Court File and Parties
COURT FILE NO.: CV-21-86166 DATE: 2022/03/04 ONTARIO SUPERIOR COURT OF JUSTICE
IN THE ESTATE OF MARY GERTRUDE SULLIVAN, DECEASED
BETWEEN:
Jim Meuse, Applicant – and – David Taylor, Respondent
Counsel: Cheryl Letourneau for the Applicant Christopher Morris for the Respondent
HEARD: December 2, 2021
decision on application to remove AND REPLACE AN estate trustee
Justice Sally Gomery
Endorsement
1This application revolves around the authentication, evaluation, and sale of the so-called Sanders Portrait, a portrait purportedly of William Shakespeare painted during his lifetime. A 2016 appraisal of the Portrait gave it a value of USD $50,000,000. This valuation assumes that a buyer would be persuaded that the Portrait does, in fact, depict Shakespeare. If the Portrait is simply a 400-year-old painting, it is worth a fraction of this amount.
2The Portrait now belongs to the Estate of Mary Sullivan. The respondent David Taylor is the sole trustee of the Estate. The applicant Jim Meuse believes that Mr. Taylor is not qualified to realize the Portrait’s value or otherwise administer the Estate, and that he is uniquely qualified to do so. He therefore seeks replace Mr. Taylor as the Estate trustee.
3For the reasons that follow, the application is dismissed with costs.
Background
4Mrs. Sullivan died on April 6, 2020. She was predeceased by her husband, Jim Sullivan, on August 18, 2019. In wills executed in January 2015, Mr. and Mrs. Sullivan each named each other as primary estate trustee. If one of them predeceased the other or was otherwise unavailable or unwilling to act, Mr. Sullivan’s cousin James Hale-Sanders was named as an alternate estate trustee in both wills. If he was unavailable or unwilling to act, Mr. and Mrs. Sullivan each appointed Mr. Taylor, their long-time accountant, as the second alternate trustee.
5Mr. Hale-Sanders acted as Mr. Sullivan’s estate trustee after he died, and then as Mrs. Sullivan’s trustee in the immediate aftermath of her death eight months later. On September 24, 2020, however, Mr. Hale-Sanders formally renounced his appointment as the trustee of Mrs. Sullivan’s estate. Mr. Taylor accepted to replace him on October 14, 2020. Mr. Meuse commenced this application to remove Mr. Taylor five months later.
6The Estate’s primary asset is the Sanders Portrait. It was owned by Mr. Sullivan, who left it to his wife along with the rest of his estate. Mr. Sullivan acquired the Portrait from his mother, who inherited it from her mother (who had brought it with her when she immigrated from England to Canada in the late 19th century), and so on back through the generations. The Portrait’s provenance has been traced to Mr. Sullivan’s great-great grandfather, who mentioned it in an inventory of possessions in 1844, and then on a reconstructed basis to one of Mr. Shakespeare’s neighbours, who would have passed it on to one of Mr. Sullivan’s ancestors in the late 16th or early 17th century. 1 The Portrait depicts the head and shoulders of a man with a reddish-brown goatee dressed in a silver doublet over a linen shirt. A label on the back of the Portrait, which is no longer legible, apparently read: “Shakspere/Born April 23 = 1564/Died April 23 – 1616/ Aged 52/This Likeness taken 1603/Age at that time 39 ys”.
7The Portrait’s value depends on whether it can be authenticated, to the satisfaction of a buyer with the means to acquire it, as a contemporaneous painting of Shakespeare. Mr. Sullivan’s efforts to prove that it was the genuine article was the focus of his attention for many years prior to his death. The Estate’s only other potentially valuable asset are shares in Tempest Artwork Ltd. (“Tempest”). Tempest is a company incorporated by Mr. Sullivan in 2001, to which he transferred intellectual property then associated with the Portrait.
8Obtaining the maximum price for the Sanders Portrait is the key issue in the management of Mrs. Sullivan’s Estate. There are many parties who claim to have a stake in the sale. Mr. Sullivan’s ownership of the Portrait was confirmed in a deed of arrangement he signed on May 24, 2002, with representatives of four other families who might have ownership claims. In the deed, the parties recognized that Mr. Sullivan owned the Portrait and the intellectual property to research that he had done and that others had done at his direction. The deed contemplated that the Portrait would sell for $20,000,000 and that at least $12,500,000 of the proceeds would be split between the families in various percentages.
