SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Damien Stéphane Lavigne and Danika-Lee Lavigne (by their Litigation Guardian, Stéphane Lavigne
AND
Marc-André Labelle
BEFORE: The Honourable Justice M.Z. Charbonneau
COUNSEL: Jason Shelly and James Katz, for the Applicant
Judith E. Wilcox, for the Respondent
HEARD: October 16, 2015
ENDORSEMENT
1The applicant Stéphane Lavigne as litigation guardian for Damien Stéphane Lavigne and Danika-Lee Lavigne brings an application for an order removing the respondent Marc- André Labelle as Trustee of the estate of Christine Labelle, deceased.
2The applicant Stéphane Lavigne and the deceased Christine Labelle lived together as husband and wife until 2006. They had two children Damien Stéphane Lavigne born August 12, 2000 and Danika-Lee Lavigne born October 24, 2001. They separated in 2006. By order dated January 20th, 2006 they were granted joint custody of the two children with the principal residence with their mother.
3In 2006 approximately, the deceased and the respondent started to live together in a common law relationship. On February 23rd day of February 2007, the deceased executed a will leaving the entire of her estate to her two children. She appointed the respondent as executor and trustee. She appointed her father Jean-Claude Labelle and her friend Michele Picard as substitute executors and trustees should the respondent be unable to act.
4The couple lived in a house owned entirely by the deceased situated at 362 Ménard Street in the Township of Champlain.
5In May 2013, there was a fall-out in the relationship between the deceased and the respondent. The deceased ordered him to leave the house. The deceased died on August 1st, 2013 as a result of an aggressive liver cancer which had been diagnosed only a few months before.
6On June 11, 2013 the deceased had removed the respondent as designated beneficiary of her pension and notified the plan of the change of her marital status from common law spouse to unmarried. The deceased had hired a lawyer and on July 22, 2013 caused the lawyer to send a letter to the respondent advising him she wanted to negotiate a separation agreement and asking him not to come to her house without giving her prior notice.
7After their mother’s death, the children went to live with their father, the applicant. The relationship between the respondent and the applicant had and continued to be acrimonious.
8The respondent resumed living in the house on Ménard Drive. He changed the locks. He allowed his sister to occupy part of the house from time to time.
9There was a confrontation between the respondent and the applicant when the latter came to the house to get some of the children’s belongings. Unfortunately the confrontation escalated and involved the children. The applicant later allowed the removal of certain items from the house. He admits that there are still items belonging to the children in the home.
10The applicant filed an objection to the certificate of appointment of estate trustee being issued to the respondent on August 20, 2013. As a result the administration of the estate has been left in limbo.
13Several interim procedural orders have been made including an order in April 2014 allowing the listing and sale of the house at 362 Ménard Street and two commercial lots owned by the deceased and the respondent in common tenancy in Alexandria at a price to be set by appraisal. The respondent had previously listed the house for sale at $650,000.00. The house was appraised at $522,000.00 and listed for that amount pursuant to the order.
14The respondent has continued to live in the home and has used the Hummer motor vehicle owned by the estate.
15On the 26th of September, 2014, the respondent applied to the Ontario Pension Board (OPB) for survivor benefits pursuant to the terms of the deceased’s pension plan. He filed with the O.P.B. an affidavit declaring that he was cohabiting with the deceased at the time of her death. He elected to receive monthly installments of $935.64 and over time received a total of $13,154.99 which he deposited in his personal bank account.
16As a result of a letter sent to the O.P.B. by the applicant’s solicitor, the respondent’s eligibility to receive the survivor benefits was reviewed. Ultimately all benefits were cancelled and a refund was requested by the O.P.B. The respondent refunded the money he had received from the O.P.B.
17The house at 362 Ménard was free and clear of any mortgage until the deceased executed and registered a mortgage in favor of the National Bank of Canada in the amount of $509,000.00 in April of 2009.
18In August 2009, the respondent and the deceased purchased the two commercial lots in the Township of North Glengarry. The properties are held by them as tenants in common.
19On November 12, 2014 the Township of North Glengarry issued an order to remedy for non-conformity with maintenance of the commercial lots. The respondent failed to comply and ultimately had to pay the Township $2,000.00 which included a fine.
Position of the parties
20The applicant submits the following actions by the respondent warrant his removal as trustee:
He breached his fiduciary duty by preventing the children from entering the home and retrieving all their belongings.
He breached his fiduciary duty by continuing to reside rent free in the home and allowing his sister to do so, using the Hummer motor vehicle and other property of the estate, and allowing the commercial lots to be subject to work orders.
He breached his fiduciary obligation by fraudulently claiming and receiving survivor benefits to the detriment of the children, who are the only beneficiary of the estate including the pension plan survivor benefits.
