COURT FILE NO.: CV-20-1847
DATE: 2021 07 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PATRICIA ELAINE McLAUGHLIN, Applicant
AND
JOANNE LENORE McLAUGHLIN et al, Respondents
BEFORE: TRIMBLE J.
COUNSEL: For the Applicant, Patricia McLaughlin: R. Douglas Elliott, delliott@cambridgellp.com and Joseph Figliomeni jfigliomeni@cambridgellp.com
For the Respondents, Joanne Lenore McLaughlin and Julie Marie McLaughlin: Ian Hull, Ihull@hullandhull.com and Rebecca Rauws, Rrauws@hullandhull.com
For the Respondent Stuart Owen McLaughlin: Allan Coleman, acoleman@osler.com
For the Respondents Stephen Rockett, Peter Paauw and Stuart Owen McLaughlin, in his capacity as Trustee of the S. Bruce McLaughlin 2001 Family Trust: Melanie Yach, myach@airdberlis.com
For the Respondents 926100 Alberta Ltd., 926109 Alberta Ltd., Peel Financial Services Ltd., Halton Hills South Property Corp., 2147957 Ontario Inc, and 1355754 Alberta Ltd.: David Chernos, dchernos@cfscounsel.com and Andrew Finkelstein, afinkelstein@cfscounsel.com
For the Respondent 3 Angels Holdings Limited: Daniel Murdoch, dmurdoch@stikeman.com
For the proposed successor estate trustees, Laurel McLaughlin and James Morrison: Matthew Flemming, matthew.fleming@dentons.com, Kathryn A. McCulloch, kathryn.mcculloch@dentons.com, and John Lorne MacDougall, QC
HEARD: 31 May 2021 by Zoom Videoconference
ENDORSEMENT
The Motion
[1] The Applicant, Patricia McLaughlin, seeks an order a) affirming the status of Stuart Owen McLaughlin as an estate trustee for the Estate of Stuart Bruce McLaughlin, b) removing Julie McLaughlin and Joanne McLaughlin as estate trustees for the Estate of S. Bruce McLaughlin (“the Estate”) and compelling them to pass their accounts, c) appointing James Morrison and Laurel McLaughlin as successor trustees for the Estate such that the three co-trustees of the McLaughlin Estate are Stuart, James and Laurel.
[2] Other relief was requested but not addressed at the motion. Those issues may be brought back on later.
[3] Julie and Joanne McLaughlin seek to appoint as trustees of the Estate either the Bank of Nova Scotia (Scotiatrust) or John Campion.
[4] The residual beneficiaries, I am told, have been put on notice. The OCL has been notified on behalf of the residual beneficiaries who are minors, and the OCL is not participating.
The Issue
[5] The sole issue on this motion is who is the most appropriate replacement estate trustee(s) or who should be appointed estate trustee(s) during litigation in the circumstances of this case?
Background
[6] This Application involves a dispute between Patricia McLaughlin, the widow of the late Bruce McLaughlin and their children: Stuart, Julie, Laurel, and Joanne, over the McLaughlin Estate's failure to pay to Patricia a specific bequest of $5,000,000 and income from the Estate, as provided for in Bruce McLaughlin’s Will.
[7] For ease of reference only, I refer to the personal litigants by their first names since they share the same last name.
[8] When Bruce died in July 2012, he left a sizeable and very complicated estate. He had Primary and Secondary Wills and the assets of the Estate are held in a complex web comprising a Family Trust, holding and operating corporations and other trusts, both in Canada and the United States, the complete details of which are unnecessary for the purposes of this motion.
[9] The matter is further complicated by a high level of distrust and enmity between various members of two family camps: Patricia and two of her children, Stuart, and Laurel on one side; and Julie and Joanne, Patricia and Bruce’s two other children, on the other.
[10] Patricia believes that Julie and Joanne, for 12 years, have denied her the bequest that Bruce made. Instead, they have operated the Family Trust and the Estate and the complex web of companies as their own fiefdom, and instead of paying her income from the estate, they paid her a monthly stipend as a “loan” against her entitlement under Bruce’s Will. Patricia is 94 and wishes to receive her bequest.
