Court File and Parties
COURT FILE NO.: 05-316/19 COURT FILE NO.: CV-20-00651315-00ES DATE: 20210511
SUPERIOR COURT OF JUSTICE - ONTARIO
In The Matter of the Estate of Vincenzo Sasso, deceased
BETWEEN: FRANK SASSO, Applicant
AND: RAFFAELE SASSO, Respondent
AND BETWEEN: RAFFAELE SASSO, Applicant
AND: FRANK SASSO, Respondent
BEFORE: Dietrich J.
COUNSEL: Amanda Bettencourt and Lionel Tupman, for the Applicant/Respondent Frank Sasso Peter Cozzi, for the Respondent/Applicant Raffaele Sasso
HEARD: April 12 and 30, 2021
ENDORSEMENT
1The late Vincenzo Sasso (the “Deceased”) died on June 3, 2018 at 96 years of age. He was survived by his two sons, Raffaele Sasso (“Raffaele”) and Frank Sasso (“Frank”).
2On March 22, 2010, the Deceased had appointed Raffaele and Frank to act jointly as his attorneys for property and his attorneys for personal care. In his last will and testament dated December 29, 1981, he had appointed them to act jointly as Estate Trustees of his estate (the “Estate”), and he divided the residue of the Estate equally between them.
3During the Deceased’s lifetime, when he was no longer capable, and Raffaele and Frank were managing his property and personal care, a number of issues arose between Raffaele and Frank relating to the Deceased’s property. At that time, Frank sought to have Raffaele removed as an attorney for property. With the assistance of a mediator, the issues were resolved. Raffaele and Frank executed an agreement dated August 23, 2016 (the “Agreement”), which would govern the administration of the Deceased’s property and his personal care going forward. Since the Deceased’s death, issues relating to the Agreement and the administration of the Estate have arisen between Raffaele and Frank.
4Frank commenced the within application (Court File No. 05-316/19-00ES) in November 2019 seeking, among other relief, a) the removal of Raffaele as an Estate Trustee, and b) the court’s direction as to the appropriate apportionment of the Estate between Frank and Raffaele to account for amounts owing to the Estate by Raffaele and other adjustments (“Frank’s Application”).
5In response, Raffaele commenced the second within application (Court File No. CV-20-00651315-00ES) in November 2020. Among other relief, he seeks a) an order directing the sale of the remainder of the Deceased’s real properties, b) approval of his accounts as an attorney for personal care, and c) various payments to him and others from the Estate or Frank (“Raffaele’s Application”).
6Pursuant to an Order of Justice Conway dated November 16, 2020 (“Justice Conway’s Order”), Frank’s Application and Raffaele’s Application are to be heard one after the other.
7For the reasons that follow, regarding Frank’s Application, Raffaele shall be removed as an Estate Trustee, and Frank is entitled to a larger share of the residue of the Estate owing to certain deductions from Raffaele’s share. Raffaele’s Application is dismissed.
Background Facts
8At the time of his death, the Deceased’s assets were comprised principally of three real properties: 24 Cremorne Avenue, in the City of Toronto, Ontario (the “Cremorne Property”), vacant land in Lindsay, Ontario (the “Bolsover Property”), and 61 Northwood Drive, in the City of Toronto, Ontario (the “Northwood Property”).
9The Deceased had only a modest income. During his lifetime, in 2014, Frank and Raffaele agreed that a $100,000 mortgage should be placed on the Cremorne Property to provide a line of credit to fund the Deceased’s care. Subsequently, in August 2014, Frank discovered that Raffaele had, on behalf of the Deceased, arranged for an additional $50,000 to be advanced on the line of credit from the CIBC. Raffaele benefited personally from that line of credit through cheques he made payable to himself or his construction company, and possibly other withdrawals for which he has not accounted.
10Frank also discovered that, in December 2014, Raffaele had borrowed, on behalf of the Deceased, $145,000 from a private lender and caused the Bolsover Property to be pledged as security for the loan. Raffaele was named as a guarantor on the loan. This mortgage transaction was done without Frank’s knowledge, and Raffaele admits that the loan was for his own benefit. When the loan was not repaid, the lender obtained a judgment/writ of execution and registered it. At the time of the Deceased’s death, the amount owing on the judgment was $230,725.83.