9There are other individuals and professional firms who claim that they are entitled to a portion of the eventual proceeds of sale of the Portrait. Several individuals, including Mr. Meuse, claim they loaned money to Mr. Sullivan or are entitled to compensation for work they did for him, which would be repayable on the sale of the Portrait. Gowlings WLG LLP provided legal services in connection with the Portrait, for which it says it is currently owed over $1,000,000. This claim is secured by a PPSA registration and an order from the Superior Court providing that the Portrait cannot be sold, transferred, moved, or encumbered without either Gowlings’ consent or a further court order. Other professional services firms, including Mr. Taylor’s accounting firm, either invoiced Mr. Sullivan or claim to have arranged with him for the payment of work purportedly done by them in connection with authenticating the Portrait.
10Mr. Meuse alleges that Mr. Taylor lacks the expertise and competence to obtain a fair market value for the Sanders Portrait. He alleges that Mr. Taylor has not acted diligently in the performance of his duties as Estate trustee, that he has involved some professionals in the administration of the Estate, and that he has been involved in efforts, on two occasions, to transfer the ownership of the Portrait at a below-market price. He therefore seeks to have Mr. Taylor removed and himself appointed in his place. The residual beneficiaries of the Estate, three charities, support the application.
Principles Applicable to This Application
11Section 5 of the Trustee Act, R.S.O. 1990, c. T.23, empowers the court to order the appointment of a new trustee in substitution for or in addition to an existing trustee. Even in the absence of the Trustee Act, the court has an inherent power to remove a trustee where circumstances require it: Gonder v. Gonder Estate, 2010 ONCA 172, 54 E.T.R. (3d) 193, at para. 26.
12In Radford v. Radford Estate (2008), 43 E.T.R. (3d) 74 (Ont. S.C.), at paras. 100-113, Quinn J. canvassed the principles on an application to remove an estate trustee. They were summarized as follows in Johnston v. Lanka, 2010 ONSC 4124, 103 O.R. (3d) 258, at para. 15:
(1) the court will not lightly interfere with the testator’s choice of estate trustee; (2) clear evidence is required that removal of the trustee is necessary; (3) the court’s main consideration is the welfare of the beneficiaries; and (4) the estate trustee’s acts, or omissions must be of such a nature as to endanger the administration of the trust.
13The court must assume that the testator’s choice of trustee should be respected absent compelling evidence that doing so will endanger the estate. Removal of an estate trustee should only occur “on the clearest of evidence that there is no other course to follow”: Crawford v. Jardine, [1997] O.J. No. 5041 (Ont. Gen. Div.), at para. 18. In the words of the Court of Appeal of Ontario in Re Weil, [1961] O.R. 888 at p. 889, interfering “with the discretion and choice of a person in preparing his last will and testament must be not only well justified but . . . must amount to a case of clear necessity.”
14A person seeking the removal of an estate trustee chosen by a testator must therefore show that removing the trustee is necessary because otherwise the estate will not be properly executed or the property in the estate will be endangered. It is not enough for the applicant to prove that the trustee has made mistakes or neglected their duties in the past. Although the respondent estate trustee might not have executed her functions perfectly or ideally, “that is not the test”: Radford, at para. 120. The question instead is “whether the trust estate is likely to be administered properly in accordance with the fiduciary duties of the trustee and with due regard to the interests and welfare of the beneficiaries”, as removal “is intended not to punish trustees for past misconduct but rather to protect the assets of the trust and the interests of the beneficiaries”: St Joseph’s Health Centre v. Dzwiekowski, at para. 28.
15The beneficiaries’ preferences are relevant only if there is evidence that the executor is hostile towards them or the relationship is otherwise so broken that this may impede the administration of the estate. In the words of Beaudoin J. in Venables v. Gordon Estate, 2012 ONSC 956, 76 E.T.R. (3d) 172, at para. 31:
Our courts are reluctant to interfere with a Testator’s express wishes and remove a Trustee simply because there is a conflict between the Trustee and a beneficiary. There has to be evidence that the Trustee is unable to exercise exercise in a completely impartial and objective manner the very wide discretion they are given under a Will.
Analysis
16A good deal of Mr. Meuse’s argument on this application focussed on why he would be a better choice than Mr. Taylor as the trustee of Mrs. Sullivan’s Estate. This application, however, is not a beauty contest between the parties. My task is not to decide whether Mr. Meuse is better qualified than Mr. Taylor to sell the Sanders Portrait, whether the beneficiaries would have more confidence in him, or whether he would otherwise be a better estate trustee than Mr. Taylor. Approaching the application this way would amount to second-guessing Mrs. Sullivan’s choice of trustee. That choice of trustee is presumptively good unless there is compelling evidence that leads me to conclude that allowing Mr. Taylor to continue in this role endangers the Estate. If I reach this conclusion, then and only then would I consider whether Mr. Meuse should replace Mr. Taylor.
