Court File and Parties
Court File Nos.: CV-24-00720716-00ES Date: 2024-10-25 Ontario Superior Court of Justice
In the Matter of the Estate of Barbara Jean Morrall, Deceased
Between:
Christopher James Morrall Applicant
– and –
William Fortune Gordon Respondent
Counsel: Ranjan Das and Nikolas Shymko, for the Applicant Did not appear, for the Respondent
Heard: September 26, 2024
Reasons for Judgment
A.A. Sanfilippo J.
[1] Barbara Jean Morrall died on June 16, 2020 (the “Deceased”), survived by her spouse, William Fortune Gordon, and her children, Christopher James Morrall and Lisa Jean Morrall. In the days before her death, the Deceased left a last will and testament executed June 10, 2020 (the “Will”) by which she appointed Mr. Gordon as the executor and trustee of her estate (the “Estate”), and appointed Mr. Morrall as the alternative executor and trustee to act if her spouse “is unable or unwilling to act.”
[2] The Deceased left to Mr. Gordon her house, known municipally as 287 Cranbrooke Avenue, Toronto Ontario (the “Cranbrooke Property”), and left the residue of her Estate to her children in equal shares, with Mr. Morrall taking his share absolutely and with Ms. Morrall’s share being placed into a trust, to be known as “Lisa’s Trust”. The Will provides that the estate trustee shall act as trustee of Lisa’s Trust, to pay from the net income or capital “extra comforts and amenities of life for Lisa without substantially impairing the benefits which Lisa may receive from other sources.”
[3] Mr. Morrall brought this application on his submission that in the four years since his mother’s death, Mr. Gordon has not taken any steps in the administration of the Estate. Furthermore, Mr. Morrall showed that his efforts to obtain input from Mr. Gordon regarding the administration of the Estate have gone unanswered, for over one year.
[4] Mr. Morrall sought the following relief:
(a) An order removing Mr. Gordon as estate trustee of the Estate or, alternatively, an order deeming Mr. Gordon as having renounced his position as estate trustee.
(b) An injunction restraining Mr. Gordon from using, accessing, spending or otherwise dissipating the assets of the Estate.
(c) Such further orders as may be necessary to enable the orderly and lawful administration of the Estate.
[5] Mr. Gordon did not appear in this Application although, as I will explain, he had ample opportunity to do so.
A. The Issue of Service of the Application
[6] At the initial return of this Application on August 8, 2024, Mr. Morrall proved that he served the Notice of Application on Mr. Gordon on May 24, 2024, in accordance with r. 16.02(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.[^1] Mr. Morrall showed that Mr. Gordon did not deliver a Notice of Appearance, as required by r. 38.07(1).[^2] Mr. Morrall submitted that Mr. Gordon was thereby not entitled to receive notice of any step in the application or to receive any further document in the application unless the court orders otherwise, as provided by r. 38.07(2).[^3]
[7] Even though Mr. Gordon was in default of delivery of a Notice of Appearance, the Applicant nonetheless attempted to serve Mr. Gordon with his Application Record. The Applicant established that on July 30, 2024, his lawyer sent an electronic copy of the Application Record to two email addresses known to be used by Mr. Gordon. Neither of these emails were returned as undeliverable. Furthermore, the Applicant showed that on August 2, 3 and 4, 2024, a process server retained on his behalf attended at the Cranbrooke Property where Mr. Gordon resides and, since no one appeared to be present, left the Application Record and Factum in the mailbox. The process server returned on August 3, 2024, with similar result, and upon returning on August 4, 2024, saw that the Application Record, Factum and delivery card left by the process server had been removed from Mr. Gordon’s mailbox.[^4]
[8] The Applicant did not serve the Application Record on Mr. Gordon personally, or by an alternative to personal service. However, the Applicant established that he delivered the Application Record to Mr. Gordon both in electronic form by email, and by leaving the Application Record and Factum in Mr. Gordon’s mailbox. Considering that these materials were retrieved by Mr. Gordon from his mailbox by August 4, 2024, I found, at the hearing on August 8, 2024, that Mr. Gordon received notice of the Application Record by August 4, 2024, at the latest. Accordingly, I ordered under Rule 16.04(1) that the Applicant’s multiple deliveries of the Application Record to Mr. Gordon were sufficient to constitute substituted service of the Application Record, and I ordered, under Rule 16.04(2), that the effective date of service of the Application Record was August 4, 2024. I also ordered that the Application be heard on September 26, 2024, and that the parties preserve all Estate assets (the “August 2024 Order”).
