Court File and Parties

Court File No.: CV-22-00679675-00ES Date: 2024-08-20 Superior Court of Justice - Ontario

Re: Rebecca Staples, Michael Staples and Maureen Shannon Sherk, personally and in her capacity as Trustee of the Holbrook Family Trust, Applicants And: Tiffany Jean, personally and in her capacity as Estate Trustee of the Estate of Warren Nelson Holbrook, Jennifer Kelly Holbrook, personally and in her capacity as Trustee of the Holbrook Family Trust, Connor Jean, Emily Staples, Alana Victurnia Jean Holbrook, Deborah McPherson, Tyler Staples, Grace Jean, minor by her litigation guardian The Children’s Lawyer, Holbrook Holdings Inc., Rejenmor Inc. Lansdowne Automotive, Fort Garry Stables Inc., Respondents

Before: C. Gilmore, J.

Counsel: Joseph Figliomeni, Lauren Peacock and Angela Kwok, Counsel for the Applicants Rebecca Staples and Michael Staples. Andrea Sanche, Counsel for the Applicant Maureen Shannon Sherk. Peter Askew, Counsel for the Respondent Tiffany Jean Alexandra Mayeski, Counsel for the Respondent Jennifer Kelly Holbrook Andrew Sader, Litigation Guardian for the minor Respondent Grace Jean (not appearing)

Heard: July 30, 2024

Endorsement on Motion

Introduction

[1] This is a motion brought by the Applicants Rebecca (“Rebecca”) and Michael Staples and Maureen Sherk (“Maureen”) (“the Moving Parties”) to remove Tiffany Jean (“Tiffany”) as Estate Trustee of the Estate of Warren Nelson Holbrook (“the Estate”), and for an interpretation of the Hotchpot Clause (“the Clause”) in Mr. Holbrook’s Will.

[2] On March 24, 2023, the Moving Parties brought a similar motion in which they sought to remove Tiffany and replace her with Adam Erlich of Fuller Landau LLP as Successor Estate Trustee of the Estate.

[3] During the March 2023 motion, Tiffany’s counsel argued that her removal was unnecessary as the Estate was insolvent and mostly administered. She relied on an informal accounting provided by the Estate solicitor which set out that the Estate had nominal value. The Applicants’ position was vastly different. Their view was that the Estate was worth in excess of $5M and that the family business, Rejenmor Inc. (“Rejenmor”) was a profitable business and a going concern. Tiffany’s actions to that point as Estate Trustee and to date have been harshly criticized by the Applicants.

[4] Given the significant difference of opinion regarding the value of the Estate, I declined to order Tiffany’s removal and made no findings with respect to her actions as Estate Trustee. I appointed Mr. Adam Erlich as an Independent Observer and required him to provide a report to the Court with respect to the actual value of the Estate, likely distribution scenarios, and an opinion as to how to deal with Rejenmor.

[5] Once Mr. Erlich’s report was available, the motion was to be returned before me to determine whether Mr. Erlich should continue as Successor Estate Trustee, or whether Tiffany should resume her previous role. I also ordered that Tiffany was to continue as Estate Trustee and administer the Estate pending further Order of the Court. However, she was not to make any distributions from the Estate unless agreed upon by the parties or pursuant to a Court Order.

[6] Mr. Erlich’s report was provided to the Court in June 2023. Based on his report, the sum of $141,082 is available for distribution to the beneficiaries after consideration of the legacies and other debts of the Estate. As he interpreted the Hotchpot Clause to mean that the deceased’s children had received advances/gifts from the Estate, there was no requirement for repayment of any advanced amounts, but based on the funds available only Rebecca would receive any distribution given the amounts already advanced to Jennifer Holbrook (“Jennifer”) and Maureen during the deceased’s lifetime.

[7] As for Rejenmor, Mr. Erlich found that it was generating a profit as of the first four months of fiscal 2023 and held $700,000 USD in undistributed dividends in its US account.

[8] In Mr. Erlich’s opinion, it is unlikely that any arm’s length purchaser would be interested in buying Rejenmor. He determined that it will likely continue to be profitable given its limited operating expenses. He was concerned about the costs of a wind up including any termination pay owed to Jennifer who has worked at Rejenmor for decades. He added that the shares of Rejenmor would fall into the residue of the Estate and be distributed in accordance with the terms of the deceased’s Wills.

[9] The Applicants continue to mistrust Tiffany and submit that she is not qualified to act as Estate Trustee and in an inextricable conflict of interest. They also do not agree with her position on the Hotchpot Clause and submit that Jennifer should be required to repay the advances received from her father in order to equalize the inheritance of all three daughters as their father intended.

[10] For the reasons set out below, the Applicants’ motion is dismissed. Tiffany should not be removed as Estate Trustee given the modest value of the Estate and the work she has done to date. The largest conflict with respect to Tiffany’s role as Estate Trustee and the tensions between the parties relates to Rejenmor. The Court has provided directions as to what is to happen with that business such that some finality for the administration of this Estate may be achieved.

[11] As for the Clause, the Applicants cannot create an obligation where none exists. The advances are to be treated as gifts and the interpretation of the Clause adopted by Tiffany and Mr. Erlich shall be treated as the correct one.

Background Facts

[12] The deceased died on December 3, 2021. He has three children, The Applicants, Rebecca and Maureen, and the Respondent Jennifer.

