Court File and Parties

COURT FILE NO.: CV-16-3588-00ES DATE: 2024 01 12 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

CAROL BELLAMY Applicant J. de Vries and G. Fournie, for the Applicant

- and -

CAROLYN THOMPSON Respondent E. Bisceglia and S. Turajlich, for the Respondent

HEARD: September 12, and 13, 2023, in person

Reasons for Decision

Wilkinson J.

[1] This application for a passing of accounts of the Estate of Jean Ann Ruston (“the Estate”) has been a long time coming. The late Jean Ann Ruston died on January 12, 2005. Her Estate has one beneficiary, the Respondent, Carolyn Thompson (“Carolyn”). The onus to establish that the accounts ought to be passed is on the Applicant and co-Estate Trustee, Carol Bellamy (“Carol”).

[2] Carol and Carolyn were co-Trustees for the Estate. Carolyn was an Estate Trustee as appointed in her mother’s will. Carol and Carolyn were appointed as co-Estate Trustees of the Estate on April 19, 2005. Carol’s husband Ron was involved with investing the funds of the Estate. The extent to which Carolyn consented to Ron’s involvement is a matter of dispute between the parties, but the evidence is clear that Carol was supportive, and in fact, encouraged her husband’s involvement with the Estate. In November of 2013, Ron Bellamy died, and in December of 2013, Carol advised Carolyn that she could no longer carry on as an Estate Trustee. Although Carolyn opposed her removal, Carol was formally removed as a co-Trustee for the Estate on July 3, 2014.

[3] On July 31, 2015, Carolyn filed a Statement of Claim against Carol and Ron, and their company, Bellamy Enterprises, alleging damages resulting from breach of trust, fraud and negligence. The claim also included claims against numerous other financial institutions. That action was stayed on consent pending the outcome of this motion, pursuant to the June 27, 2016 Order of Trimble J.

[4] Carol commenced this Application to pass accounts on August 12, 2016. Counsel advises that there have been six rounds of objections, resulting in 19 objections remaining before me. Neither party chose to cross-examine the other. For the reasons that follow, I make the following Orders addressing the objections in different groupings as they were presented to me by counsel:

• Objections #8 and #19 – Investment in Czechmate Ltd. – dismissed.
• Objection #4 – Gifts in Lieu of compensation paid from Estate assets – $25,000 repayment to the Estate.
• Objections #16, #17, #18, #20, #21 and #22 – Thompson’s Personal Assets:
  • (a) Objection #16 –Payments to Carol Bellamy from the RBC joint account – repayment of $4,600 + $48,800 = $53,400 repayment to the Estate.
  • (b) Objection#17 –Payments to Carol Bellamy from the RBC joint account – banking records to be produced by Carol Bellamy – proceed to trial.
  • (c) Objection #18 – Payments to Carol Bellamy from Carolyn Thompson’s personal TD account - banking records to be produced by Carol Bellamy – proceed to trial.
  • (d) Objection #20 – Transfer of CI Investments to the RBC joint account – proceed to trial.
  • (e) Objection #21 – Payments from Carolyn’s personal TD account – banking records to be produced by Carol Bellamy – proceed to trial.
  • (f) Objection #22 – Request for banking records to be produced by Carol Bellamy – granted. Carolyn Thompson’s request for credit card statements, insurance policies and Rogers accounts – dismissed.
• Objection #14 – Estate Investments – dismissed.
• Objections #5, #9 and #10 – Reimbursements to Bellamy - $5,781.85 + $29,277.50 + $5,458.92 =$40,518.27 repayment to the Estate.
• Objection #11 – Manulife Insurance Policy – dismissed.
• Objection #6 – Estate Taxes – dismissed.
• Objection #7 – Distribution to Thompson to joint RBC Account – proceed to trial.
• Objection #13 – Capital Disbursements Made To or For Thompson – $213,282.32 repayment to the Estate and proceed to trial.

Powers of the court

[5] Section 49(2) of the Estates Act, R.S.O. 1990, c. E.21, sets out the powers of the court in passing the accounts of an estate, which includes the jurisdiction to enter into, and make full inquiry and accounting, of the estate of the deceased. Section 49(3) of the Act sets out further powers, including making orders that the executor, administrator or trustee, pay sums by way of damages or otherwise to the estate as I consider to be proper and just.

[6] Section 49(4) of the Act states that I may also order the trial of an issue of any complaint or claim under subsection (3), and in such case, I shall make all necessary directions as to pleadings, production of documents, discovery and otherwise in connection with the issues to be determined. These powers are also described in Rule 74.18(13.1) and (13.2) of the Ontario Rules of Civil Procedure.

[7] In considering the actions of Estate Trustees when determining if accounts should be passed, Durno J. confirmed in Nicholson Estate, Re (2000), 35 E.T.R. (2d) 126 (Ont. S.C.), at paras. 6 and 8 that every trustee is expected to act as the person of ordinary prudence would act, and that the Trustee is held to a reasonable standard of care, not perfection.

Background – Issues not in dispute

[8] The parties both agree that they were friends at the time of the passing of Jean Ann Ruston, and that following the death of her mother, Carolyn was upset and overwhelmed, and requested that Carol assist her with managing her mother’s Estate.

[9] There is no dispute between the parties that this Estate was a large one to manage. It included eight real properties (six houses, one condominium, and one vacant lot), 26 bank accounts, savings bonds, mutual funds, investments, and two safety deposit boxes (which were empty). Carol states that many of the properties were in various levels of disrepair, and needed to be cleaned, fixed, and prepared for sale. Carolyn does not agree that the properties were in disrepair, but does agree that they needed “updating”. Carol indicates that in one of the properties, paperwork was located that revealed Ms. Rushton also owned an additional property about which even her own daughter Carolyn was unaware. Carolyn does not dispute this evidence.

[10] As co-Trustees for the Estate, either Carolyn or Carol could sign cheques on behalf of the Estate, but there is no dispute that it was the parties’ general practice for both women to sign estate related cheques.

Early Estate Payments to Carol, Ron, and Bellamy Enterprises

[11] There is no dispute that Carol took the lead in managing the affairs of the Estate, along with her husband, Ron, who obtained authority from Carol and Carolyn to manage the monetary investments of the Estate. Carol also produces Carolyn’s signed trading authorization for Ron to manage Carolyn’s personal investments, but Carolyn disputes providing consent to a significant number of the transactions.

[12] Early on in her management of the Estate, Carol was paid $50,000 plus HST totaling $53,500 for her past work as a Trustee, and as an advance for her ongoing work as a Trustee. There is no dispute that Carol was actively involved in assisting with the management of the Estate at this time.

[13] Carol was also paid $5,938.50 on June 28, 2005 as a 3% commission for assisting with the sale of a property located at 97 Williams Street, in Bolton, Ontario.

[14] These payments were made directly from the account for the Estate to Carol Bellamy or to Bellamy Enterprises. After these two payments were made, Carol states that she received accounting advice to avoid receiving payments directly from the Estate, as those payments would be taxable to her. Accordingly, from that point forward, Carol, and also her husband Ron, were paid for their services from the personal accounts of Carolyn as “gifts” that did not trigger tax consequences for them.

[15] The records demonstrate that frequently (but not always) payments were made from the Estate directly to Carolyn, and then immediately from Carolyn’s personal account to either Carol, Ron, or Bellamy Enterprises. This convoluted system created by the Bellamys to avoid being taxed on monies received for trustee and estate services has certainly generated greater complexity for all involved. The accounting is unnecessarily complicated. Further, there is a live issue between the parties as to whether some of the payments for investments made from Carolyn’s personal account were essentially Estate investments, which then create fiduciary responsibilities on behalf of the Estate.

[16] The parties remained on friendly terms throughout the almost nine-year involvement of the Bellamys with the Estate. Carolyn states that she trusted both Ron and Carol completely. Carol does not dispute this fact.

[17] I was not provided evidence as to when the relationship between Carol and Carolyn began to deteriorate.

[18] After Carol was removed as Estate Trustee, she delivered several boxes of Estate financial documents to Carolyn. The last delivery of documents from Carol occurred on May 14, 2019.

Summary of Carol Bellamy’s position

[19] Carol provides evidence that Carolyn asked her to assist with the management of her mother’s estate, and that is why she agreed to be appointed as a co-Estate Trustee. Carol submits that given the size and complexity of this Estate, her management of the Estate was reasonable. She notes that estate management, especially in the hands of a lay person, does not have to be perfect. She argues that given the passage of time between when she became involved with the Estate in 2005, and when she resigned in December 2013, several boxes of documents that she provided to Carolyn reasonably demonstrate sufficient record keeping of the financial transactions and management of the Estate.

[20] Carol further strenuously argues that Carolyn, as a co-Trustee of the Estate, also had a fiduciary duty to ensure the appropriate financial management of the Estate, notwithstanding that she is the sole beneficiary of the Estate. Carol points to Carolyn’s signature evident on numerous cheques, often for very large sums, and argues that Carolyn had ample opportunity over the course of almost nine years to ask questions or raise concerns about the finances of the Estate.

