Court File and Parties
COURT FILE NO.: CV-21-3253-0000 DATE: 20230525
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: In the Estate of Joan Ann Hutchinson, deceased Donna Margaret Hutchinson, Applicant
AND:
Marie Ann Woodhouse in her personal capacity, and in her capacity as Estate Trustee of the Estate of Joan Ann Hutchinson and Julie Patricia Wigglesworth in her personal capacity, and in her capacity as Estate Trustee of the Estate of Joan Ann Hutchinson, Respondents
BEFORE: Justice V. Christie
COUNSEL: Jonathan Friedman, Counsel for the Applicant Paul Portman, Counsel for the Respondent, Woodhouse Wigglesworth, self-represented
HEARD: May 24, 2023
Endorsement
RE APPLICATION TO REMOVE ESTATE TRUSTEES
CHRISTIE J.
Overview
[1] The Applicant, Donna Hutchinson, has brought an application seeking various forms of relief, but, in essence, seeks to have her two sisters removed as Estate Trustees of their mother’s estate, to be replaced by herself, and to have the current Estate Trustees pass accounts. The Applicant takes the position that the Estate Trustees are not taking meaningful steps to finalize the administration of the estate, specifically, to disburse funds from the sale of their mother’s home, which sold in 2017. From the perspective of the Applicant, this is the only remaining issue to finalize the administration of this estate. It should be noted that this application was issued in September 2021.
[2] The Respondent, Marie Ann Woodhouse, takes the position that this application should be dismissed, that her motion in relation to outstanding undertakings and refusals be heard, and that a timetable be established to manage a counter application that she wishes to bring, alleging that the Respondent, Ms. Wigglesworth, has misappropriated funds. This Respondent argued that if this application is granted and the house sale funds distributed, there will be no means by which to make needed adjustments to the estate distribution, as this is the only account that remains.
[3] The Respondent, Julie Wigglesworth, is fully supportive of the relief sought by the Applicant and agrees to step aside as Estate Trustee.
Background Facts
[4] The deceased, Joan Ann Hutchinson, died on May 23, 2017.
[5] The parties to this application are sisters to each other and the daughters of the deceased. They are all beneficiaries to the estate of the deceased, pursuant to a Last Will and Testament that the deceased executed on April 5, 2017, which provides that:
a. The Respondents, Woodhouse and Wigglesworth, were to be the Estate Trustees.
b. All personal property, including “all articles of personal and household use or ornament, and all automobiles and their accessories”, were to be divided amongst her three daughters.
c. A cash gift of $5000 was to be given to each Estate Trustee as “a small acknowledgment of their efforts”
d. The residue of the estate was to be divided equally among her three daughters.
[6] The Respondents, Woodhouse and Wigglesworth, sought and were granted a Certificate of Appointment pursuant to the Will. They also applied for and received a Clearance Certificate for the estate.
[7] At the time of her death, the deceased owned a property in Newmarket. This property was transferred to the co-Estate Trustees on November 14, 2017, and was sold on November 17, 2017, for $692,400.00.
[8] The Applicant received no monies from the sale despite requests.
[9] In 2021, the Applicant retained counsel to assist her.
[10] On August 24, 2021, Ms. Wigglesworth advised counsel for the Applicant that she was willing to distribute the remaining funds of the estate, however, her co-Estate Trustee, Ms. Woodhouse, was refusing to attend any meeting at the bank to finalize the administration. In part, she stated:
I have also contacted my co-executor on several occasions to select a time to go to the Bank of Nova Scotia, as there is the requirement of two signatures to take any money from this account and she has refused repeatedly to assist in this final disbursement. I would also like to add that I have been willing to do the disbursement since June 2018 (final income tax).
I do not want to be held accountable for the actions of the other estate trustee or to delay this disbursement.
[11] On September 21, 2021, this Application was commenced.
[12] On October 8, 2021, Ms. Wigglesworth advised counsel that she had been attempting to “motivate” her co-Estate Trustee to disperse the funds for “several years” to no avail. Ms. Wigglesworth expressed her agreement to be removed as Estate Trustee if her co-Estate Trustee were also removed. Ms. Wigglesworth also agreed to the Applicant replacing them in this role or a representative of the “Bank of Nova Scotia’s estate department be named as the executor so that he/she can do the final dispersal as this is a no charge service”.
[13] On February 9, 2022, O’Connell J. ordered that $150,000.00 from the proceeds of the sale of the property be distributed equally to each of the three beneficiaries. Apart from that, the remaining proceeds of sale remain in an account, drawing negligible benefit.