[13] The Applicant Michael is Rebecca’s husband. Michael and Rebecca have two adult children, the Respondents Emily Staples (“Emily”) and Tyler Staples (“Tyler”). Jennifer also has two adult children, the Respondents Connor Jean (“Connor”) and the Respondent Tiffany. Tiffany is the granddaughter of the deceased. She is 26 years old.

[14] The Respondent Alana Victoria Jean Holbrook (“Vickie”) is the deceased’s wife from whom he had been separated for a number of years prior to his death.

[15] The deceased executed a Primary and Secondary Will on December 19, 2019 (“the Wills”). The deceased’s Secondary Estate consists of his corporate interests, his personal and household articles and amounts owing to him. His Primary Estate consists of all his other property.

[16] The residue of the Estate is to be divided equally between Rebecca, Jennifer, and Maureen with a hotchpot clause that requires each of the three residual beneficiaries to have charged against their share of the Estate the amount of advances they received from their father during their lifetime. The Primary Will provides that each of the deceased’s grandchildren (Tiffany, Connor, Emily and Tyler) shall receive a $100,000 legacy.

[17] The Wills appointed Tiffany and Royal Trust as co-Estate Trustees of the Estate. Royal Trust renounced its right to act as co-Estate Trustee shortly after the deceased’s death. The deceased had not obtained a formal consent from Royal Trust to act as co-Estate Trustee and Royal Trust was unaware of its appointment. According to the Wills, Tiffany had the right to appoint a trustee to replace Royal Trust. No replacement appointment has been made.

[18] According to Tiffany, she attempted to have Scotia Trust replace Royal Trust but their conclusion, similar to that of Royal Trust, was that the deceased owned insufficient personal assets on the date of death to make the appointment feasible.

[19] Tiffany’s position is that her grandfather appointed her as Estate Trustee as he believed she could remain impartial given the difficult dynamics within the family.

[20] The Holbrook Family Trust (“the Family Trust”) exists separate from the Estate and was settled by the deceased’s mother in 2009. The trustees of the Family Trust are Maureen, Jennifer and Michael. Tiffany is not a trustee of the Family Trust and has no control over it.

[21] The deceased was an entrepreneur who owned several businesses. In 2006 he incorporated Holbrook Holdings Inc. (“HHI”) and was the sole officer and director of HHI until his death. HHI’s estimated value is $5M.

[22] The common shares of HHI are held by the Family Trust. The preferred and voting shares of HHI were owned by the deceased personally and have a fixed redemption value of $1,072,000.

[23] HHI also owns all the shares in Rejenmor. Rejenmor is a going concern and is in the business of marketing and selling additives to the plastics, rubbers, adhesives, coatings, and textile markets. Rejenmor has been profitable. Jennifer has worked for Rejenmor for 27 years, and her annual salary is approximately $80,000 plus bonuses in the range of $40,000 annually.

[24] Prior to his death, the deceased was paid an annual salary of $300,000 from Rejenmor. During the period when Michael and Maureen were directors of Rejenmor they refused to pay Jennifer her bonus in 2022. Jennifer subsequently commenced employment law claims against Rejenmor.

[25] In December 2021 Tiffany appointed Michael, Maureen, and Jennifer as directors of Rejenmor. Conflicts erupted between the directors and Tiffany. Tiffany exercised her authority as Estate Trustee, and appointed herself as the sole officer and director of HHI which controls assets of approximately $5M. As the sole officer and director of HHI, Tiffany also controls Rejenmor. Rebecca and Maureen would like to wind up Rejenmor. They allege that Tiffany agreed to transfer the shares of Rejenmor to the beneficiaries equally but has failed to do so.

[26] During his lifetime, the deceased was generous with his children and provided financial assistance to them. It was his wish to treat his daughters equally which resulted in the Hotchpot Clause in his Wills. That clause states as follows:

it was and continues to be my intention to equalize all advances, loans, and trust distributions among my children. ... I DIRECT that each daughter of mine, and anyone claiming under her share shall bring into hotchpot and have charged against the share directed to be set aside for that daughter the value of advances made either directly or indirectly through the Holbrook Family Trust. I direct my Trustees, along with the Executors and Trustees of my Secondary Will, to consider the value of both my Primary and Secondary Estates in aggregate in calculating the amount to be brought into hotchpot, and if necessary to determine a reasonable amount to bring into hotchpot, and have charged against the share for a daughter of mine or anyone claiming under her under this my Primary Will….

[27] A similar clause is found in the Secondary Will. The deceased’s intentions to treat his daughters equally is further found in the notes of the Will’s drafting solicitor, Ms. Thompson.

[28] In June 2018, the deceased contributed $600,000 to Jennifer’s purchase of a 72-acre farm property (“The Farm”). The total purchase price was $990,000. He also paid for $100,000 in farm equipment and improvements for Jennifer including an indoor arena and expansion of a building for businesses operated by Connor and Tiffany. It is not disputed that the deceased also assisted his daughter Jennifer with payments for insurance, taxes, and utilities for the farm.

[29] At the time the deceased assisted Jennifer with the purchase of the farm, he incorporated two new businesses: Fort Garry Stables Inc. (“Fort Garry”) and Lansdowne Automotive Inc. (“Lansdowne”). Those businesses operate from a building on the farm.