[21] Carol also submits that some of the financial transactions and investments involved banks and other financial institutions, providing Carolyn with additional opportunities to discuss any of her financial questions or concerns with independent third parties who were not connected to the Estate. She did not do so.

[22] Although Carol acknowledges that some of the investments may not have been financially successful, such as one particular set of investments made to a real estate venture in Dallas Texas, known as “Czechmate Ltd.”, she argues that investing is not a precise science. Secondly, she argues that these investments came from Carolyn personally, and that even if the investments were made at Carol’s suggestion or Ron’s suggestion, they do not form part of Carol’s fiduciary duty as Trustee of the Estate, as she claims that these investments were made by Carolyn personally.

[23] Carol repeats this argument for all investments made with cheques from Carolyn’s personal TD account, and the joint RBC account that she held with Carol.

[24] Carol argues that Carolyn’s failure to ask questions or take any action to discharge her fiduciary duty to the Estate if she had concerns about Estate investments or finances, establishes acquiescence on the part of Carolyn, which estops her ability to now challenge financial decisions that were made on behalf of the Estate. Further, Carol argues that the presence of Carolyn’s signature on a large majority of the cheques implies her knowledge of, and consent, for the amounts being paid. Carol relies upon the equitable doctrine of acquiescence in this regard.

[25] Carol also relies upon the equitable doctrine of laches to argue that these accounts ought to be passed, as it has been over eighteen years since the death of Ms. Rushton. She indicates that documents are missing given the passage of time, which is prejudicial to her ability to respond to the objections now raised. She argues that the window of opportunity to object to the accounts has long passed.

[26] Carol also submits that the objections that have been made are not sufficiently precise pursuant to the statutory requirements, and therefore should not be considered when determining if the Estate accounts should be passed.

Summary of Carolyn Thompson’s position

[27] Carolyn provides evidence that she did not consent for Carol to be a co-Estate Trustee, and that she only wanted her help as a friend. She further states that when she signed the paperwork adding Carol as an Estate Trustee that she did not appreciate that this appointment would give Carol access to all the Estate information, and that Carol would be provided compensation for her assistance.

[28] Carolyn provides evidence that she was not aware of many of the payments received by Carol as gifts, or the gifts received by Ron and/or Bellamy Enterprises for investing services provided. She states that Carol and Ron took money from the Estate as they saw fit, and have not properly accounted for it. She states that specific sums of money should be returned to the Estate, or alternatively, a trial date should be set to address the accounts in more detail, as there are credibility issues as between Carol and Carolyn that cannot be determined or resolved by way of a written record.

[29] Carolyn also provides evidence that following her mother’s death, she was overwhelmed with the management of the Estate, and relied heavily on Carol and Ron to make decisions on behalf of the Estate.

[30] Carolyn acknowledges that her signature appears on many cheques, including many large cheques. However, she states that these cheques and other paperwork were often thrust at her to sign by Carol when Carolyn was at work, or in other circumstances when she could not read the paperwork properly or carefully to consider what she was being asked to sign. She states that when she raised questions about the cheques or paperwork, Carol reassured her with statements such as “Don’t worry, you can trust us”. Carolyn also indicates that sometimes Carol asked her to sign blank cheques.

[31] Carolyn submits it was Carol’s fiduciary duty as a Trustee of the Estate to keep accurate and thorough records of all financial transactions relating to the Estate, and that the boxes of materials that were eventually delivered to her by Carol on April 6, 2016 were disorganized, and challenging to decipher. Indeed, her counsel makes the point that numerous lawyers and accountants have reviewed the documentation, and it has taken a great deal of effort on the part of counsel to organize and synthesize the documents so that they can be understood in a manageable fashion. He argues that Carolyn could not be expected on her own to organize and understand the impact of these voluminous documents, and that it is therefore not reasonable to suggest that she has been in possession of these documents since 2016 and has unduly delayed the passing of the accounts.

[32] Carolyn argues that many of the payments for investments written on cheques from her personal account were for all intents and purposes cheques from the Estate. She points to numerous examples of payments being disbursed from the Estate to her, and then immediately from her to Ron, or third parties for investment purposes. She states that in essence, these payments were comprised of Estate funds, as she did not have such large sums of money to make investments independent of the Estate. Accordingly, Carolyn argues that Carol’s fiduciary obligation as Estate Trustee remained intact regarding these investments, notwithstanding that the actual cheques may have been written from her personal account.

[33] Carolyn also states that of the $3,757,699.77 that Carol indicates was distributed to Carolyn, a significant portion of these distributions included payments that were made from the Estate to Carolyn, followed by cheques made out to Ron, Carol or Bellamy Enterprises for identical amounts. Accordingly, Carolyn argues that Carol and Ron received the financial benefit of a large number of the Estate distributions which appear in the records as Estate distributions to her.

[34] As an example of financial mismanagement, Carolyn points to a personal investment she held with CI Investments prior to the death of her mother. In reviewing the Estate documents, she discovered that the investment monies were moved from her personal investment account to the joint RBC account for Carolyn and Carol that was set up by Carol. Carolyn indicates in her affidavit that she did not give consent for this financial transfer to be made.

[35] Carol also provides two examples of Carol signing cheques from Carolyn’s personal TD account as further examples of Carol’s mismanagement of the Estate funds.

Defences advanced by Carol Bellamy

Laches argument by Bellamy

[36] Carol submits that the passage of time has been prejudicial to her resulting in missing documents, and the accounts of the Estate should be passed now. The Ontario Court of Appeal has already ruled that notices of objection are not bound by the Limitations Act, as a notice of objection is not a “proceeding” within the meaning of section 4 of the Limitations Act (Wall v. Shaw, 2018 ONCA 929, 43 E.T.R. (4th) 1). It is, however, open to me to dismiss the objections to the passing of accounts on the basis of laches.

[37] Laches is an equitable doctrine that stands for the principle that if a claimant permits long delay before they bring their action, the court may dismiss the action as a result of that delay (Waters, Donovan W. M., Waters' Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012), at p. 1323.) Carol argues that there has been too much delay in putting forward the objections brought by Carolyn to the passing of accounts.

[38] Although the testator died in 2005, the Application to pass accounts was not brought by Carol until August 12, 2016. The demand for the accounts to be passed arose from the action filed by Carolyn against Carol and other financial institutions on July 31, 2015. Counsel for Carol advises that the accounts went through six rounds of objections before the motion to pass the accounts was ready to proceed in 2019. Unfortunately, the parties were not reached in 2019, and then the impact of the COVID-19 pandemic introduced more delay regarding the hearing of this motion, which finally came before me in September of 2023.

[39] I am not prepared to pass the accounts before me with no further scrutiny simply due to the passage of time. Carol’s argument that the accounts should be passed now due to the doctrine of laches fails. Although some of the financial records appear to be missing, there is still substantial documentary production from Carol, with several boxes of documents having been produced. I further note that Carol was removed as Estate Trustee on July 3, 2014, and that it was open to her to apply to pass the accounts well before she finally applied to do so in 2016. It does not strike me as equitable for Carol to not apply to pass accounts until she was forced to do so by Carolyn’s decision to file a statement of claim against her, and then argue that Carolyn cannot object to the accounting due to the passage of time. Carol cannot rely upon the doctrine of laches to avoid further scrutiny of the Estate accounts that she now presents to me.

Acquiescence Argument by Bellamy

[40] Carol argues that Carolyn agreed to the payments that were made to her, which is evidenced by Carolyn’s signature on a majority of the cheques that were written to Carol Bellamy. Acquiescence is described in Waters’ Law of Trusts in Canada at p. 1303 as follows:

If a beneficiary consents to, or concurs in, a breach of trust prior to its being carried out, or he releases the trust from liability, or in some other way acquiesces in the breach after it has been carried out, he may not subsequently claim from the trustee any compensation to the trust for the loss arising. It is the beneficiary's personal conduct which bars him from making such a claim.

[41] Carolyn argues that she was unaware of the extent of money that was being paid to Ron, Carol, or Bellamy Enterprises during the time that Carol was managing the Estate. She states in her affidavit that although her signature appears on many of the cheques, she was not well informed as to what expenses the cheques were reimbursing, or the reasons for the payments. She indicates that she didn’t question why the cheques were written because she trusted Ron and Carol.

[42] I accept Carolyn’s statement that she was in a vulnerable position following the death of her mother, and that she wasn’t paying particular attention to the cheques she was signing. I also accept her evidence that she did not educate herself as to the reason the cheques were being signed because she trusted Carol and Ron. While this action is ill-advised, and lacks caution, it does not equate to Carolyn consenting to, or concurring with the financial decisions made by Carol and Ron regarding the Estate. Accordingly, the defence of acquiescence will not be available to Carol to deny Carolyn the opportunity to challenge the passing of accounts.

[43] It should also be noted that even if Carolyn was found to have acquiesced to the various payments being made, this court retains an equitable responsibility to ensure that the fees paid to Ron and Carol Bellamy for their work with this Estate were appropriate and reasonable in the circumstances.

Argument that the Objections Lack Precision

[44] Carol argues that the objections by Carolyn are not sufficiently precise, and ought to be dismissed on this basis. Carolyn responds with evidence that Carol did not keep her well informed as to the status of the Estate and its affairs, and the missing documentation, provides a sufficient explanation for any lack of precision in her objections.