17I must first determine whether Mr. Taylor should be removed as Estate trustee. If I conclude that his administration of the Estate does not endanger it, I must dismiss the application without any further analysis. If I am persuaded, on the evidence, that Mr. Taylor must be removed, I will assess whether Mr. Meuse would be an appropriate trustee.
Should Mr. Taylor be replaced as the Estate trustee?
18Although the applicant’s oral submissions focussed on two particular grounds for Mr. Taylor’s removal, I will address each of the grounds mentioned in the notice of application and the affidavits filed by Mr. Meuse.
Has Mr. Taylor failed to take substantive steps to perform his duties as Estate trustee?
19In the notice of application, Mr. Meuse asserts that Mr. Taylor has failed to take any substantive steps to perform the duties of Estate trustee, in particular steps to probate Mrs. Sullivan’s will and to open a bank account for the Estate. In Mr. Meuse’s April 21, 2021 affidavit, he further faults Mr. Taylor for not yet claiming a survivor’s pension for which Mrs. Sullivan was eligible after her husband’s death or arranging for repayment of CPP and OAS payments that were deposited into her account after she died. He also criticizes Mr. Taylor for failing to get in contact with the Estate’s beneficiaries.
20The evidence falls far short of establishing that Mr. Taylor is delinquent in performing his duties as Estate trustee, or that any step he has failed to take endangers the Estate’s administration. Given his short tenure in this role and the potential size of the Estate, he has in fact accomplished a good deal. Based on uncontradicted evidence, Mr. Taylor has taken the following steps since accepting to act as Estate trustee:
- He has applied for a certificate of appointment as Estate trustee;
- He has obtained a comprehensive reporting letter from the lawyer acting for the Estate when he took over, and has obtained and reviewed financial, legal, and business records relevant to the administration of the Estate;
- He has identified potential creditors of Mrs. Sullivan’s Estate. This is a complex and ongoing task given the number of parties alleging that they have a stake in the proceeds of the sale of the Sanders Portrait;
- He has completed Mr. and Mrs. Sullivan’s 2019 and 2020 tax returns;
- He has hired an antiques expert, Janet Carlile to assist in selling the Sanders Portrait by identifying auction houses that could assist in the sale, and contacting them to see if they are interested;
- He has contacted auction houses directly;
- He has had discussions with Christie’s auction house about the possibility of shipping the Sanders Portrait to London so that an independent expert can authenticate it as a contemporaneous portrait of Shakespeare and express an opinion as to its value on the open market;
- He has retained legal counsel in Ottawa to assist with the administration of the Estate; and
- He has communicated with Gowlings in respect of their secured claim and their position on this application.
21The issues raised by Mr. Meuse in his affidavit are frankly inconsequential. Mr. Taylor chose to use a trust account held by the Estate’s solicitors as the Estate’s bank account. Mr. Meuse says that this prevented him from transferring funds to the Estate. He admitted on cross-examination that the funds at issue consisted of a cheque for about $450. He did not explain why he could not simply endorse the cheque to Mr. Taylor, as Estate trustee. In oral argument, Mr. Meuse’s counsel acknowledged that any issue with the Estate account was addressed after the application was filed. The unclaimed survivor’s pension would be worth $8000. Mr. Taylor’s failure to take immediate steps to claim this money, or to reimburse the government for payments made after Mrs. Sullivan’s death, in no way imperils the Estate.
22While reaching out to the beneficiaries right away might have been courteous, it is unclear what Mr. Taylor could have provided to them, by way of information, at this stage of the Estate’s administration.
23Mr. Meuse has not shown that Mr. Taylor has failed to take substantive action as the Estate trustee in the thirteen and a half months between the time he accepted to act and the date this application was heard. He may well have accomplished more but for the necessity of defending this application.
Did Mr. Taylor refuse to shut down an account that was used to conduct fraudulent transactions?