[30] Fort Garry Stables is a corporation owned and operated by Tiffany. It is an agritourism business which provides horse riding lessons and trail rides. Jennifer operates JCT Farms, a sole proprietorship to which Tiffany pays rent of $500 per month. In exchange, Fort Garry is entitled to use 71 acres of the 72-acre farm for its business. Tiffany concedes that the $500 rent is below market value.

[31] Lansdowne is an autobody shop operated by Connor on the farm. Lansdowne also pays rent to JCT Farms although the amount of rent paid is not known. Prior to his death, the deceased loaned Connor $274,000 which was secured by a mortgage registered on the title to his home. Connor has since paid out the mortgage and those funds were used to pay out the line of credit used by the deceased to loan the mortgage funds to Connor.

[32] The deceased also loaned $15,000 to Tiffany’s common law spouse Mike Guindon and $21,450 to an individual named Sean Kontkanen.

[33] Tiffany denies that she has failed to deal with loans owing to the Estate. She has agreed to offset the loan to Mike Guindon from her share of the Estate and has collected $5,000 of the amount owing from Mr. Kontkanen. Through her counsel, she has sent a formal demand letter to Mr. Kontkanen concerning his loan.

[34] After the deceased died, Jennifer removed cash from the deceased’s safe. She has admitted that she removed $40,000. Jennifer claims this was a gift from her father in the form of support for the ongoing payment of Farm expenses. Tiffany has not taken steps to recover the funds from Jennifer. She received advice from her professional advisors that doing so would not be cost effective.

[35] In December 2022 Jennifer commenced a dependant’s relief claim against the Estate. Tiffany did not respond to the Application other than filing a Notice of Appearance. Tiffany accepted her mother’s offer to settle the Application in March 2023 without costs to the Estate. Costs of $1500 are to be paid to Rebecca and Michael when the Estate is distributed.

[36] Tiffany has hired professional advisors to assist her with the administration of the Estate. The Estate has paid KPMG $73,868, and legal fees of $28,124 to Cunningham Swan LLP to date. HHI has paid KPMG $9,096 and Cunningham Swan $25,553 as of March 2023.

[37] In October 2023, the Applicants brought a motion seeking the transfers of HHI’s voting shares to the residuary beneficiaries and for a discharge of the deceased’s mortgage on title to Maureen’s home. The court granted the discharge (which was on consent) but did not decide the issue of the transfer of the voting shares.

[38] In December 2023, the Applicants issued an Application against Tiffany claiming oppression, a breach of fiduciary duty, removing Tiffany as a director of HHI and requesting an Order to distribute the voting shares of HHI to the residuary beneficiaries of the Estate. The Application was served in December 2023 and Tiffany served a Notice of Appearance. No steps have been taken by the Applicants in relation to this Application since service in December 2023.

The Positions of the Parties

The Applicants

[39] The Applicants have not changed their position that Tiffany should be removed as Estate Trustee. Their arguments remain similar to the ones they made in March 2023 with some updates. Their arguments may be summarized as follows:

a. Tiffany has abdicated her responsibilities as Estate Trustee to expensive professional advisors. Her inexperience has cost the Estate a great deal. b. Tiffany will not communicate with two of the three beneficiaries namely Maureen and Rebecca. She will only talk to her mother Jennifer. Tiffany has a serious conflict with respect to her mother and has not treated the other beneficiaries with an even hand. She has preferred her mother because of her mother’s employment at Rejenmor. c. Tiffany had the right to substitute Royal Trust with another trust company as co‑Estate Trustee but failed to take adequate steps to do so. d. Tiffany has a high school education and no experience in administering estates, especially a high conflict and complex estate. e. Tiffany has failed to take adequate steps to recover funds from Mr. Guindon and Mr. Kontkanen. While she claims to have instructed her lawyers to pursue Mr. Kontkanen in Small Claims Court, no claim has been issued. f. Tiffany has failed to transfer the shares of Rejenmor to the beneficiaries despite an agreement to do so. She has allowed her mother to continue operating Rejenmor and has not responded to claims by Jennifer that she is owed a substantial bonus for work done in 2022. g. It is unrealistic for Tiffany to take the position that Rejenmor should operate indefinitely when the majority of its beneficial owners (Rebecca and Maureen) have no interest in it continuing as a going concern. There is more than $1M in Rejenmor that could flow through to the beneficiaries but Tiffany refuses to permit this. Rather, the only person who has benefitted and will continue to benefit from Rejenmor’s ongoing operation is Jennifer, Tiffany’s mother. h. It is self-serving on Tiffany’s part to accept that the $40,000 in cash given to Jennifer just prior to the deceased’s death was intended to pay for The Farm expenses. It is irreconcilable with Tiffany’s obligation as Trustee to act with an even hand not to pursue Jennifer with respect to the cash payment. i. Tiffany agreed to settle Jennifer’s dependent’s support application against the Estate but failed to seek any costs for the Estate as a term of the settlement. j. The Applicants are aware that Tiffany paid over $135,000 to KPMG and Cunningham Swan as of March 2023. Tiffany has incurred an additional $50,000 in legal fees since March 2023. k. Mr. Erlich’s report recommends that the legacies in the Wills be paid out and the shares of Rejenmor transferred to the beneficiaries, but Tiffany has failed to take any steps in this regard. l. On the issue of the Clause, the Applicants insist that Jennifer should pay back to the Estate the $600,000 that was contributed by her father towards the purchase of The Farm. They claim that this amount was never intended to be a gift, but rather was a loan. m. Jennifer and Tiffany do not dispute that the deceased intended to treat his daughters equally. The hotchpot calculation should reflect this. n. The opinion of Mr. Erlich regarding the hotchpot calculation cannot be relied upon. He is not a lawyer and was appointed solely to provide a value for the Estate, likely distribution scenarios, and an opinion as to how to deal with Rejenmor. o. Tiffany’s suggested interpretation of the Clause would result in Jennifer receiving far more than the other daughters. This was not the deceased’s intention. Further, it is not surprising that Tiffany would favour an interpretation that benefits her mother. Moreover, using Tiffany’s suggested interpretation of the Clause, the only beneficiary who would receive any distribution is Rebecca. This means that Rebecca would receive all of the voting shares of HHI as they fall into residue. This cannot be what the deceased intended. p. It is concerning that when asked on examination how she intended to deal with the Hotchpot Clause, Tiffany refused to answer. q. The Applicants favour an interpretation of the Clause which would equalize the distributions to the beneficiaries either by using the proceeds of Jennifer’s farm sale, distributions from the Family Trust, or a distribution of the HHI shares.