[45] Rule 74.17(1) of the Rules of Civil Procedure states that Estate Trustees “shall keep accurate records of the assets and transactions in the estate”, and then provides sub-requirements detailing the Estate Trustee’s record keeping responsibilities. These responsibilities as described by the Law Society of Ontario are referenced by Ricchetti J. in de Vries v. Resetar et al, 2010 ONSC 2602, 58 E.T.R. (3d) 254, at para. 131:

There is a duty at common law and under the Trustee Act for estate trustees, executors, administrators and guardians to keep complete and accurate accounts for the assets under their administration. A beneficiary is entitled, on notice to inspect the accounts and any of the supporting documentation. All trustees ... should maintain accurate, up to date estate accounts and organize and keep all source documents such as bank statements, duplicate deposit slips, cancelled cheques, receipt confirmations and vouchers to support the records.

[46] Although the passage of time may have contributed to Carol’s inability to produce a complete set of financial records for the Estate, Carol also contributed to this delay by not seeking to pass accounts as soon as she was removed as Estate Trustee in 2014. I accept Carolyn’s argument that as an Estate Trustee, it was Carol’s responsibility to ensure that adequate records were kept for the Estate. The lack of specificity in some of the objections cannot now be used to shield Carol from further examination of these accounts. If there is a lack of precision in the objections raised, that lack of specificity will not result in an automatic passing of Carol’s accounts.

[47] I therefore find that the defences of lack of precision, laches and acquiescence are not available to Carol Bellamy in this Application.

Objections

[48] It is a matter of dispute as between the parties as to whether Carolyn understood the impact of the documents that she was signing when she agreed that Carol be appointed as a co-Estate Trustee. Carolyn claims to have not understood that Carol would be entitled to compensation for her work as Estate Trustee at the time that Carol was appointed. Carol claims that Carolyn was aware of the level of involvement in the Estate that Carol would have as Estate Trustee, and that all of the necessary paperwork was signed at a lawyer’s office after meeting with the lawyers.

[49] Carolyn acknowledges she asked Carol for help in managing the Estate. For me to determine if the Accounts are to be passed, I do not need to make a finding as to Carolyn’s level of understanding as to the role that Carol would be performing in relation to the Estate at the time that the application for a certification of estate trustee paperwork was signed. It is clear from the evidence that Carolyn needed help with the Estate, that she asked Carol for help with the Estate, and that Carol provided help. The issue before me, however, is if Carol provides adequate evidence to allow me to proceed with Passing the Accounts.

[50] I will address the objections in groupings as counsel presented them to me, recognizing that the passing of accounts is an informal summary procedure (Newell v. Newell, 2010 ONSC 5010, at para. 23). Estate Trustees are not held to a standard of perfection with respect to record keeping. The standard of care for an Estate Trustee is the standard of care of a person of ordinary care and diligence in managing their own affairs (Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302 at p. 315).

[51] Although the Estate accounting records produced by Carol are not perfect or complete, I am satisfied that sufficient documentation has been produced by her to proceed with this Application for passing of accounts.

Objections #8 and 19 – Investment in Czechmate Ltd.

[52] In total three payments were made to Czechmate Ltd., which both parties agree was a housing development in Dallas. Carol acknowledges that Ron had previously invested with this company on other projects. Carolyn deposes that she did not have much information about the investment, other than Ron and Carol advised her that it was a good investment opportunity, and that she should trust them.

[53] The first payment was made from Carolyn’s personal CIBC account on August 27, 2007, for $100,000 USD (conversion was $101,787.99 CDN). Ron had trading authority over this account. The second payment for $200,000 USD ($201,520 CDN at the time) was made by wire transfer to Czechmate Ltd. from the Estate account of Jean Ann Ruston on May 14, 2008. There is a promissory note from Czechmate Ltd. to “Mrs. Caroline P. Thompson” for $200,000 USD. The documentation prepared by Carol lists this expenditure as a capital disbursement to Carolyn, even though the wire transfer came directly from the Estate. The bank statement for this estate account was sent to the home of Carol Bellamy.

[54] A further $200,000 USD ($203,120 CDN) was paid to Czechmate Ltd. by wire transfer on October 18, 2010 from Carolyn’s personal Caldwell Securities account. Carol provides a copy of Ron’s trading authority for this account signed by Carolyn.

[55] A second promissory note was generated by Czechmate Ltd. for $300,000 USD in favour of “Mrs. Caroline P. Thompson” on November 1, 2010.

[56] Carolyn does not provide any financial documentation establishing the current value of the investment in Czechmate Ltd. Carolyn deposes that her daughter, Angela, has made inquiries in respect of the Texas investments, and advised Carolyn there is little indication that the money will be paid back. I put no weight on this statement, as it is hearsay evidence. No affidavit evidence was submitted by Carolyn’s daughter regarding this issue.

[57] Carolyn further submits that it has been almost thirteen years since the last deposit in this venture in October of 2010, and that if the investment was going to be profitable, some return on the investment would have been expected by now. Carolyn argues that although only one of the payments came directly from the Estate account, the payments made to Czechmate Ltd. were essentially Estate investments. She is the sole beneficiary of the Estate, and the other two payments came directly from the Estate to her before the investments were made from her personal account.

[58] Carolyn provides evidence that she did not have this level of capital available to her on her own to make investments without contributions from the Estate. She therefore argues all the monies invested in Czechmate Ltd. were essentially Estate investments, and that Carol failed in her fiduciary role to manage the Estate funds in a responsible fashion by allowing these investments to be made. Carolyn therefore states that Carol should be ordered to return to the Estate the $506,427.99 that was invested in Czechmate Ltd.

[59] Carol argues that the majority of the Czechmate Ltd. investments were made by Carolyn personally from her own account, and that it is not Carol’s responsibility as Estate Trustee to manage the personal investments made by Carolyn. With respect to the investment made directly from the Estate account, Carol argues that as co-Estate Trustee, Carolyn had the same responsibility as Carol to act in the best interests of the Estate, and that any financial liability resulting from those investments should not be borne by Carol.

[60] Carol also argues that Carolyn produces no reliable financial information about the current value of the Czechmate investments. As Carol is no longer involved with the Estate, she states she has no way to access this documentation. Carol argues that the investments could still become profitable, and it would be unfair to order that she make this repayment when the Estate might eventually recover its entire investment, and perhaps even make a profit.

[61] Carol further argues that in the event that it is found that the Czechmate payments were made on behalf of the Estate, as co-Trustee of the Estate, Carolyn had knowledge of the investment payment being made, and acquiesced to same. Carol argues that Carolyn cannot now claim she was unaware of the investments being made, or seek reimbursement to the Estate for these payments.

[62] Carolyn does not provide any reliable evidence as to the current value of the Czechmate investments, nor does she provide evidence of the efforts that she has made to determine the current value of the investment.

[63] Setting aside the issue of the current value of the Czechmate investments, it is relevant to consider who bears the financial responsibility in the event that this investment has failed. Carolyn deposes that Carol and Ron looked after the paperwork for this Texas investment, and that she was not involved, nor did she choose to make the $200,000 May 14, 2008 as a personal investment, as opposed to an investment made on behalf of the Estate. Carol deposes that the decision to invest in this Texas development was a decision made by Carolyn alone.

[64] There is a significant issue of credibility between the two parties on this issue. Carolyn states she had very little information about the Texas investment, and that Ron made all the arrangements with no instruction from her. Carol deposes that Carolyn was well informed, and made all the investment decisions herself.

[65] Both parties provide reports from experts that address issues relating to investments made on behalf of the Estate. Carolyn submits a report from Danielle Park, a Chartered Financial Analyst and Certified Financial Planner, to support her position that placing Estate funds in the Czechmate investment was a breach of the standard of care owed to the Estate. Ms. Park is also a lawyer licensed with the Law Society of Ontario. Carol takes issue with Ms. Park’s qualifications to opine on this matter. She argues that Ms. Park is a non practising lawyer, and that her report is outside the scope of her expertise. Carol did not cross examine Ms. Park on her affidavit or on her qualifications to provide expert evidence.

[66] The Curriculum Vitae that Ms. Park submits is quite brief. However, it indicates that she has been the President, portfolio manager, and co-founder of Venable Park Investment Counsel Inc. since 2003. It also indicates that she is a regular financial commentator and market analyst for various media sources, including CBC, CTV, BT, Global, and 680 News. She has also authored the text “Juggling Dynamite: An Insider's Wisdom about Money Management, Markets and Wealth that Lasts”. Insomniac Press; 1 (April 20 2007).

[67] The fact that Ms. Park is not a practising lawyer does not impact her ability to be considered an expert in matters involving financial management and investing. While Carol objects to Ms. Park providing evidence about the standard of care for investors, she does not provide sufficient evidence to seriously challenge Ms. Park’s expertise in the area of investments and financial management. I am satisfied that Ms. Park’s knowledge and experience are sufficient to permit her to provide opinion evidence regarding the standard of care for investors.

