COURT FILE NO.: CV-21-239-00ES
DATE: 2021-05-04
SUPERIOR COURT OF JUSTICE-ONTARIO
IN THE ESTATE OF Ursula Boost, deceased
RE: BARBARA MUNRO, Applicant
AND:
THOMAS HENRY THOMAS, Respondent
BEFORE: Gibson J.
COUNSEL: Jordan Green, counsel for the Applicant
Caitlin W. McIntyre, counsel for the Respondent
HEARD: March 23, 2021
ENDORSEMENT
Overview
[1] Ursula Boost (“the Testator”) passed away on October 28, 2019. This matter involves a dispute between the Applicant Barbara Munro (“Barbara”), the Testator’s daughter, and the other beneficiaries of the estate. This is ultimately a dispute about trust which, as seems so often to be the case, involves at its heart a dispute amongst siblings about a family cottage.
[2] The Testator had four children, including the Applicant. In her last Will and Testament dated March 25, 2004, she appointed her son-in-law Thomas Henry Thomas, the Respondent (“Thomas”), as Estate Trustee. While he has not applied for or been granted probate, Thomas has held himself out as the sole executor and acted in this capacity, including the distribution of assets.
[3] The Will provides that the beneficiaries and their interest in the estate are as follows:
a. Barbara-Anne Munro (10%)
b. Monika Ursula Thomas (25%)
c. Carl Robert Boost (25%)
d. Markus Richard Boost (30%)
e. Grandchildren (10%)
[4] The Applicant contends that the Respondent has not been forthright with the provision of information about the estate to the beneficiaries. By her Notice of Application, dated February 16, 2001, Barbara seeks an Order providing for the following relief:
a. That the named executor and Respondent produce full bank records of the deceased, including those from April 1, 2013 to the present;
b. That the Respondent produce full and complete medical records of the deceased, including, but not limited to those maintained by the nursing home where the deceased resided;
c. That the Respondent provide by way of affidavit, an explanation as to all gifts which he claims the deceased made by way of property during her lifetime, including, but not limited to, those relating to the deceased’s TFSA, the waterfront property located at Turkey Point, the proceeds of the sale of the principal residence, and other cash assets;
d. The named executor, being the Respondent, submit to an examination under oath;
e. The named executor, being the Respondent, submit to cross-examination on his affidavit dated October 16, 2020; and
f. Costs as assessed.
[5] The Respondent resists the Application and asks that it be dismissed. He submits that the demands being made by the Applicant are not consistent with the obligations of the Respondent to account for his dealings with the estate, as those assets all fell outside of her estate, or, in the case of the cottage, were dealt with years before the Testator’s death, while she lived independently in her own home, taking care of her own health and finances. He submits that the issues raised, including the issue of capacity and undue influence, as well as the relief being sought by the Applicant, all fall outside the scope of this Application under Rule 74.15 of the Rules of Civil Procedure. Given the broad scope of the demands within this Application, he submits, including the demands for particulars of assets passing outside the Estate by inter vivos disposition or beneficiary designation, this is at heart an objection as to the Respondent’s Accounting of the Estate. In particular, he suggests, the Applicant is objecting to the Executor’s reporting of assets falling into the Estate. The proper course of action for such an objection, he submits, is through the forcing of a Passing of Accounts.
Issues
[6] The Applicant frames the issue for the Court as whether Thomas, as executor de son tort of the Estate, is obligated to report to the beneficiaries information in his possession regarding the nature and value of the estate assets which make up the Estate. The Respondent says the Applicant’s claims are overbroad and overreaching, and rather frames the issue for the Court as to whether the Court should permit the Respondent to proceed to a formal Passing of Accounts without an Application for a Certificate of Appointment of Estate Trustee with a Will.
Facts
[7] The Respondent was duly appointed as the sole executor for the Estate of Ursula Boost, Deceased, when her Will was originally created on March 25, 2004 (the Will). The Will gives the Respondent the authority to act as the Executor of the Estate of Ursula Boost. Probate was not required as there were no real property assets within the Estate as at the date of death, and probate was not required for any of the accounts held in the deceased's name as at the date of her death. The Respondent says that this would have led to unnecessary costs for the beneficiaries, and the total value of the remaining assets did not warrant this.
[8] No action to force the Respondent to obtain a Certificate of Estate Trustee has been suggested by the Applicant prior to this Application, and there have been no prior allegations of the Executor acting without appointment. There have been no prior objections with respect to the validity of the Will, or to Thomas's appointment in it, prior to this Application.
[9] At no point during her lifetime did the Testator require the intervention of, or make use of the assistance from, a Power of Attorney for Care or Property. The Testator made her own medical and financial decisions throughout her lifetime. While the Applicant has raised a concern that her mother might have experienced dementia in the latter phase of her life, there is no independent evidence of this before the Court.