11Following Frank’s discovery of the Bolsover Property mortgage, he brought legal proceedings against Raffaele seeking, among other things, the removal of Raffaele as an attorney for property, and an accounting from Raffaele. The litigation was resolved by the Agreement. The Agreement set out specific duties for each of Frank and Raffaele, as attorneys. For example, they agreed that: a) the Cremorne Property would be sold, the net proceeds would be used, if necessary, to repay the mortgage on the Bolsover Property, and any such payments related to the mortgage would be deducted from Raffaele’s share of the Estate; b) Raffaele would pay off the Bolsover Property mortgage, and if he did not, $150,000 would be deducted from his share of the Estate, as well as any fees or amounts owing on the redemption of the mortgage; c) Raffaele would be permitted to continue live rent-free at the Northwood Property, for the time being, provided that he paid all utilities and certain expenses, and that he contributed $5,000 annually to the property taxes and insurance; and d) neither Raffaele nor Frank would sell, transfer or encumber the Northwood Property without the consent of the other.
12The Agreement required that all expenditures on behalf of the Deceased be paid by cheque, other than purchases of $200 or less for food, medical supplies and miscellaneous items for the Deceased, for which reimbursement would be made to the attorney having made the purchase upon presentation of the receipt signed by both attorneys. Cheques would be signed by both attorneys.
13The Agreement also prohibited cash or debit withdrawals from the Deceased’s bank account by either attorney. Access to the Deceased’s bank account and the CIBC line of credit were limited to specifically enumerated expenses, including the Deceased’s long-term care at Cummer Lodge; the caregiving services of Maria Frita, at Cummer Lodge, to a maximum of $150 plus HST per week (supported by an invoice and paid by cheque signed by both attorneys); the caregiving services of Ping Ping Zhang, at a rate as agreed between the attorneys, supported by an invoice in accordance with the Standards of Practice of the CTCMPAO; the fees of a personal services worker, and other caregiving costs, if required, both as agreed to by both attorneys, and failing agreement, as determined by a mediator or the court; municipal taxes and maintenance costs; and other expenses relating to the Deceased’s care.
14The Agreement specifically provided that, as of the date of execution, no amount was owing to either Ms. Frita or Ms. Zhang.
15Clause 4.01 of the Agreement provided that if a dispute arose with respect to the Agreement and the parties were unable to resolve it, the parties could resolve the dispute through mediation, and if that failed, either of the parties could apply to this court to seek directions or obtain any necessary order.
16The Cremorne Property was not sold during the Deceased’s lifetime, but was sold after his death. The sale transaction did not close as scheduled because it was during the sale process that Frank discovered the judgment/writ of execution against the Deceased, which needed to be addressed and paid.
17The sale of the Cremorne Property proceeded on the basis of Raffaele’s agreement, at that time, that the net proceeds of sale of the Cremorne Property would be used to pay off the judgment, and there would be a corresponding deduction from his share of the Estate. The judgment creditor was paid out of the proceeds of sale. However, immediately following the sale, Raffaele reneged on his agreement to have the amount of the judgment and related payments deducted from his share of the Estate. Because of this disagreement between the Estate Trustees, the net proceeds of sale in the amount of $189,730.39 remain in the trust account of the vendors’ solicitor and have not been transferred to the Estate Trustees or an Estate bank account.
18Prior to the hearing, Raffaele agreed to the deduction from his share of the residue of the Estate of the whole of the judgment and related payments in the amount of $230,725.83.
Positions of the Parties on Both Applications
Frank
19Frank submits that Raffaele’s failure to comply with both the terms of the Agreement and his subsequent agreement regarding the distribution of the net proceeds of sale of the Cremorne Property demonstrate that Raffaele will continue to put his own interests ahead of the interests of the beneficiaries of the Estate, to their detriment. Frank asserts that the administration of the Estate cannot proceed with Raffaele as an Estate Trustee because Raffaele is in breach of his obligations as an Estate Trustee, and this is hindering the administration of the Estate.