The Respondent Tiffany Jean

[40] Tiffany submits that there exist even fewer reasons to remove her as Estate Trustee than at the time this motion was originally argued in March 2023. Her position is as follows:

a. She has resolved Jennifer’s dependent’s support claim on a without costs basis to the Estate. b. She has moved her horse operations to a new location and listed The Farm for sale as of December 2023. c. She has collected the mortgage loan owed by her brother Connor and paid off the deceased’s line of credit from which the loan was originally advanced. Tiffany noted that she implored the Applicants to agree to use the mortgage proceeds to pay off the line of credit, but they would not agree until the January 2024 Case Conference. d. Tiffany and Jennifer have already provided sworn evidence related to the $40,000 cash payment. Even if it is brought into the Hotchpot as suggested by the Applicants, Jennifer will not receive any share of the residue of the Estate. Tiffany retains her position that it would not be cost effective to pursue Jennifer for this amount. e. Tiffany has provided evidence with respect to the renunciation of Royal Trust and her search for another potential co-Estate Trustee. As was borne out by Mr. Erlich’s report, the Estate is a very modest one and it is not surprising that an institutional Estate Trustee would not take on the appointment. f. Tiffany has arranged to transfer the deceased’s shares in Lansdowne to Connor pursuant to the terms of the Secondary Will. g. Rejenmor continues to be profitable, is without debt, and has limited operating expenses and significant cash reserves. It should not be wound down. However, Tiffany is willing to take advice from her professional advisors as to the future of Rejenmor and any associated employment law issues. h. The Applicants have failed to provide any cogent evidence that the Clause should be interpreted to require Jennifer to repay amounts advanced to her by the deceased during his lifetime. Tiffany notes that the Independent Observer agrees with her interpretation that amounts advanced to Jennifer were gifts and that there is nothing in the drafting solicitor’s file or the Wills which would indicate any intention by the deceased that amounts advanced by Jennifer be repaid to the Estate. Tiffany notes that where money was loaned by the deceased it was documented. She referred to the promissory notes to secure the loans to Fort Garry and Lansdowne and Connor’s mortgage. i. Replacing Tiffany with a costly third-party Trustee does not make economic sense at this stage when there is little left in the Estate to administer. j. The Independent Observer has found that there is only $142,082 available in the Estate to distribute after payment of the legacies and other debts. This does not take into account any litigation costs incurred by any party. k. Tiffany persuaded Mr. Kontkanen to repay $5,000 towards the loan he owes to the Estate despite the fact that there is nothing in writing to confirm the debt. Tiffany has instructed her lawyers to commence a Small Claims Court action against Mr. Kontkanen for the balance. l. Tiffany requested that the Applicants agree to pay off the deceased’s car loans and consent to a transfer of the vehicles to Connor as per the deceased’s Secondary Will. The Estate incurred interest on the car loans until the Applicants finally agreed to have the loans paid out at the January 2024 Case Conference. m. Tiffany’s counsel wrote to the Applicants’ counsel on four occasions regarding a proposal for distribution of the deceased’s personal effects. It was not until Tiffany’s counsel raised the issue at the January 2024 Case Conference that the Applicants consented to the sale of the personal property.

The Position of Jennifer Holbrook

[41] Jennifer agrees with Tiffany and Mr. Erlich that the Applicants have incorrectly interpreted the Clause, and that there is no requirement for her to repay any amounts to the Estate. This includes the $600,000 advanced by her father to purchase the farm, and the $253,000 distribution she received from the Family Trust. These two amounts are to be calculated as a reduction of Jennifer’s share of the Estate and do not require repayment.

[42] This position is bolstered by the content of the drafting solicitor’s file regarding the deceased’s intentions. There is no reference in either Ms. Thompson’s file or the Wills that Jennifer must repay any amounts to the Estate.