[68] Ms. Park concludes that the risk tolerance for Carolyn was low, as she was 58 years old, divorced and working as a casual, part time employee with Canada Post earning employment income of less than $15,000 per year, with no benefits or work pension. She owned her own home, but the market value was less than $600,000, and she had cash savings and retirement accounts in her name of less than $20,000.

[69] When asked to comment on the reasonableness of the Texas investment, Ms. Park states:

This is a private limited partnership with no guaranteed income or defined maturity date. It is the definition of speculation. In addition, the security is illiquid and does not trade on a public market. It is therefore not investment grade and was not suitable given the beneficiary's personal circumstances and needs. Case in point, more than 7 years after depositing $500,000 in US cash, the security has not paid any income or return of capital, and there is no indication or assurance as to when, or if, it might. Moreover, allocation of $500,000 US was an imprudent concentration of the estate's liquid cash available for expenses and other income generating securities.

[70] Carol relies upon the opinions of Chartered Financial Planner and Chartered Financial Consultant, Donald Flack, who concludes that as a percentage of Carolyn Thompson’s entire net worth, the securities that would be considered speculative represented only 1.9% of her total assets. Although Carolyn does not challenge Mr. Flack’s expertise regarding financial management and investing, Carolyn submits that the report prepared for Carol does not comment upon the reasonableness of the Czechmate investment, and that I should infer from Flack’s silence in this regard that he was unable to conclude that the Czechmate investment was reasonable.

[71] Carol submits that Flack’s report does not address the Czechmate investment as it is her position that the Czechmate investments were personal investments made by Carolyn, as opposed to Estate investments, and accordingly, the Czechmate investments were outside of the scope of his report.

[72] On the issue of the reasonableness of the Czechmate investment, I accept the evidence of Ms. Park. Although Carol argues that it was outside of the scope of Mr. Flack’s report to provide an opinion on this issue, the reality remains that Carol provides no evidence to suggest that the Czechmate investments were reasonable or responsible investments.

[73] I find that the $500,000 USD investment in Czechmate was not a reasonable investment for either the Estate, or for Carolyn personally. I have concerns as to the adequacy of the information or advice that was given to Carolyn prior to the Czechmate investments being made.

[74] It is clear that these investments have not produced any return in the thirteen years since the last payment was advanced by Carolyn in 2010. While it does not look promising that any return will be forthcoming, that is not the evidence before me. Carol argues, and I accept, that it would be a miscarriage of justice for me to order repayment from Carol to Carolyn for the Czechmate investment funds, when the potential still exists that this investment might still generate a return, or even a profit from the initial investment.

[75] There is no reliable evidence before me as to the current value of the Czechmate investments. There is also no evidence from Carolyn detailing the efforts that she has made to determine the current value of the Czechmate investments. I further note that there is no evidence that Carol or Ron enjoyed personal gain or profit from arranging for the investment of Estate and/or Carolyn’s funds in Czechmate. I acknowledge there is some evidence of a personal connection between Ron and Carol and Czechmate, but there is insufficient evidence for me to make any specific findings in this regard.

[76] Although I have significant concerns regarding the decision to make such a substantial investment in such a speculative enterprise, Carolyn does not provide conclusive evidence that the monies invested in Czechmate are forever lost. As I have insufficient evidence to make any further findings with respect to this investment, objections #8 and #19 are dismissed. Accordingly, there is no need for me to make a determination as to whether the funds advanced to the Czechmate investment were advanced on behalf of the Estate, or by Carolyn in her personal capacity.

Objection #4 – Gifts in Lieu of Compensation Paid from Estate Assets

[77] Section 61 of the Trustee Act states:

61. (1) A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.

[78] Carolyn provides evidence emphatically in her affidavit that she never agreed to give monetary gifts to Carol or Ron, or to pay them commissions or compensation for labour they purportedly provided in respect of the Estate properties.

[79] In the months following the death of Jean Ann Ruston, one of her properties located at 97 William Street in Bolton, Ontario, was sold. There is no dispute between the parties that Carol assisted Carolyn with the sale of this property. Following the sale, Bellamy Enterprises Inc, invoiced the Estate for $5,938.50, which is a 3% commission on the sale of the property. This payment was made directly from the Estate.

[80] Carolyn deposes that she was not aware that Carol was charging a 3% commission on the sale of each property, and disbursing the funds for these commission payments to herself, Ron, or Bellamy Enterprises. Conversely, Carol states that there was an agreement between the parties that Carol would charge a 3% commission on the sale of each property, as many of the properties required a great deal of work to clean, repair and present for sale.

[81] Given that the sale of the William Street property occurred within six months of the death of Ms. Rushton, I accept that during that time frame, Carol expended a good deal of time assisting Carolyn with the Estate. A payment of $5,938.50 is not unreasonable under these circumstances.

[82] The evidence also suggests that Carol spent a substantial amount of time assisting Carolyn with the sale of the other properties in the Estate. Carol’s affidavit evidence suggests that she was paid $41,325 in gifts from the Estate (3% of the proceeds of sale) to compensate her for her work in assisting with the sale of these properties.

[83] Recognizing that if Carol had not been assisting the Estate, additional realtor fees would have been charged to the Estate, the 3% commission charged by Carol for the sale of each property was reasonable.

[84] Carolyn also objects to the $53,500 that was taken from the Estate in 2005 to compensate Bellamy Enterprises for the work being done to assist Carolyn with management of the Estate. Given that Carol was already receiving commission cheques to compensate her for assisting with the sale of the properties, it was excessive for Carol to take an additional $53,500 in June of 2005. Carol is ordered to repay the Estate $25,000 for the pre-taking of compensation for fees from the Estate.

Objections #16 – Payments from the Thompson – Bellamy joint RBC account

[85] This objection involves four sets of payments. The first set of expenses totals $5,283.67 described by Carol as reimbursement to her for “personal expenses for Carolyn”, which includes two cheques each for $2,300 for investing services provided by Ron. These two cheques were signed by Carolyn. Carolyn deposes that she had no knowledge as to what these cheques were for, and further, that the money for these cheques was paid from the Estate account into the joint RBC account, and then the cheques were written from the RBC account.

[86] Carolyn persuasively argues that she did not have the funds on her own to make these kinds of payments to Ron, and that it was the Estate account that funded the payments by first disbursing funds to the RBC joint account, from which the payments were then made to Ron. Carolyn therefore argues that these payments are for all intents and purposes payments from the Estate.

[87] Although the RBC account may not technically have been an Estate account, I find that the funds in the RBC joint account came exclusively from the Estate, which created an opportunity for Carol and Ron to have access to Carolyn’s inheritance. I therefore find the Carol had a fiduciary obligation to manage the funds in the RBC joint account in a manner that was in the best interests of the sole beneficiary, Carolyn, despite Carolyn’s signature also being on the cheques.

[88] The explanation provided by Carol in her affidavit that these payments were to Carol, even though they were actually for Ron’s services, does not sufficiently detail the services that Ron provided to demand payment in this amount. Carolyn’s objection with respect to these transactions is reasonable. Carol is ordered to repay the Estate $4,600.

[89] The next aspect of Objection #16 relates to payments totalling $22,628.05 to the Bellamys for credit card expenses, which Carol claims reimbursed her for expenses she personally incurred on behalf of the Estate, and occasionally, personal expenses for Carolyn that Carol put on her own card. Carol provides evidence that these personal expenses for Carolyn include items such as truck repairs to Carolyn’s truck, Carolyn’s veterinarian expenses, and plumbing expenses.

[90] Carolyn provides evidence that she did not authorize Carol to incur expenses for the Estate and then reimburse herself, although such consent is not required for legitimate estate expenses, pursuant to section 23.1(1)(b) of the Trustee Act. In addition, Carolyn does not dispute that many of the items paid for on the credit card related to legitimate expenses for the Estate, or for payments made for goods and services for Carolyn herself. In addition, most of these cheques were signed by Carolyn alone. As many of the items paid for on the credit card payments related to legitimate expenses for Carolyn, the objection relating to this aspect of the accounts is dismissed.

[91] There is also a dispute with respect to a payment to Hydro One for $2,140.08, which Carol states relates to a utility expense from Carolyn’s personal property. Carolyn disputes that this payment was for her property. Carolyn signed the cheque for this payment on April 25, 2011. Neither party provides documentation to confirm the address to which this account attaches. Carolyn should have been able to access her own Hydro One records, to demonstrate that this payment did not relate to her home. I accept Carol’s evidence that this particular Hydro One account related to Carolyn’s property. This objection is dismissed.

[92] The next aspect of Objection #16 relates to payments totaling $97,600 to Ron Bellamy, as “gifts” for his personal investment services provided between 2009 and 2013. Carolyn denies that she ever agreed to pay Ron fees for his services, notwithstanding the fact that Carolyn signed most, if not all, of the cheques for Ron’s services.

[93] Carol deposes that Ron was paid approximately $2,300 per month in 2009 and $2,500 per month in 2010 for investment services provided to Carolyn for her personal accounts. Carol deposes that the statements and cheques prior to October 31, 2009 are not available, and that much of the activity with respect to the RBC accounts occurred prior to 2009, immediately following the death of Ms. Rushton in 2005.