[14] The Respondent, Ms. Woodhouse, has made it perfectly clear that she does not intend to distribute the funds from the property sale until some other estate issues are worked out, specifically related to some money in GIC accounts.
[15] In summary, at the time of her death, the deceased held several investment accounts jointly with one of her three daughters. The named beneficiary on these accounts was also the same daughter who held the joint account. The position of the Applicant and the Respondent Wigglesworth is that the deceased intended for the funds from each of these accounts to be transferred by way of survivorship to the living joint account holder / beneficiary, and not to form part of the residue of the estate to be divided equally amongst the three beneficiaries. The position of the Respondent Woodhouse is that the only reason for joint account holders was to avoid probate, but that the intention was that these funds would become part of the estate to be distributed equally amongst the three daughters. The Respondent Woodhouse suggests that the facts support this as being the more plausible scenario, given that some splitting of funds has occurred, and if there is no sharing of the funds, there will be significantly unequal distribution.
[16] It would appear that, after the deceased died, the funds from these investment accounts were withdrawn from each account by the respective joint account holder and used as they wished. All of these accounts were closed within a year after the deceased died. According to the Applicant, the three sisters were together at the bank when the accounts were closed.
[17] The Respondent Woodhouse has provided no written agreement to support her claim that the funds were to be distributed equally and has conceded that there is no such written agreement. According to the Respondent Woodhouse, there was an oral agreement. In her affidavit sworn on September 9, 2022, she stated:
- Julie and I agreed on or about June 30, 2017 to divide the monies from the matured GIC's into three shares so that myself, Donna and Julie would each receive an equal amount.
The Applicant and Respondent Wigglesworth deny that there was any agreement to equally distribute these funds. It is to be noted that the Respondent Woodhouse has never brought an application to have a court decide whether the GIC funds did or did not form part of the estate to be distributed equally, although she claims that this is her intention. It would appear that the Respondent Woodhouse never raised this issue until this application was brought, despite the fact that this difference of opinion has existed for many years.
[18] It is absolutely clear and conceded by the Respondent Woodhouse that she has refused to meet with her co-Estate Trustee for the purpose of finalizing the administration of this estate as she believes that she has not received her share of all investment accounts. In her affidavit sworn September 9, 2022, she stated:
- I have refused to meet with Julie for the purpose of closing the estate account as I want to be paid the outstanding monies which are outlined above and can be summarized as a total of $453,557.72 which sum should be divided into three shares being $151,185.90 each. However, Julie will not pay me any monies until the estate account is closed. The funds should be put back in the estate account and divided amongst all three siblings.
[19] Respondent Woodhouse stated clearly on cross-examination that it is her intention to withhold the estate money until she gets her perceived share. She testified:
Q. So, your plan is to withhold the estate money until you get or until Julie honours this agreement that you say existed? A. Correct.
[20] As previously stated, it is also absolutely clear and conceded by the Respondent Woodhouse that she has not initiated any litigation to have this issue determined despite the passage of years.
Analysis
[21] In St Joseph's Health Centre v. Dzwiekowski, 2007 ONSC 51347, St. Joseph’s applied for an order removing the respondent as executrix and trustee under the will and appointing a bank to replace her, alleging breaches of trust in failing to attend to the administration of the estate in a proper and timely manner. The Court stated:
[28] The authorities are, I believe consistent in placing the emphasis on the future administration of the estate, and the risks to which it will be exposed if the trustee remains in office. The question 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. The sanction of 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. As Lord Blackburn stated:
... if satisfied that the continuance of the trustee would prevent the trust being properly executed, the trustee might be removed.
[29] Past misconduct that is likely to continue will often be sufficient to justify removal, and there have been other cases where it has led to such friction, distrust and animosity with the beneficiaries that such an order has been made. In all cases, however, I believe the guiding principle is that stated by Lord Blackburn.
The Court placed the emphasis on the future administration of the estate and how that would be jeopardized if the person remained in the role of Estate Trustee.
[22] In Bunn v. Gordon, 2015 ONSC 4768, the Applicants sought to remove the Respondent as Estate Trustee. The Court stated in part as follows:
[4] The law with respect to the removal of a trustee has been canvassed by both parties. A very thorough review of the law was undertaken by Tulloch J. (as he then was) in Oldfield v. Hewson, at paras. 19-23:
[19] Pursuant to s. 37(1) of the Trustee Act, a Court may remove a personal representative upon any ground on which the Court may remove any other trustee and may appoint some other person or persons to act in the place of the executor or administrator so removed. The Courts, however, are reluctant to exercise its discretion to interfere with the discretion exercised by a testator in choosing his or her trustee or executors and thus only in rare circumstances will the Courts intervene to remove a trustee.