[11] Julie and Joanne believe that the real litigant in this matter is Laurel, the black sheep of the family. Laurel had Bruce had a significant disagreement following which Bruce excluded Laurel from his Will. Laurel was estranged from the family for 20 years, but recently reconciled with Patricia and Stuart.
[12] Bruce was a successful real estate developer who developed large tracts of land in Peel and Halton Regions in Ontario, Grouse Mountain in B.C., and properties in Texas, among others.
[13] From the early 1980’s until approximately 2010, Bruce carried out various corporate restructuring and estate planning measures, including the creation of the "2001 Family Trust", and the preparation of various Primary and Secondary Wills. During this process significant wealth was purportedly distributed among the four children during Bruce’s lifetime.
[14] Patricia says that beginning in 2002, Bruce began to demonstrate signs of dementia. At that time, Joanne, Julie, and Stuart began to manage Bruce's businesses pursuant to a Power of Attorney for Property, dated October 22, 2001.
[15] In his last Primary Will dated September 16, 2008, Bruce appointed Joanne, Julie and Stuart as his estate trustees. Bruce left a specific bequest of $5,000,000 to Patricia, to be paid within 36 months of his death, and ordered that the residue of the Estate be held for Patricia's benefit. On Patricia’s death the residue was to be shared between Joanne, Julie, Stuart, and Laurel’s issue.
[16] In the 12 years since Bruce’s death, Patricia has received no money from the Estate or the 2001 Family Trust. Julie and Joanne have repeatedly told Patricia that Bruce's Estate lacked the liquid assets to pay Bruce's specific bequest to Patricia. Julie, Joanne, and Stuart have paid a stipend to Patricia from their corporation, 3 Angels, to meet Patricia's needs so that she has not had to encroach on her own assets in order to live. In addition, 3 Angels has paid for Patricia’s personal support worker/companion and home repairs. 3 Angels says that these payments are loans against what the Estate will eventually pay Patricia.
[17] Patricia says that Julie, Joanne and Stuart have benefitted from the sale of several valuable Estate assets including the Grouse Mountain Resort in British Columbia, resulting in each of Joanne, Julie, and Stuart each receiving approximately $60,000,000. Patricia has never been provided with an accounting or the financial statements for the Estate or the 2001 Family Trust, of which she is a beneficiary.
Procedural History
The Application and Urgent Motion
[18] Patricia commenced this Application in May 2020 following the procedure under the Chief Justice's Notice to the Profession for an urgent motion.
[19] I heard the first appearance in this matter, in writing, on 14 May 2020 based on Patricia's letter to the Court asking for an urgent motion. By endorsement dated 20 May 2020, I determined that the following issues raised in the Application were likely urgent (subject to an argument on the merits):
a) An accounting from the McLaughlin Estate and the 2001 Family Trust;
b) An order preserving the Estate assets and 2001 Family Trust property; and
c) An order for an interim disbursement of $500,000, and a monthly stipend of $25,000 per month to the Applicant, both of which will be credited as advances of any entitlement the Applicant has to funds from the Estate or the 2001 Family Trust.
[20] The balance of the Application must proceed in the normal course.
[21] The hearing of the three urgent issues on an opposed basis was originally scheduled for 31 August, but re-scheduled to 14 September, then 14 October 2020.
[22] By Endorsement dated 2 September 2020, I determined that the following preliminary issues were urgent as they had to be decided before the three urgent issues defined on 20 May could be decided:
a) Whether 214 Ontario and 1355 Alberta should be added as parties to the Application, and if so,
b) Whether 214 Ontario and 1355 Alberta are to be included in the "preservation order" that was defined as urgent in May.
[23] In my Reasons of 21 September 2020, I held that 214 Ontario and 1355 Alberta should be joined as parties and bound by the preservation order.
Other Litigation is Likely
[24] There is further litigation expected to be commenced with respect to the Estate and Family Trust, including applications to pass accounts (which are likely to be opposed) and an application for the opinion, advice, and direction of the court with respect to one of the assets of the Estate.
[25] As Julie and Joanne put it understatedly in paragraph 4 of their Factum on this motion: “What is clear is that there is no shortage of fighting amongst the members of the McLaughlin family. What is also clear is that there appears to be a complete loss of trust and respect amongst the family.”