[43] Jennifer submits that what this litigation is really about is her sisters’ resentment with respect to the funds gifted to her by her father to buy The Farm and the expenses for the property that he assisted Jennifer with while he was alive. Jennifer refers to an email sent by her father in November 2019 to the drafting solicitor in which he expresses frustration with Maureen and Rebecca who wanted to be paid their share of what their father had put into Jennifer’s farm and their share of any expenses he was paying towards it.

[44] Jennifer’s position is that Rejenmor should not be wound up as it continues to be profitable. If the shareholders ultimately decide on a wind up, she will be owed termination pay and severance. Jennifer submits that the Applicants seek to wind up Rejenmor to maximize their inheritance and to Jennifer’s detriment, as she relies on her income from Rejenmor.

[45] Jennifer notes that Ms. Thompson’s file also contains a note that “Jennifer is likely a dependent.” While she has settled her dependent’s relief claim with the Estate, she maintains that she was a dependent of the deceased on the date of death.

The Issues

1. Removal of Tiffany Jean as Estate Trustee

[46] Sections 5 and 37 of the Trustee Act, R.S.O. 1990, c. T.23 (the “Trustee Act”) provide the Court with authority to remove a trustee and appoint another trustee in their place. Furthermore, the Court has the inherent jurisdiction to remove trustees.

[47] The principles to be applied when analyzing whether to remove an Estate Trustee are well known and set out in Carmichael Estate (re), 2000 ONSC 22320 at paragraph 17, Chambers Estate v. Chambers, 2013 ONCA 511 at paragraphs 95–96, Henderson v. Sands, 2023 ONSC 897 at paragraphs 8–10, and is Taetz v. Mikolajewski, 2023 ONSC 4635 at paragraph 11 as follows:

(a) The court should not lightly interfere with a testator’s choice of the person to act as his or her Estate Trustee. The wishes of the testator will generally be honoured “even if the person chosen is of bad character”. (b) A court should remove an Estate Trustee only on the “clearest of evidence” and should be reluctant to pass over a named Estate Trustee unless “there is no other course to follow”. (c) Even if an Estate Trustee has not executed their functions perfectly or ideally, “that is not the test”. The test is whether the estate is likely to be administered properly in accordance with the fiduciary duty of the trustee and for the benefit of the beneficiaries. (d) Friction alone between Estate Trustees and beneficiaries is not in itself reason for removal. For friction to be the basis for removal, it must rise to a level that prevents the proper administration of the estate. (e) Passing over an Estate Trustee is an “unusual and extreme course”. It has been described as an “extreme remedy” and one of “last resort”. (f) Past misconduct may justify removal if that misconduct is likely to continue in the future. Removal is not intended to punish, but to protect the Estate assets and the interests of the beneficiaries. (g) The Court’s main guide should be the welfare of the beneficiaries.

[48] While taking into consideration the wishes of the Testator and the high threshold set by the case law for the removal of a Trustee, the Court may also take into account situations where the Estate Trustee has placed herself in a position of conflict, has failed to administer the Estate in a timely manner, is unable to administer the Estate impartially or with an even hand, or where the hostility and distrust between the Estate Trustee and the beneficiaries prevents communication or the effective administration of the Trust.

[49] The Applicants submit that Tiffany cannot act with an even hand given her relationship to Jennifer, that she has preferred Jennifer in her dealings with the Estate, and that the animosity between the parties makes it impossible for her to properly discharge her functions.

[50] On the animosity issue, it is clear that there is long standing antipathy between the Applicants and Jennifer. Based on emails sent by Maureen and Rebecca to their father they were resentful of the resources given to Jennifer including money to purchase The Farm and equipment, a preferred lease rate for her business, and contributions to her expenses. This friction has carried over to the administration of the Estate with Rebecca and Maureen now insisting that Jennifer repay the $600,000 contributed by her father towards the purchase of The Farm.

[51] The Applicants have cited several cases in support of their argument that the friction between Tiffany and the Applicants is a sufficient reason to remove her as Estate Trustee. However, in reviewing those cases I note that, for example, in Oldfield v. Hewson, 2005 ONSC 2808, the Estate Trustee failed to administer the Estate for seven years, failed to pay taxes on time, loaned money to himself from the Estate, and failed to transfer property to the beneficiary as set out in the Will. For obvious reasons, his actions created a high degree of animosity between the parties, and he was removed.

[52] The facts here are not in the least similar. Tiffany has done her best to administer the Estate although at times thwarted by a lack of cooperation from the Applicants.

[53] The Applicants also claim that Tiffany is in an inextricable conflict of interest with respect to Rejenmor as her mother’s sole source of income is through that business. I agree that Tiffany’s vagueness about the future of that business may be problematic. It would be different if the business was not profitable or was accumulating debt. However, the opposite is true. In these circumstances, the Court will provide directions on that issue such that Tiffany’s apparent conflict on that issue will be at an end. As such, there is no need to remove her with respect to the operation of Rejenmor.

[54] The Applicants complain that Tiffany has failed to distribute the legacies, even before my April 12, 2023, Order was made. Tiffany has always maintained that the Estate could not afford to distribute the legacies. She was accurate in her assessment. After consideration of legal fees and other costs, there may be an abatement of the legacies. Tiffany’s cautious approach was reasonable in the circumstances.

