Court File and Parties

Court File Nos.: CV-19-022; CV-21-01 Date: 2021/03/16 Superior Court of Justice - Ontario

Re: Court File No.: CV-19-022 Patricia Anne Larmon, Estate Trustee of the Estate of Leonard James Munro, deceased, Moving Party And Steven Munro and Darren Munro, Respondents

Court File No.: CV-21-01 Steven Munro and Darren Munro, Applicants And Patricia Anne Larmon, Estate Trustee of the Estate of Leonard James Munro, deceased, and Patricia Anne Larmon, personally, Respondents

Before: The Honourable Mr. Justice Marc Smith

Counsel: Sheri Thompson, Counsel for the Moving Party (Court File No.: CV-19-022) and the Respondents (Court File No.: CV-21-01) William P. H. Procter, Counsel for the Respondents (Court File No.: CV-19-022) and the Applicants (Court File No.: CV-21-01)

Heard: February 19, 2021 by video conferencing

Endorsement

M. Smith J

[1] There are two matters before me. The first is a Motion for Directions commenced by Ms. Patricia Anne Larmon (“Ms. Larmon”), Estate Trustee of the Estate of Leonard James Munro (“deceased”). She seeks, amongst other things, several payment declarations and various orders directing Messrs. Steven Munro and Darren Munro (the “Beneficiaries”) to deliver documents and provide funds to pay the debts of the Estate.

[2] The Beneficiaries oppose the Motion for Directions on the basis that this Court lacks jurisdiction to deal with the relief claim. In addition, the Beneficiaries seek the removal of Ms. Larmon as Estate Trustee due to the mismanagement of the administration of the deceased’s Estate.

[3] For reasons that follow, the Motion for Directions and the Application to remove Ms. Larmon as Estate Trustee, are both dismissed.

Background

[4] The deceased passed away on December 23, 2018. His Last Will and Testament was dated July 31, 2013 (the “Will”).

[5] The deceased resided with Ms. Betsy Cole, his common law spouse. The deceased had two sons: Steven Munro and Darren Munro.

[6] On June 13, 2019, a Certificate of Appointment of Estate Trustee with a Will was issued by the Court, appointing Ms. Larmon as the Estate Trustee. She is the deceased’s sister.

[7] Messrs. Steven Munro and Darren Munro are the beneficiaries to the Will.

[8] At the time of his death, the assets of the deceased totalled $208,098.18, the main asset being a house located in Hanmer, Ontario (the “Hanmer House”).

[9] Ms. Larmon seeks the Court’s assistance in completing the administration of the deceased’s Estate because she claims that the Beneficiaries have been uncooperative.

[10] Conversely, the Beneficiaries claim that Ms. Larmon should be removed as the Estate Trustee due to the mismanagement of the administration of the Estate, the failure to file tax returns, and the improper accounting practices. It is their position that the Court does not have the jurisdiction to hear Ms. Larmon’s Motion.

Motion for Directions (Court File No.: CV-19-022)

[11] The Beneficiaries claim that Ms. Larmon, as the Estate Trustee, cannot move under Rule 75.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) because she does not have a financial interest in the matter. Also, for the relief being sought, it is argued that a Motion for Directions is not the proper manner.

[12] Rule 75.06(1) reads: “Any person who appears to have a financial interest in an estate may apply for directions, or move for directions in another proceeding under this rule, as to the procedure for bringing any matter before the court.”

[13] In support of their position, the Beneficiaries rely upon an older case called Collins v. Collins, 1981 ONSC 1885, 1981, 32 O.R. (2d) 358. In this family law case, the Court needed to determine if it had jurisdiction to deal with the declaratory relief. The Beneficiaries point me to the following passage in the decision:

One thing, however, is clear, according to Mr. Justice Walsh in Re Casterton (1978), 1978 ONSC 1725, 23 O.R. (2d) 24, 94 D.L.R. (3d) 290, 13 C.P.C. 192, following Mr. Justice Morand in Re Oil, Chemical & Atomic Workers Int'l Union, Local 9-14 and Polymer Corp. Ltd., 1966 ONSC 227, [1966] 1 O.R. 774, 55 D.L.R. (2d) 198, 66 C.L.L.C. 348; a declaratory judgment is not available on an originating notice of motion unless authorized by one of the other Rules of Practice, such as Rule 10. In this case, although an application to vary a decree nisi on originating notice of motion is authorized by the Rules, a declaration of rights under a decree nisi is not. The correct procedure is an action commenced by generally-endorsed writ of summons requesting a declaration, and according to the above-cited cases, the Court has no jurisdiction to proceed on the first branch of the motion as currently framed.