[10] The Testator had disposed of the two pieces of her real property, owned within her lifetime, years before the date of her death: the cottage near Turkey Point, and her principal residence at 237 Waterloo Street North in Cambridge, Ontario. The cottage was disposed of in November of 2011, when the Testator elected to transfer it to two of her children, Carl Boost and Monika Thomas. The Testator made an agreement with Carl Boost and Monika Thomas that they pay to Markus Boost the amount of $33,333.33, or approximately one third of the value of the cottage, on the date of her death. The Testator did not add her children on title jointly, but rather transferred full title to Carl Boost and Monika Thomas. Since the date of this disposition, Carl Boost and Monika Thomas have taken care of all expenses related to the cottage including property taxes and maintenance. As of the date of the Testator's death, Markus Boost was provided $33,333.33 with respect to the cottage property in accordance with the terms of the Agreement between Carl Boost, Monika Boost and the Testator.
[11] The principal residence was disposed of two years later in April of 2013 by the Testator to a third-party purchaser.
[12] At that time the Testator entered into a lease for an apartment, Unit #311, 515 Langs Drive, Cambridge, Ontario, where she continued to reside independently, taking care of her own healthcare and finances, until October of 2015. In October of 2015, the Testator made the independent and voluntary decision to place herself in long-term care due to her physical ailments. From the time of her execution of the Will until her death, Thomas says, the Testator remained mentally functional and handled all aspects of her finances without assistance from her family.
[13] From the date of the subject Will in 2004, to the date of death in 2019, the Testator took care of all of her own housing, health care, and finances. Shortly after the disposition of the cottage in 2011, Dr. C. Cameron assessed the Testator's physical health and mental capacity for the purpose of completing her Disability Tax Credit Certificate in 2012. At this time, Dr. Cameron found the Testator to have mental capacity.
[14] The Respondent says that all of the information requested by the Applicant which they were entitled to demand was provided to the Applicant within one year from the date of the Testator's death.
[15] On October 26, 2020, the Respondent provided a fulsome accounting of all of the assets that fall into the Estate, using proper court format, in lieu of a formal passing of accounts. The Respondent says that he had previously attempted a formal passing of accounts but had been advised that a Certificate of Appointment would be required for this. A certificate was not necessary for the administration of the assets within the subject Estate, he submits, and the value of the Estate did not warrant the corresponding cost to the beneficiaries. The Respondent also advised the Applicant that one could still be forced. The informal accounting was also updated very recently on February 22, 2021, to include the finalized German tax return information, as well as legal costs to date.
[16] At no point was the Applicant advised by the Respondent that all of the estate assets were held jointly with surviving individuals. The Respondent did advise the Applicant that the TFSA had named beneficiaries, and therefore fell outside of the Estate. The Respondent also did further advise that the Executor had disposed of all other assets, including real property, inter vivos during her lifetime. There were no jointly held assets owned by the Testator which passed outside of the Estate by right of Survivorship.
[17] The Applicant refuses to accept that the TFSA does not fall within the Estate. The Applicant and her counsel were informed that the inclusion of the TFSA by Kinder Lawyers was in error. This mistake was not made in bad faith, the Respondent now insists, and was an administrative error on the behalf of the Respondent's counsel. I accept that this was so.
[18] The Applicant, by her own admission, was not there for the Testator at the end of her life and did not have a close relationship with the Testator. There is no evidence that the Applicant attended to visit the Testator prior to her death. Having visited the Testator in person regularly prior to her death, the Respondent advises that he did not witness any of the problematic behaviour described by the Applicant in paragraphs 23 and 24 of her Affidavit, sworn January 27, 2020. I accept that this was the case.
[19] There has been much correspondence between counsel. The Respondent, through his counsel, has attempted to explain his position with respect to the assets of the Estate, and his duties to account. The Respondent has remained firm in his position that the extent of the accounting demanded by the Applicant reaches beyond her rights as a beneficiary, and further includes assets that are not properly subject to accounting by the Executor and which he has not dealt with during his administration, as these particular assets fell outside of the Estate on or prior to the date of death.
Analysis
Duty to Account
[20] As the Executor of the Estate of Ursula Boost, deceased, the Respondent has an obligation to account for his dealings with the assets of the estate. This duty is set out under the Rules of Civil Procedure, including the associated responsibilities.
[21] Rule 74.17 specifically sets out the assets required to be accounted for by the Executor in a proper accounting of the Estate including, without limitation: a statement of assets at the date of death; an account of all money received; and an account of all money disbursed, including payments for trustee's compensation, and payments under court order. There is no requirement under the Rules for the Executor to account for assets falling outside of the Estate that were passed inter vivos, for tax planning, estate planning, or other purposes.
