Court File and Parties

Court File No.: CV-21-00001969-0000 Date: 2025-10-03 Superior Court of Justice – Ontario

Re: Jessey Jane Pitt, Plaintiff -and- Ian Beattie, as Estate Trustee for the deceased Brian Thomas Beattie, Shaun Ian Bruce Beattie and Jordan Elizabeth Beattie, Defendants

Before: Justice Spencer Nicholson

Counsel: O. Sabo for the Plaintiff J. Laplante for the Defendants

Heard: July 11, 2025

Reasons

NICHOLSON J.:

Facts

[1] The plaintiff, Ms. Pitt, is the sole beneficiary of the estate of Brian Beattie ("Brian"). Brian died on May 13, 2020. Although she is not a member of Brian's family, she was named as the sole beneficiary under his last will and testament.

[2] Ms. Pitt's mother had been named as the estate trustee in Brian's will. However, she predeceased him. Accordingly, the defendant, Ian Beattie ("Ian"), who is Brian's brother, was appointed estate trustee.

[3] Pursuant to the will, Ms. Pitt was to receive the residue of the estate, which was to be held in trust until such time as she reached the age of 25 years. She was born on August 6, 2002 and is accordingly only 23 as of today's date.

[4] The most significant asset of Brian's estate was a property located on Hamilton Road in London. With Ms. Pitt's consent, the property was sold by Ian and the proceeds paid into the estate. That occurred in the fall of 2020. The sale price was $260,425.00.

[5] In this action, Ms. Pitt alleges that the Hamilton Road property was sold improvidently to Ian's son and daughter-in-law, the co-defendants Shaun and Jordan Beattie. It is alleged that the property was not sold on the open market, but rather to non-arm's length parties without proper exposure on the market.

[6] The matter has been set down for trial, but not yet reached. There were previous trial dates that did not proceed. The trial is currently scheduled for May 11, 2026.

[7] The plaintiff's affidavit material discloses that the most recent informal accounting of the value of the estate is $642,443.99. Ian deposes that this figure is "misleading". This is the gross value of the assets and there are $198,834.70 in disbursements, leaving a net value of $476,798.20. Ms. Pitt disputes the validity of all of those disbursements.

[8] The estate trustee acknowledges the plaintiff's entitlement to receive funds before she turns 25 years of age. On April 17, 2025, to avert this motion, the estate trustee agreed to release $100,000, although the plaintiff indicates that only $98,982.00 was actually paid. The estate trustee had also suggested that he would distribute $200,000 if Ms. Pitt would execute a partial release with respect to the estate trustee's management of the funds. Expressly, the partial release would not cover the issue of the sale of the real property. The proposed release was not in evidence before the court.

[9] After the payment of $100,000.00, the estate trustee indicates that there remains a further $397,134.00 held in trust.

[10] In this motion, Ms. Pitt seeks a partial distribution of the estate funds as she is the only beneficiary of the estate. She seeks a further $300,000.

[11] I have no doubt that Ms. Pitt can use the funds. She is a post-secondary student residing in Toronto, and working part-time. Having said that, there is no evidence before the court that she has any financial hardship.

[12] In his responding affidavit, Ian has included a chart of expected expenses from the amount being held in trust. The anticipated litigation costs of the trial and any potential appeal is included. Ms. Pitt argues that the estate trustee's position really amounts to a demand for security for costs.

Legal Analysis

[13] Ms. Pitt relies upon the rule in Saunders v. Vautier, which was described by the Supreme Court of Canada in Buschau v. Rogers, 2006 SCC 28. The common law rule allows beneficiaries of a trust to depart from the settlor's original intentions provided that they are of full legal capacity and are together entitled to all the rights of beneficial ownership in the trust property. Thus,

"if there is only one beneficiary, or if there are several (whether entitled concurrently or successively) and they are all of one mind, and he or they are not under any disability, the specific performance of the trust may be arrested, and the trust modified or extinguished by him or them without reference to the wishes of the settlor or the trustees."