[14] In other words, declaratory relief is not available on a Notice of Motion and if not authorized by the Rules, the Court has no jurisdiction to proceed.

[15] Ms. Larmon argues that r. 75.06 of the Rules is precisely the mechanism that should be used, and she does have a financial interest in the Estate.

[16] Ms. Larmon relies upon two cases: Moses v. Moses, 2021 ONSC 587 and D’Angelo Estate, 2010 ONSC 7244. The decision of Moses is most helpful as it provides a useful analysis of what is meant by the term “financial interest”. At paragraphs 21 and 22 of this decision, the Court wrote the following:

21 In Smith v. Vance, [1997] O.J. No. 6534 (Div. Ct.), the appellants appealed a decision striking their Notice of Objection and dismissing their cross-motion for directions in respect of their challenge to the testator's will. The Divisional Court allowed the appeal and, in its reasons, addressed the meaning of the words "any person who has a financial interest in the estate" as they appear in what is now Rule 75.06(1):

Financial interest is not defined in the Rules of Civil Procedure. In the absence of any limiting definition, those words must be taken in their natural meeting of an interest by way of money or property or other assets having monetary value. Blacks Law Dictionary (5th Edition) defines financial interest as:

An interest equated with money or its equivalent.

With respect to both Rule 75.03(1) and s. 23 of the Estates Act, where the stated interest is clear and obvious (for example, the claimant is a named beneficiary), there should be no difficulty recognizing the status of that person as a party. Different considerations apply where the claimant is one who pretends to have an interest. The word pretend is not to be interpreted as claiming or professing falsely or deceptively but rather as alleging or laying claim to an interest in law. One who pretends to have an interest is not required to prove that he or she has a financial interest before being permitted to become a party under s. 23 of the Estates Act. If such were the case, the inclusion, within s. 23 of entitlement of those persons pretending to have an interest would be redundant and superfluous.

However, claimants must do more than simply assert an interest. They must present sufficient evidence of a genuine interest and meet a threshold test to justify inclusion as a party. It need not be conclusive evidence at that stage but must be evidence capable of supporting an inference that the claim is one that should be heard.

If the evidence offered by an objector is capable of supporting an inference that the claim raises a genuine issue and thus is one that should be heard, the objector is entitled to standing and should be granted permission to be added as a party. Claimants passing that threshold test should not be denied status simply because they cannot produce a copy of the will under which they claim to be a beneficiary or because of the perceived difficulty of setting aside a will or series of wills on grounds of incapacity. The onus of proof on the issue of capacity is upon the persons propounding the will or wills in question and that onus passes to the objector only with respect to proof of a lost or destroyed will.

22 In W.(W.) v. Y.(Y.), 2016 ONSC 2387, Gilmore J. held, at para. 21, that the threshold for determining whether an applicant has shown a financial interest in the deceased's estate is a low one, and the fact that an applicant may have a financial interest in the event that the court makes certain findings in her favour is sufficient for the applicant to apply for directions. Gilmore J., at para. 33, citing Smith v. Vance, held that the evidence required for the applicant to move forward need not be conclusive, but need only be capable of supporting an inference that the claims raise a genuine issue which should be heard by the court.

[17] There must be more than a mere assertion of the existence of a financial interest. Ms. Larmon must present sufficient evidence to support that she has such a financial interest. The threshold test is not high, and the evidence need not be conclusive.