24Mr. Meuse alleges that, on November 15, 2020, he told Mr. Taylor about several fraudulent transactions in a TD bank account that had belonged to Mrs. Sullivan, but Mr. Taylor refused to shut the account down. In the reply email he sent to Mr. Meuse, Mr. Taylor wrote: “Unfortunately, I have never had anything to do with her accounts, nor Lloyd's accounts. It has all been in your hands. You should contact TD immediately and see what is going on. IT IS YOUR RESPONSIBILITY.” As a result, it was Mr. Meuse who contacted TD to advise that Mrs. Sullivan had died and to ask that the account be frozen.
25The evidence supports Mr. Taylor’s contention that this account was controlled by Mr. Meuse and Mr. Hale-Sanders. During his cross-examination, Mr. Meuse admitted that they set up the account after Mr. Sullivan’s death, using a power of attorney granted to Mr. Hale-Sanders by Mrs. Sullivan. Although Mr. Meuse denied he had signing authority for this account, he subsequently admitted that Mr. Hale-Sanders gave him online access to the account that allowed him to make withdrawals and deposits to and from it, which amounts to the same thing. He also admitted that the fraudulent transactions at issue amounted to three charges by Amazon amounting to less than $100 in total.
26The evidence also supports Mr. Taylor’s contention that, when Mr. Meuse informed him of the transaction on the account about three weeks after he had accepted to act as the Estate trustee, he had not yet been able to obtain any information about the account. Mr. Taylor testified that, prior to the November 15, 2020, email exchange, he had repeatedly asked Mr. Meuse for information about the account so that the funds in it could be transferred to the Estate. He eventually got the requested information from Mr. Hale-Sanders.
27Mr. Taylor’s response to Mr. Meuse’s report of the transactions in the account was reasonable, in the circumstances. It does not support an argument that Mr. Taylor is unfit to administer the Estate.
Did Mr. Taylor inappropriately involve Dr. Daniel Fischlin in efforts to sell the Portrait?
28Dr. Daniel Fischlin is a professor at the University of Guelph who was involved in some of Mr. Sullivan’s efforts to authenticate, evaluate, and sell the Sanders Portrait. According to Mr. Taylor, Dr. Fischlin had been working with the Royal Ontario Museum in Toronto to find a buyer for the Portrait, who would then donate it to the Museum, where it is currently stored. Mr. Meuse alleges that, just before Mrs. Sullivan’s death, Mr. Hale-Sanders drafted and signed a joint venture agreement that would have transferred ownership of the Sanders Portrait to Mr. Hale-Sanders and Dr. Fischlin. This agreement, which Mr. Meuse characterizes as unconscionable, was terminated before any transfer occurred. In his affidavit, Mr. Meuse alleges that, despite this history and Dr. Fischlin’s support for the donation proposal, Mr. Taylor “is still using Fischlin as his primary selling agent”.
29In oral argument on this application, Mr. Meuse’s counsel acknowledged that the joint venture agreement never really came into effect but describes this as a “near miss” that could have bankrupted the Estate but for Mr. Meuse’ intervention.
30The joint venture agreement was signed on April 1st, 2020, months before Mr. Taylor became involved in the Estate. There is no evidence that Mr. Taylor was in any way involved in negotiating or signing it. During his cross-examination, he testified that he did not even know about the agreement until Mr. Meuse sent it to him in November 2020. Mr. Taylor then contacted Mr. Hale-Sanders’ lawyer, Lee Villar, who told him that the agreement had been cancelled some time previously.
31In his affidavit, Mr. Taylor denies that he has taken any formal steps to retain Dr. Fischlin to continue any efforts to evaluate and sell the Sanders Portrait. In cross-examination, he denied that he has any intention of trying to sell the Portrait only in Canada. He also says that he has not been provided with a copy of any enforceable agreement between Dr. Fischlin and Mr. Sullivan. None of this evidence is contradicted.
32There is accordingly no basis whatsoever for Mr. Meuse’s allegation that Mr. Taylor “has made an improper exercise of discretion in allowing Daniel Fischlin to effectively control the only estate asset”.
Did Mr. Taylor retain an estate lawyer who had a conflict of interest?
33Mr. Meuse alleges that Mr. Taylor improperly maintained Mr. Villar as the Estate’s lawyer, despite Mr. Villar’s involvement in the drafting of the joint venture agreement. Mr. Meuse says that there has been a complaint made to the Law Society of Ontario about this involvement, but does not say who made the complaint or when. I infer that the LSO complaint was filed in 2021, because the file number cited has a 2021 prefix.
34In cross-examination, Mr. Taylor admitted that he did not replace Mr. Villar as the Estate’s lawyer until some time in 2021. There is no evidence as to when Mr. Taylor learned about the complaint, but he would not have been aware of it when he first took on his duties as trustee because the complaint had not yet been made. As noted earlier, he was unaware of the joint venture agreement until Mr. Meuse brought it to his attention in late 2020.