7 October 2020 Agreement Adjourning the 14 October 2020 Motion
[26] By agreement dated 7 October 2020, the parties adjourned the urgent motion then returnable 14 October 2020 on terms. This Adjournment Agreement concerned the Estate’s indirect interest in a residential real estate development in Halton Hills, held as part of the web of companies Bruce created.
[27] 214 Ontario owned a 25% interest in 450 acres of land in Halton Hills that was being developed for residential use. 214 Ontario held the 25% interest as the trustee of the Halton Trust, the sole beneficiary of which is 926109 Alberta Ltd. Julie is the sole officer and director of 214 Ontario. 214 Ontario is wholly owned by 1355 Alberta, a company owned equally by Stuart, Julie, and Joanne. 1355 Alberta's sole asset is the one and only share of 214 Ontario. 926109 Alberta is wholly owned by Peel Financial Services Limited. The Estate owns several classes of shares in Peel Financial Services Limited. The Family Trust owns the balance of the shares of Peel Financial Services Limited.
[28] The terms of the Adjournment Agreement included:
a) Within 10 days of the closing of 214 Ontario’s sale of its 25% interest in the Halton Hills land development, or 31 January 2021, whichever came first, Julie and Joanne would resign as estate trustees and be replaced by David Steele;
b) If Mr. Steele was unwilling or unable to serve or resigned or was removed, the estate trustees would be decided by agreement or by the Court.
c) The parties would proceed to a mediation before Hon. Warren Winkler on 25 and 26 November 2020.
[29] The parties advise that the sale of the 25% interest in the Halton Hills development is set to close in August 2021.
[30] Julie and Joanne resigned effective 31 January 2021 following the Adjournment Agreement. Stuart resigned as trustee in May 2020. None of the resignations have been approved by the Court. Technically, they all remain estate trustees.
[31] For reasons unimportant to this motion, Mr. Steele refused to act as estate trustee. The parties convened a case conference to discuss the recent events and seek direction.
[32] At the Case Conference on April 8, 2021 I endorsed that the parties should put forward the names of proposed estate trustees, along with the proposed trustees’ signed consents to act. If the parties could not agree on who should be appointed, the matter would be the subject of a motion.
[33] Joanne and Julie proposed two potential replacement trustees: Scotiatrust and John Campion, both of whom signed consents to act.
[34] Patricia proposed Stuart and Laurel, and her brother, James Morrison as replacement trustees. The Responding Motion Record filed on behalf of Laurel and Mr. Morrison contained a consent signed by Laurel. The other two informed the Court that they consented to act.
[35] The parties have been unable to agree on which of the proposed options should be appointed.
The Law
[36] The Court’s authority to remove and replace estate trustees from sections 5(1) and 37(1) of the Trustee Act, RSO 1990, c T.23, which state:
Power of court to appoint new trustees
5 (1) The Superior Court of Justice may make an order for the appointment of a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. […]
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.
[37] Under these sections, the Court has a broad discretion that must be guided by the following principles:
a) The Court must have regard to the wishes of the deceased or settlor of the trust as expressed in or derived from the wording of the Will or the trust documents.
b) The Court should not appoint a person to be trustee with a view to favouring the interest of some of the persons with an interest in the trust, over the interests of the deceased or settlor or in opposition to the interest of others with an interest in the trust.
c) The Court in appointing a trustee will have regard to the question of whether the proposed trustee will promote or impede the execution of the trust.
(see: Assaf Estate (RE), 2008 CanLII 23489 (ONSC) at para 29; Re Jones Trusts, [1910] OJ No. 618 (ONHCJ) at para 20 citing Re Tempest (1886), 1 Ch. App. 485)
[38] Courts have also stated a preference for appointing as replacement trustees well educated individuals who have an interest in managing the Estate and have demonstrated sound judgment over institutional trustees (see: Re Heintzman, 1981 CanLII 1771 (ON HCJ); Sherbourne Estate (Re), [2005] OJ No. 2622 at para. 29).
