Court File and Parties

COURT FILE NO.: ES-808-15 DATE: 2016-06-20 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

CARLA DAWN LEVERETTE WOOLNOUGH Applicant – and – GRAHAM NEAL DARE and BRYAN ROBERT DARE, personally and in their capacities as the Estate Trustees of the Estate of Carl Merner Dare Respondents

Counsel: C. David Feedman, for the Applicant Kelly A. Charlebois, for the Respondents

HEARD: April 20, 2016

The Honourable Mr. Justice D. A Broad

[1] This is an application brought by the applicant, one of eight beneficiaries of the estate of Carl Merner Dare (the “estate” and the “testator” respectively), for removal of the respondents as estate trustees of the estate.

[2] At the conclusion of argument I dismissed the application giving brief oral reasons, indicating that fuller written reasons would follow. My fuller reasons are set forth below.

Background

[3] The applicant is a granddaughter of the testator and one of eight residuary beneficiaries of the Estate, being all of the grandchildren of the testator. The applicant resides in the Province of Ontario as do the respondents. The respondents are sons of the testator and uncles of the applicant. The applicant’s mother, Carolyn Ruth Dare Wilfred (“Carolyn”), is the remaining child of the testator and resides in New Zealand.

[4] The assets comprising the residue of the estate consist of an investment portfolio, a cottage and associated property on Muskoka (the “cottage”), and a vacant lot in Muskoka.

[5] Subject to two charitable bequests, the will provides that the residue is to be divided into equal shares among the testator’s eight grandchildren, including the applicant, and distributed to them in two instalments. One half of each share was to be transferred after the first anniversary of the testator’s death. This was done in April, 2015. The remaining half of each share is to be held until the sixth anniversary of the testator’s death being April 9, 2020, at which time it is to be paid to the beneficiaries outright.

[6] The applicant and her family occupied the cottage following the death of the testator on April 9, 2014 until she vacated it in November 2015. The applicant and her family also enjoyed the use of the cottage for some time prior to the testator’s death. Neither of the testator’s primary and secondary wills dealt specifically with the cottage, but rather it formed part of the residue of the estate. The testator did leave a signed memorandum setting out certain wishes respecting his estate, including a wish that the applicant be afforded the use of the cottage property through and including the summer of 2015. Although the memorandum was not binding on them, the respondents permitted the applicant and her family to continue to occupy the cottage until the end of the summer of 2015 as directed by it, but required her to vacate by September 21, 2015 in order to prepare the cottage property for sale.

[7] Following receipt of the respondent’s demand that she vacate the cottage she brought the within application on September 2, 2015 claiming an interlocutory injunction preventing the respondents from offering for sale or transferring any legal or equitable title to any real property owned by the estate, including the cottage, and allowing the applicant an exclusive right to the use and enjoyment of the cottage and vacant lot without cost or financial contribution until October 31, 2016. The application also sought removal of the respondent as estate trustees and their replacement by Bank of Nova Scotia Trust Company.

[8] The applicant wishes to purchase the cottage from the estate. She requests the removal of the respondents as estate trustees because she fears that she will not be given a fair opportunity to purchase the cottage because of the “family dynamics” between herself and her mother, on one hand, and the respondents on the other.

[9] The “family dynamics” which the applicant points to in her affidavit in support of the application as giving rise to her concern that she will not be given a fair opportunity to purchase the cottage includes the existence of ongoing litigation commenced by Carolyn against the respondents, in their personal capacities, pursuant to the oppression remedy provisions of the Ontario Business Corporations Act relating to their respective personal interests in a corporation as well as an ongoing dispute or controversy between the respondents and Carolyn concerning a trust established by the testator in the Cayman Islands.

[10] The applicant’s claim for an interlocutory injunction preventing the sale of the cottage was dismissed by Justice Lococo on October 14, 2015. I dismissed the applicant’s motion for leave to appeal Justice Lococo’s order to the Divisional Court on November 12, 2015. The applicant vacated the cottage shortly thereafter on November 15, 2016.

[11] On December 18, 2015, counsel for the respondents wrote to counsel for the applicant conveying the respondents’ “shock and dismay” that the cottage was unliveable in that it was devoid of appliances, furniture, linens, dishes, tools and other personal items “many of which had been in the cottage for many years” and requiring the immediate return of all the estate’s belongings, and returning the property to the condition it was in when the applicant took possession.

[12] The respondent Graham Neal Dare was cross-examined on March 7, 2016. The respondent Bryan Robert Dare had earlier been cross-examined on November 17, 2016. On April 12, 2016, the applicant served two fresh affidavits sworn April 7, 2016, one from herself and the other from Carolyn. The applicant brought a motion returnable on the date set for argument of the application for leave to file supplementary evidence consisting of the April 7, 2016 affidavits, after completion of cross-examinations, pursuant to rule 39.02(2) of the Rules of Civil Procedure. The applicant argued that the letter from the respondent’s counsel dated December 18, 2015 constituted allegations of dishonesty and theft on her part and that the allegations were repeated under oath by the respondent Graham Neal Dare on his cross-examination. She states that her affidavit was delivered in order to respond to these serious and unfounded allegations. She also states that Carolyn’s affidavit was served in order to respond to allegations made by the respondent Graham Neal Dare on his cross-examination respecting the “family dynamics.” The applicant offered to submit herself and Carolyn to cross examination on the fresh affidavits if requested by the respondents’ counsel.

[13] I reserved my decision on the applicant’s motion to admit the affidavits of April 7, 2016 following argument.