[55] The Applicants complain that Tiffany has failed to collect loans owing by her common law spouse and Mr. Kontkanen. Tiffany has agreed to set off any amount owed by Mr. Guindon from her legacy. This is a reasonable solution. She intends to pursue Mr. Kontkanen in Small Claims Court, but cost efficiency must be foremost given the amounts at stake. Tiffany cannot be removed for her failure to pursue amounts owed to the Estate where the cost to pursue such amounts may exceed the amount owing.

[56] The Court must respect the wishes of the Testator and can only remove Tiffany on the clearest of evidence. In this case the evidence is not clear that she should be removed given what she accomplished to date and what remains to be done.

[57] In the end, while the Court considered appointing Mr. Erlich as Successor Estate Trustee, it is neither cost efficient nor have the Applicants met the high threshold required to remove Tiffany as Estate Trustee.

[58] Based on the evidence in this case as reviewed above, I am satisfied that Tiffany has executed her duties as best she can in the circumstances and make the following specific findings:

a. Tiffany’s position on the $40,000 cash payment was not unrealistic given the amounts at stake and given the deceased’s view (as recorded in the drafting solicitor’s file) that Jennifer was a dependent. b. Tiffany paid the funeral expenses from her own pocket to ensure the burial was not delayed. c. Tiffany applied for and obtained a Certificate of Appointment of Estate Trustee within 6 months of the date of death. d. Tiffany facilitated the transfer of assets that passed outside of the Estate to their designated beneficiaries. e. Tiffany has been able to resolve the issue of transfer of shares to Lansdowne and Fort Garry, the payout of Connor’s mortgage, the payout of the line of credit, some collection on the loans owed by Mr. Kontkanen and Mr. Guindon, tax issues, and the continuation of Rejenmor. f. I find that Tiffany appointed herself as director of HHI not to thwart or exclude the Applicants, but so that she could use the value of the shares held by the Secondary Estate to pay out taxes. Tiffany arranged for a $300,000 loan from HHI to the Estate in order to satisfy the tax liability owing under the deceased’s terminal return. Had she not done so, the Estate would have accumulated penalties and interest on the tax debt. g. With the advice of her accountants, Tiffany arranged for a loss carryback plan to obtain tax savings for the Estate. h. Tiffany did her best to arrange for the distribution and sale of the deceased’s personal property. As she could not obtain the consent of the Applicants to do so, she sold the property pursuant to a court order. i. Tiffany has provided disclosure to the beneficiaries on an ongoing basis. Mr. Erlich’s report makes it clear that after the distribution of the legacies there is no more than approximately $140,000 available for distribution by the Estate. Tiffany is right to oppose the appointment of a third-party Successor Estate Trustee. The Estate simply cannot afford it. j. I accept Tiffany’s evidence that Royal Trust was not consulted with respect to being named as co-Estate Trustee. Their representatives were properly concerned that there were insufficient assets in the Estate to merit their appointment. I further accept that Tiffany approached Scotiabank who refused the appointment for the same reasons. k. Having found that Tiffany was unable to locate a third-party professional co-Estate Trustee, Tiffany acted on her own. Her decision to hire professionals to guide her on legal and accounting issues is understandable. Having observed the dynamics of the interaction between the Applicants and Jennifer, it sheds light on why the deceased chose his granddaughter as Estate Trustee. l. Tiffany has been criticized for not paying out the legacies, however, given the modest cash position of the Estate it was not prudent to do so as there may be an issue of abatement. m. The most compelling argument with respect to Tiffany’s possible removal relates to the ongoing operation of Rejenmor. In his report dated June 2, 2023, Mr. Erlich was ambiguous about the future of Rejenmor. He stated that that unless sales declined below the payroll level it made sense to keep it as a going concern. On the other hand, he stated that it could be wound up with obvious termination pay or severance consequences. It is unfair and unrealistic of Tiffany to leave this issue as an open one given the position of Maureen and Rebecca that Rejenmor should be wound up. However, this issue can be dealt with by way of directions from the Court to ensure there is finality for all concerned. The fact that Tiffany has not taken steps with respect to Rejenmor, given its profitability, is not sufficient to remove her as Estate Trustee. n. The Applicants are critical of Tiffany for not having taken a firm position on the Hotchpot issue. Tiffany has taken a position. She supports the conclusions in Mr. Erlich’s report. This means that neither her mother nor her aunt Maureen would receive any distribution from the Estate. The Applicants are in turn critical of Mr. Erlich for having opined on the Hotchpot when they say he is not qualified to do so. I do not agree. Mr. Erlich was specifically directed by the Court to provide distribution scenarios. He could not do so without consideration of the Hotchpot Clause in the Wills. His conclusions are not binding on the Court in this regard in any event. o. There is animosity between these parties and allegations that Tiffany will simply not speak to her aunts. The case law is clear that friction between the beneficiaries and the Estate Trustee is not a sufficient ground for removal. Indeed, there is some evidence that it is the Applicants who have been challenging. It is difficult to understand why they would not consent to using the mortgage proceeds to pay down the line of credit or the payout of the vehicle loans. Their delay caused expense to the Estate by way of ongoing interest payments which were entirely avoidable. It was only when the Court expressed its views at a Case Conference in January 2024 that those amounts were paid. Any animosity which exists in this matter has not prevented Tiffany from taking steps to administer the Estate and is insufficient to meet the high threshold for her removal.

