Court File and Parties

COURT FILE NO.: CV-23-00707187-00ES DATE: 202409 05

ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF JOSEPH HOLMES, deceased

BETWEEN: JACQUELINE HOLMES, in her capacity as co-Estate Trustee for the Estate of Joseph Holmes, and in her personal capacity Applicant

AND:

GARY HOLMES, in his capacity as co-Estate Trustee for the Estate of Joseph Holmes, and in his personal capacity, LAWRENCE HOLMES, PAUL HOLMES, SIMONE HOLMES, BRANDON HOLMES, and GALYN HOLMES Respondents

BEFORE: Justice A.A. Sanfilippo

COUNSEL: Zara Wong, for the Applicant, Jacqueline Holmes Gary Holmes, Respondent, self-represented Paul Holmes, Respondent, self-represented Lawrence Holmes, Respondent, self-represented

HEARD: July 8, 2024

Endorsement

[1] Joseph Holmes died on March 28, 2023 (the “Deceased”), survived by four of his five children: the Applicant, Jacqueline Holmes, and the Respondents, Gary Holmes, Lawrence Holmes, and Paul Holmes. Joseph was predeceased by his spouse, Yvonne Holmes, and by his son, Gavin Holmes. Gavin was survived by his children, Simone Holmes, Brandon Holmes, and Galyn Holmes, who are named as Respondents in this proceeding but have not appeared.

[2] This is the fourth court proceeding between these siblings since 2020. Prior to Joseph’s death, the litigation pertained to disputes regarding the management of Joseph’s property. Since Joseph’s death, the parties have disputed the administration of Joseph’s estate (the “Estate”). Jacqueline brought this Application by Notice of Application issued on September 19, 2023 (this “Application”) to seek orders regarding the alleged settlement of an earlier application and orders and directions to advance the Estate.

[3] During the hearing of this Application, the parties settled the issues pertaining to the settlement of the earlier application, and I granted Jacqueline’s claim to pass over Gary as an estate trustee of the Estate, with broader reasons to follow. These are the reasons.

[4] For brevity and clarity, I will respectfully refer to the parties by their first names, considering that they share a surname.

A. The Litigation History

[5] On November 5, 2013, Joseph granted a Continuing Power of Attorney for Property appointing his spouse, Yvonne, as his attorney for property and appointing Gary as his alternate. On the same day, Joseph granted a Continuing Power of Attorney for Personal Care appointing Yvonne as his attorney for personal care and appointing Jacqueline as his alternate. As Yvonne predeceased Joseph, Jacqueline began acting as Joseph’s attorney for personal care in about May 2016. Gary began acting as Joseph’s attorney for property on about April 28, 2019, upon Joseph’s diagnosis of moderate dementia on January 23, 2019. On June 14, 2019, Joseph moved into an assisted living facility.

[6] In 2019, Gary and Jacqueline brought an application in court file number CV-19-00003091-00ES for an order that Paul vacate Joseph’s home, known municipally as 98 Holm Crescent, Thornhill, Ontario (the “Property”). By Judgment issued October 7, 2019, Justice Dietrich found that Joseph was the sole legal and beneficial owner of the Property and ordered Paul to vacate the Property and pay Jacqueline and Gary’s costs, fixed in the amount of $37,500.00 (the “October 2019 Judgment”). The October 2019 Judgment authorized Gary to “maintain, rent or sell the [Property] at his discretion and for the sole benefit of Joseph.”

[7] On January 28, 2020, Jacqueline commenced an application in court file number CV-20-00003008-00ES to compel Gary to pass his accounts as Joseph’s attorney for property (the “2020 Application”). On February 24, 2020, Justice Conway established a timetable for the 2020 Application to be heard on April 14, 2020.

[8] By Order rendered by Justice Dietrich on September 15, 2021, Gary was ordered to commence by October 10, 2021, an application to pass his accounts of his attorneyship of property (the “September 2021 Order”).

[9] Gary did not commence his application to pass accounts within the time provided by the September 2021 Order. On April 14, 2022, Justice Conway ordered Gary to pay Jacqueline costs thrown away in the amount of $15,000.00 (the “April 2022 Order”). On May 5, 2022, Justice Conway ordered Gary to provide full financial disclosure of his management of Joseph’s property to Jacqueline on a quarterly basis and to bring his Application to Pass Accounts by no later than June 24, 2022 for the Accounting Period from April 28, 2019, to December 31, 2021 (the “2019-2021 Accounting Period”).