[18] At paragraphs 21 through 33 of her sworn affidavit dated December 3, 2020, Ms. Larmon sets out the expenses that she has paid with her own personal funds. She provides documented evidence demonstrating the withdrawals from her personal account to pay expenses that are related to the Estate.

[19] In the Beneficiaries’ responding affidavit dated January 11, 2021 (paragraph 6), they acknowledge that the following are proper Estate expenses: the income tax payment of $1,925.25, the Estate administration tax of $2,635.00 and the payment made to Dixon Appraisals. They do not dispute that these amounts have been paid by Ms. Larmon.

[20] On the evidentiary record before me, I am satisfied that Ms. Larmon has a financial interest in the Estate.

[21] Even though Ms. Larmon has a financial interest in the Estate, the analysis does not end there. The question that must be answered is whether the Motion for Directions is the appropriate procedure to follow. I find that it is not.

[22] The purpose of a Motion for Directions under r. 75.06 of the Rules is procedural in nature. It was best described by Justice Strathy (as he was then) in the case of Abrams v. Abrams, [2008] O.J. No. 5205 at para. 5:

5 First, I accept the submission that the purpose of Rule 75.06 of the Rules of Civil Procedure is to permit the court to design a procedural regime that will suit the nature of the dispute and that will, in the words of Rule 1.04, promote "the just, most expeditious and least expensive determination" of the proceeding. I agree with the submission that the proceeding has gone on too long. An aggressive schedule is necessary in order to move it to a conclusion, in the interests of Ida Abrams and of her entire family. [Emphasis Added]

[23] Rule 75.06(3) of the Rules sets out the type of orders for directions that can be given by the Court:

Order

(3) On an application or motion for directions, the court may direct,

(a) the issues to be decided;

(b) who are parties, who is plaintiff and defendant and who is submitting rights to the court;

(c) who shall be served with the order for directions, and the method and times of service;

(d) procedures for bringing the matter before the court in a summary fashion, where appropriate;

(e) that the plaintiff file and serve a statement of claim (Form 75.7);

(f) that an estate trustee be appointed during litigation, and file such security as the court directs;

(f.1) Revoked: O. Reg. 193/15, s. 13 (1).

(g) such other procedures as are just. O. Reg. 484/94, s. 12; O. Reg. 290/99, s. 1; O. Reg. 193/15, s. 13 (1).

[24] Orders for directions under r. 75.06(3) are provided to assist the parties and establish a procedural regime that is most appropriate for the dispute in question.

[25] Ms. Larmon seeks the following relief in her Notice of Motion:

a. A declaration that the sum of $5,349.83 is owing from the Estate to Ms. Betsy Cole.

b. A declaration that the sum of $15,271.11 is owing from the Estate to Ms. Larmon.

c. A declaration that Ms. Larmon is no longer required to attempt to obtain payment of the debt from Mr. Steven Munro in the amount of $52,625.97 and that it is fully satisfied.

d. An order regarding the delivery of the .250 rifle to Mr. Darren Munro and a declaration that upon such delivery, the bequest in the Will has been fulfilled and there are no other hunting equipment outstanding to Mr. Darren Munro.

e. A declaration that Mr. Steven Munro is already in possession of all tools and that the bequest has been fulfilled.

f. An order directing that Mr. Steven Munro deliver the 2001 Silverado vehicle ownership for transfer or alternatively that the vehicle be delivered to be sold.

g. An order directing that the Beneficiaries provide $40,000.00 and upon payment, the Hanmer House to be transferred to the Beneficiaries. Alternatively, an order for the sale of the Hanmer House.

[26] As can be seen by the relief being sought by Ms. Larmon, it has nothing to do with procedural matters. Rather, it pertains to the payment of expenses, fulfillment of duties and delivery of assets. In my opinion, r. 75.06 of the Rules was not intended to be used to secure these types of declarations and orders.

[27] Ms. Larmon says that if the Motion is dismissed, the Court will be met with an Application because she is unable to move the matter along without the Court’s assistance. While that might be true, a Motion for Directions under r. 75.06 of the Rules is simply not the proper procedure to follow. The relief sought by Ms. Larmon affects the substantive rights of the Beneficiaries and in my view, it does not fall within the intended scheme established under r. 75.06 of the Rules.