35There is no basis to conclude that the Estate was prejudiced in any way by Mr. Taylor’s failure to retain a new lawyer for the Estate immediately after accepting to act. The mere fact that Mr. Villar represented a party involved in the cancelled joint venture agreement would not require that his retainer be terminated immediately. On the contrary, it may have been imprudent for Mr. Taylor to have done so without further information and a chance to familiarize himself with the Estate’s administration to date.
Did Mr. Taylor improperly attempt to get Mr. Sullivan to change his will in 2018?
36At para. 21 of his April 21, 2021 affidavit, Mr. Meuse alleges that, in 2018, Mr. Taylor participated in “an apparent attempt, via competency hearing”, to influence Mr. Sullivan to change his will to remove the three Catholic charities as beneficiaries. He further alleges that, during the assessment, Mr. Sullivan was “presented with incorrect and/or misleading information”. The attempt to change the will was unsuccessful only because Mr. Sullivan was assessed as lacking capacity to change his will.
37This allegation was repeated in Mr. Meuse’s factum on the application, but not pursued in oral argument. I will deal with it because where a litigant makes such a grave accusation — in effect, that Mr. Taylor knowingly presented an elderly man with false information to improperly dissuade him from leaving his money to charitable organizations — it would be irresponsible not to do so.
38Mr. Meuse has produced, as an exhibit in relation to this allegation, a March 21, 2018 letter from Leonard Bernstein, a capacity assessor. This letter was addressed to Mr. Hale-Sanders. The assessor states that he was retained to assess Mr. Sullivan’s capacity to sell the Sanders Portrait to an anonymous private buyer for $10,000,000, so that the buyer could then donate it to the Royal Ontario Museum. Mr. Bernstein mentions that, when he interviewed Mr. Sullivan at his home, Mr. Taylor was there, along with Mr. Hale-Sanders and Dr. Fischlin. Mr. Taylor is described as Mr. Sullivan’s accountant.
39In cross-examination, Mr. Meuse admitted that he did not know who requested the assessment. He testified that he was unaware that the assessment had occurred until a year or so later, when Mr. Hale-Sanders provided him with a copy of the letter. Mr. Meuse expressed the view that it was “very suspicious”, even though Mr. Hale-Sanders reassured him that nothing untoward had occurred. In Mr. Meuse’s view, the 2018 capacity assessment was “Plan A” to sell the Sanders Portrait as proposed by Dr. Fischlin and Mr. Hale-Sanders, and “Plan B” was the March 2021 joint venture agreement.
40Even if I could accept the letter as evidence of the events described in it in the absence of a sworn statement by Mr. Bernstein, there is nothing in the letter, or in Mr. Meuse’s testimony, that would support a conclusion that Mr. Taylor participated in an untoward or surreptitious attempt to influence Mr. Sullivan in 2018, or that he ever provided him with false or misleading information. Mr. Meuse has not even established, in my view, that the 2018 capacity assessment was performed for any nefarious purpose. It appears to have been done at the request of the lawyers acting for the seller and the buyer in the proposed sale of the Portrait. In any event, there is no evidence that Mr. Taylor was involved in arranging for the capacity assessment or that he was involved in the proposal.
Does Mr. Taylor lack the knowledge required to administer the Estate?
41This is really the heart of this application. Mr. Meuse contends that, because Mr. Taylor has no specialized knowledge of Elizabethan art or the sale of such art, he cannot make reasonable or informed decisions concerning the sale of the Sanders Portrait. He attempts to make the case that he would be better suited to deal with the Estate because of his past involvement in efforts to authenticate and sell the Portrait as a one-of-a-kind historical artifact.
42This argument is founded on some fundamental misapprehensions about the role of an estate trustee in general and the role of the trustee of this particular Estate.
43First, an estate trustee is not required to have subject-matter expertise about the estate’s assets, experience in administering estates, or any particular training or education. A trustee administering an estate with a house as its primary asset, for example, does not have to be a real estate broker or have any specialized knowledge about selling houses. To the extent that a trustee lacks knowledge or expertise in an area relevant to their administration of the estate, they can retain appropriate experts. What is important is that the testator had confidence that the individual appointed will carry out the wishes expressed in their will.