[10] On June 27, 2022, Gary brought an application to pass his accounts as Joseph’s attorney for property for the 2019-2021 Accounting Period in court file number CV-22-00683245-00ES (the “2022 Application”).

[11] Jacqueline contended that Gary’s passing of accounts showed that Gary made cash withdrawals from Joseph’s accounts unsupported by vouchers and contrary to Joseph’s interests. Gary claimed that certain of these withdrawals constituted compensation for his work as attorney for property. At the core of Jacqueline’s claims is Gary’s handling of the net sale proceeds from the closing of the sale of the Property. Jacqueline submitted that after Gary sold the Property, he deposited the net sale proceedings into a Manulife investment account held at Raymond James as account number 1LR-BW0A-0 (the “Raymond James Account”). Gary produced a statement that showed that the Raymond James Account had a value of $404,354.87 as of March 30, 2023. By letter dated January 24, 2023, Gary purported to make a beneficiary designation on the Raymond James Account on behalf of Joseph, designating each of Joseph’s five children (or in the case of Gavin, his children) as equal 20% beneficiaries. Jacqueline alleged that this beneficiary designation is contrary to s. 31(1) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30.

[12] On December 5, 2022, the parties attended a mediation and entered into Minutes of Settlement dated January 10, 2023, that were executed, with the assistance of counsel, by Jacqueline on February 28, 2023, and by Gary on March 13, 2023 (the “Minutes of Settlement”). The Minutes of Settlement were conditional on court approval on behalf of Joseph, pursuant to Rule 7.08 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[13] Joseph died on March 28, 2023, within weeks of the execution of the Minutes of Settlement, and before a motion was brought for court approval of the Minutes of Settlement. Joseph left a last will and testament dated May 31, 2014 (the “Will”). The Will appointed Yvonne as the estate trustee, but in the event that she predeceased Joseph, as she did, the Will appoints Gary and Jacqueline as estate trustees. As Yvonne predeceased Joseph, the residue of the Estate is to be divided among Joseph’s children in equal shares. If any child predeceased Joseph, as did Gavin, his children alive at Joseph’s death (Simone, Brandon, and Galyn) would receive Gavin’s share in equal shares.

[14] Gary and Jacqueline have not brought an application for the Certificate of Appointment of Estate Trustee (“CAET”) for the Estate.

B. This Application

[15] On September 13, 2023, Jacqueline brought this Application for the following relief:

(a) An Order that the Minutes of Settlement are valid and binding on Gary and Jacqueline in their personal capacities and in their capacities as attorneys for Joseph. (b) An Order approving the Minutes of Settlement on behalf of Joseph. (c) An Order passing over Gary as estate trustee of the Estate. (d) An Order that Jacqueline is the sole estate trustee of the Estate. (e) Regarding the Raymond James Account, i. A Declaration that the beneficiary designation made by Gary for the Raymond James Account on behalf of Joseph is void; ii. A Declaration that the Raymond James Account is an Estate asset and does not pass by way of beneficiary designation. (f) An Order that Gary commence an application to pass accounts as the attorney for Joseph for the period January 1, 2022, to March 28, 2023 (the “2022-2023 Accounting Period”).

[16] By Order issued by Justice Gilmore on December 20, 2023, service of this Application was validated on Gary and Paul Holmes, a Case Conference was scheduled for February 6, 2024, to establish a litigation timetable, and the hearing of this Application was scheduled to proceed on July 8, 2024. On February 7, 2024, I implemented a litigation timetable both for the development of this Application for hearing; a timetable for the delivery by Gary of an informal accounting for the 2022-2023 Accounting Period; and an order that the parties complete by May 31, 2024, the mandatory mediation required by Rule 75.1 (the “February 2024 Order”).

[17] At a Case Conference conducted by Justice Faieta on June 15, 2024, the parties reported that they were unable to agree on a date or a mediator for the completion of the mandatory mediation by May 31, 2024, or at all. Justice Faieta held that due to “the hostility between the parties” there was no reasonable prospect that a mediation would narrow or resolve any issues and thereby exempted this Application from mediation, under Rule 75.1.04.

C. Issues Resolved

[18] At the hearing, the parties resolved several issues raised by this Application.

[19] Gary and Jacqueline agreed that the Minutes of Settlement are valid, binding, and enforceable on Gary and Jacqueline. An order shall issue accordingly. All parties consented to an order that the Minutes of Settlement be approved on behalf of Joseph. I will address this shortly.