[9] The Applicant showed that he sent the August 2024 Order and the Endorsement on which it was rendered to Mr. Gordon by email on August 9 and 12, 2024, including with a letter from the Applicant’s lawyer, and attempted personal service of the Order and Endorsement on Mr. Gordon on August 13, 14 and 19, 2024, each time leaving the materials at the door of the Cranbrooke Property.[^5] The Applicant sent an electronic copy of his Supplementary Application Record to Mr. Gordon by email on September 19, 2024 and similarly sent the Bill of Costs on September 23, 2024.[^6] On September 20, 2024, the Applicant’s lawyer sent by email to Mr. Gordon the video conference connection link for the hearing of this Application.[^7]
[10] I am satisfied that the Applicant has taken all available steps to provide notice to Mr. Gordon of the hearing of this Application to provide Mr. Gordon with an opportunity to be heard, and that Mr. Gordon has declined to appear. This Application proceeded unopposed by Mr. Gordon.
B. Applicable Legal Principles
[11] 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.[^8] Furthermore, the Court has the inherent jurisdiction to remove trustees.[^9]
[12] In La Calamita v. La Calamita, at para. 95, I summarized the well-established principles that guide the court’s analysis of whether to remove an estate trustee, which I adopt for my analysis of this Application, 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.[^10]
(b) The court should not lightly interfere with a testator’s choice of the person to act as his or her estate trustee.[^11] The wishes of the testator will generally be honoured “even if the person chosen is of bad character”.[^12]
(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”.[^13]
(d) Even if an estate trustee has not executed their functions perfectly or ideally, “that is not the test”.[^14] 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.[^15]
(e) Friction alone between co-executors is not itself reason for removal.[^16] For friction to be the basis for removal, it must rise to a level that prevents the proper administration of the estate.[^17]
(f) Passing over an executor is an “unusual and extreme course”.[^18] It has been described as an “extreme remedy” and one of “last resort”.[^19]
(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.[^20]
(h) The Court’s main guide should be the welfare of the beneficiaries.[^21]
[13] In Chambers Estate v. Chambers, 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”.[^22] Until a trustee named under a last will and testament takes steps to assume authority to administer the estate, the trustee may be passed over as estate trustee rather than removed. However, the grounds for passing over a named trustee are the same as the grounds for removal of an estate trustee.[^23]
C. Analysis – Removal or Passing Over of Mr. Gordon as Estate Trustee
[14] At the conclusion of the hearing of this Application on September 26, 2024, I ruled that Mr. Gordon shall be passed over as estate trustee of the Estate. I will explain why.
[15] I determined that it is clearly necessary that Mr. Gordon be passed over as estate trustee because there are several issues material to the administration of the Estate that are not being addressed. First, the Applicant showed that the beneficiary, Ms. Lisa Morrall, has significant health and financial needs arising from her history of Alcohol Use Disorder, alcohol-induced major neurocognitive disorder, and other mental health and addictions related issues. The Deceased provided in paragraph 3(d)(iii)(2) of the Will that Ms. Morrall’s beneficial interest in the residue of her Estate be held in trust for Ms. Morrall and be paid to Ms. Morrall for her needs as the Trustee “deems to be advisable” and that the “…Trustee should provide extra comforts and amenities of life for Lisa…” This showed a clear intention by the Deceased that Ms. Morrall be supported through the inheritance made available to her under the Will. By not undertaking his duties as estate trustee, Mr. Gordon has not taken any steps in four years to address Ms. Morrall’s ongoing needs as directed by the Deceased through the Will. Mr. Morrall deposed that he has filled this role by taking steps to support his sister using his own funds, and that he has acted as attorney for Ms. Morrall further to the Power of Attorney for Personal Care and Power of Attorney for Property granted to Mr. Morrall by Ms. Morrall on January 16, 2021.
[16] Second, Mr. Morrall deposed that the residue of the Estate includes cottages located at 349 Orchard Grove Road, Grafton, Ontario, and 201 Ruttan Road, Grafton, Ontario (together, the “Cottages”), investments, family heirlooms, cash monies, and other valuable assets (the “Estate Residue”). Mr. Morrall showed that Mr. Gordon has not provided an inventory of the Estate Residue, and Mr. Gordon has not attended to the property taxes, insurance, utilities, and maintenance of the Cottages. Mr. Morrall deposed that he discovered that the property taxes on the Cottages is in arrears.