44In this case, Mrs. Sullivan chose Mr. Taylor as her estate trustee if both her husband and Mr. Hale-Sanders were unable or unwilling to act. Mr. Sullivan made the same appointment of estate trustee in his will. I infer from this that they believed that Mr. Taylor had the requisite knowledge, skill set, experience, and judgment to administer their estates competently and in accordance with their intentions.
45Second, even though the sale of the Sanders Portrait is critical to the administration of this Estate, arranging for that sale is only a part of what the Estate trustee must do in this case. Administering the Estate involves complex legal, accounting, insurance, and tax issues. There are many parties with claims against the proceeds of the sale of the Portrait. Some of those are undoubtedly legitimate while others may need to be litigated. There are unresolved questions about the value of the Tempest shares and the value of the intellectual property it was assigned. Mr. Sullivan’s former law firm has registered a lien against the Portrait and obtained a court order requiring its approval before the trustee can, for example, ship the Portrait to London so it can be appraised.
46As a result, I doubt very much that there is a single person alive capable of handling all the facets of the administration of this particular estate without calling on outside experts. As a chartered professional accountant and certified management accountant who assisted with the incorporation of Tempest and prepared the Sullivans’ taxes, Mr. Taylor has some personal expertise that he can draw upon in his role as trustee. He is not a lawyer or insurance expert, though. And, like Mr. Meuse, he is not an expert in Elizabethan art and has no formal education or training as an art historian or evaluator.
47Mr. Taylor’s lack of expertise in some of the areas relevant to the administration of the Estate does not disqualify him to administer the Estate competently. The question instead is whether, based on his performance to date, there is compelling evidence that he has demonstrated such misjudgment or incompetence that I have no choice but to remove him in order to protect the Estate.
48In oral argument on the application, the applicant focussed on two particular concerns about Mr. Taylor’s performance as Estate trustee: the steps he has taken to date to sell the Sanders Portrait, and his own evaluation of the worth of the Estate.
Mr. Taylor’s efforts to sell the Portrait to date
49Mr. Meuse is critical of Mr. Taylor’s decision to retain Janet Carlile, a person without any expertise in Elizabethan art, to assist him, and of his communications with two art auction houses that Mr. Meuse considers unsuitable to manage the sale of the Sanders Portrait. Mr. Meuse says that these actions show that Mr. Taylor is incapable of realizing the value of the Portrait for the benefit of the beneficiaries.
50In his affidavit, Mr. Taylor says that he retained Ms. Carlile as a specialist in old artifacts knowledgeable about the art market. She contacted four major auction houses about selling the Sanders Portrait. Only one of them, Christie’s in London, was interested. Mr. Taylor also contacted two auction houses in Toronto and New York directly. Neither of them expressed any interest in selling the Portrait. Mr. Taylor then contacted Christie’s, who said that they would like to have the Portrait shipped to London so that it can be reviewed by independent experts. Mr. Taylor states that he believes this proposal represents the best opportunity to sell the Sanders Portrait while maximizing its value.
51Mr. Meuse’s factum asserts that auction is “not necessarily the best way to sell the Sanders Portrait as a private sale might be preferred” and that the Estate should not be committing itself to a single dealer. It states that Mr. Taylor’s approach to Christie’s is “clear evidence of incompetence”, as Christie’s could authenticate the Portrait based on past research materials, and that the cost of shipping it to London will be very expensive. Mr. Meuse also alleges that two auction houses that Mr. Taylor and Ms. Carlile contacted were unsuitable.
52Mr. Meuse has not produced any expert report or any other evidence that would support these criticisms. Beyond Mr. Meuse’s bald assertions, he has not put anything before the court that could establish that Mr. Taylor’s approach is misguided or that there is another, better way of selling the Sanders Portrait. Even assuming that Ms. Carlile has limited insight into the sale of this unique artwork, I have no basis to second-guess Mr. Taylor’s decision to seek her assistance in identifying and contacting auction houses that might handle the sale. Nor is there any basis, on the evidence before the court, to conclude that there are other auction houses that might be a better choice than Christie’s, or that seeking out a private buyer without the assistance of an auction house would yield a better price for the Portrait, or that Christie’s insistence on a further, independent evaluation is unnecessary.
53Mr. Meuse argues that, because he assisted Mr. Sullivan for many years in trying to sell the Portrait, he knows how this should be done. This argument is illogical. Mr. Meuse is asking the court to find that his past lack of success is the very reason to predict his future success. If, moreover, he has unique and invaluable insight into how best to sell the Portrait, it is odd that neither Mr. nor Mrs. Sullivan saw fit to name him as an estate trustee in their respective wills.