[39] In cases of high conflict between the beneficiaries, replacement trustees should be as neutral as possible, and should not be seen to be allied with one camp or another (see: Widdifield on Executors and Trustees, 6th ed. (Toronto: Carswell, 2002), Chapter 15.3.1 citing Berg Estate, [1994] 2 E.T.R. (2d) 265), an approach which was also taken by the Court of Appeal in Re Bazos, 1964 CanLII 258 (ON CA), [1964] 2 O.R. 236-238, in the context of appointing an administrators pendente lite (Estate Trustee During Litigation).
The Positions of the Parties
1. Patricia McLaughlin
[40] Patricia argues that Stuart, Laurel, and Mr. Morrison should be the replacement estate trustees for the following reasons:
Replacement trustees are necessary, Stuart, Julie and Joanne having resigned.
Bruce’s intention was to have family members as estate trustees, not strangers. Laurel and Stuart are his children, and Mr. Morrison, his brother-in-law.
The administration of the Estate (namely, the payment of the specific bequest to Patricia) has not occurred because of an alleged insufficient liquidity in the Estate. This situation has persisted for 9 years despite the clear terms of the Will.
Stuart, Laurel and James have demonstrated their ability and willingness to act as replacement estate trustees. They are aware of the complex structure of the Estate and family group of companies and can begin acting immediately, without the necessity of a long learning curve. They have been acting as trustees of the Family Trust since 2020.
They have the necessary underlying industry expertise and the institutional knowledge of the family group of companies, given their background and the review thousands of pages of records that has already been completed in the context of their duties for the Family Trust.
2. Joanne and Julie McLaughlin
[41] Joanne and Julie argue that because the family is split into two warring camps, it is not appropriate for any members of either side to be replacement trustees. The only reasonable alternative to appointing combatants as replacement trustees is to appoint a neutral third party. Joanne and Julie urge the Court to appoint The Bank of Nova Scotia Trust Company ("Scotiatrust") or John Campion as replacement trustees.
3. Stuart McLaughlin
[42] Stuart supports Patricia. He notes that he is not asking to become a replacement trustee but is acquiescing to Patricia’s request.
[43] The other parties support one or the other of the family camps or take no position.
The Proposed Trustees
4. Laurel McLaughlin
[44] Laurel is a business and law school graduate, and career business-woman in real estate. For 20 years she worked in the family business with her father, was president of Peel Financial Holdings Ltd. (now known as 3 Angels Holdings Ltd.) and was involved in various corporate reorganizations between 1982 and her resignation from all companies in 1999. She has historical knowledge of the Estate’s assets. She has become educated in matters since 1999 helping her mother with the current litigation. She is not a beneficiary of the Estate although her children are. She is a trustee of the Family Trust.
[45] On the other hand, Laurel and her father parted company in 1999 following a significant disagreement following which he excluded her from the business then excluded her from his Will by deeming her to have predeceased him. She made it clear in writing at the time that she thought that she was being unfairly excluded from the Estate and Family Trust.
[46] Further, Laurel has said that she has serious questions with the validity of the McLaughlin Wills (yet she seeks to enforce it insofar as the $5 million bequest to Patricia). She is not a litigant but is allied with Patricia. Her support of Patricia is active as she has sworn affidavits in this litigation and made allegations against Joanne and Julie.
[47] Laurel is not a beneficiary of the Estate, but her children are beneficiaries of the Family Trust, and of the residue of the Estate after the payment of Patricia’s bequest and after her death.
[48] Laurel and Mr. Morrison are trustees of the 2001 Family Trust, which is involved in this litigation indirectly, and in that capacity will likely be an objector to the passing of accounts.
[49] Finally, Laurel was found in contempt by the British Columbia Court of Appeal in litigation in B.C. between Laurel and her companies, and companies owned by Joanne and Julie. She is a law school graduate that does not accept responsibility for her actions and will not accept that she was found in contempt beyond a reasonable doubt.
5. Stuart McLaughlin
[50] Stuart, too, is familiar with the family history and the issues involved in this litigation. He was a trustee of the Estate from Bruce’s death in 2012 until 15 May 2020 having been appointed by the Will. His resignation was never approved by the court. He has also been a trustee of the Family Trust.
[51] On the other hand, Stuart is a party to this litigation and will be party to the passing of accounts litigation. He was an estate trustee from 2012 to 2020, and for that time, is jointly and severally liable with Joanne and Julie for any improper conduct of the estate trustees.