20Frank further asserts that, in addition to disputing the amount that Raffaele owes to the Estate, Raffaele has brought an application against Frank, which he has no standing to bring. Frank asserts that Raffaele’s application is procedurally flawed, and should be dismissed. Frank also asserts that by making claims against the Estate, as an Estate Trustee, Raffaele’s conduct clearly evidences a conflict of interest that precludes Raffaele from continuing as an Estate Trustee.
21Frank further asserts that Raffaele had not carried out his duties as an Estate Trustee, including obtaining appraisals of the Deceased’s jewelry, which he had agreed to do. Further, Raffaele has offered no excuse for his failure to comply with the terms of the Agreement that require him to pay certain ongoing expenses of the Northwood Property.
22Frank also submits that if Raffaele’s Application is not dismissed on procedural grounds, it should be dismissed because Raffaele has not met his burden to prove that he is entitled to any of the relief he seeks.
Raffaele
23In response to Frank’s Application, Raffaele submits that he has advised Frank that he accepts the terms of the Agreement and will account to the Estate and to Frank for any and all financial non-compliance with the Agreement, including monies owing for the contributions he was required to make to the property taxes and insurance of the Northwood Property. His obligations with respect to the latter are already covered in Justice Conway’s Order. However, Raffaele asserts that Frank’s calculation of the amount owing to Frank from the Estate as deduction from Raffaele’s share is incorrect because of double-counting.
24Raffaele submits that Frank’s desire to remove Raffaele as an Estate Trustee is rooted in a struggle for control of the sale of the real properties remaining in the Estate, as opposed to any breach of fiduciary duty by Raffaele. Accordingly, Raffaele submits that he should not be removed as an Estate Trustee, and that Frank’s desire to remove him is borne out of a desire to punish Raffaele for his alleged past misconduct.
25Raffaele further submits that he is not in a conflict of interest because his personal interests do not conflict with his duty as an Estate Trustee. He asserts that this is so because he owes money to Frank personally under the Agreement and not to the Estate.
26Raffaele further submits that Raffaele’s Application should not be dismissed because it is properly brought under the Substitute Decisions Act, 1992, S.O., c. 30 (the “SDA”) and he has met his burden of proof respecting the claims he makes for payment to himself and to Ms. Frita and Ms. Zhang.
Raffaele’s Application
27Raffaele’s Application, on its face, is brought by Raffaele, personally, against Frank, personally. As grounds for Raffaele’s Application, he cites the SDA, ss. 39(1), 39(3), 40 and 42, and rules 74.16, 74.17 and 74.18 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). In argument, his counsel asserts that Raffaele’s Application is also brought pursuant to clause 4.01 of the Agreement, though no reference is made to this ground in the notice of application. Further, some of Raffaele’s claims pre-date the Agreement (e.g., compensation for personal care services prior to the Agreement) and others are not covered by the Agreement (e.g., the claim for interest as a beneficiary of the Estate). During Raffaele’s cross-examination, his counsel advised that Raffaele brought the application in his capacity as attorney of the Deceased and as an Estate Trustee. Frank asserts that, owing to a variety of procedural deficiencies, Raffaele’s entire application must be dismissed.
28Respecting the substance of Raffaele’s Application, Raffaele submits that he is entitled to a) an order directing the sale of the Bolsover Property and the Northwood Property; b) a payment from the Estate of yearly interest at a rate of 5 percent of the undistributed value of the Estate assets from June 3, 2019 (being the first anniversary of the Deceased’s death) based on the “rule of convenience”; c) an order approving his accounts for personal care services and compensation as an attorney for personal care for those services provided for the period from March 22, 2010 to June 3, 2018, in the amount of $198,850, and reimbursement for expenses incurred as an attorney for personal care; d) reimbursement for out-of-pocket expenses as an Estate Trustee; and e) payment in satisfaction of a claim on behalf of Ms. Frita and Ms. Zhang for their unpaid invoices, totaling $80,656, for services provided to the Deceased.