[94] Ron charged Carolyn for his services investing Carolyn’s money that was received from her inheritance in the Estate. Carol does not provide evidence as to the reason why the decision was made to disburse funds to Carolyn, and have Ron assist with those investments, rather than retaining these sums in the Estate to be managed as Estate investments. From this perspective, even though the cheques to Ron were written from Carolyn’s personal accounts, the funds were essentially Estate funds that flowed through Carolyn’s accounts.

[95] To the extent that the funds paid by Carolyn to Ron were paid using Carolyn’s inherited funds, I find that Carol therefore continued to act in a fiduciary relationship to Carolyn when providing Carolyn with advice or direction as to how to spend or manage the monies she received from the Estate. I also note that Carol had a legal, but not beneficial, ownership in the joint RBC account that was set up, which created a fiduciary obligation by Carol to Carolyn as the beneficial owner.

[96] Whether the money was retained in the Estate, or was disbursed to Carolyn, including the joint account, it was all Carolyn’s money as she was the sole beneficiary of the Estate. Carol’s fiduciary duty as Estate Trustee remained in place when she was providing guidance to Carolyn as to how to manage funds received from the Estate.

[97] The evidence suggests that Carol retained a significant amount of control over the funds in both the RBC joint account and Carolyn’s personal TD account. This situation created a scenario where Carolyn continued to rely upon Carol for financial management assistance, and Carol continued to treat the funds in these accounts as if they remained in the Estate account under her control as Estate Trustee. In this respect, I find that Carol mismanaged Estate assets by paying Ron Bellamy the extent of fees that were ultimately charged to Carolyn to provide investment services for her.

[98] This is not a scenario where Carol can obtain relief from section 35 of the Trustee Act. In order to secure the protection of that section, an Estate Trustee must establish that they have acted honestly and reasonably, and ought fairly to be excused for the breach of trust. In the case before me, Carol cannot be said to have acted honestly or reasonably. She involved her husband as the primary investor for the Estate funds, and also funds disbursed to Carolyn from the Estate, and then chose to pay him significant sums of money for his investment advice, for which Carol, as Ron’s wife, may also have benefited financially.

[99] Even if Carolyn authorized these payments to herself as co-Estate Trustee, Carol still had an obligation to protect Carolyn as the sole beneficiary of the Estate. There was no evidence before me that Carol challenged these payments to Ron, and in fact, the opposite appears to be true; Carol’s affidavit materials suggest that she was fully supportive of these payments being directed to Ron. Carolyn suggests that Carol was in a conflict of interest when she paid Ron for his investment services to Carolyn. I agree.

[100] Carol submits that as co-Trustee and also having signed the cheques to Ron, Carolyn demonstrates acquiescence with respect to these payments to Ron, and cannot now dispute the legitimacy of the payments. Carol argues that as co-Trustee, Carolyn occupied the same position as Carol with respect to the Estate, and that both parties had a fiduciary duty to the Estate.

[101] The argument by Carol that Carolyn shared equally in a fiduciary obligation to act in the best interests of the Estate would certainly carry a great deal of weight if there were other beneficiaries of the Estate apart from Carolyn. But as Carolyn was the sole beneficiary of the Estate, her fiduciary duty to the Estate was essentially a fiduciary duty to herself as sole beneficiary. This circumstance places her in a wholly different category than Carol, who was not a beneficiary to the Estate, was being paid for her time to provide services to the Estate, and was providing advice to the sole beneficiary of the Estate.

[102] Carol’s evidence is that Carolyn needed help paying bills on time, and was generally overwhelmed with managing the Estate. The evidence suggests that Carol was significantly more sophisticated and experienced with financial matters than Carolyn. Carolyn was inexperienced, and unprepared to manage an Estate of this size, which made her vulnerable, and very reliant on Carol. Although they were both Estate Trustees, I find that Carolyn was dependent upon Carol to provide her with advice and guidance.

[103] I am aware of previous decisions finding passive Trustees jointly and severally liable for the actions of other co-Trustees (see Cahill v. Cahill et al, 2016 ONSC 1385, aff’d 2016 ONCA 962). This situation before me is qualitatively different than the scenario in Cahill, as in the present case, the passive Trustee is also the sole beneficiary, who arguably fails to discharge her duty as Trustee by failing to monitor the actions and decisions of the other co-Trustee.

[104] In considering the fiduciary obligations of the beneficiary trustee, I am guided by Waters’ Law of Trusts in Canada, 5th Ed: at p. 968, which indicates that Trustees generally cannot delegate their powers or duties as they are making decisions about the management of property “for the benefit of others”:

18.I — DELEGATION BY TRUSTEES A. — Introduction The rule adopted by Equity towards persons occupying fiduciary positions was that such persons cannot delegate their powers or duties. The Latin maxim was clear and succinct: delegatus non potest delegare (a delegate may not delegate in turn). The reasoning behind the rule was that “trustees who take on themselves the management of property for the benefit of others have no right to shift their duty on other persons”, and this includes both third party agents and co-trustees. Fiduciary authority is entrusted to a trustee, and as a starting point, that person must use his or her own personal judgment in carrying out the responsibilities of the office. [Citation omitted]

[105] In the case before me, all the decisions being made by the Trustees ought to have been for the exclusive benefit of Carolyn. The evidence is that Carolyn believed she was acting in the best interests of the Estate, and by extension, her own financial best interests, by entrusting the management of the Estate affairs to Carol. Given that Carolyn was the sole beneficiary of the Estate, I find that her failure to more aggressively question decisions being made for her and the Estate by Carol is not fatal to her right to demand damages on behalf of the Estate. I find that Carol’s fiduciary obligations to the Estate and to Carolyn as its sole beneficiary exceeded Carolyn’s fiduciary obligations to the Estate.

[106] Carol does not provide sufficient evidence to support her claim that $97,600 over four years is a reasonable fee for Carolyn to pay for investment services. I find these fees to be excessive. I do not find that there is a lack of precision regarding the objection to the amounts removed from the joint account, as Carolyn’s evidence is that she does not know what specific services Ron Bellamy provided to entitle him to these payments.

[107] I order that Carol return 50% of the fees paid to Ron Bellamy to the Estate, totaling $48,800.

Objections #17 and #18 – Payments to Carol from Carolyn’s Personal TD Account

[108] In her affidavit, Carol acknowledges that Carolyn paid approximately $184,505 to Carol from Carolyn’s personal TD account, and another $53,500 paid directly from the Estate to Bellamy Enterprises, for a total payment to Carol of approximately $238,000. There are an additional $605,620.55 in transactions from that account, which Carolyn states were made to Carol and Ron Bellamy. Carol disputes this assertion.

[109] There are far too many transactions with respect to these accounts to be considered in a summary process such as passing of accounts. The parties encourage me to adopt a “spot check” approach to consider samplings of deductions to obtain a more general sense as to the types of transactions that were being moved through Carolyn’s personal TD account.

[110] Although Carol provides evidence that the Estate disbursed $3,757,699.77 to Carolyn, she also admits that from this amount approximately $238,000 was paid to her. There is also evidence of numerous other large cheques being paid from Carolyn’s personal TD account, including the following:

• a cheque for $100,000 withdrawn on March 30, 2006;
• a cheque for $50,000 withdrawn on June 6, 2007;
• a cheque for $138,115.21 withdrawn on June 6, 2007, and then later deposited into the Estate Account (this same sum was originally withdrawn from Carolyn’s personal Caldwell Investment account and deposited into the joint account on June 5, 2007)
• a cheque for $30,000 withdrawn on September 4, 2007;
• a cheque for $35,000 withdrawn on September 13, 2007;
• a cheque for $50,000 withdrawn on December 19, 2007.

[111] Carolyn argues that the deposits for the bank accounts of Carol, Ron, and Bellamy Enterprises ought to be produced, to determine if any of the additional approximately $600,000 in deductions from Carolyn’s personal TD account were made to the Bellamys. Carolyn deposes that Carol often appeared at her workplace when there wasn’t much time to have discussions, and asked her to sign cheques, indicating that payment was needed for such things as Estate expenses, or reimbursement to the Bellamys for Estate expenses. Carolyn states in her affidavit that she trusted Carol, so she signed whatever paperwork was put in front of her.

[112] Carolyn further deposes that the cheques from her TD personal account and the RBC joint account were in the bundles of cheques she signed without knowing what goods or services she was paying for. She also provides evidence that Carol actually signed at least two cheques that came from Carolyn’s personal account: cheque #250, dated March 2, 2010 to Ron for $2,100 and cheque #245 dated January 26, 2010 for $2,000.

[113] Copies of many of the cheques that were written are missing. Carolyn provides documentation demonstrating that from 2006 to November 2009, the total sum of $814,015.68 was issued in cheques from Carolyn’s personal TD account, for which the payee is not identified due to the unavailability of cheques predating November 30, 2009. Carolyn notes that Carol did not request the RBC bank statements and cheques until August 21, 2018, even though she had filed her application to pass the accounts two years earlier. Carolyn urges me to draw a negative inference from this failure to produce relevant bank records.