[17] Third, Mr. Morrall showed that Mr. Gordon is unresponsive to inquiries by the beneficiaries. Mr. Morrall deposed emails and text messages that he sent to Mr. Gordon in the period from February 1, 2021 to May 1, 2023 resulted in a reassurance that some step in estate administration was imminent or in hand, but that text messages sent by Mr. Morrall to Mr. Gordon since June 22, 2023 have not been answered. On July 20, 2023 and August 21, 2023, Mr. Morrall wrote that he would pursue legal action in the absence of a response, and on October 16, 2023, Mr. Morrall’s lawyer wrote to Mr. Gordon to caution that litigation would be initiated in the absence of engagement, but Mr. Gordon did not respond.
[18] The Court’s main guide in analysis of whether an estate trustee should be removed or passed over is the welfare of the beneficiaries. The welfare of the beneficiaries required that the estate trustee take steps to advance a probate application, gather and protect the Estate Residue, address the needs of Ms. Morrall and engage and respond to the beneficiaries, none of which has been done in four years. This clear evidence shows that it is necessary to replace Mr. Gordon as estate trustee. Because Mr. Gordon has not initiated a probate application for a Certificate of Appointment of Estate Trustee (“CAET”) and because there is no evidence that Mr. Gordon has, at any time, assumed authority to administer the Estate, the appropriate remedy is to pass over Mr. Gordon as estate trustee.
[19] The passing over of Mr. Gordon as estate trustee accords with the intention of the Deceased as expressed through para. 2 of the Will, which provides as follows:
I NOMINATE, CONSTITUTE AND APPOINT my spouse, WILLIAM FORTUNE GORDON, to be the Executor and Trustee of this my Will but if he is unable or unwilling to act, I NOMINATE, CONSTITUTE AND APPOINT my son, CHRISTOPHER JAMES MORRALL, to be the Executor and Trustee of this my Will. [emphasis added]
[20] The Deceased intended that the Applicant act as her estate trustee if her spouse were “unable or unwilling to act”. Based on my finding that Mr. Gordon has not taken any steps in estate administration in four years, I conclude that he is unable or unwilling to act, supporting the appointment of the alternate estate trustee, Mr. Morrall, in his place. Mr. Morrall is willing and able to act as estate trustee. He deposed that he works as a financial planner with a financial institution and is experienced in estate management in addition to financial planning.
[21] This case is not dissimilar to the decision by Dawe J., as he then was, in Kinnear v. White.[^24] The Court held that the failure of the estate trustee nominated by the will to take any steps in the administration of the estate, including failure to commence a probate application for a CAET notwithstanding the urging of the beneficiaries, supported an order that the estate trustee be passed over.
[22] On these reasons, I conclude that it is clearly necessary to pass over Mr. Gordon as estate trustee of the Estate. The intentions of the Deceased are recognized and honoured in the passing over because the Deceased named the Applicant as the alternative estate trustee to act in circumstances that I have found to be present. The Applicant has shown that it is in the best interests of the beneficiary, and in the interests of an orderly estate administration, that Mr. Gordon be passed over and that Mr. Morrall be appointed as trustee of the Estate.
[23] With his appointment as estate trustee, I grant Mr. Morrall leave to commence a probate application for the issuance of a CAET. I order, as well, that upon the filing of the necessary supporting application materials, a CAET for the Estate shall be issued to Mr. Morrall, as sole executor and trustee, on an expedited basis.
D. Costs
[24] Mr. Morrall seeks costs of this Application on the basis that this Application was necessary to advance the administration of the Estate. Mr. Morrall filed a Bill of Costs that shows that the Applicant has incurred full indemnity costs in the amount of $23,966.67, consisting of fees in the amount of $20,278.00, applicable taxes of $2,636.14 and disbursements of $1,052.53. The Bill of Costs shows that Mr. Morrall’s costs on a partial indemnity basis total $14,801.01, all inclusive, and total $21,675.26 on a substantial indemnity basis. The Applicant submitted that he should receive an award of full indemnity costs payable by Mr. Gordon either personally or from his distributive share of the Estate.