[28] For these reasons, Ms. Larmon’s Motion is dismissed.

Application (Court File No.: CV-21-01)

[29] On January 14, 2021, the Beneficiaries commenced an Application against Ms. Larmon (as Estate Trustee and in her personal capacity). During the hearing, the Beneficiaries only addressed two of the reliefs being sought: (1) an Order dismissing Ms. Larmon’s Motion; and (2) an Order removing Ms. Larmon as Estate Trustee. Given that Ms. Larmon’s Motion has been dismissed, my decision on this Application is now limited to the second relief.

[30] Section 37 of the Trustee Act, R.S.O. 1990, c. T.23 reads as follows:

Removal of personal representatives

37 (1) The Superior Court of Justice may remove a personal representative upon any ground upon which the court may remove any other trustee, and may appoint some other proper person or persons to act in the place of the executor or administrator so removed. R.S.O. 1990, c. T.23, s. 37 (1); 2000, c. 26, Sched. A, s. 15 (2).

[31] Removing an estate trustee should only occur in the “clearest of evidence” and the Court should “not lightly interfere with a testator’s choice of the person to act as his or her estate trustee”. A removal has been found to be an “unusual and extreme course” (Chambers Estate v. Chambers, 2013 ONCA 511 at para. 95).

[32] The Beneficiaries allege that Ms. Larmon has mismanaged the Estate, as set out in the Affidavit of Mr. Darren Munro dated January 11, 2021. Some of the reasons relied upon for her removal are:

a. The legal fees claimed by the Estate are excessive. Ms. Larmon should have been more vigilant in her monitoring and contesting of the lawyers’ bills.

b. The house insurance lapsed, and it was not renewed by Ms. Larmon.

c. Ms. Larmon has not provided the Beneficiaries with any information with respect to the Terminal Income Tax Return.

d. There were personal effects given to Ms. Betsy Cole that should have gone to the Beneficiaries (value of upwards of $5,000.00).

e. There are a number of missing tools that are unaccounted for.

f. A lot of the hunting equipment, which was to be given to Mr. Darren Munro, has disappeared.

g. There have been numerous arithmetic errors in Ms. Larmon’s calculations, such as:

i. An account for legal services was stated to be $6,608.49 when it should have been $4,526.06;

ii. The Estate Administration Tax was said to be $5,032.87 but the amount due and owing was $2,397.00.

iii. It was initially represented by Ms. Larmon that the tax liability was $28,000.00. With information provided by counsel for the Beneficiaries, it was later determined to be in the range of $6,000.00.

[33] The Beneficiaries recognize that the test for the removal of an estate trustee is high, but they argue that it has been met, not only on the income tax issue but the failure to insure the Hanmer House. It is claimed that there have been significant delays for what they describe as a simple Estate. The Beneficiaries have no confidence in the numbers being provided by Ms. Larmon and there is a lack of information being disclosed to them.

[34] Ms. Larmon has provided a detailed affidavit dated February 12, 2021, in response to the allegations of wrongdoing. Her position can be summarized as follows:

a. In terms of the legal fees, she claims that this is not a straightforward Estate. As an example, the deceased’s former spouse (the Beneficiaries’ mother) retained counsel and threatened litigation against the Estate. An account for services rendered totalled $4,526.06, which not only included dealing with the litigation threat but also obtaining a Certificate of Estate Trustee with a Will and filing the Estate Information Return. Also, the previous lawyer retired, and it was necessary to retain new counsel.

b. She says that the house insurance is in arrears and it needs to be paid before obtaining a new quote for insurance. This information has been communicated to the Beneficiaries.

c. A copy of the Terminal Income Tax Return was filed in or around April 2, 2019. A Notice of Assessment from CRA dated April 11, 2019 was also received.

d. She disputes the value attributed to the alleged personal effects that were not given to the Beneficiaries. Also, Ms. Betsy Cole advised her that those items were already in her possession when the deceased moved in or they were purchased jointly.