[22] It is beyond dispute that an executor has an obligation to fully and fairly report to the beneficiaries information as to estate assets. An estate trustee must act in an open and transparent manner. A beneficiary of an estate is entitled to compel an executor to produce an estate accounting. As Braid J. stated in Class v. Smith, 2018 ONSC 623 at para. 51:
“A trustee has an obligation to keep proper accounts, and to keep a complete record of his activities. He must be in a position, at all times, to prove that he administered the trust prudently and honestly.”
[23] A guardian of property has a fiduciary obligation to carry out his or her obligations with honesty and due care and attention: Aragona v. Aragona, 2012 ONCA 639.
[24] I accept that the Respondent in the present case is acting as an executor de son tort.
[25] The Respondent has provided the Applicant with a detailed accounting of the assets of the Estate as at the date of death on October 28, 2019. The Respondent has further provided the Applicant with a detailed accounting of his dealings with these assets throughout the course of his administration of the Estate. The Respondent has investigated the Testator's assets and the intentions behind her inter vivos dispositions and was satisfied with respect to these. This has been articulated to the Applicant by the Respondent through correspondence between their counsel.
Capacity and Inter Vivos Gifts
[26] One of the concerns raised by the Applicant concerns the inter vivos disposition of the cottage property, as well as the designation of beneficiaries for the TFSA. There is a more onerous standard of proof for circumstances where assets are left jointly to a surviving adult child, inter vivos, as there is a presumption of resulting trust: Calmusky v. Calmusky, 2020 ONSC 1506, para 32.
[27] A lower degree of influence is required to set aside inter vivos dispositions than testamentary dispositions. Any influence in the eye of the law that could be viewed as coercion, would constitute undue influence: Banton v. Banton (1998), 1998 CanLII 14926 (ON SC), 164 D.L.R. (4th) 176 (Ont. Ct. (Gen. Div.)).
[28] None of the assets disposed of outside of the Will, including the TFSA, the primary residence, and the cottage, were held jointly with the Testator. The Testator rather named beneficiaries and fully disposed of her real property prior to her death. Therefore, the facts of this matter can be distinguished from the noted caselaw in the Applicant's Factum discussing resulting trusts and inter vivos gifts, Calmusky and Pecore v. Pecore, 2007 SCC 17, as these cases speak to the issue of joint property held between a Testator and an adult child.
[29] In the present matter, the Testator’s decision to fully transfer these assets out of her own name speaks to her intention that these assets be gifted over fully to the recipients during her lifetime, and serves as evidence against the contention that she intended for these assets to eventually benefit the Estate. The transfer of the cottage was not a purely gratuitous one, as a promissory note was entered into, and duly performed, by Carl Boost and Monika Thomas. Further, no party can receive an order by giving their own evidence on matters occurring before the death of a testator, unless this evidence is also corroborated by other material evidence: Calmusky v. Calmusky, 2020 ONSC 1506, para 32-33. While the Respondent has presented material evidence to support the assertion that the inter vivos transfers should be upheld, the Applicant has not raised any such material to support her allegations.
[30] There is evidence of capacity for the Testator throughout all times relevant to this matter. After the Testator's Will was prepared in 2004, and the disposition of the cottage property occurred in 2011, the Testator was shown to have capacity through a medical assessment by her physician. There was no joint tenancy between the Testator and any other party as at the date of her death. The Testator named beneficiaries for the relevant instrument, and disposed of her cottage of her own volition, in exchange for the promises made by Carl Boost and Monika Thomas under a promissory note. Further, the Will itself evidences the Testator's intention not to treat all beneficiaries with an even hand, with respect to the shares allotted to each.
Probate and formal passing of accounts
[31] There is no formal obligation to submit the estate to Probate and obtain a Certificate of Estate Trustee. The decision as to whether or not to bring the Estate to Probate is based on a number of factors, including the size of the Estate. The Respondent did not apply for a Certificate of Appointment as, due to the number of beneficiaries, the cost of Probate, and the assets available within the Estate, to do so seemed unnecessary and against the best interests of the beneficiaries. A Formal Passing of Accounts was considered by the Respondent, but the requirement of a Certificate of Appointment dissuaded the Respondent in the best interest of the beneficiaries from pursuing this. As of the date of this application there has been no attempted action by the Applicant to compel the Respondent to complete a Formal Passing of Accounts.
[32] The Respondent has provided the Applicant with two separate informal accountings. For the first of these two accountings, the Respondent provided the Applicant with bank records to prove assets as of the date of death, and to show his dealings with the assets of the Estate during administration. The latter was provided just prior to the commencement of this Application. The Respondent has sworn an additional copy of this secondary informal accounting, in proper court format, for the purposes of this Application.