[14] Ms. Pitt is of full age and there is no evidence that she is not mentally capable of understanding the implications of terminating the trust. There is no dispute that she is absolutely entitled to the trust property. She is the only beneficiary.

[15] The plaintiff relies upon DeLorenzo v. Beresh, 2010 ONSC 5655. In that case, the beneficiary sought delivery of the assets of the trust to her. The estate trustee took the position that he would be personally liable if he were to distribute the estate assets without first obtaining a tax certificate. Although noting that an estate trustee has a lien against the estate for indemnity and compensation for work performed, Lofchik J. held that this was not a valid basis to withhold the entirety of the estate from the beneficiary and ordered that 80% be distributed.

[16] I note in that case it is described that the beneficiary's interest in the trust property had indefeasibly vested in her. This was not a case in which the rule in Saunders v. Vautier was applied, as the beneficiary had already reached the age to which the trust funds were to be held. Lofchik J. was clearly influenced by the fact that the estate trustee had failed to obtain the necessary tax clearance certificate over a ten-year period when he knew that the beneficiary's trust payout date was approaching.

[17] The estate trustee does not dispute that Ms. Pitt is entitled to invoke the rule in Saunders v. Vautier and require that funds be paid to her directly. However, the estate trustee argues that this rule does not permit the beneficiary to "bypass the administration of an estate". The estate trustee argues that the amount to be paid to Ms. Pitt is yet to be determined as the estate's residue is unknown. The funds should be held pending the completion of the administration of the estate. This cannot occur until a judgment in the trial is rendered.

[18] The estate trustee relies upon Culbert v. Czerkas, 2024 ONSC 4973, a decision of Kurke J. in which he dealt with a competing claim for dependent support under the Succession Law Reform Act, as well as a trust claim for the beneficiary (daughter). He released the funds to the daughter under the rule in Saunders v. Vautier, but also ordered that estate funds be paid to the dependent spouse. Importantly, the amount of the funds held in trust, only 10% of the estate, would not encroach upon the spouse's dependency claim. The estate trustee argues that the court was able to do so because the other liabilities had been determined. The estate trustee argues that had the beneficiary sought a distribution prior to the determination of any competing claims, it would have left the estate in an untenable position.

[19] In Furfari v. Furfari, 2016 ONSC 4882, at para. 30, Wilton-Siegel J. stated as follows:

[30] There is no legal entitlement of a beneficiary to receive an interim distribution. A beneficiary is only entitled to expect that a trustee will discharge his or her duty with honesty, objectivity and care. Moreover, as the applicant recognizes in his factum, it is trite law that a court will not involve itself in an estate trustee's exercise of discretion relating to the administration of an estate unless it finds that a trustee has failed to meet this standard of behaviour or has otherwise acted unfairly or in bad faith.

[20] Gilmore J., in Bank of Nova Scotia Trust Company v. Charles, 2021 ONSC 1361, also noted that a beneficiary cannot insist upon distribution of his or her share until the estate trustee agrees to the distribution. She stated that a court is not able to substitute its own discretion for that of the estate trustee. She relied upon Parson v. McGovern, 2014 ONSC 1785. In Charles, it was not yet known what the beneficiary's share was going to be.

[21] In Parson, supra, Smith J. dealt with a motion to compel the estate trustee to make an interim distribution of substantially the whole of the estate to each of two beneficiaries, before the passing of accounts. In that case, the estate trustee had proposed an equal distribution to each beneficiary but required as a condition of the distribution that the party seeking the order sign a waiver of passing of accounts and a release of trustees.

[22] Smith J. noted, at para. 25, that the court had jurisdiction to intervene in the exercise of a discretion by trustees in three situations: 1) a mala fide exercise of such a discretion; or 2) a failure to exercise such a discretion; or 3) a deadlock between trustees as to the exercise of such a discretion.