[25] The issue of costs in estates litigation is like any form of civil litigation in that it is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and r. 57 of the Rules, unless public policy considerations require that the costs be paid out of the estate.[^25] In Westover Estate v. Jolicouer, the Court of Appeal explained that the “public policy considerations include the need to give effect to valid wills that reflect the intention of competent testators as well as the proper administration of estates”.[^26]
[26] In my view, this Application raised a public policy consideration because the Estate was not being administered, properly or at all. This is different than a circumstance in which an estate is being administered by an estate trustee and the challenge brought to remove the estate trustee is unwarranted.[^27] Here, I accept Mr. Morrall’s submission that this Application was necessary to advance the administration of the Estate and, indeed, to carry out the Deceased’s intention that if Mr. Gordon was unwilling or unable to act as trustee, that Mr. Morrall take his place. The public policy consideration of ensuring that estates are properly administered supports the payment of costs by the Estate.
[27] I find, based on Mr. Gordon’s conduct, that this is an appropriate case for a blended cost award, following the approach set out in Sawdon Estate, at paras. 93-95. As explained by the Court of Appeal, “[t]he availability of a blended costs order gives the court the ability to both respect the public policy considerations that may be involved and maintain the discipline” of “the general costs principle of ‘loser pays’ in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.”[^28]
[28] Mr. Gordon was notified by Mr. Morrall’s lawyer, in a letter dated October 16, 2023, that Mr. Morrall intended to seek costs against Mr. Gordon if required to initiate a legal proceeding for Mr. Gordon to be removed or passed over as estate trustee. Mr. Gordon took no steps to resign as estate trustee, or even to engage with Mr. Morrall or his lawyer. This conduct supports a cost award against Mr. Gordon.
[29] Having reviewed the Applicant’s Bill of Costs, I am satisfied that the actual costs incurred by Mr. Morrall in bringing this Application, $23,966.67 all-inclusive, are fair, reasonable and proportionate. I do not accept the submission that these costs should be awarded payable by Mr. Gordon on an elevated scale because Mr. Morrall did not establish that Mr. Gordon’s conduct was reprehensible, scandalous or outrageous, as required to prove entitlement to costs on an elevated scale.[^29] Mr. Morrall shall thereby receive an award of costs payable by Mr. Gordon on a partial indemnity basis.
[30] The question, then, is “to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case.”[^30] With reference to the factors set out in r. 57.01(1), and then “stepping back” to fix, in all the circumstances, a cost result is fair, reasonable, and proportionate,[^31] I have concluded that Mr. Gordon shall pay Mr. Morrall partial indemnity costs fixed in the amount of $14,000.00. These costs may be paid from Mr. Gordon’s distributive share in the Estate.
[31] Having found that Mr. Morrall incurred actual costs of $23,966.67 all-inclusive and having awarded costs payable to Mr. Morrall by Mr. Gordon in the amount of $14,000.00, all inclusive, Mr. Morrall shall be paid the balance of his costs in bringing this Application, being $9,966.67 from the assets of the Estate.
E. Disposition
[32] On the basis of these reasons, I order:
(a) The Respondent, William Fortune Gordon, is hereby passed over as an Estate Trustee in the Estate of Barbara Jean Morrall (the “Estate”).
(b) The Applicant, Christopher James Morrall, is constituted as the sole Trustee of the Estate.
(c) The Applicant, Christopher James Morrall, is granted leave to apply for a Certificate of Appointment of Estate Trustee with a Will in the Estate, in his capacity as the sole Trustee of the Estate.
(d) On the filing of the necessary supporting application materials, a Certificate of Appointment of Estate Trustee with a Will for the Estate shall be issued to the Applicant, Christopher James Morrall, as sole Trustee, on an expedited basis.
(e) The Applicant, Christopher James Morrall, is awarded costs of this Application fixed in the amount of $23,966.67, of which partial indemnity costs fixed in the amount of $14,000.00 all-inclusive shall be paid by the Respondent, William Fortune Gordon or from his distributive share in the Estate, and Christopher James Morrall shall be paid the balance of his costs, specifically the amount of $9,966.67 from the assets of the Estate.
[33] The Applicant may file on the Case Center bundle for this hearing (003), a draft Judgment that accords with the disposition set out in this Endorsement and may then forward the draft Judgment in PDF and Word format by email to the Court Registrar and to the Estates List Trial Coordinator, to be brought to my attention.