[52] He is a director, officer and/or shareholder of 3 Angels, PFSL, HHSPC, 214 Ontario and 1355 Alberta (among others), against all of which Patricia makes allegations of possible impropriety and all of which are subject to the preservation order in this matter, which Stuart opposed.
[53] Stuart and his children are beneficiaries of the residue of the Estate after the payment of Patricia’s bequest and after her death.
6. James Morrison
[54] Mr. Morrison is Patricia’s younger brother and sole surviving sibling. He is a chartered accountant holding FCPA and FCA designations. He is a retired partner from Deloitte, having held senior leadership roles within that company. He has significant experience in trusts, and dealing with trust companies, banks, and acting as an estate trustee. He is neither a beneficiary of the Family Trust nor of the Estate. He has been a trustee of the Family Trust since July 2020.
[55] On the other hand, while Mr. Morrison has no direct interest in the Estate or the family trust, he is Patricia’s brother and may favour those who support Patricia in this litigation.
7. Stuart, Laurel and Mr. Morrison
[56] These three proposed replacement trustees have agreed that they must be appointed as a group. Neither will serve without the other two. Their position is that this court cannot “cherry pick” between them, this binding the Court’s hands in respect of appointing only one or two of them only. All three of them have now signed consents to act as replacement trustees, without condition, and without remuneration.
8. The Bank of Nova Scotia Trust Company ("Scotiatrust")
[57] The Bank of Nova Scotia Trust Company is the trust arm of a well-known Schedule A Canadian bank. No one raised any concern with the expertise of the BNS’s trust wing, Scotiatrust, to act as replacement trustee.
[58] On the other hand, Scotiatrust is a stranger to the family, the complex estate arrangements that Bruce made, and to the disputes. In order to familiarize itself with the complex estate arrangements at issue and to act as estate trustee, Scotiatrust will likely have to retain lawyers and accountants to advise it. This will take time. The sale of the 25% of the Halton development is set to close at the end of August.
[59] Further, Scotiatrust is a for profit entity. It will charge fees for its service at an estimated $12,000 per month. These fees will deplete the Estate, which, purportedly, has no liquidity. Scotiatrust would not be required to post a bond (s. 175 Loan and Trust Corporations Act). The same is true of a lawyer, such as Mr. Campion, whom I address below.
[60] Finally, Scotiatrust has only consented to act as an estate trustee during litigation, and its consent is conditional on “subject to review of the terms of the court order appointing Scotiatrust and to completing Scotiatrust’s due diligence by speaking with Deloitte, the accountants for the Estate”. In other words, it appears that Scotiatrust wishes to appoint itself only as estate trustee during litigation.
9. John Campion
[61] Mr. Campion is a well-known, well-respected lawyer in Toronto. He has broad experience in his many years at the bar including in matters involving trusts and estates matters. No one questioned his capacity or ability to be an estate trustee in this matter.
[62] Mr. Campion has been involved with litigation involving some of the parties and their companies. Joanne and Julie argue that this is an asset. He will not need much time to come up to speed with the remaining issues and players in this litigation.
[63] On the other hand, while Mr. Campion’s involvement in litigation tangentially related to this application gives him a certain familiarity with the issues in this application, it may be that his involvement in the tangential litigation means that Mr. Campion is not independent or disinterested.
[64] Mr. Campion acts as an arbitrator adjudicating various corporate and commercial disputes between Joanne and Julie and their companies on one hand and Stuart and his companies on the other. These proceedings appear to be taking place in Alberta. Patricia is not a party to those proceedings.
[65] In his capacity as arbitrator, Mr. Campion has heard and decided arbitrations which conflict with Patricia’s position in this proceeding and the interests of the Estate in this proceeding. For example, part of the relief Patricia seeks in this litigation is a declaration that money that Joanne, Julie, and Stuart advanced to her constituted a gift or alternatively parental support. She alleges that in Arbitration award no. 24 dated 28 September 2020, Mr. Campion found that the payments to Patricia were made as a loan. He has also made findings about Patricia’s financial independence and reserved the right to reduce support that Stuart, Joanne, and Julie agreed to provide to Patricia. Patricia was not a party to those arbitrations.