Claims against the Estate
29With respect to Raffaele’s request for an order directing the sale of the remaining properties, and a payment of interest based on the rule of convenience, these claims appear to be brought by him as a beneficiary of the Estate. Raffaele claims that he has been prejudiced by a delay in the administration of the Estate, including the sale of the real properties, for which he should be compensated with an interest payment. This claim must be brought against the Estate, currently represented by Raffaele and Frank, its Estate Trustees. Though Raffaele asserts that the interest ought to be paid by Frank personally, the claim must nonetheless be brought against the Estate Trustees, who are responsible for the administration of the Estate and distributions to the beneficiaries.
30Rule 14.06 of the Rules is clear: “[E]very originating process shall contain a title of the proceeding setting out the names of all the parties and the capacity in which they are made parties, if other than their personal capacity.” Raffaele did not identify the capacities in which he brought the application or Frank’s capacity. Further, because the Estate Trustees are required to act unanimously, Raffaele could not have brought the application as one of two Estate Trustees without the consent of the other Estate Trustee, Frank, which he did not have: Testa v. Testa, 2015 ONSC 2381 at paras. 34 and 35. Therefore, the claim for interest must fail on procedural grounds.
31Raffaele also claims reimbursement for Estate expenses incurred by him in the amount of $3,056.15 as an Estate Trustee. The bulk of this claim relates to work done by Raffaele and two others, at his request, to ready the Cremorne Property for sale. This claim should also have been brought against the Estate and not against Frank personally. This claim too must fail on procedural grounds.
32In the same category of claims, Raffaele brings a claim, against the Estate, purportedly on behalf of Ms. Frita and Ms. Zhang. One of two Estate Trustees cannot unilaterally advance a claim against the Estate without the consent of the other. Raffaele does not have Frank’s consent to bring this claim. Further, it is unclear why Raffaele is bringing this claim on behalf of Ms. Frita and Ms. Zhang, and whether the invoices each has submitted should be paid given that their invoices predate the Agreement. Raffaele deposed that he is not their counsel or their agent; rather, he is bringing the claim on their behalf because it is his moral duty to do so. This claim must also fail on procedural grounds. I make this finding without prejudice to the rights of Ms. Frita and Ms. Zhang to advance a claim against the Estate if they are indeed creditors of the Estate.
Claims as an Attorney for Personal Care
33Raffaele’s remaining claims relate to reimbursement for expenses he incurred as an attorney, on behalf of the Deceased, on account of purchases of food and other items for the Deceased, and for compensation for acting as an attorney for personal care.
34Clause 2.01 of the Agreement provides that: “All expenditures on behalf of Vincenzo Sasso shall be paid by cheque, except for single purchases of $200.00 or less for food, medical supplies and miscellaneous items upon presentation of the receipt by cheque signed by both parties.” In argument, Raffaele attempts to rely on clause 4.01 of the Agreement, which permits the parties to the Agreement to apply to the court in respect of a dispute arising out of the Agreement if they cannot resolve the dispute between themselves or through mediation. As noted, Raffaele did not plead clause 4.01 as a ground for his application.
35Raffaele also relies on ss. 39(1), 39(3), 40 and 42 of the SDA, and rules 74.16, 74.17 and 74.18 of the Rules. A number of these sections relate to powers of attorney for property and compensation payable to an attorney for property, and therefore do not assist Raffaele in his request.
36Rules 74.16 and 74.17 relate to a passing of accounts by persons acting under a power of attorney, and set out the form of accounts, but there is no prescribed form for the accounts of an attorney for personal care. Rule 74.17 provides that once the appropriate materials are filed with the court, the court shall issue a notice of application to pass accounts. This procedure was not followed in this case. No notice of application to pass accounts was issued in the prescribed form. Rule 74.18 requires the applicant to serve the notice of application and a copy of the draft judgment sought on each person who has a vested interest in the estate. Raffaele did not follow this procedure either and he has not provided Frank or the court with a draft of the judgment he seeks.
37In addition to the procedural irregularities and deficiencies in the pleading, contrary to Justice Conway’s Order, to which Raffaele had consented, and which required Raffaele to provide “court-format accounts”, Raffaele provided very informal accounts. These accounts are, essentially, a) a listing of the total monthly out-of-pocket expenditures for food and medical supplies for the benefit of the Deceased incurred during the accounting periods; and b) a calculation of the number of hours spent providing personal care multiplied by an hourly rate of $25/hour over a period of approximately seven years, resulting in a claim of $198,850.