[20] The governing principle on which the Courts have relied to determine whether or not a trustee should be removed is the welfare of the beneficiaries. This principle was established in the case of Letterstedt v. Broers (1884) 9 APP. CAS. 371 at 385 - 389 (P.C.), where Lord Blackburn stated that the “main guide must be the welfare of the beneficiaries”.
[21] Professor Waters in his seminal text on the law of trust in Canada makes the following comments with respect to this principle:
The law of trust in Canada, in reference to Lord Blackburn’s guidelines, states:
If it is clear that the continuance of the trustee would be detrimental to the execution of the trust, and on request he refuses to retire without any reasonable ground for his refusal, the court might then consider it proper to remove him. He went on to quote from Story that the acts or omissions must be such as to endanger the trust property, or to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.
D.W.M. Waters, Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984) at 683.
[22] This prevailing principle has been followed in Ontario. In the case of Elliott Estate (Re) at paras. 10 - 12, (H.C.J.) (Q.L.), Justice Learner reiterated the law as enunciated by Lord Blackburn:
Historically, the courts do not take lightly the wishes of the deceased as expressed in testamentary documents. This includes naming of those who shall administer the Estate. The Judicature Act, R.S.O. 1970, c. 228, was amended giving the High Court of Justice the power to remove an executor or administrator by (1896) 59 Victoria, c. 18, s. 4. Essentially, this power has been continued and presently is found in The Trustee Act, R.S.O. 1970, c. 470, s. 37(1).
It is stated in Letterstedt v. Broers (1884) 9 APP. CAS. 371 at 387:
In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case.
In MacDonell, Sheard and Hull, Probate Practice 2nd Edition, at p.133, it is stated that Lord Blackburn’s remarks have been repeatedly referred to but the basic principles therein stated have neither been enlarged or qualified. Subsequent cases simply illustrate the application of those principles to various sets of circumstances. In each case, it seems to be necessary to convince the court that continuance in office of a particular executor, trustee or administrator would be likely to prevent the trust being properly carried out. Re Anderson (1928) 35 O.W.N. 7; Re Thorpe (1929) 35 O.W.N. 325.
[23] I am satisfied that the continuance of Hewson as trustee would be detrimental to the execution of the trust. From his past conduct as executor, it is clear that he has been ineffective in administering the Estate in an expeditious manner so that Keith’s wishes can be realized and the beneficiaries can benefit from the bequest. Furthermore, due to the protracted conflict, the hostility and distrust between Hewson and the beneficiaries prevents them from “working in harmony” and which makes it impossible for him to exercise the very wide discretion he is given under the will. This situation is similar to that of the case of Re Davis Estate (1983) 14 E.T.R. 83 at 85 (Ont. C.A.) where the Court held that, regardless of the causes of hostility between the trustee and the beneficiaries, the existence of hostility in and of itself impaired the relationship such that it was appropriate to remove and replace the trustee. The Court stated:
It is apparent to us that an unfortunate but substantial degree of hostility now exists between the executrix and the three beneficiaries.
Regardless of what has brought about the present situation, we are of the view that it is no longer possible for the executrix to exercise in a completely impartial and objective manner the very wide discretion she is given under the will as to payment of income and/or capital to one or all of the beneficiaries. In the circumstances, we think it is desirable that the executrix and trustee be removed as such ...
See also: Mayer v. Rubin, 2017 ONSC 3498, 30 E.T.R. (4th) 239; Class v. Smith, 2018 ONSC 623, para 40
[23] This court recognizes that, pursuant to Rule 1.05, “when making an order under these rules the court may impose such terms and give such directions as are just.”
[24] Clearly, the Estate Trustees are of differing views about the proper administration of this estate. This cannot continue. However, even more significantly, Ms. Woodhouse has stated her position clearly – that she intends to hold the estate funds in limbo until issues are settled which are not even, at this time, being litigated. This is an unreasonable position to take and is not in accordance with the proper role of the Estate Trustee.
[25] If the Respondent Woodhouse felt that the issues relating to the investment accounts was a significant issue, it should have been litigated a very long time ago. Rather then litigating this issue with a proper evidentiary record, Ms. Woodhouse asks this court to consider these issues in the context of this application. This is not the appropriate manner in which to litigate this issue – effectively asking this court to decide this issue in a vacuum. The Respondent ultimately conceded that this court would not be in a position to decide what should have happened to the GIC funds on this evidentiary record.