Analysis
[66] As indicated above, this family is divided into two camps (Patricia, Stuart and Laurel on one side, and Joanne and Julie on the other), each hostile to the other. Stuart, Joanne and Julie were all named estate trustees under Bruce’s Primary Will and so acted from Bruce’s death on 24 July 2020. Stuart resigned on 15 May 2020 and Julie and Joanne resigned on 31 January 2021 pursuant to the Adjournment Agreement. The effect of these resignations is that from May 2020 until 31 January 2021 Julie and Joanne were the only de facto or active trustees, and since 31 January 2021 there have been no de facto or active trustees.
[67] The Estate will shortly be liquid. The 25% interest that was held by 214 Ontario in the Holton Hills development has now been sold, and the transfer closes in August 2021. That money will sit in the Family Trust. It will take time to determine the most tax efficient method of transferring the proceeds of the sale between various companies and trusts so that the Estate becomes liquid and can make the $5 million bequest to Patricia.
[68] Accordingly, the stasis in which the Estate has been locked since 31 January must be remedied by the appointment of a replacement trustee.
[69] The replacement trustee will be appointed in the middle of this Application and for the purposes of this litigation. There is other litigation that may be brought during the replacement trustee’s term including:
a) Joanne’s and Julie’s passing of accounts as estate trustees which will be objected to;
b) Litigation concerning improprieties in Joanne and Julie supporting and looking after Patricia,
c) Litigation alleging that Joanne and Julie mismanaged the HHSPC project and took secret profits.
[70] I turn now to an evaluation of the considerations for appointment of the placement trustee(s).
The Testator’s Wishes
[71] It is clear from Bruce McLaughlin’s overall estate planning that he wished the control of his estate to rest in the hands of family members, but by his intentionally excluding Laurel from that group, he clearly did not want control to rest with any family member.
[72] On the one hand, this would favour the appointment of family members as estate trustees. Given how Bruce treated Laurel in his estate planning, it would be contrary to Bruce’s wishes to have Laurel act as an estate trustee. Given that the trustees of the Estate were all Bruce’s and Patricia’s children, one might say that appointing Mr. Morrison is also contrary to Bruce’s wishes.
Will the New Trustee Favour the Interests of One Beneficiary over Another?
[73] As indicated above, there are two warring camps in this family. From May 2020 to 31 January 2021, one of those camps (Joanne and Julia) had de facto control over Bruce’s estate. Before that, control of the Estate laid with Julie, Joanne and Stuart who were appointed under the Will.
[74] Appointing a triumvirate of estate trustees which includes Laurel and Stuart to replace Joanne and Julie after their resignation, would simply serve to put one of the hostile camps in control of the Estate following the resignation of the other.
[75] The animosity of the two camps has continued since Joanne’s and Julie’s resignation. Julie and Joanne argue that the sale of 214 Ontario’s 25% interest in the Halton Hills development was arranged by Stuart, Laurel and Mr. Morrison. They did not inform Julie and Joanne until that day before the motion.
[76] Patricia, Laurel and Stuart argue that immediately before resigning as trustees, Joanne and Julie engaged in significant transactions to their benefit, including transferring assets and shares from the Estate to their corporations, backdating a transfer of shares to a spousal trust to 2012, and executed promissory notes in favour of 3 Angels of over $2 million which absolve them of personal liability for the debts.
[77] Given the level of distrust between these groupings of family members, there is a serious risk that appointing Laurel and Stuart as estate trustees would not, as they insist, reduce the level of litigation and promote resolution. Indeed, the likelihood is the contrary. The evidence persuades me that the likelihood that this matter will move more quickly, smoothly, or cooperatively, and at less expense, if Stuart and Laurel are appointed, is negligible.
[78] The evidence also persuades me that there is a risk that one or the other camps within the family, if put in control of the Estate, might favour their own interests over the other’s interests.
Individual or Institutional Trustees
[79] Judges have often expressed a preference for individuals to act as estate trustees over institutions such as a trust company. That preference is expressed in the context of the individual as someone who knew the testator and his/her intentions, understood the family and the dynamics, and could be more reactive to the needs and the circumstances at hand. Further, institutional trustees require longer time to come up to speed with the trust or estate. Finally, institutional trustees charge fees which, often, individual trustees do not.