[59] In summary, based on the clear principles related to the high threshold required to remove an Estate Trustee, my findings with respect to Tiffany’s conduct as Estate Trustee, and the cost of appointing a Successor Estate Trustee, the Court is led to the inevitable conclusion that Tiffany must remain as Estate Trustee in order to complete the administration of the Estate.

2. Issue 2 – Interpretation of the Hotchpot Clause

[60] During his lifetime, the deceased advanced various amounts to his daughters from the Family Trust and from his own resources. The Clause specifies that the daughters must bring amounts advanced to them during their father’s lifetime into hotchpot.

[61] Specifically in his Primary Will, Mr. Holbrook states as follows:

I have over the years advanced sums to my children and their children either directly or indirectly, and it was and continues to be my intention to equalize all advances, loans, and trust distributions among my children, including:

a. Through the Holbrook Family Trust. I have kept a chart of the distributions from the Trust made to date and will continue to update it as and when I made subsequent advances after the date of this will. As of the date of making this my Primary Will, these amounts total $226,200 for Rebecca, $253,600 for Jennifer, and $462,700 for Maureen; it is not my intention that funds distributed from the Holbrook Family Trust to my grandchildren be brought into hotchpot or taken into account;

b. I have also paid $600,000 for a share of the property at 721 County Road 2, Lansdowne, Ontario belonging to my daughter Jennifer, where I currently reside, which I consider to be an advance on her inheritance;

c. I hold a mortgage over real property municipally known as 721 County Road #2, Lansdowne, Ontario and legally described as Part of Lot 8, Concession 1, Lansdowne as in LR110169 except Part 1 on 28R9436 (PIN 44299-0111) belonging to my daughter, Jennifer, for $187,500, jointly with my spouse Vickie; if my spouse Vickie dies before me, I will direct the Trustees of my Secondary Will forgive and discharge this mortgage, but the value forgiven is to be treated as an advance on my daughter Jennifer's inheritance; and

d. I have advanced $33,950 to my daughter Rebecca from my personal resources.

I DIRECT that each daughter of mine, and anyone claiming under her shall bring into hotchpot, and have charged against the share directed to be set aside for that daughter or, if she is not then alive, against the share directed to be paid to or set aside for her issue, the value of the advances made either directly or indirectly through the Holbrook Family Trust. I direct my Trustees, along with the Executors and Trustees of my Secondary Will, to consider the value of both my Primary and Secondary Estates in aggregate in calculating the amount to be brought into hotchpot, and if necessary to determine a reasonable amount to bring into hotchpot, and have charged against the share for a daughter of mine or anyone claiming under her under this my Primary Will.

[62] The deceased also made certain loans during his lifetime including a loan to Fort Garry in the amount of $295,921.61 personally guaranteed by Tiffany, and the sum of $300,000 to Lansdowne personally guaranteed by Connor.

[63] Notes from the file of the lawyer who drafted the deceased’s Wills, Mary-Alice Thompson, have been produced. Certain notations made by the lawyer are of interest including the following (the reference to “he” in the notes is to the client who was the deceased):

“He and Jennifer sold horses. He put 600k, Jennifer put 725k, 250k mtg.”

“He has paid to other daughters...has equalized gifts to them.”

“Hotchpot with equalization statement “I love all my daughters.”””

“He put 600k into farm, Jennifer paid more – will hotchpot at purchase price.”

An email from the deceased to Ms. Thompson dated November 30, 2019, sets out as follows (in part):

“They [Maureen and Rebecca] feel they should get their share of what I have put into the farm purchase now, as both could use it now. They also feel that whatever I am paying Jennifer (since she isn’t really working) plus what I am paying towards farm operations (utilities, taxes etc.); that I should calculate this amount monthly and give 50% of this each month to both Rebecca and Maureen – “to make it equal.”

[64] In my Endorsement of March 24, 2023, I required that Mr. Erlich was to provide to the Court a proper accounting of the actual value of the Estate and likely distribution scenarios as well as an opinion as to how to deal with Rejenmor with respect to it remaining a going concern.

[65] With respect to Mr. Erlich’s views on likely distribution scenarios, his view was that the $141,082.49 should be distributed to Rebecca as she received less from her father than Jennifer and Maureen. In support of this conclusion, he provided a chart at paragraph 41 of his report. In his interpretation of the Clause, he found that estate distributions would need to exceed $202,000 for Maureen to receive anything and $984,350 for Jennifer to receive anything. That is, when the lifetime advances were brought into hotchpot, Jennifer and Maureen had already received more than their available share of the estate so they would receive nothing.

[66] Mr. Erlich further explained that the advances to the daughters were assumed to be gifts given their description as advances on inheritance, unless there was evidence or argument to the contrary.

[67] The Applicants interpret the Clause as intended to equalize the advances on the daughters’ inheritances based on the wording “bring into hotchpot and have charged against the share directed to be set aside for that daughter…the value of the advances made” to mean that the recipient must put back into the pot what she has received, and then the pot would be shared out. This would require Jennifer, for example, to notionally repay to the Estate the $600,000 she was advanced in relation to the farm purchase.

[68] The Applicants argue that doing otherwise would result in a distribution scenario which is unequal and contrary to the intentions of the deceased. Specifically, it would result in Jennifer receiving a total inheritance which is almost double that of her sisters.