[114] Carol responds that Carolyn does not provide evidence to support her allegations that Carol misappropriated funds, and that to request copies of her personal bank statements is an invasion of her privacy and amounts to a fishing expedition. Carol submits that over the span of nine years Carolyn had ample opportunity to ask questions of Carol, or address any concerns that she had regarding the manner in which her mother’s Estate was being managed. Carol notes that some of the meetings included lawyers and bank managers.

[115] Carol further states in her affidavit that Carolyn decided the amount and timing of any gifts given to Carol in lieu of compensation. Carolyn denies that she was involved with determining the quantum or timing of gifts to the Bellamys.

[116] The bank statements for Carolyn’s account are missing critical payee information for the cheques written. I decline to make a negative inference regarding this issue at this stage without being given an opportunity to review relevant bank statements. Given the amount of money involved, it is reasonable to request that Carol produce copies of her bank statements from 2006 to 2012, including all bank accounts for Carol Bellamy, Ron Bellamy and Bellamy Enterprises, and images of the front of back of all cheques deposited into these accounts.

[117] I am aware of the caution from Shaughnessy J. in Newell v. Newell, 2010 ONSC 5010, at para. 17, which is a reminder that parties cannot use the courts as a fishing expedition. This is not a fishing expedition. It is an effort to determine the destination of hundreds of thousands of dollars of relevant transactions that are presently not able to be identified as a result of missing financial records.

[118] I acknowledge that Carol produces a very brief statement from David Grimason, the Branch Manager of the Royal Bank in Erin, Ontario, indicating that the Royal Bank only retains statement and account information for seven years. In our world of paperless electronic record keeping, I am not satisfied that sufficient efforts have been made by the Royal Bank or Carol to obtain the requested documentation. Furthermore, Carol’s affidavit simply states that she no longer has the bank statements in question. She does not provide any further detail, such as when she disposed of them, and why, particularly when she knew that they pertained to the time period when she was an Estate Trustee of a significant estate. I am not satisfied that Carol has fully exhausted all avenues to obtain the relevant records.

[119] Once the bank records are obtained, Carol is permitted to redact all withdrawal information and the quantum of any funds electronically deposited into her account. The account balance information may also be redacted. The cheques being deposited are not to be redacted, nor are the descriptions of all transactions (such as “CHQ” for cheque or “DEP” for electronic deposit, etc.) to be redacted. The period for which the bank accounts must be produced (2006 to 2012) corresponds with paragraphs 70(d) and (e) of Carolyn’s Notice of Objection.

[120] I am not prepared to dismiss these objections on the basis of a claim of acquiescence or lack of precision at this stage. The amount in dispute is too significant for me to make credibility findings on the basis of a written record. Further, it bears repeating that it is recognized that Carolyn faces challenges offering a more precise objection when she was not the primary decision maker controlling the Estate accounts, nor did she write most of the cheques which are alleged to have been for Estate purposes. It is also acknowledged that both parties are working with incomplete records. It will be of assistance to the court to hear live witness testimony regarding the issues in dispute given the credibility issues present in this litigation. I order that the issues outlined in Objection #17 and #18 proceed to trial.

Objection #20 – Transfer of CI Investment Accounts

[121] Carolyn indicates that she did not knowingly authorize the transfer of her personal mutual funds held in CI Investments Accounts to an account that was jointly owned with Carol. Carol provides affidavit evidence that Carolyn gave Ron and Carol trading authority for this account, and provides a signed authorization from Carolyn. I acknowledge Carolyn’s evidence that she was not aware of these trades, and did not provide specific consent for these trades.

[122] Carol does not provide affidavit evidence as to why monies were transferred out of Carolyn’s CI Investment mutual fund account. This issue is ordered to proceed to trial.

Objection #21 – In and out transactions totalling $814,015.68 alleged by Carolyn to have been paid to Carol

[123] As with objections #17 and #18 above, I order that Carol’s bank records be produced to address this issue, with appropriate redactions as set out above. This issue will proceed to trial.

Objection #22 – Carolyn requests the personal banking records of Carol, Ron, and Bellamy Enterprises

[124] As ordered above, Carol is to provide her bank statements, and the bank statements for Ron Bellamy and Bellamy Enterprises. Carol is not required to produce a list of all credit cards, insurance policies, and Rogers accounts issued to Carol, Ron, and Bellamy Enterprises. This information is not required to determine if additional deposits related to Estate funds were made to any of the Bellamy accounts.

Objection #14 – Estate Investments – $110,225.48

[125] Carolyn submits that the investments made by Ron on behalf of the Estate did not yield adequate returns. She provides affidavit evidence disputing that she provided informed consent for Ron to act or invest on behalf of the Estate. Carolyn states that any authorization given to Ron to manage investments on behalf of the Estate was either given to him by Carol, or provided by Carolyn under threat from Carol that Carolyn was jeopardizing Estate assets if she did not allow Ron to deal with the investments.

[126] The standard of care for an Estate Trustee when managing investments is set out in section 27 of the Trustee Act, which states:

27(1) In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

(5) A trustee must consider the following criteria in planning the investment of trust property, in addition to any others that are relevant to the circumstances:

1. General economic conditions.
2. The possible effect of inflation or deflation.
3. The expected tax consequences of investment decisions or strategies.
4. The role that each investment or course of action plays within the overall trust portfolio.
5. The expected total return from income and the appreciation of capital.
6. Needs for liquidity, regularity of income and preservation or appreciation of capital.
7. An asset’s special relationship or special value, if any, to the purposes of trust or to one or more of the beneficiaries.
8. A trustee must diversity the investment of trust property to an extent that is appropriate to, a) the requirements of the trust; and b) general economic and investment market conditions.

[127] As mentioned earlier, the standard of care for an estate trustee is not one of perfection (Nicholson Estate, Re (2000), 35 E.T.R. (2d) 126 (Ont. S.C.) at para. 8).

[128] As noted above, Carolyn relies upon the opinion of Danielle Park to establish that Ron was not an appropriate investment manager. In her written opinion, Ms. Park indicates that there is no evidence of formal training that Ron received as an investment manager. Ms. Park further opines that many of the investment decisions made by Ron can be described as “non-dividend paying growth equities with a high, and in many cases, speculative, capital risk profile”. Ms. Park also states that investment allocation was “aggressive and not appropriate or prudent given the personal circumstances and income needs of the beneficiary”. Ms. Park indicates that although the investments yielded an overall net gain of $129,598.33, if Ron had not adjusted the original investment mix, the investments would have experienced a net gain of $156,506.52.

[129] Carol submits that Ms. Park’s opinions on the standard of care for investing are legal determinations that are outside her scope of expertise. Carol relies upon the opinion of Mr. Flack who states, “Given the proportionate value of the accounts in question as related to the overall value of the estate and the assets held as investments as of November 2013, these investments are consistent with someone of Carol Thompson’s economic standing”. Mr. Flack elaborates that Carolyn Thompson was the sole heir to substantial assets, and that only 1.9% of her total assets were invested in investments that would be considered speculative.

[130] Carol points out that at the time of Ms. Rushton’s death, the value of the Estate was approximately $3,805,024.01. She states that over the course of the next nine years, many Estate expenses were paid, including $3,754,347.79 disbursed to Carolyn, which, of course, includes the $184,505 that Carol acknowledges that she received, and all payments made from Carolyn’s account to Ron Bellamy, which Carol acknowledges to be approximately $321,000. When Carol resigned as Estate Trustee, there was $891,241.24 left in the Estate. Carol therefore submits that the Estate earned income during the time that she was Estate Trustee, and the investments made by Ron on behalf of the Estate were reasonable.

[131] Considering the requirements of section 27 of the Trustee Act, I find that Carolyn does not provide sufficient evidence to establish that Carol breached the standard of care with respect to the investment decisions that were made on behalf of the Estate. While it may be true that the original investments in the Estate would have generated a greater return had they not been touched by Ron Bellamy, I accept the opinion of Donald Flack that Ron’s investment decisions were generally not unreasonable considering Carol’s entire net worth and financial portfolio. This objection is dismissed.

Objection #5 – Reimbursements to Bellamy for expenses

[132] These objections involve various payments that were made to the Bellamys reimbursing them for Estate expenses. Some of these expenses are questionable, such as Carol’s practice of meeting Carolyn for dinner to discuss Estate matters, and then charging the entire dinner to the Estate. Since Carolyn is the sole beneficiary of the Estate, these dinners or lunches resulted in Carolyn paying for Carol’s meal under the guise of an “Estate expense”.

[133] Carol provides evidence that Carolyn was in agreement with charging these meals to the Estate, but it is perplexing why Carolyn would agree to do so. In my view, the fact that Carolyn agreed to fund these meals, and pay Carol a fee for her work at the same time, speaks to the degree of trust that Carolyn had with Carol. It would appear that Carolyn did not think to challenge something as obvious as why the Estate – or Carolyn as the sole beneficiary – should be paying for meal expenses. Meetings to discuss the affairs of the Estate did not require food to be productive and valid.

[134] Another questionable expense is that Carol charged the Estate for mileage at .42 per kilometre, yet also invoiced the Estate for gas expenses paid on Carol’s credit card. Carolyn states in her affidavit that many of the expenses that were reimbursed to the Bellamys are not properly documented, and many of the expense reimbursements lack receipts.