[26] Even if this court factors this into its analysis on this application, there is no evidence to support or even suggest that there will be no other opportunity to recover money if these funds are not “preserved” in some manner. Ms. Wigglesworth is a resident of Ontario. There is no indication that she is “judgment-proof”. Besides that, there is no basis upon which to hold the estate account as security for another anticipated proceeding. This would appear to be a matter to be litigated between the current Estate Trustees, not Ms. Hutchinson. This is litigation that has not even commenced despite the passage of many years.
[27] Ms. Woodhouse has made her intentions perfectly clear. It is blatantly obvious that the Estate Trustees must be removed in these circumstances. The proper administration of the estate is at risk if the current Estate Trustees remain. It is highly unlikely for this estate to be administered properly in accordance with the fiduciary duties of the trustees and with due regard to the interests and welfare of the beneficiaries if these Estate Trustees remain. The continuance of these Estate Trustees will prevent the proper administration of this estate and, therefore, must be removed.
[28] As for replacing the current Estate Trustees with the Applicant, this Court is not convinced that this is the appropriate course of action given the differences demonstrated between these parties. This Court acknowledges that the main friction, distrust, and animosity seems to exist between the Estate Trustees, and does not seem to directly involve the Applicant, Donna Hutchinson. Having said that, this court senses tension among the beneficiary sisters, to say the least. While this court appreciates that having a neutral third party appointed may come at an unfortunate cost, it is the view of this court that a neutral third party is what the proper administration of this estate requires.
[29] As for the passing of accounts, the Rules and legislation are clear. Rule 74.15(1)(h) of the Rules of Civil Procedure provides that “any person who appears to have a financial interest in an estate may move… for an order requiring an estate trustee to pass accounts”.
[30] Section 50(1) of the Estates Act, R.S.O. 1990, c. E. 21 provides that “an executor or an administrator shall not be required by any court to render an account of the property of the deceased, otherwise than by an inventory thereof, unless at the instance or on behalf of some person interested in such property or of a creditor of the deceased, nor is an executor or administrator otherwise compellable to account before any judge.”
[31] An Estate Trustee is obliged to keep records of their activities in fulfilling their role, and to be in a position to demonstrate that they have done so at all times. As a beneficiary, the Applicant is entitled to compel the current Estate Trustees to pass their accounts from the date of death to present. Clearly the Estate Trustees are required to keep accounts. As previously stated, Ms. Wigglesworth is prepared to pass accounts. Ms. Woodhouse did not spend any time on this application opposing this request.
Conclusion
[32] In submissions on this application, the Respondent Woodhouse acknowledges that the funds from the property sale are effectively being held as security for litigation that has never been commenced by her. If Ms. Woodhouse truly believed this to be an essential issue to the proper administration of this estate, it would only make sense that she would have brought an application to have it decided many months or even years ago. Instead of that, she has been improperly holding estate funds to protect a perceived financial interest that she believes she has without ever pursuing the issue in court.
[33] Six years have now passed since the deceased died. Nearly six years have passed since the house was sold. The only application currently before the court in relation to this estate is this one. It appears that the distribution of funds in the estate account, most of which were obtained by the sale of the house, would finalize the administration of this estate. The only reason this has not happened is because one of the Estate Trustees simply refuses to allow it to happen, holding it as security for a claim of misappropriated GIC account money that she has never pursued. Ms. Woodhouse is not responsibly carrying out her duties, rather she is frustrating the process.
[34] This application is granted. The Court orders:
a. That the Respondents, Marie Ann Woodhouse and Julie Patricia Wigglesworth, be removed as the Estate Trustees of the Estate of Joan Ann Hutchinson;
b. That a neutral, independent, professional, estate trustee be appointed in substitution on behalf of the estate. The parties are encouraged to reach an agreement on the person to be involved, failing which, the parties are permitted to make written submissions on this issue, together with their costs submissions (to be addressed below), and this portion of the submission shall be no more than two pages in length;
c. An Order pursuant to Rule 74.15(1)(h) of the Rules of Civil Procedure compelling the Respondents to file an application to pass their accounts for their actions as Estate Trustees from May 23, 2017 to the date of the Order.
[35] This Court strongly encourages the parties to attempt to resolve the issue of costs. If the parties are unable to agree on costs of this application, the court will accept a two-page written submission on costs from each party (for a combined page limit of four pages if the new estate trustee is not agreed upon), to be filed with the court, uploaded to Caselines, and emailed to Bev.Taylor@ontario.ca, no later than Friday, June 9, 2023 at 4:30 p.m.
Justice V. Christie Date: May 25, 2023