Reimbursement for expenses
38Raffaele’s informal accounts show that he spent a total of $13,159.51 on food and medical supplies, among other things, for the benefit of the Deceased. Initially, he sought reimbursement in that amount.
39Frank requested copies of the receipts in support of Raffaele’s claim and challenged a number of the items on the basis that they were not purchased for the benefit of the Deceased. Raffaele made handwritten marks on each of the receipts to indicate which items were purchased for the Deceased. He then revised his request for reimbursement to $6,225.43.
40Frank totaled the items marked by Raffaele and arrived at a total of $3,116.67, which he approves for payment to Raffaele. The onus is on Raffaele to produce the receipts that support the expenses he incurred. Raffaele deposed that the items on the receipts marked with a handwritten notation were those that he incurred on behalf of the Deceased. Frank is entitled to rely on Raffaele’s evidence. There is no evidence to suggest that Frank’s calculation of the total of the noted expenses is inaccurate. Raffaele has not provided any documentary evidence in support of his claim for an additional $3,108.76, or any information with respect to additional expenditures he made for the benefit of the Deceased. Accordingly, I find that the amount owed to Raffaele in respect of his $13,159.51 claim for reimbursement as an attorney pursuant to clause 2.01 of the Agreement is $3,116.67.
41Raffaele asserts that he also incurred an ambulance transfer expense of $132.72, though he has not provided any proof of payment of that expense. Should he produce proof of payment acceptable to Frank, the Estate should reimburse him for that expense as well. The parties are agreed that Raffaele should also be reimbursed for the $25 fee he paid to Dynamic Foot Care on behalf of the Deceased, for which he has provided proof of payment.
Compensation
42Regarding his time spent providing personal care services to the Deceased, Raffaele admits that he kept no log of the time spent. He also kept no records with respect to the decisions he made as an attorney for personal care in accordance with the SDA, s. 66(4.1).
43His informal accounts for the time spent are as follows:
Time Period: January 1, 2011 - August 22, 2016 Cost: 4 hours/day at a rate of $25/hour, 5950 hours over this 68 month time period $148,750.00
Time Period: August 24, 2016 - June 3, 2018 Cost: 4 hours/day at a rate of $25.00/hour, 2004 hours over this 21 month time period $50,00.00
Total: $198,850.00
44The descriptions of the services Raffaele claims to have provided are contained in two paragraphs in his affidavit in support of his Application. In the first, he states that he provided “hands on” personal care for his father on all evenings, overnights and mornings while they lived together in the Northwood Property until November 2014 when the Deceased moved into an assisted living centre, and from there, in 2015, to Mackenzie Health Centre, and then, later in 2015, to Cummer Lodge, where the Deceased passed away. Raffaele deposed that he continued to provide personal care services to the Deceased once the Deceased was no longer living with him. In the second paragraph of his affidavit, Raffaele states that for the seven years prior to the Deceased’s death, he attended to his father’s needs by “helping to feed, wash, shave and groom [the Deceased] and in shopping for and generally caring for [his] needs.”
45Raffaele asserts that caring for his father as an attorney for personal care in accordance with the Deceased’s wishes was “necessary, desirable and reasonable because in addition to it being what the Deceased wanted, it improved the Deceased’s health and permitted him to live independently and with dignity in his home for as long as possible in accordance with his wishes.”
46In determining an award of compensation for an attorney for personal care, the court is guided by the overarching principles of reasonableness and proportionality: Re Brown, [1999] O.J. No. 5851 (ONSC) at para. 4(g). In the same case, the court held, at para. 4(d), that compensation for legitimate services may be awarded, provided there is sufficient evidence about the nature and extent of the services provided and evidence from which a reasonable amount can be fixed for compensation. The court also held, at para. 4(h)(i), that the reasonableness of the claim for compensation will be determined by the court in each case, bearing in mind, among other things, the need for the services, the nature of the services provided, the qualifications of the person providing the services, the value of such services, and the period over which the services were furnished. There must be some evidentiary foundation to support the claim for compensation.