e. In respect of the alleged missing tools, many of them were purchased jointly by the deceased and Ms. Betsy Cole or they belonged to her son, Peter Cole. Mr. Cole has provided a detailed affidavit outlining his knowledge of the particular items that are set out in Mr. Darren Munro’s affidavit.

f. Regarding the hunting equipment, Ms. Larmon deposes that she made inquiries, the results of which are set out in detail in her affidavit. As noted in her materials, she indicates that many items have not been found and she questions whether the Beneficiaries’ claims are legitimate. For example, she submits that fishing rods, radios, sleeping bags, air mattresses, a smoker and a deep fryer do not fall under the definition of hunting equipment.

g. She acknowledges that some of the household expenses were incorrectly calculated. This represents an error of $410.90.

h. She acknowledges that there were some other miscalculations, but she denies that this amounts to mismanagement. She notes that she has paid significant sums out of her own pocket.

i. For the tax liability, she recognizes now that she misunderstood the accountant. The error was communicated to the Beneficiaries as early as September 21, 2020.

[35] Ms. Larmon says that each and every complaint of the Beneficiaries has been addressed in the affidavit materials. She submits that there is no malfeasance on her part and there is no strong and compelling evidence of neglect to justify removing her. It is argued that Ms. Larmon has not mishandled the Estate.

[36] In my view, there is insufficient evidence for the removal of Ms. Larmon. I say so for the following reasons:

a. There is no persuasive evidence that the missing tools or hunting equipment is Ms. Larmon’s fault. To the contrary, there is evidence that strongly suggests that there are no missing tools and equipment but rather, they did not belong to the deceased.

b. The affidavit evidence reveals that the Beneficiaries and Ms. Larmon have been experiencing some conflict since shortly after the passing of the deceased, which I find is partially due to the Beneficiaries meddling in the administration of the Estate. Improperly interfering in the administration of the Estate or not cooperating with Ms. Larmon will invariably delay things. The Beneficiaries have their role to play in some of the delays.

c. There is no malfeasance on Ms. Larmon’s part. She has acknowledged making some mistakes in her mathematical calculations, she recognizes that she misunderstood the accountant regarding the taxes, and she has communicated the corrections to the Beneficiaries.

d. The only asset of significance is the Hanmer House. Mr. Steven Munro resides in this home and he has refused to vacate. The house is entirely within his control and it is not endangered in any way by any of the alleged conduct by Ms. Larmon. Given the limited liquid assets in the Estate (approximately $5,000.00 at the time of the deceased’s death), Ms. Larmon has tried to work with the Beneficiaries to have them contribute into the Estate to pay for some of the debts, but they have refused.

e. Ms. Larmon has explained the issue with respect to the insurance. On the other hand, the Beneficiaries have not provided me with sufficient evidence as to the reasons that this falls entirely upon Ms. Larmon. Mr. Steven Munro should have taken steps to pay the insurance arrears and have the house insured. I don’t accept the Beneficiaries’ explanation that they have been waiting for Ms. Larmon to provide the funds, when they are well aware or should be aware that the liquidated assets are grossly insufficient to pay all of the Estate debts.

[37] In my opinion, the test has not been met. The evidence does not support a conclusion that there is a clear necessity to replace Ms. Larmon as the Estate Trustee. I find that Ms. Larmon is taking her responsibility of administering this Estate seriously and diligently. A clear example is that, despite the dispute with the Beneficiaries, Ms. Larmon has nonetheless continued to administer the Estate by utilizing her own personal funds to pay some of the expenses. This is a true testament of her commitment to fulfilling her brother’s wishes to administer his Estate.

[38] The Beneficiaries’ Application to remove Ms. Larmon as the Estate Trustee is therefore dismissed.

Conclusion

[39] In sum, both matters before me are dismissed. Given the divided success, I am inclined to award no costs to either of the parties. However, if either party wishes to seek costs, they may do so within 30 days of the date of this Endorsement, by serving and filing written submissions of no more than five pages. The responding party shall serve and file written submissions of no more than five pages within 15 days thereafter.

M. Smith J.

Released: March 16, 2021