[20] All parties agreed that Raymond James and Manulife shall produce any and all documents related to the Raymond James Account, including but not limited to the following:

(a) Account opening documentation. (b) Copies of revoked and current beneficiary designation(s). (c) Monthly, quarterly or annual account statements. (d) Copies of correspondence with Gary and/or his representatives, including his lawyers and accountants.

[21] The parties also agree that the Jacqueline shall provide copies of all documents and correspondence received from Raymond James and Manulife Investments to the Respondents upon receipt. An order shall issue accordingly.

[22] The parties agreed that the issues pertaining to the Raymond James Account that have been raised by this Application, including the beneficiary designation and whether it is an asset of the Estate, shall be adjourned to be determined after the documentary production from Raymond James and Manulife.

[23] Gary requested, and the parties consented to an extension of time to the timetable set out in the February 2024 Order for Gary to deliver responses to follow-up questions and requests. The parties confirmed that the other steps set out in this timetable have been complied with, in that: Jacqueline provided, by March 11, 2024, all her questions and any requests for vouchers and information; Gary provided, by April 15, 2024, responses to the questions posed by Jacqueline; and Jacqueline provided, by April 30, 2024, follow-up questions and responses. Paragraph 10(d) of the February 2024 Order required that Gary deliver by May 15, 2024, responses to the follow-up questions and requests. The parties agreed that paragraph 10(d) of the February 2024 Order shall be extended to August 6, 2024. An order shall issue accordingly.

[24] The parties’ agreement on these issues, left two issues for determination:

(a) Approval of the settlement on behalf of Joseph, under Rule 7.08. (b) Jacqueline’s claim that Gary be passed over as an estate trustee of the Estate.

[25] I will explain my determination of these issues:

D. The Approval under Rule 7.08

[26] The Minutes of Settlement contain the following core provisions:

(a) Gary would not take any further compensation for the period of the passing of accounts beyond the $46,700 in compensation that he had already taken. (b) Jacqueline would withdraw her Notice of Objection to accounts in the 2022 Application and Gary would obtain a judgment passing his accounts for the 2019-2021 Accounting Period. (c) Gary and Jacqueline’s legal fees incurred in the 2022 Application, estimated as $45,000.00 for Gary and $33,000.00 for Jacqueline, would be paid by Joseph within 15 days of Gary obtaining the judgment passing his accounts. (d) Gary would move Joseph’s funds from the Raymond James Account into an investment vehicle guaranteeing the full principal amount, and if Joseph’s expenses exhausted the money in his bank accounts, funds would be moved out of the investments to cover Joseph’s financial needs. (e) From January 1, 2022, onward, Gary’s compensation as attorney for property would be reduced to 1.0% of receipts and disbursements, and Gary would waive entitlement to a care and management fee. (f) Jacqueline would bring a motion to be appointed as Joseph’s litigation guardian and to approve the Minutes of Settlement on behalf of Joseph. (g) Notwithstanding the settlement was contingent upon court approval, the form and content of the Minutes would be acted upon forthwith.

[27] In Wu v. Zurich Insurance Company (2006), 2006 16344 (ON CA), 211 O.A.C. 133, the Court of Appeal held that a settlement concluded prior to the death of the party under disability was valid and effective even though court approval had not been sought prior to the death of the party under disability. The Court of Appeal determined, at para. 14, that the operation of the settlement was suspended pending “necessary” court approval. In Wu, court approval was no longer necessary because the contractual right that was settled passed to the deceased’s estate with the result that there was no longer a party under disability. However, the Court of Appeal instructed, in para. 28, that “if it were necessary to do so, the settlement in favour of Rebecca Wu could be approved by the court after her death.”

[28] Here, the parties have now agreed that the Minutes of Settlement are valid and binding on Gary and Jacqueline in their personal capacities and in their capacities as attorneys for Joseph. The operation of the Minutes of Settlement was suspended pending court approval, if necessary. The rights asserted by Jacqueline in the 2022 Application accrued to the benefit of Joseph and can thereby be said to have been transferred to his Estate upon his death. However, in the circumstances of this case, the transfer of the right to the Estate would be subject to administration by the joint estate trustees, Jacqueline, and Gary, who were adversaries in the 2022 Application.