There is a real risk that the respondent is in a conflict of interest based on the fact the large mortgage registered against the home was borrowed shortly before the purchase of the commercial lots. It has yet to be determined on what terms the deceased and the respondent entered into this commercial venture. Similarly, there is evidence of a debt owed by the estate to Gray Hawk, a corporation closely associated with the respondent. Moreover, the respondent claims the estate owes him money for bills he has paid to date and this also puts him in a personal conflict of interest.
21The respondent counters that he and the deceased had reconciled prior to her death. Therefore, he believed he was entitled to claim the pension benefits. He occupies the home as its guardian for security purposes and in order to comply with the terms of the fire insurance policy.
22He did not prevent the children from retrieving their belongings. He was however preventing the applicant from entering and removing any property from the home pending the proper inventory of all the property.
23As a result of the objection to his application for appointment as estate trustee, he was not capable of proceeding with the administration of the estate including selling assets and making inventories. In the meantime, he paid expenses for the home, the fine and the expenses for the commercial properties from his personal account until he will be in a position to make a proper accounting.
24He submits that he and the deceased each paid their share of the purchase price for the commercial lots. He states he has no knowledge of the reason why the deceased registered the large mortgage on the house.
25When he realized he was not entitled to the survivor benefits he repaid them to the O.P.B.
Analysis
26A court must not remove an estate trustee unless there is clear and cogent evidence that it is more probable than not that the trustee will not be able to carry out his fiduciary duties in the best interest of the estate. Here the only beneficiaries of the estate are the deceased’s two children. I come to the conclusion that the respondent’s conduct since the death raises real concerns about his ability to carry out his duties in a fair and independent manner for the sole benefit of the children.
27It is not any particular action of the respondent but the totality of the respondent’s actions which lead me to my conclusion.
28First of all, he has exhibited hostile behavior toward the beneficiaries when he prevented free access to the house to the children and to their father. It is clear he considered the house his home and he still does. He changed the locks and even called the police to mediate his meeting when the children first came to the house.
29The respondent then proceeded to occupy the house to the exclusion of the children. He continued for over two years to drive the estate’s motor vehicle causing the vehicle to depreciate to the detriment of the beneficiaries of the estate. He took no step to put the house for sale until March 2015, at a price well above the appraised value.
30In order to obtain benefits from the deceased’s pension fund, he swore an affidavit that at the time of the deceased’s death he was not living separate and apart from the deceased. On the totality of the evidence I find that was not true. I find he was living separate and apart from the deceased and he knew it or was wilfully blind about that fact. The deceased had ordered him out of the house in May. She had, in June, removed him as beneficiary on her pension plan and changed her civil status from common law spouse to unmarried. In July shortly before her death she caused her lawyer to send a letter to the respondent indicating that she wanted to negotiate a separation agreement and ordering him not to come to the house without prior notice. The respondent’s statement that he had “reconciled” with the deceased is not credible.
31It is also noteworthy that the respondent only refunded the survivor benefits when the O.P.B. ordered him to do so after an investigation prompted by the applicant’s counsel inquiry to the board. When the O.P.B. decided that the respondent was not entitled to any benefits he did not contest the Board’s decision based on the fact that he was living separate and apart from the deceased at the time of her death.
32It is clear from various answers given by the respondent during his cross-examination that he will be making claims against the estate for expenses he allegedly made on the estate’s behalf. This will more likely than not put him in a conflict of interest.
33Similarly the fact that the deceased took a large mortgage on her house at the same time that the parties were entering into a joint commercial venture raises questions about the use that was made of the $507,000. The respondent’s statement, that he has no knowledge of the $507,000 mortgage or its use, is not credible. After all, the parties had been cohabiting for some 8 years. There is no evidence the deceased would have completely hidden such a large transaction from the respondent. There is a real risk that a conflict of interest will arise between the respondent and the estate even if all transactions were totally legitimate.
34The proposed replacement trustees are the two alternate trustees named in the will. For all of the above reasons it is in the best interest of the estate that the respondent be passed over.
35The Court therefore appoints Jean-Claude Labelle and Michele Picard as joint executors and trustees of the deceased Last Will and Testament.
36If need be, counsel for the applicant may submit brief written submissions on the issue of costs within 20 days, the respondent to answer within 15 days thereafter and, if needed, 3 days to reply.
Charbonneau, M.Z.
Date: November 25, 2015
COURT FILE NO.: 880-2013
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Damien Stéphane Lavigne and Danika-Lee Lavigne (by their Litigation Guardian, Stéphane Lavigne
AND
Marc-André Labelle
BEFORE: The Honourable Justice M.Z. Charbonneau
COUNSEL: Jason Shelly and James Katz, for the Applicant
Judith E. Wilcox, for the Respondent
ENDORSEMENT
Charbonneau, J.
Released: November 25, 2015