Guiding Principles

[14] The principles that guide the court’s discretion to remove estate trustees were recently summarized by Pattillo, J. in the case of Johnston v. Lanka Estate 2010 ONSC 4124 (S.C.J.) at para. 15, relying on the cases of Radford v. Radford Estate, [2008] O.J. No. 3526 (S.C.J.) and St. Joseph’s Health Centre v. Dzwiekowski, [2007] O.J. No. 4641 (S.C.J.), as follows:

(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 trustees’ acts or omissions must be of such a nature as to endanger the administration of the trust.

Basis for the Applicant’s Claim for Removal of the Respondents as Estate Trustees

[15] The applicant argues that there is a long-standing rift between her mother Carolyn and the respondents dating back more than 20 years to the time when Carolyn married a man who was not approved of by the testator and other members of the family. The rift has extended to litigation between Carolyn and the respondents regarding the holding company in which they are shareholders and to efforts of the respondents to resist attempts by Carolyn and herself to enquire into the Cayman Islands trust.

[16] The applicant argues that the bitterness between the respondents and Carolyn is of such a nature that a reasonable inference can be drawn that the respondents have transferred or will transfer their antipathy towards Carolyn to her, which will in turn adversely affect her ability to purchase the cottage from the estate at its fair market value.

[17] The applicant says that she has an interest in purchasing the cottage, represented by her emotional attachment to it, which goes beyond her interest as beneficiary of the estate. She argues that she is vulnerable to unfair treatment by the respondents in denying her a fair opportunity to purchase the cottage to which she is uniquely attached. She argues that the court’s discretion to remove estate trustees is a broad one and should be exercised in this case in order to afford protection to her from unfair treatment by the respondents. She argues that the respondents should be replaced by an independent estate trustee who can be trusted to provide her with a fair opportunity to purchase the cottage.

Analysis

[18] In my view the evidence does not support the exercise of the courts discretion to remove the respondents as estate trustees based on the principles summarized by Pattillo, J. in Johnston v. Lanka Estate. The primary problem with the applicant’s position, in my view, is the conflation of her interest as a beneficiary of the estate with her interest in purchasing the cottage based upon her emotional attachment to it.

[19] The applicant has no higher legal interest in the cottage than any of the other beneficiaries. The testator did not see fit to deal with the cottage separately in his will nor to confer a particular interest in it on the applicant, but rather he directed that it form part of the residue of the estate. The legitimate interest of the beneficiaries, of which the applicant is one, is that the residuary assets of the estate, including the cottage, are realized upon by the estate trustees at the highest possible value. The estate trustees’ duty is to take reasonable and appropriate measures to achieve that objective.

[20] The applicant’s interest in purchasing the cottage, by reason of her emotional attachment to it, has nothing to do with her interest as beneficiary in the estate assets. Her interest in purchasing the cottage is no different than that of any third party interested in purchasing it. The fact that she is a beneficiary of the estate is simply coincidental.

[21] As exemplified by the affidavit of Bryan Robert Dare, the respondents have determined that the cottage and the lot should be sold, as it is not to the financial advantage of the estate to retain them as assets. He deposed that the building is aging and could require additional repairs if the property is not sold at the earliest opportunity. He deposed further that it is conceivable that the property could be on the market for successive years before it is sold and that, since the respondents need to make final distribution to the beneficiaries in early 2010, they wish to ensure that the necessary steps to list and sell the cottage property are taken well in advance. The respondents propose to list the cottage property for sale, sell it and to invest the proceeds of sale.

[22] In applying the principles set forth in Johnston v. Lanka Estate I am not satisfied that there is any basis to interfere with the testator’s choice of the respondents as estate trustees of his estate. Based upon the evidence of the applicant, the testator can be taken to have been aware of the long-standing “family dynamics” referred to by her at the time of the making of his will and nevertheless chose the respondents to be his estate trustees in the light of those dynamics.

[23] I am similarly not satisfied that any necessity for removal of the respondents has been clearly shown on the evidence.

[24] There is nothing in the evidence to suggest that the respondents’ plan to list the cottage for sale, sell it and invest the proceeds would in any way jeopardize the welfare of the beneficiaries. Similarly there is nothing to show that replacement of the respondents with an institutional estate trustee would be in the beneficiaries’ best interests.

[25] Finally, there is nothing in the evidence to suggest that there have been any acts or omissions, actual or anticipated, on the part of the estate trustees which have endangered or which would risk endangering the administration of the trust. There is no evidence that respondents’ plan to list the cottage for sale would prevent the applicant from submitting an offer to purchase it, nor that the respondents would refuse to accept an offer from her which is more beneficial to the estate and to the beneficiaries than any other competing offers. The suggestion by the applicant that there is a risk that the respondents would act unfairly towards her in the sale process by reason of the “family dynamics” is entirely speculative.

Disposition

[26] For the foregoing reasons I dismissed the application on April 20, 2016. In light of my findings set forth above, it is not necessary for me to rule on the applicant’s motion for leave to file the April 7, 2016 affidavits, as their admission would not have affected my determination to dismiss the application.

Costs

[27] If the parties cannot agree on the costs of the action and the motions, the respondents may make written submissions as to costs within 14 days of the release of this endorsement. The applicant has 14 days after receipt of the respondent’s submissions to respond. The submissions shall be brief, not exceeding five double spaced pages, excluding Bills of Costs. The defendants may deliver brief reply submission (not exceeding three double-spaced pages) within 7 days thereafter. All such written submissions are to be forwarded to me at my chambers at 85 Frederick Street, 7th Floor, Kitchener, Ontario N2H 0A7. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

D. A Broad J. Released: June 20, 2016