[29] In the exercise of my parens patriae jurisdiction, as explained in Wu, at paras. 10 and 17-18, I have analysed whether the settlement set out in the Minutes of Settlement is in Joseph’s best interests. The framework for analysis is not a comparison of what might have been capable of being achieved upon a full determination on hearing of the 2022 Application, but rather whether the settlement is reasonable and in the disabled party’s best interests: Spicer v. Wawanesa Mutual Insurance Company, 2023 ONSC 3221, 35 C.C.L.I. (6th) 257, at para. 14.

[30] The terms of settlement are in Joseph’s best interests because they preserve the funds obtained from the sale of the Property, limit and set controls over further withdrawals, and set out the ongoing holding of the funds in trust. For these reasons, the settlement set out in the Minutes of Settlement is approved on behalf of Joseph.

[31] Last, I am mindful that while Jacqueline claimed, in para. 1(i) of her Notice of Application, an order that the Minutes of Settlement be approved on behalf of Joseph, she did not strictly comply with the requirements for an application for approval under Rules 7.08(4)(a) and (b). In the interests of justice, and on the consent of the parties to the approval of the settlement, I dispense with strict compliance with Rules 7.08(4)(a) and (b) on the basis of Rule 2.03.

E. The Passing Over of Gary as Estate Trustee

[32] The Court has the inherent jurisdiction to remove trustees: James Estate (Re), 2024 ONCA 623, at para. 33, citing Gonder v. Gonder Estate, 2010 ONCA 172, 54 E.T.R. (3d) 193, at para. 26; Chambers Estate v. Chambers, 2013 ONCA 511, 309 O.A.C. 205, at para. 101. 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.

[33] The well-established principles that guide the court’s analysis of whether to remove an estate trustee were summarized in La Calamita v. La Calamita, 2024 ONSC 4219, at para. 95, as follows:

(a) The court will remove the estate trustee only if doing so is clearly necessary to ensure the proper administration of the trust: Di Michele v. Di Michele, 2014 ONCA 261, 319 O.A.C. 72, at para. 84; Di Santo v. Di Santo Estate, 2023 ONCA 464, 87 E.T.R. (4th) 167, at para. 26. (b) The court should not lightly interfere with a testator’s choice of the person to act as his or her estate trustee: Chambers, at para. 95. The wishes of the testator will generally be honoured “even if the person chosen is of bad character”: Chambers, at para. 96. (c) 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”: Chambers, at para. 95. (d) Even if an estate trustee has not executed their functions perfectly or ideally, “that is not the test”: Taetz v. Mikolajewski, 2023 ONSC 4635, at para. 11; Radford v. Radford Estate (2008), 2008 45548 (ON SC), 43 E.T.R. (3d) 74 (S.C.), at para. 120; St Joseph’s Health Centre v. Dzwiekowski, 2007 51347 (Ont. S.C.), at para. 25. 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: Meuse v. Taylor, 2022 ONSC 1436, 161 O.R. (3d) 30, at para. 14; Henderson v. Sands, 2023 ONSC 897, 85 E.T.R. (4th) 182, at para 11. (e) Friction alone between co-executors is not itself reason for removal: Chambers, at para. 96. For friction to be the basis for removal, it must rise to a level that prevents the proper administration of the estate: Henderson, at para. 8. (f) Passing over an executor is an “unusual and extreme course”: Chambers, at para. 95. It has been described as an “extreme remedy” and one of “last resort”: Kinnear v. White, 2022 ONSC 2576, at para. 7. (g) 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: St Joseph’s Health Centre, at paras. 28–29; Virk v. Brar Estate, 2014 ONSC 4611, E.T.R. (4th) 241, at para. 48. (h) The Court’s main guide should be the welfare of the beneficiaries: Kinnear, at para. 11, citing Crawford v. Jardine (1997), 20 E.T.R. (2d) 182 (Ont. Gen. Div.), at para. 18; Henderson, at para. 8; Radford, at para. 103; St Joseph’s Health Centre, at para. 26.

[34] Because no CAET has been issued to Gary, and because Gary has not assumed authority to administer the Estate, Jacqueline seeks to pass over Gary as estate trustee rather than remove Gary from this appointment. The Court of Appeal instructed that “[a]n estate trustee is removed after he or she has received a certificate of appointment, whereas an executor is passed over before the issuance of such a certificate”: Chambers, at para. 90.

[35] I determined that it is clearly necessary to pass over Gary to ensure the proper administration of the Estate for the following reasons. First, Gary and Jacqueline have been in conflict since 2020 regarding issues pertaining to Gary’s conduct as attorney for property for Joseph. Although these issues were resolved through the Minutes of Settlement in January 2023, Gary did not confirm his commitment to the Minutes of Settlement until this hearing on July 8, 2024.