47In my view, Raffaele’s claim for compensation cannot succeed because it lacks an evidentiary foundation, and he has not shown his claim to be demonstrably reasonable.
48Frank does not dispute that Raffaele provided personal care services to the Deceased, as did Frank. However, apart from Frank’s acknowledgement of Raffaele’s services, there is no evidence to corroborate Raffaele’s claim. In particular, there is no independent evidence to support the time spent, or the nature of the services provided. Such evidence would not have been difficult to obtain as Raffaele was, according to the record, providing personal care services simultaneously with other caregivers who could have provided such evidence. Raffaele deposed that sometimes he took time off work to care for the Deceased, but he has provided no independent verification of his absences from work. Apart from Raffaele’s own evidence of missing work to look after the Deceased, there is no evidence of any lost opportunity cost to Raffaele.
49There is no evidence of Raffaele’s qualifications to provide the care services he claims to have provided.
50Raffaele claims $25 an hour for four hours a day over a seven-year period. However, from at least 2013, the Deceased was receiving at least eight hours of care, six days a week from third-party caregivers. From 2014 until his death in 2018, the Deceased resided in hospital or a long-term care facility, where he received in-patient care and also paid for care from third-party caregivers, including Ms. Frita and Ms. Zhang. The majority of the Deceased’s care was provided by persons other than Raffaele and Frank.
51Based on the evidentiary record, I am not satisfied that Raffaele provided caregiving services for his father in excess of what a loving son living with his father, on a rent-free basis, in his father’s residence, would have provided out of natural love and affection. Raffaele’s services were not gratuitous, in the sense that Raffaele has lived in the Deceased’s residence for over fifty years without ever paying rent. In the Agreement, Raffaele agreed to make a contribution to the property taxes and insurance on the Northwood Property, where he lived with the Deceased, but he has not complied with that obligation prior to or since the Deceased’s death.
52Further, during the Deceased’s incapacity, Raffaele helped himself to his father’s property by writing cheques on the Deceased’s line of credit to himself and his construction company, and by mortgaging the Bolsover Property for his benefit alone.
53Raffaele’s claim for compensation came as a surprise to Frank, who deposed that he would have expected that he and Raffaele as attorneys for property would have agreed to such an expense before it was incurred on behalf of the Deceased. Raffaele did not raise this potential expense when the Agreement regarding the attorneys’ duties going forward was being negotiated. He raised it for the first time after he was served with Frank’s Application.
54Frank too provided personal care services to his father and is not seeking any compensation for these services. When the Agreement was prepared, considerable care was taken to articulate who would provide personal care services to the Deceased and what compensation each would be paid for doing so. No provision was made for personal care services provided by Raffaele. Further, the Agreement specifically provides that any additional care services, above those provided by Ms. Frita and Ms. Zhang, would need to be agreed to by both Raffaele and Frank. Frank was not asked to approve, nor did he approve, Raffaele as an additional paid caregiver.
55In conclusion, there is an insufficient evidentiary basis on which to calculate the value of the services Raffaele may have provided to the Deceased and the reasonableness of the amount claimed. Accordingly, Raffaele’s claim for compensation must be denied.
Frank’s Application
56Frank asserts that Raffaele should be removed as an Estate Trustee of the Estate because he has breached the terms of the Agreement and he seeks to bring actions against the Estate, personally, and on behalf of others.
57Frank asserts that these facts demonstrate that Raffaele is in an irreconcilable conflict of interest. The Deceased’s last will and testament requires decisions to be made by Frank and Raffaele jointly. Raffaele, in asserting these claims against the Estate is, in essence, asserting these claims against Frank and himself.
Law
58Rule 14.05(3)(c) of the Rules provides that an application may be brought for the removal of one or more executors, administrators or trustees.
59Subsections 37(1) and 37(3) of the Trustee Act, R.S.O. 1990, c. T.23 permit this court to remove the personal representative of an estate on any ground upon which the court may remove any other trustee, and an application seeking such removal may be made upon application by any executor complaining of the conduct of a co-executor. The power to remove an Estate Trustee arises from the court’s inherent jurisdiction: Radford v. Radford Estate, 2008 CanLII 45548 (ON SC), [2008] O.J. No. 3526 (ONSC) at para. 103.
