrutiny. Demands for constant information and questioning are disruptive. However, the reality is that a trustee has a duty and an obligation to account and communicate. The threat of criminal sanctions was, in my view, unwarranted and would naturally increase the animosity between the applicants and the respondent. However, that does not relieve the trustee of her obligations.
[17] In all the circumstances of this case, I find that the relationship between the applicants and the trustee has broken down such that the trustee can no longer act as trustee. To paraphrase the Court of Appeal in Re Davis, supra, it is apparent that an unfortunate but substantial degree of hostility now exists between the trustee and the beneficiaries. The antipathy towards the beneficiaries is such that it will prevent the proper administration of the estate. While it is not all one-sided, the trustee has the fiduciary obligation. In the circumstances, Carrie can no longer continue as estate trustee.
[18] The applicants propose W. Peter Murray to act as estate trustee. Mr. Murray is a lawyer of significant experience who is willing to act in this matter. Accordingly, I am prepared to appoint him as trustee without the need for posting a bond.
Disposition
[19] An order shall issue as follows:
(1) The respondent Carrie Gordon is removed as estate trustee.
(2) Carrie Gordon shall pass the estate accounts up to today’s date.
(3) W. Peter Murray is appointed to act as estate trustee in the Estate of Hazen Allan Simpson without the requirement to post a bond.
Costs
[20] On the issue of costs, if counsel are unable to agree, I would ask that the applicants provide costs submissions within two weeks of these reasons, delivered to me at my chambers in Welland. The respondent has two weeks to reply. The submissions shall be limited to three pages and attach Bills of Costs.
Sweeny J.
Released: July 27, 2015
COURT FILE NO.: 14/5975
DATE: 2015/07/27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Kristen Jean Bunn and
William Simpson-Bunn
Applicants
- and –
Carrie Gordon
Respondent
REASONS FOR DECISION
Sweeny J.
Released: July 27, 2015