[80] In this case, any savings to be achieved by having a family member as a trustee are illusory. Appointing a family member as estate trustee would exacerbate an already fractious and overheated litigation environment. Litigation costs would eat any expense savings many times over.
Replacement Trustee must be as Neutral as Possible
[81] There is no doubt that any replacement Trustee should be as neutral as possible. The trustee’s judgement must be as free as it can be from the contrary interests of warring beneficiaries and be guided solely by its obligations under the Will and the law.
[82] The only proposed placement trustee that can be said to be neutral is Scotiatrust. All other proposed replacement trustees have some level of interest or bias in the litigation. Laurel was asked in cross-examination if she could administer the Estate fairly, without preferring the interests of any one beneficiary or class of beneficiaries over another. She said she would be foolish to do otherwise. The evidence on this motion persuades me that she might prefer the interests of one beneficiary over another.
Result
[83] In weighing the required factors together, the only reasonable replacement trustee in this case is Scotiatrust. It is neutral.
[84] Laurel and Stuart are not neutral as between beneficiaries. The evidence on this motion suggests that none of them could be. Further, their presence as trustees would exacerbate difficulties in administering the Estate.
[85] Mr. Morrison is less interested but still has an interest given his natural affinity for Patricia. Alone, it is likely that he would be an admirable trustee. He must be excluded, however, because of his (and Stuart’s and Laurel’s) insistence that he, Laurel and Stuart all be appointed together or none of them at all.
[86] Given his role as arbitrator and the rulings he has made, Mr. Campion, if appointed would never be accepted by the Patricia/Laurel/Stuart camp. Litigation would increase, not decrease.
[87] That Scotiatrust may charge a fee for acting as estate trustee during litigation, is an unavoidable consequence of its necessary appointment given the degree of enmity between family members.
[88] The terms attached as schedule “A” to Scotia’s consent are acceptable to the court.
[89] The appointment of Scotiatrust as replacement estate trustee is subject to signing a final order.
[90] The withdrawal of Stuart, Joanne and Julie as trustees is approved effective the date of the order appointing Scotiatrust. Scotiatrust must still do some due diligence. The detailed order appointing Scotiatrust must be greed to or approved by me.
[91] I make this order concerning the effective withdrawal date for Julie, Joanne, and Stuart without prejudice to their arguing differently at the final hearing of the Application. This issue was not addressed at the motion. I make the order, however, as the Estate cannot be left without an estate trustee.
[92] Scotiatrust is appointed as Estate Trustee During Litigation, according to its consent. Its authority is limited to the duration of this litigation. Since the parties all agree that the only asset remaining in the Estate is its indirect interest in the proceeds from the sale of the Halton Hills development, there are no other assets to administer. Since there are no other assets to be administered, there is no difficulty in appointing Scotiatrust.
[93] This means, however, than when and if this litigation ends, so too does Scotiatrust’s appointment unless it continues by order or agreement.
[94] As an ETDL, Scotiatrust’s activities will be subject to the court’s supervision, and Court approval will be required for some of its activities.
Next Steps
[95] There will be a case conference by Zoom, to be held within 30 days of the date of the release of these reasons at 8:30 am on any day I am sitting, with counsel and a representative of, or counsel for Scotiatrust, so that the parties can address the detailed order necessary to give effect to the appointment of Scotiatrust, and a timetable for the balance of this litigation. Each party will provide a case conference statement not exceeding 4 pages before that case conference. Each party will also submit a draft order. Submissions will be served and filed 10 days before the case conference. The case conference will be held by Zoom.
[96] Because of the August closing of the sale of the 25% interest in the Halton Hills development, if, within 7 days of this order the parties do not agree to a case conference date, I will set one arbitrarily.
Costs
[97] Costs of this motion are reserved until the case conference mentioned above or the final signing of the order appointing the replacement trustee(s).
Trimble J.
Date: July 22, 2021
COURT FILE NO.: CV-20-1847
DATE: 2021 07 22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: PATRICIA ELAINE McLAUGHLIN, Applicant
- and -
JOANNE LENORE McLAUGHLIN et al, Respondents
ENDORSEMENT
Trimble J.
Date: July 22, 2021