[135] Carol’s affidavit indicates that at least some of these expenses were for Carolyn’s personal use, including payments made for her son. Carol also states that some of the receipts and vouchers for these expenses are no longer available due to the passage of time.

[136] The payments to Carol Bellamy being objected to under Objection #5 total $17,347.28. Recognizing that some receipts are missing due to the passage of time, but also recognizing that there were likely expenses charged to the Estate that were excessive, I order that one third of these expenses be returned to the Estate, totalling $5,781.85.

Objection #9 – Payments to Bellamy Enterprises

[137] These objections relate to reimbursement payments to Carol, Ron, or Bellamy Enterprises totalling $87,841.27 for “labour” or “financial services” that Carol deposes were provided by Ron Bellamy in the first seven months of 2005, billed out at the rate of $30 per hour, or $75 per hour. Much of the documentation pertaining to these payments for services is difficult to read. Carol’s affidavit simply states that these payments were for “estate expenses”.

[138] This objection also includes a payment made by the Estate to Bellamy Enterprises of $53,500 for work performed on behalf of the Estate, which was charged to the Estate on June 28, 2005. I have already addressed the $53,500 paid to Bellamy Enterprises by the Estate in my discussion of Objection #4.

[139] The evidence suggests that Ron and Carol spent a significant amount of time in managing Ms. Rushton’s estate in the months following her death in 2005. I accept Carol’s evidence that she was heavily involved in repairing and selling the properties, and that Ron assisted with sorting out Ms. Rushton’s 26 bank accounts. However, Carol does not provide satisfactory documentation to justify such a large sum being paid to Bellamy Enterprises for Ron’s services provided in such a short time frame. I order one third of this amount totalling $29,277.50 be reimbursed to the Estate.

[140] Carolyn also objects to payments made to Bellamy Enterprises and/or credit cards reimbursing for Estate expenses incurred on credit cards. As noted above, this process is a summary process, and not an audit. Carol provides evidence that many of these credit card expenses were related directly to Carolyn or her son, and the balance were expenses primarily related to preparing the Estate properties for sale. I note that the majority of these expenses were incurred in 2005 to 2007, which includes the time frame when the properties were being repaired and getting ready for sale.

[141] Carolyn’s objections with respect to these expenses appear to primarily relate to the lack of adequate documentation, which Carol attributes to the length of time that passed between Ms. Rushton’s death and the Application to pass accounts. Given the passage of time, I do not feel that a trial would be of assistance in attempting to determine the purpose for many of these expenses for which documentation is missing.

[142] I accept Carol’s evidence that some of the expenses on these credit card invoices were for repairs to properties, such as new garage doors. However, most of the invoices from Bellamy Enterprises to the Estate lack sufficient specificity. The invoices often include language such as “General Expenses Put on Master Card”, with no further detail. As a result, I do not have sufficient documentation to conclude that all these expenses are legitimate Estate expenses. The total expenses charged for this portion of the capital disbursements is $27,294.59. I order that one fifth of this amount be reimbursed to the Estate, for a total reimbursement payment of $5,458.92.

Objection #10 – Reimbursement to Bellamy for Rogers Wireless

[143] The expenses charged to the Estate for Rogers Wireless total $3,351.98. Carolyn deposes that Carol only had one cell phone, and that no documentation has been provided to establish the calls that were made for Estate purposes. Further, the cheques for Rogers Wireless payments were not signed by Carolyn.

[144] Carol deposes that she purchased a cell phone specifically to address Estate matters. It was not unreasonable for Carol to purchase a cell phone specifically for Estate matters, given the size and complexity of this Estate, and recognizing that Carol was primarily responsible for selling the properties. Carolyn does not provide sufficient evidence to establish that this cell phone was used by Carol for non Estate related purposes. This objection is dismissed.

Objection #11 – Manulife Insurance Policy

[145] Carolyn objects to the purchase of a high premium life insurance policy through Manulife as arranged by Ron. She submits that given the value of the Estate and the fact that she was the sole beneficiary, that it did not make economic sense for her to purchase a life insurance policy. It is not disputed that the annual premiums for this policy were $67,315. The evidence suggests that this premium was paid for eight different years, for a total premium paid to Manulife of $538,520.

[146] Carol submits that Carolyn was well aware of the existence of the life insurance policy, as she had to fill out forms and undergo a medical examination to obtain the coverage. Carol also submits that this policy was for the benefit of Carolyn’s children, and provided no financial compensation to Carol or Ron.

[147] During oral argument, I was advised that ultimately Carolyn was able to recover a significant portion of these premiums. I have been given no evidence as to how this occurred, or the amount that was ultimately paid by Carolyn for these life insurance premiums. While I question the necessity of this life insurance coverage at such high premiums given Carolyn’s substantial inheritance in her mother’s estate, this instance is a proper application of s. 35 of the Trustee Act. I am not aware of any personal benefit Carol or Ron derived from arranging for this life insurance coverage for Carolyn. I find that this breach of the standard of care for this Estate investment was honestly made by Carol and/or Ron at Carol’s direction. This objection is dismissed.

Objection #6 – Estate Taxes

[148] Carolyn submits that the taxes for the Estate were improperly filed, resulting in financial losses to the Estate of an unknown amount. Carolyn states in an affidavit that the tax information pertaining to the Estate went to Carol’s address, and that at all times Carol controlled the tax filings for the Estate. Carolyn further states that she has posed questions regarding the tax filings to Carol, to which she still has not received answers. Carolyn submits that until this Application is determined, the full tax liability of the Estate cannot be determined. She asks that Carol be required to indemnify her with respect to any tax liability assessed and/or determined at a later date. Carolyn does not provide any expert opinion regarding ongoing potential tax liability of the Estate.

[149] Carol submits that an accountant was hired to prepare and file the Estate tax returns. Carol submits that Carolyn has failed to demonstrate that the Estate taxes were improperly filed, or that there has been any loss to the Estate as a result of the Estate taxes paid.

[150] While I appreciate Carolyn’s position that questions pertaining to the Estate taxes remain unanswered, since accountants were involved in the preparation of the taxes, these questions can also be directed to them. These questions could have been asked prior to the motion being argued. This objection is dismissed.

Objection #7 – Distribution to Thompson – paid to joint RBC account

[151] These objections address payments totalling $11,875 that were paid from the Estate to Carolyn on August 10, 2006. The issue is not that the Estate provided a payment to Carolyn as the sole beneficiary of the Estate. The difficulty is that these payments were deposited into the joint RBC account that Carolyn held with Carol. Carolyn’s signature may have been on the cheque, but Carolyn states that she did not personally receive the funds. Carolyn submits that Carol does not provide proof that these monies were exclusively received by Carolyn.

[152] Carolyn provides affidavit evidence that she never authorized Carol to transfer money from the Estate account in the joint RBC account.

[153] Carol provides affidavit evidence that Carolyn was aware of all the monies being transferred into her personal and joint accounts. Carol further submits that these cheques were cashed, and that this objection should be withdrawn, as the distributions were made more than ten years ago.

[154] Carol and Carolyn have opposite views as to who benefited from these deposits on August 10, 2006. As this is a discrete issue involving just two cheques, it will not add significant extra time to require the parties to address the issue of Carolyn’s consent for these two payments at the trial of this matter. This objection is directed to proceed to trial.

Objection #13 – Payments to or for Thompson

[155] Over the years that Carol was Estate Trustee for Ms. Rushton’s Estate, Carol provides affidavit evidence that a total of $3,757,699.77 was disbursed by the Estate to Carolyn. A significant portion of these funds were deposited into Carolyn’s personal TD account, and also into the joint RBC account to which both Carol and Carolyn had access. Many of these payments were made to Carolyn, but cheques were written to Carol, Ron or Bellamy Enterprises, which flowed money through to them.

[156] Carol does not provide a thorough explanation as to why payments purportedly to be “for” Carolyn were deposited into a joint account to which Carol also had access, as opposed to being deposited into an account to which only Carolyn had access. I accept that some of the payments were made by Carol for goods and services for Carolyn and her children. However, there are many cheques that have been written on this account which Carol indicates that she cannot identify, notwithstanding her onus to establish that all the payments disbursed from the Estate account were reasonable. Carolyn denies authorizing the disbursing of the funds to her reflected in Objection #13, and she denies receiving these sums. This issue is directed to proceed to trial.

Payments to Ron made by Carolyn:

[157] The evidence suggests that Carolyn’s payments to Ron for his services were typically paid out of the joint RBC account with monies distributed to Carolyn from the Estate. Carol prepared the cheques to Ron for Carolyn to sign. The evidence indicates that Ron was essentially on a monthly retainer with Carolyn, averaging approximately $2,500 per month, which was paid by Carolyn from her personal accounts. This amount far exceeds a reasonable amount for these types of investment services. There is evidence that Ron sometimes provided invoices in which he assigned himself an hourly rate of $75, which, at a monthly fee of $2,500, equates to Ron spending over 33 hours per month to the Estate and/or Carolyn providing investment services. I do not accept that Ron regularly spent that amount of time working on Estate investments or providing advice or services to Carolyn, and if he did, it was excessive.