[36] Second, although Gary has passed his accounts for the 2019-2021 Accounting Period, Jacqueline has provided notice of objections regarding Gary’s accounts for the 2022-2023 Accounting Period. Until the accounting of the 2022-2023 Accounting Period is passed, the parties continue to dispute Gary’s attorneyship of Joseph’s property, and if the informal passing of accounts proves insufficient, Gary may be required to bring an application to pass accounts for the 2022-2023 Accounting Period.

[37] Third, Gary and Jacqueline dispute the role of the Raymond James Account in Joseph’s Estate. Jacqueline claims that the beneficiary designation made by Gary must be set aside and Gary seeks to establish the validity of the beneficiary designation and that the investments in the Raymond James Account should pass outside the Estate.

[38] Fourth, the evidence in the record shows that the Gary and Jacqueline have not been able to communicate productively, collaboratively, or effectively. They could not agree on a date for the conduct of mediation, or a mediator. They have chronic disputes on basic documentary production. While friction between the trustees is not, alone, a basis for removal, the presence of friction supports removal when it prevents the proper administration of the Estate. I find that the friction between Jacqueline and Gary prevents the proper administration of the Estate.

[39] Fifth, while the Deceased’s choice of trustee should not be lightly interfered with, I have no doubt that Joseph would not support the selection of a trustee that results in unnecessary expense to the Estate and delay in the administration of the Estate. Based on the parties’ litigation history, Gary’s appointment as trustee will result in continued legal expense and delay in the administration of this Estate.

[40] Sixth, the main guide in consideration of the removal or passing over of a trustee is the welfare of the beneficiaries. Lawrence supports Jacqueline in her claim to pass over Gary as a trustee, and Paul submitted that both Gary and Jacqueline should be passed over. The Applicant did not seek the appointment of a professional trustee, and I would have been reluctant to appoint a professional trustee at this time considering the size of the Estate, and Jacqueline’s willingness to act as sole estate trustee. Section 37(4) of the Trustee Act provides that where the “executor … removed is not a sole executor … the court need not, unless it sees fit, appoint any person to act in the place of the person removed, and if no such appointment is made, the rights and estate of the executor … removed passes to the remaining executor … as if the person so removed had died.” The beneficiaries require an efficient, prompt estate administration and this is fostered by passing over Gary as estate trustee.

F. Disposition

[41] For these reasons, and on the consent of the parties on some terms, I order:

(a) Gary Holmes shall be passed over as estate trustee of the Estate of Joseph Holmes, deceased. (b) The Minutes of Settlement dated January 20, 2023, executed by Gary Holmes and Jacqueline Holmes (the “Minutes of Settlement”), in respect of the application bearing court file number CV-22-00683245-00ES (the “2022 Application”), are valid, binding, and enforceable on Gary Holmes and Jacqueline Holmes. (c) The settlement set out in the Minutes of Settlement in the 2022 Application is approved on behalf of Joseph Holmes, deceased, and are binding and enforceable on Joseph Holmes and the Estate of Joseph Holmes. (d) Raymond James and Manulife Investments shall produce any and all documents and correspondence in relation to investment account #1LR-BW0A-0 regarding Joseph Holmes, deceased, to the lawyers for the Applicant, including but not limited to: i. account opening documentation; ii. copies of revoked and current beneficiary designation(s); iii. monthly, quarterly or annual account statements; and iv. copies of correspondence with Gary Holmes and/or his representatives, including his lawyers and accountants. (e) The lawyers for the Applicant shall provide all documents and correspondence received from Raymond James and Manulife Investments to the Respondents upon receipt. (f) The requirement set out in paragraph 10(d) of the Order of February 6, 2024, that “Gary Holmes shall, by May 15, 2024 provide responses to the follow-up questions and request” is varied to extend the time from May 15, 2024 to August 6, 2024. (g) The balance of this Application is adjourned to November 28, 2024, at 10:30 am. The parties may file supplementary materials, as they are advised.

[42] This endorsement and the orders and directions contained in it shall have the immediate effect of a court order without the necessity of the issuance and entry of a formal order. The Applicant submitted that she intends to take out a formal order, and she may do so by filing a draft order on Case Center and forwarding a copy, in PDF and Word format, to the Court Registrar and the Estates List Trial Coordinator, to be brought to my attention.

Justice A.A. Sanfilippo Date: September 5, 2024