60A trustee may be removed where there is an obvious conflict of interest between the trustee’s interests and his duties as trustee or where he must inevitably weigh his personal interests against the interests of the beneficiaries: Rose v. Rose, (2006) 81 O.R. (3d) 340 (ONSC) at para. 70, Evans v. Gonder, 2010 ONCA 172 at paras. 26 and 46.
Analysis
61It is well settled that the testator’s decision as to an Estate Trustee’s appointment will not be lightly interfered with.
62However, removal of an Estate Trustee is warranted where the proper administration of an estate becomes improbable because of the actions of the subject trustee having regard to the interests of a particular or all of the beneficiaries: Re Consiglio, 1973 CanLII 681 (ON CA), [1973] 3 O.R. 326 (Ont. C.A.) at para. 6.
63Frank asserts that Raffaele has demonstrated that he is in a conflict of interest and that he will put his interests ahead of the Estate by improperly obtaining benefits that were not provided for in the Agreement or the Deceased’s last will and testament. Despite his obligations under the Agreement to pay expenses and make contributions relating to the Northwood Property, where he continues to live rent-free, the property taxes for the Northwood Property are now being paid out of the net proceeds from the sale of the Cremorne Property, which are Estate funds. This is a benefit to Raffaele that is not shared equally with Frank.
64Frank also submits that Raffaele is bringing claims against the Estate, on behalf of caregivers, without any authority, other than what Raffaele describes as a “moral obligation.” Such conduct is not in the interests of the beneficiaries of the Estate. Further, Raffaele has sued the Estate for interest he alleges is owing to him as a beneficiary of the Estate for purported delays in the administration of the Estate.
65In Gabriele Estate v. Gabriele, 2015 ONSC 6035 at para. 24, held it will remove the trustees where there was “an obvious conflict between their duties as trustees and their personal interests.” I find that Raffaele finds himself in this very position. As a claimant against the Estate for monies he asserts are owed to him, he cannot impartially put the interests of the beneficiaries ahead of his own, nor can he properly weigh his interests as against the beneficiaries’ interests. A trustee should not ever be in that position: Orenstein v. Feldman, [1978] O.J. No. 630 at para. 16. The duty of an Estate Trustee is to the beneficiaries.
66Misconduct is not a necessary requirement. The Court of Appeal in Consiglio at para. 6 held that “the Court is justified in interfering, and indeed required to interfere, when the continued administration of the trust with due regard for the interests of the cestui que trust has by virtue of the situation arising between the trustees become impossible or improbable.” This court has found that it is enough that there is evidence that the Estate Trustee’s continued involvement would exacerbate the existing mistrust and disharmony and would be detrimental to the interests of the beneficiaries: Borisko v. Borisko, 2010 ONSC 2670 at paras. 6-7 and Radford v. Radford Estate, 2008 CanLII 45548 (ON SC), [2008] O.J. No. 3526 at para. 104. There is significant distrust between Frank and Raffaele. They could not even agree on the management of an Estate bank account. The funds that would otherwise have been placed in an Estate bank account are held in a trust account by a lawyer.
67In Oldfield v. Hewson, [2005] O.J. No. 375, the court removed an Estate Trustee where the protracted conflict, the hostility and distrust between the Estate Trustee and the beneficiaries prevented them from “working in harmony”, which made it impossible to exercise the discretion given to him under the will.
68Quite apart from Raffaele’s misconduct as an attorney, which is not relevant to his removal as an Estate Trustee, there is evidence of Raffaele’s misconduct as an Estate Trustee. He has attempted to commence a legal proceeding as an Estate Trustee without the consent of his co-Estate Trustee; he has attempted to bring a claim against the Estate as a beneficiary of the Estate; he has attempted to bring a claim against the Estate on behalf of alleged creditors of the Estate in respect of whom he admitted he had no agency relationship; and he has failed to arrange for the appraisal of the Deceased’s jewelry, which he agreed to do. Under cross-examination, Raffaele acknowledged that, in advancing a claim against the Estate, he was effectively suing himself. Despite the fact that the claims against the Estate were not properly constituted, they provide convincing evidence of conflicts of interest. The conflicts of interest put Raffaele in a position in which his continuance in the administration of the Estate would be detrimental to the due execution of the trust created in the Deceased’s last will and testament. It would be difficult for him to act impartially and in the interests of both beneficiaries of the Estate. Under these circumstances, he should be removed as a trustee: Rose, at para. 70.