[158] Carol provides evidence that Carolyn paid Ron fees of $280,255 between 2005 and 2013 for his assistance on both Estate investments and for Carolyn’s personal investments, and an additional $41,027.32 for services Ron provided to assist Carolyn’s children. I note that Carolyn’s personal investments were made with money that came to her as a distribution from the Estate. These payments to Ron total $321,282.32.

[159] I find that the payment to Ron of $321,282.32 is excessive, and that Carol, as co-Trustee, permitted her husband Ron to overcharge Carolyn for his services. Indeed, Carol’s affidavit speaks highly of her husband’s experience as an investor, even though there is no evidence that he had any formal training or accreditation to do so.

[160] I find that $1,000 per month is a more reasonable fee that Ron or Bellamy Enterprises ought to have charged Carolyn for the assistance provided, which still equates to over 13 hours per month spent providing work for the Estate if Ron charged Carolyn $75 per hour. Using $1,000 per month on average as a reasonable fee over the nine years that Ron was involved with Carolyn and the Estate, Ron’s total fee to Carolyn and/or the Estate would have been approximately $108,000. Carol does not provide justification for the excessive fee of $321,282.32 paid.

[161] I accordingly order that Carol repay $213,282.32 to the Estate which was overcharged for Ron Bellamy’s services. This issue, will, however still proceed to trial to determine if any additional payments were made to Carol, Ron or Bellamy Enterprises once the bank records are produced.

Was the identified amount paid by the Estate to Carol Bellamy, Ron Bellamy, and Bellamy Enterprises reasonable in all of the circumstances?

[162] Section 61(1) of the Trustee Act provides that a trustee “is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.” It does not, however, provide a formula as to how this compensation will be paid.

[163] Carol submits that there is a general convention for Estate Trustees to be paid 5% of the overall estate value, or 2.5% of all money going into and out of the estate, plus a care and management fee of 2/5 of 1% of the average value of the Estate. From this perspective, Carol submits that she is entitled to compensation from the Estate of $316,106.86, from which $53,500 was prepaid, resulting in a net amount owed to her by the Estate of $262,606.86. Carol therefore argues that the $184,505 that she has received in compensation from the Estate is in actuality less than the amount to which she is entitled. She argues that these accounts should be passed as the fee that was paid to her was reasonable.

[164] The convention of paying 5% of the value of an estate to an Estate Trustee does not remove the responsibility of the court to consider the validity of the objections raised, and to consider the reasonableness of the fees paid to the Estate Trustee in all the circumstances of the estate.

[165] Common law provides that in assessing the appropriateness or otherwise of an executor’s compensation, five factors should be considered:

1. the size of the trust;
2. the care and responsibility involved;
3. the time occupied in performing the duties;
4. the skill and ability shown; and
5. the success resulting from the administration.

Hooke Estate, 2013 ONSC 1674, at para. 7; referencing Toronto General Trusts and Central Ontario Railway (1905), 6 O.W.R. 350.

[166] In addition to the Hooke Estate criteria, courts should also consider the “tariff guideline” when determining appropriate compensation for trustees (Pachaluck Estate v. DiFebo, at para. 48):

In addition to the various criteria, the so-called “tariff guideline” should also be utilized and applied in arriving at fair and proper remuneration. Once again, the application of the tariff percentages should not be carved in stone and applied in the same way in every case. Rather, just as the application of the five criteria are factor dependant, so too should be the application of percentages. They are to be applied with due regard to the particular facts of the Estate. Generally, the courts have viewed the tariff guideline as being applicable to an Estate of average complexity.

[167] In this case, it is accepted by all that the first year following the death of Ms. Rushton was a particularly busy time for the Estate Trustees, as they dealt with the challenge of cleaning up and listing for sale the various real properties that formed a significant part of the Estate. Carol chose to charge the Estate a 3% percentage commission payment for each property that was sold. The funds for these commission payments were made to Carolyn as capital disbursements from the Estate, and then immediately remitted to Carol or Bellamy Enterprises, to avoid Carol being taxed on fees she received from the Estate.

[168] Carol argues that she and her husband Ron managed this Estate reasonably. She points out that the total value of the Estate when she first became involved was $3,805,024.01, and that once the properties were sold, the total receipts for the Estate rose to $5,115,468.18. I agree that Carol was very helpful in dealing with the sale of the properties, which directly increased the value of the Estate. Indeed, that was her job as Estate Trustee.

[169] Carol points to the $3,757,699.77 that she says was distributed to Carolyn, and the fact that there was still $891,785.37 remaining in the Estate when she ceased her work as Estate Trustee, and submits that her management of the Estate was reasonable. She further submits that Carolyn, as sole beneficiary, received a reasonable amount from the Estate. However, it must be recognized that substantial portion of the capital disbursements made to Carolyn were transferred to Carol, Ron, or Bellamy Enterprises by cheques written from Carolyn’s accounts. It is disingenuous for Carol to now suggest that Carolyn personally received the full benefit of the $3,757,699.77 payments made to her.

[170] Carolyn provides affidavit evidence that she only personally received $5,000 per month or $60,000 per year over the nine years that Carol was co-Trustee of the Estate, for a total receipt of $540,000 of the $3,757,699.77 that Carol claims was distributed to Carolyn. Carol provides affidavit evidence that the $5,000 per month received by Carolyn were actually payments set up by Ron to be automatically paid to Carolyn though her CIBC Wood Gundy account, which is separate from other funds received from the Estate. Carol states in her affidavit:

In fact, the $5,000 monthly payments Carolyn refers to above was actually from Carolyn's personal CIBC Wood Gundy account and not the Estate. Ron set up this automatic withdrawal and the money was deposited into one of Carolyn's personal bank accounts. The payments Carolyn received from the Estate were above and beyond the $5,000 payments Carolyn received from her personal investments at CIBC Wood Gundy managed by Ron.

[171] I do not have sufficient evidence to determine if the funds held by Carolyn in the CIBC Wood Gundy account originated from her Estate inheritance, or if Carolyn obtained the funds in this account from some other source. However, if Carol is correct that these payments did not come from the Estate, there is an even greater gap between the amount of Estate funds that Carolyn says she has received, and the amount that Carol states has been paid to Carolyn by the Estate.

[172] I accept Carol’s evidence that a portion of the distribution paid to Carolyn was for Carolyn’s expenses, such as property taxes, hydro bills, new vehicles for the children, or paying down credit cards. While I do not doubt that those payments were legitimately made by Carol on behalf of the Estate, there remain questions as to where the rest of the money went. I am not satisfied that Carol provides an adequate accounting of the distributions made by the Estate.

[173] Carol admits that she received approximately $238,000 in fees or gifts from Carolyn and the Estate. In addition, Carol indicates that Ron received $321,282.32 from Carolyn and the Estate. Combined, the Bellamys received approximately $560,000 from the Estate. I have found that the fees paid to both Carol and Ron were excessive, and have ordered repayments as already set out.

[174] I am not prepared to simply rely upon the 5% trustee compensation guideline given that there remain significant sums of money that are presently not accounted for.

[175] In considering the Hooke Estate factors, I note that concerns have been expressed through the Objections to the Passing of Accounts regarding the reasonableness of investment decisions and management of the funds. Although the objections regarding the investment decisions made on behalf of the Estate were dismissed, these lingering concerns are relevant to consider when determining the appropriate compensation for Carol for her work as Trustee of the Estate. As well, Carol has failed to provide an adequate accounting of all of the funds disbursed from the Estate. I have, accordingly, chosen not to follow the tariff guideline, and have ordered that Carol repay to the Estate $25,000 of the trustee fees that she previously charged.

Conclusion

[176] Carol Bellamy is ordered to repay to the Estate of Jean Rushton $318,918.27, as follows:

(a) Objection #4 – Gifts in Lieu of compensation paid from Estate assets – $25,000; (b) Objection #16 – Payments to Carol Bellamy from the RBC joint account – $53,400; (c) Objections #5, 9 and 10 – Reimbursements to Bellamy – $40,518.27; (d) Objection #13 – Capital Disbursements Made To or For Thompson – $213,282.32

[177] Objections 8, 19, 22, 14, 11 and 6 are dismissed.

[178] Objections 17, 18, 20, 21, 7 and 13 will proceed to trial before me. I have ordered that Carol Bellamy repay the Estate $318,918.27. This repayment is ordered recognizing the known payments already received by the Bellamys that total over $500,000, including approximately $238,000 for Carol’s work as a trustee, expense reimbursements, and $321,282.32 paid to Ron. The evidence at the trial will determine if the outstanding banking records disclose the need for additional repayments from Carol to the Estate.

[179] The parties are to contact my judicial assistant at melanie.powers@ontario.ca to arrange a time for a virtual meeting at 9:00 am to discuss scheduling for the trial, or any other scheduling issues requiring the assistance of the court.

Costs

[180] If the parties are unable to agree upon costs, they are to each prepare submissions no longer than three pages double spaced by January 31, 2024, not including any Bills of Costs or Offers to Settle. Costs submissions shall be sent to my judicial assistant Melanie Powers at melanie.powers@ontario.ca. If I have not received any submissions within the time frames set out above, I make no order as to costs.

Wilkinson J. Released: January 12, 2024