54Mr. Meuse also relies on his long relationship with the Sullivans and the financial and personal help he gave them over the years. I have no doubt that he was a good and supportive friend. None of this is, however, relevant to the question of whether Mr. Taylor should be removed as Estate trustee.
55Finally, Mr. Meuse alleges that Mr. Taylor intends to incur unnecessary expenses to confirm that the Estate does, in fact, own the Portrait. According to an affidavit sworn by Michael Meuse, Mr. Meuse’s brother, Mr. Taylor has mentioned that he may seek a court ruling on this issue. The applicant thinks this is unnecessary because the 2002 deed of arrangement resolves this issue.
56If Mr. Taylor elects to seek a declaratory judgment on the ownership issue, this is well within the scope of the discretion given to him as Estate trustee. Given the putative value of the Sanders Portrait and the way it would dictate the division of the proceeds of its sale, obtaining confirmation that the deed of arrangement is enforceable would not be an unreasonable step to take. Mr. Taylor testified that Mr. Hale Sanders, one of the parties to the deed of arrangement, will challenge any attempt to enforce it. The cost of obtaining a declaratory judgment would be a modest investment against future litigation if in fact the Portrait is worth millions of dollars.
57In summary, Mr. Meuse has not provided any compelling evidence to substantiate his allegation that Mr. Taylor has demonstrated such incompetence in arranging to sell the Sanders Portrait that his continued administration of the Estate puts it at risk.
Mr. Taylor’s assessment of the value of the Sanders Portrait and the Tempest shares
58Mr. Meuse contends that Mr. Taylor does not understand the Estate’s value. He relies again on his brother Michael Meuse’s evidence. Michael Meuse says that, during phone calls in late 2020 and early 2021, Mr. Taylor was sceptical of the USD $50 million appraisal of the Portrait in 2016 and downplayed its value and marketability. Mr. Taylor also expressed the view that the Tempest shares have little no value.
59In 2016, the Sanders Portrait was appraised at USD $8,500,000 by Catherine Menard in and at USD $50 million by Victor Wiener Associates LLC, an independent art appraisal firm in New York. These appraisals were commissioned by the Art Gallery of Ontario (“AGO”). The Menard appraisal has not been put into evidence. In his March 2016 report, Mr. Wiener stated that AGO’s intent in commissioning the appraisal was so that it could be used by the Gallery “for the determination of revenue considerations” associated with the Portrait, as it was on the market and the AGO was interested in acquiring it. He noted that the use of the report “for any purpose other than the one stated above is unintended and will render the Report invalid”.
60In cross-examination, Mr. Taylor stated that the Estate could not use the Wiener report unless it obtained authorization to do so. He testified that, in a recent conversation, Mr. Wiener confirmed that use of the report was restricted. This is uncontradicted. Mr. Taylor understood that authorization would have to be sought from either the AGO or the University of Guelph but had not yet taken any steps to verify this understanding. When asked if the Estate would seek an updated report from Mr. Wiener, Mr. Taylor said this was something that would need to be discussed with legal counsel once this application was decided.
61Based on my review of Mr. Taylor’s evidence, he has not pre-determined the value of the Sanders Portrait. In any event, it is not his personal views that matter but whether he will take appropriate and reasonable steps to maximize the Portrait’s value on the market. In his affidavit, he recognizes that it is his duty, as trustee, to “try to sell the Sanders Portrait at the highest and most reasonable amount for the potential creditors and beneficiaries” of the Estate. There is no indication that he will not do so.
62Based on the evidence on this application, it is difficult to predict the price that may be obtained for the Portrait. It has been on the market for at least 15 years and there are sharply divergent views on its value. The appraisals obtained by the AGO in 2016 were over USD $40,000,000 apart. When Mr. Taylor wrote to a Sotheby’s on February 1, 2021 to verify its interest in handling the sale of the Portrait, its senior vice president was doubtful that it depicted Shakespeare and suggested that it would fetch, at auction, well below USD $100,000.
63Mr. Taylor has noted, quite correctly, that the Wiener report cannot be used to establish the Portrait’s value absent authorization from the party that commissioned it. He has not closed the door to seeking this authorization or from asking Mr. Wiener for an updated report. If these avenues are closed, a new appraisal will have to be done. This appears to be what Mr. Taylor is discussing with Christie’s auction house.
64I conclude that there is no compelling evidence that Mr. Taylor is predisposed to sell the Portrait for a price that does not reflect its market value, or to otherwise fail to realize its full value for the Estate.