[69] The Applicants offer their own calculation (it is not reproduced here but can found at paragraph 15 of their Reply factum) which would see all inheritance advances (including the $600,000 advanced to Jennifer) brought into hotchpot plus the amount available in the Estate ($141,082.49) for a total of $1,717,532.49. This amount would then be divided into three parts leaving each daughter with the sum of $572,510.83. From this amount would be deducted the advances each daughter received. This scenario would see Rebecca receiving $312,360.83, Maureen receiving $109,810.83 and Jennifer paying back $281,089.17.

[70] The Applicants suggest that in order to achieve this “equalization”, funds could be used either from the sale of Jennifer’s farm property, by way of a distribution from the Family Trust, or a distribution of the HHI voting shares.

[71] Tiffany’s position is that there are no documents or evidence to support that the deceased intended any of the advances on inheritance to be treated as loans. As such, she agrees with Mr. Erlich that the advances are to be treated as gifts unless that there is evidence to support another interpretation.

[72] I prefer Tiffany’s interpretation of the Hotchpot Clause. I agree with Mr. Askew’s reference to Theobald on Wills, 19th edition (London: Thomson Reuters Ltd. 2021) at page 955 in which the calculation for hotchpot is described as a “notional” one. That is, that the advance is notionally added back to hotchpot, the fund notionally increased by that amount and the beneficiary given credit for what has already been received.

[73] The Applicants rely on a paper prepared by Ms. Debra Stephens on May 3, 2018, for an Estates educational presentation sponsored by the Law Society of Ontario. I do not find this to be helpful as the calculations done by Ms. Stephens are accurate but based on the beneficiaries being “debtors” in relation to loaned amounts. That is not the case here. I prefer the interpretation of Ms. Anne Werker in her “Probater” article published in November 2005. She differentiates between the presumption of “advancement” in an estates context (gifts) and “advances” in a commercial context (see Footnote 1) which are loans and adopts the “notional” increase approach taken in the Theobald text.

[74] I further find that while Mr. Holbrook intended to treat his daughters equally, he never actually did. During his lifetime he advanced them different amounts, presumably based on what he thought was best or what they needed at the time.

[75] I also agree with Tiffany there is nothing either on the face of the Wills or in any of the productions which refers to the advances as loans or secures them as such. When Mr. Holbrook loaned money, (such as funds loaned to Tiffany or Connor) he did so by way of a promissory note or mortgage with terms.

[76] In short, I find that the Applicants are intending to create an obligation that did not exist either prior to the drafting of the Wills or in the Wills themselves. As such, I accept the calculations in Tiffany’s supplementary factum at paragraph 59 with respect to the Hotchpot Clause. This interpretation results in neither Jennifer nor Maureen receiving any distribution from the Estate and does not require repayment to the Estate of any amounts advanced to the beneficiaries during the deceased’s lifetime.

Orders and Costs

[77] The Applicants’ motion to remove Tiffany Jean is dismissed on terms as follows:

a. Tiffany Jean as Estate Trustee must arrange for the windup or sale of Rejenmor within two years of the date of issue of this Endorsement. b. This shall be considered working notice to Jennifer Holbrook for employment purposes although it is without prejudice to either Jennifer Holbrook or the representatives of Rejenmor arguing that such notice is excessive or insufficient. c. In the event that a sale is arranged, the sale must be to an arm’s length party. d. Mr. Erlich may be retained to assist in any wind up if that is the course chosen by Tiffany Jean. e. In the event that Tiffany Jean does not wind up or sell Rejenmor within the prescribed period she shall be removed as Estate Trustee and replaced with an Estate Trustee selected by the Applicants. That Estate Trustee shall then proceed with the sale or wind up of Rejenmor. f. Tiffany Jean must forthwith deal with any claims made by Jennifer Holbrook with respect to outstanding bonuses or other amounts claimed in relation to her employment. g. Tiffany Jean is to set off the sum of $14,000 from her $100,000 legacy being the balance of loan owed by her common-law partner Michael Guindon. h. Tiffany Jean must pass her accounts and provide a detailed accounting of all legal and accounting fees as well as any reimbursement for expenses or compensation she may claim. i. Once the passing of accounts has been completed, the legacies are to be paid out subject to abatement and legal fees and expenses as ordered in the Passing of Accounts.

[78] With respect to the interpretation motion, for the reasons given above, the interpretation of Tiffany Jean and the Independent Observer regarding the meaning of what should be brought into hotchpot is hereby adopted by this Court. The calculation contained at paragraph 59 of Tiffany’s Supplementary Factum shall be the calculation relied upon for the purpose of determining any remaining distributions of the Estate.

Costs

[79] Pursuant to the direction of Justice Sanfilippo in his endorsement dated October 5, 2023, the costs of the motion heard by him shall be decided by me as the judge hearing the Application.

[80] As such, I will require written submissions from the parties on costs in relation to the March 2023 motion, the October 2023 motion and the within motion. Tiffany Jean and Jennifer Holbrook shall provide those submissions, which shall not exceed four pages (exclusive of any Offers to Settle or Bill of Costs), within 14 days of the date of release of this decision. The Applicants may respond 14 days after that and any reply by Tiffany Jean or Jennifer Holbrook is limited to two pages and may be provided within 7 days of receipt of the responding costs submissions. All case law references in the written costs submissions must be hyperlinked. Costs are to be sent via email to my judicial assistant.

C. Gilmore, J. Date: August 20, 2024.