A.A. Sanfilippo J.
Released: October 25, 2024
Court File No.: CV-24-00720716-00ES Date: 2024-10-25
Ontario Superior Court of Justice
Between:
Christopher James Morrall Applicant
– and –
William Fortune Gordon Respondent
Reasons for Judgment
A.A. Sanfilippo J.
Released: October 25, 2024
[^1]: Affidavit of service of Darryl Nixon, sworn May 27, 2024. [^2]: Rule 38.07(1): “A respondent who has been served with a notice of application shall forthwith deliver a notice of appearance.” [^3]: Rule 38.07(2): “A respondent who has not delivered a notice of appearance is not entitled to, (a) receive notice of any step in the application; (b) receive any further document in the application, unless, (i) the court orders otherwise,…” [^4]: Affidavit of service of Man Ho Herman Tsui, process server, sworn August 2, 2024; affidavits of service of Shaelyn Shanahan, legal assistant, sworn July 30, 2024, August 2, 2024; affidavit of service of Stephen Fragnelli, process server, sworn August 7, 2024; affidavit of service of Julia Macmillan, legal assistant, sworn August 7, 2024. [^5]: Affidavit of Shaelyn Shanahan sworn September 17, 2024; affidavit of Achilles Nardelli, process server, sworn August 23, 2024. [^6]: Affidavits of service of Shaelyn Shanahan, sworn September 19, 2024 and September 23, 2024 [^7]: Affidavit of Shaelyn Shanahan, sworn September 23, 2024. [^8]: Trustee Act, s. 5(1): “The Superior Court of Justice may make an order for the appointment of a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.” Trustee Act, s. 37(1): “The Superior Court of Justice may remove a personal representative upon any ground upon which the court may remove any other trustee, and may appoint some other proper person or persons to act in the place of the executor or administrator so removed.” [^9]: Chambers Estate v. Chambers, 2013 ONCA 511, 309 O.A.C. 205, at para. 101, citing Evans v. Gonder, 2010 ONCA 172, 259 O.A.C. 295, at para. 42. [^10]: 2024 ONSC 4219. [^11]: 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. [^12]: Chambers, at para. 95. [^13]: Chambers, at para. 96. [^14]: Chambers, at para. 95. [^15]: 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. [^16]: 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. [^17]: Chambers, at para. 96. [^18]: Henderson, at para. 8. [^19]: Chambers, at para. 95. [^20]: Kinnear v. White, 2022 ONSC 2576, at para. 7. [^21]: St Joseph’s Health Centre, at paras. 28–29; Virk v. Brar Estate, 2014 ONSC 4611, 1 E.T.R. (4th) 241, at para. 48. [^22]: 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. [^23]: Chambers, at para. 90, applying Quinn J.’s holding in Windsor v. Mako (2008), 43 E.T.R. (3d) 255 (Ont. S.C.), at para. 35. [^24]: Sassano v. Iozzo, 2024 ONSC 1517, at para. 13, relying on Chambers, at paras. 95-96. [^25]: Westover Estate v. Jolicouer, 2024 ONCA 81, at paras. 12-13; Di Nunzio v. Di Nunzio, 2022 ONCA 889, 164 O.R. (3d) 796, at para. 9; Johnson v. Johnson, 2022 ONCA 682, 81 E.T.R. (4th) 7, at para. 21; Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 84; McDougald Estate v. Gooderham (2005), O.A.C. 203, at paras. 78-80; Neuberger v. York, 2016 ONCA 303, 131 O.R. (3d) 143, at para. 24. [^26]: Westover Estate, at para. 13, relying on Sawdon Estate, at para. 85 and White v. Gicas, 2014 ONCA 490, 98 E.T.R. (3d) 197, at para. 70. [^27]: 2024 ONSC 5887, at para. 23. [^28]: Sawdon Estate, at para. 96 and at para. 97, citing Bilek v. Salter Estate (2009), 2009 28403 (ON SC), 50 E.T.R. (3d) 227 (Ont. S.J.), at para. 6. [^29]: T.A.W. v. J.C.L., 2021 ONCA 270, at para. 4, citing Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3, at p. 134 and Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at para. 28. [^30]: Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at para. 61, citing Boucher v. Public Accountants Council for the Province of Ontario et al. (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26; Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, leave to appeal refused, [2019] S.C.C.A. No. 38555. [^31]: Apotex, at para. 60.