69Despite the deficiencies in Raffaele’s purported claims, Frank was required to respond to them, which resulted in a delay in the administration of the Estate and additional cost to the beneficiaries. It is apparent that there is a high level of distrust between these brothers and, based on Raffaele’s reaction to Frank’s Application, there is little hope that this mistrust could be overcome in a way that would allow them to work co-operatively to complete the administration of the Estate. Removal of an Estate Trustee should only occur where there is no other realistic course of action to follow: Crawford v. Jardine, [1997] O.J. No. 5041 at para. 18. I do not see an alternative realistic course for Frank and Raffaele to successfully administer the Estate. Accordingly, I find that it is appropriate that Raffaele be removed as an Estate Trustee of the Estate.
70Frank submits that it is not necessary that a neutral Estate Trustee be appointed to administer the Estate, in the place of Raffaele, which would result in delay and additional cost to the beneficiaries. Frank submits that, if given the opportunity, he would act promptly to administer the remaining Estate assets with a view to maximizing the value for both beneficiaries and remain accountable to Raffaele. He would not charge any executor’s compensation. I agree that the appointment of a replacement Estate Trustee should not be required.
Directions Regarding the Administration of the Estate
71Frank seeks direction from this court as to the appropriate calculation of the beneficial interests in the Estate.
72Based on the record and the submissions of counsel, the parties have agreed that the following amounts shall be paid to Frank out of Raffaele’s one-half interest in the Estate:
$230,725.83 for the amount of the judgment on the Bolsover Property, further to the Agreement (less the $25,000 partial distribution made to Frank in the Justice Conway Order); and
$21,916.62 to and including March 31, 2021, plus $416.66 per month from April 1, 2021 up until the sale of the Northwood Property on account of the contributions owing by Raffaele pursuant to the Agreement.
73Frank also seeks reimbursement for $91,027.07 of expenses he, personally, or his company, Sasso Auto Consulting, paid on behalf of the Deceased or the Estate. These expenses are set out in an attachment to Frank’s affidavit, dated January 29, 2020, in support of his Application. Included in this total are the $20,000 referred to in clause 2.01 of the Agreement and the $40,000 referred to in clause 2.06 of the Agreement, both being amounts that Raffaele agreed would be paid to Frank out of Estate assets. Notwithstanding that in his cross-examination, Raffaele agreed that the $91,027.07 was owing to Frank, he now argues that the total should be reduced by $6,102 for accounting fees relating to the mediation. Raffaele submits that this amount is included in the $20,000 or the $40,000 amount owing to Frank pursuant to the Agreement. Frank submits that the $6,102 was incurred for forensic accounting expenses, which were not contemplated by the Agreement, at clause 2.01, which deals with reimbursement to Frank from the Estate for funds he provided “to assist Vincenzo’s financial needs”, or at clause 2.06, which deals with a payment to Frank to “equalize expenses relating to the care of Vincenzo Sasso.” Raffaele has not provided any persuasive evidence in support of his allegation. Accordingly, I find that Frank is entitled to $91,027.07. Frank has provided documentary evidence in support of the payments he made and in respect of which he is seeking reimbursement.
Disposition
74An order shall issue in the form attached hereto.
Costs
75Frank has succeeded in obtaining an order dismissing Raffaele’s Application and has succeeded in obtaining the orders he sought in Frank’s Application. As the successful party, Frank is entitled to his costs of both Applications. The parties have exchanged costs outlines and are strongly encouraged to agree on the matter of costs. If they cannot, Frank may make written submissions limited to three pages (excluding offers to settle, if any) within ten days of these reasons, and Raffaele may make written submissions limited to three pages (excluding offers to settle, if any) within 10 days thereafter. If written submissions are not received within the timelines, the matter of costs will be deemed to have been resolved.
Dietrich J.
Date: May 11, 2021