[33] The Respondent has investigated the assets of the Estate, and provided an accounting of all of those assets falling into it as at the Testator's date of death, as well as his dealings with it, all in accordance with the Executor's duties under Rule 74.17 of the Rules. Further, upon request, the Respondent provided the Applicant with documentary evidence to support this accounting, including a statement of the Estate assets as at the date of death.
Conclusion
[34] I find that as at the date of this Application, the Respondent has administered and accounted for the Estate in a full and complete manner, while bearing in mind the following: evidence of the Testator's ongoing capacity throughout all times relevant to this Application; the lack of joint property being held by the Testator as at the date of her death, therefore leading to a presumption of a resulting trust; the fact that the disposition of the cottage was not purely gratuitous; the fact that the TFSA passed directly outside of the Estate via the named beneficiaries thereof; and given the length of time between the disposition of the cottage property and the date of death.
[35] The demands being made by the Applicant fall outside of the Respondent's accounting obligations, and Applicant's rights as a beneficiary to the Estate.
[36] The allegations made by the Applicant with respect to capacity, undue influence, and presumption of resulting trust, are unsupported by evidence. The informal accounting provided thus far evidences that the Respondent has thus far administered the Estate in the best interest of all of the beneficiaries, and with a careful mind to the intentions of the Testator, as set out in her Will. In light of the evidence of capacity throughout the Testator's life, with respect to both her financial and her health care decisions, there is no need for an invasive forensic accounting of her daily personal dealings.
[37] There are reasonable limits to the extent of an Order that should be made pursuant to Rule 74.15(1). Such an Order is discretionary. It should not be made an instrument of potential abuse of a party arising from the hostility, suspicion or paranoia of another party.
[38] The extent of the relief requested by the Applicant in this case is excessive and not warranted by the facts. There is insufficient evidentiary foundation before me to lead me to conclude that an Order should be made for bank records of the deceased as far back as 2013, or that the privacy of the deceased should be infringed by an order compelling release of all of her medical records. Or that the Respondent should be made to swear another affidavit and be subject to cross-examination on it.
[39] If an Executor will not voluntarily submit to a formal Passing of Accounts, irrespective of the reason, beneficiaries have the right to compel one. Where there are any concerns with the accounting presented by the Executor, all beneficiaries of the Estate have the right to file an objection with respect to these, at which time a hearing will be held. If the issues at hand are substantial enough to warrant a trial, one will be ordered, and the matter can be properly dispensed in accordance with the law: Rules 74.18(7), (11.5), (13.1).
[40] In some cases where a Passing of Accounts has proceeded to a hearing, full costs have been ordered against beneficiaries who have unreasonably objected to a Passing of Accounts. This preserves the assets of the Estate and prevents a Trustee who has acted in good faith with respect from being unduly subject to personal costs. In particular, where a Trustee has given reasonable explanation to the beneficiaries of the assets falling inside and outside of the Estate, has provided a legal explanation for their position, and where there is evidence of the Testator' s intentions, beneficiaries who challenge such a Trustee's accounting without good reason, or who try to force them to pursue assets that lawfully fall outside of the Estate, can be held liable for the Executor's costs: Re: In the Estate of Kenneth Pochopsky, deceased, (2017] O.J. No. 1514, at paras 33-36.
[41] The most expeditious and efficient course of action appears to me to be to permit the Respondent to proceed to a formal Passing of Accounts without requiring the time and cost associated with an Application for a Certificate of Appointment.
Order
[42] The Court Orders that:
a. the Application bearing Court File No. CV-21-00239-00ES, and the Applicant's claims for relief within the same, is dismissed;
b. the Estate Trustee, Thomas Henry Thomas, may proceed to a Formal Passing of Accounts without the requirement of obtaining a Certificate of Appointment of Estate Trustee with a Will; and,
c. the Estate Trustee, Thomas Henry Thomas, shall be permitted to recover reasonable and appropriate costs from the Estate with respect to the Passing of Accounts.
[43] In the present circumstances of the COVID-19 pandemic, this Endorsement is deemed to be an Order of the Court that is operative and enforceable in its present form, without a formal typed Order. Approval of the form and content of this Order by the Applicant is dispensed with.
Costs
[44] The parties are encouraged to agree upon appropriate costs. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs) by email to my judicial assistant. The Respondent may have 14 days from the release of this decision to provide his submissions, with a copy to the Applicant; the Applicant a further 14 days to respond; and the Respondent a further 7 days for a reply, if any. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves. If I have not received response or reply submissions within the specified timeframes after the Respondent’s initial submissions, I will consider that the parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.
M. Gibson J.
Date: May 4, 2021