65Tempest was incorporated in 2001. Mr. Sullivan was the owner of the single share initially issued by Tempest, in return for which he assigned to it his contracts with AGO for the display of the Sanders Portrait. Mr. Taylor was involved in the incorporation. According to him, Tempest’s incorporation skirted the issue (unresolved, at the time) of who exactly owned the Portrait, and it allowed the Portrait to be rented and displayed without public disclosure of Mr. Sullivan’s interest in it. The following year, after the ownership issue appeared to have been resolved through the deed of arrangement and Mr. Sullivan had been identified in the media as the Portrait’s owner, Tempest’s purpose changed. On the advice of tax lawyers, the intellectual property in the Portrait then in existence was transferred from Mr. Sullivan to Tempest in return for further shares. For the purpose of the transfer of the intellectual property from Mr. Sullivan to Tempest, Mr. Sullivan’s lawyers at Gowlings set the intellectual property’s fair market value at $5,000,000 with a tax transfer price of $85,000. As a result, the 85,000 common shares owned by the Estate notionally have a value of $5,000,000.
66In cross-examination, Mr. Taylor stated that he was unsure what intellectual property Tempest owns, because a “very considerable majority” of information about the Portrait is now in the public domain. As a result, he expressed the view that the Estate’s shares in Tempest were worth about $100, the amount in the company’s bank account. He added, however, that this has to be investigated.
67I do not find that Mr. Taylor has closed his mind to the possibility that the Tempest shares may have some value. He has a view but concedes that he will need to obtain information and advice to bear this out. Interestingly, Mr. Meuse states in his affidavit that the Portrait is the Estate’s “only substantive asset”. This is at odds with any contention that Mr. Taylor has overlooked any significant value that the Tempest shares could have.
68I accordingly conclude that Mr. Meuse has not established that Mr. Taylor’s actions with respect to the Tempest shares may imperil the Estate.
Disposition
69The application is dismissed. Mr. Meuse has not shown that Mrs. Sullivan’s choice of estate trustee should be overridden. Most of his allegations are not supported by credible evidence. To the extent some allegations were supported, I do not find that Mr. Taylor’s role as trustee will endanger the Estate. In light of this, I do not need to consider whether Mr. Meuse would be an appropriate replacement trustee.
70The parties made costs submissions in writing following the hearing. If successful, the respondent seeks substantial indemnity costs of $58,690 or, in the alternative, partial indemnity costs of $39,950.
71In my view, an award of substantial indemnity costs is merited in this case. I will however discount the amount awarded to Mr. Taylor because it is more than Mr. Meuse would have reasonably expected to pay.
72Although substantial indemnity costs are exceptional, their award is appropriate in this case because Mr. Meuse alleged in his supporting affidavit that Mr. Taylor attempted to mislead Mr. Sullivan, through false representations, for the purpose of getting him to change his will, and of refusing to take steps to prevent the Estate from being defrauded. There was no substance to any of these allegations, and Mr. Meuse’s lawyer wisely avoided pursing them in her oral submissions. Mr. Taylor nonetheless was forced to respond to the allegations in his affidavit and factum so that his name could be cleared. The lobbing of such grave accusations, without any foundation, attracts a higher cost award.
73Mr. Meuse’s approach to this application more generally increased the costs of responding to it. He made other assertions and allegations that were not pursued in oral argument. Much of the evidence he filed was irrelevant or only tangentially relevant to the issues on the application. There is no reason why the Estate should bear costs incurred for no good purpose. This would have the effect of reducing the amount available to the Estate’s creditors and beneficiaries.
74On the other hand, the bill of costs submitted by Mr. Taylor’s counsel lacks much meaningful detail and the recorded hours appear excessive. The two lawyers on the file recorded over 137 hours. This is supplemented by another 24 hours recorded by articling students. Cumulatively, the legal team acting for Mr. Taylor recorded almost three times as many hours as Mr. Meuse’s lawyer, with the result that the actual fees and disbursements for which he has been billed ($30,709) are less than the partial indemnity costs claimed by Mr. Taylor ($39,950). Mr. Meuse might have reasonably expected to pay more in costs than he paid to his own lawyer, but not that much more, bearing in mind that this was an application that took only two hours to argue.
75Taking all of these factors into account, I order Mr. Meuse to pay costs to Mr. Taylor in the amount of $40,000 on the application.
Justice Sally Gomery Released: March 4, 2022