[23] Smith J. referred to Brighter v. Brighter Estate, [1998] O.J. No. 3144, in which one of three beneficiaries disputed the valuation of the deceased's residence and contested the amount of fees charged by the executor. The executor had asked the dissenting beneficiary to sign a release and to waive the passing of accounts as a condition of receiving his distributive share, while she proceeded to distribute the other two shares. Sheard J., in Brighter, found this to be improper, stating, at para. 9:

"…The executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor's performance of duties as trustee, or the executor's compensation or fee. It is quite proper for an executor (or trustee, to use the current expression) to accompany payment with a release which the beneficiary is requested to execute. But it is quite another for the trustee to require execution of the release before making payment; that is manifestly improper."

[24] Smith J., in Parsons, distinguished Brighter finding that there was no threat to withhold only one beneficiary's distributive share. Rather, the trustees in Parsons were merely exercising their discretion not to make any further interim distribution to any beneficiary until after they had passed their accounts.

[25] In the case at bar, Ian claims that he cannot pass his accounts, given the outstanding litigation. He argues that this would constitute a collateral attack on the plaintiff's action, since she has sought an accounting in her statement of claim. I agree that the existence of this litigation stymies a passing of accounts. Further, he points out, correctly in my view, that the delay in obtaining a trial date has not been occasioned by him.

[26] Importantly, in the case before me, the estate trustee did not refuse to make a distribution unless there was a partial release signed, rather they refused to make a distribution in the amount that the plaintiff requested in the absence of a release. A $100,000 interim distribution was made, without the requirement for the execution of a partial release, or indeed any strings attached. Accordingly, the mala fides that existed in Brighter are not present in the case at bar. Furthermore, this is not a case where there is a failure to exercise the estate trustee's discretion.

[27] Additionally, while I have no doubt that Ms. Pitt would appreciate receiving her inheritance sooner rather than later, I have no specific evidence of prejudice to her if the funds are not distributed before the action is completed.

[28] I do note that none of the cases referred to involve a sole beneficiary seeking to obtain the entirety of their entitlement pursuant to the rule in Saunders v. Vautier.

[29] The plaintiff argues that the defendants are essentially seeking security for costs and that this should not prevent the plaintiff from obtaining a more sizeable distribution.

[30] Estate trustees are typically entitled to be indemnified for all reasonably incurred costs, including legal costs, in the administration of the estate (see: Geffen v. Goodman Estate, [1991 2 S.C.R. 353, [1991] S.C.J. No. 53, at pp. 390-391). Absent such a rule, a person would be hesitant or unwilling to take on the beneficial role of estate trustee.

[31] I agree that the traditional rule of costs in estates cases, that costs are payable out of the estate, has been displaced (see: McDougald Estate v. Gooderham, et al at paras. 74-92; Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 119 O.R. (3d) 81, 2014 ONCA 101; Estate of Sydney Monteith v. Monteith et al, 2024 ONSC 800 at paras. 8-9). The issue is whether or not the costs of those involved in the litigation have been incurred for the benefit of the estate, or as a result of some failure of the testator. In such cases, the legal fees are payable by the estate.

[32] Both parties spent considerable time in their oral arguments discussing Pletch v. Pletch Estate, 2024 ONSC 1411, a decision of the Ontario Divisional Court. That decision confirmed that as a general rule, an estate trustee is entitled to be fully indemnified for her legal costs from the estate, including litigation costs, provided the estate trustee is acting in good faith and those litigation costs are reasonably incurred. It also referred to the development of the law of costs in estates matters, referring to Sawdon, supra, amongst other cases. The court summed up the costs principles that apply to an estate trustee's ability to recover legal costs from an estate as follows:

a. An estate trustee is entitled to indemnification from the estate for all reasonably incurred legal costs;

b. If an estate trustee acts unreasonably or in his or her own self-interest, he or she is not entitled to indemnification from the estate; and

c. If an estate trustee recovers a portion of his or her costs from another person or party, he or she is entitled to indemnification from the estate for the remaining reasonably incurred costs.

[33] In the case at bar, it is the very actions of the estate trustee that are being impugned in favouring his own family members over the beneficiary of the estate. Accordingly, there is a strong likelihood that in the event that the plaintiff is successful, costs will be payable by the unsuccessful defendants, and not the estate. This is not a case where the litigation was caused by the testator. This is not a case where the estate trustee is defending the estate, but rather his own actions.

[34] However, should the defendants ultimately prevail, a portion of the defendants' costs will be payable in all likelihood by the plaintiff. Implicit in a finding that there was no wrongdoing on the part of the defendants, the trial judge will likely be of the view that the estate trustee's actions in defending the case successfully arose out of his duties as estate trustee. Even if the plaintiff is only ordered to pay partial indemnity costs, the estate trustee may well be entitled to full indemnity from the estate. This accords with the public policy rationale of not discouraging persons from taking on the responsibility of an estate trustee.

[35] In Henderson v. Sands, 2022 ONSC 2959, Gilmore J. relied upon DeLorenzo v. Beresh, supra, at para. 24, quoting as follows:

[24] In a situation as the present, the outcome of the litigation may very well have a bearing as to what costs each of the parties should be required to bear. It is therefore preferable that each of the parties bear their own costs until the litigation is completed. It would be inequitable to have the estate trustee pay his legal costs from the estate funds and require the applicants, whose funds are tied up in estate, to bear their own legal costs while the litigation is proceeding….

[36] I do not, however, take the affidavit of the estate trustee as indicating that he has already been taking estate funds to pay his costs. That would be inappropriate in light of the allegations being made.

[37] I disagree with Ms. Pitt's counsel's characterization of the estate trustee's estimation of future legal fees as "security for costs". Rather, I would characterize this as a "holdback". In estate litigation, it is not impermissible for there to be a holdback in respect of legal fees, even where the right of the estate trustee to be indemnified by the estate remains a live issue (see: Trezzi v. Trezzi, 2023 ONSC 4396).

[38] Furthermore, I agree with the estate trustee that I am being asked to pre-determine the issue of entitlement to costs without knowing what the results of the trial will be. I understand that both sides have reports that provide disparate valuations of the subject property at the time of the sale. As noted, it is very possible that the defendants, including the estate trustee, could be ordered to pay costs to the plaintiff if she is successful. However, if she is unsuccessful, she will likely be obligated to pay costs to the defendants. If the estate trustee is successful, and not made whole by an award of costs, he would have the right to be indemnified out of the trust property for all costs and expenses properly incurred.

[39] Other than to acknowledge that all of those outcomes are possible, it would be speculation on my part to assume what the outcome of the trial will be, and what the cost consequences that flow from that trial might be. It is also impossible for me to assess what a reasonable amount of a holdback for costs might be on the evidence before me.

[40] I therefore reject the plaintiff's arguments that it is improper for the estate to holdback some portion of the estate on account of potential costs. Furthermore, although the amount of costs is uncertain, the cases cited above place a significant amount of discretion in the estate trustee to make such decisions.

[41] The only case referred to me in which the court overrode the discretion of the estate trustee was DeLorenzo v. Beresh. In that case, Lofchik J. clearly found that the estate trustee had unreasonably delayed obtaining the tax certificate, which delayed the distribution of the estate. This is similar to the requirement of mala fides, as noted in the case law cited above. In the absence of such misconduct, it is my view that the cases require the court to be deferential to the discretion of the estate trustee unless there is a valid reason not to be.

[42] I observe that there has been some judicial criticism of the DeLorenzo decision (see: Furtney v. Furtney, 2014 ONSC 3744; Toller James Montague Cranston (Estate of), 2021 ONSC 1347; Trezzi, supra).

[43] Thus, while I may have been of the view that a different figure than $100,000 was appropriate to be distributed, it is the estate trustee who is empowered to make such decisions. The two offers, one unconditional and the other conditional on the execution of the release, are not the same as holding the plaintiff hostage, as in Brighter, by releasing to some of the beneficiaries unconditionally but withholding the distribution from the third beneficiary because he would not sign a release.

[44] Mr. Beattie's last will and testament makes clear that it is the residue of the estate that is bequeathed to Ms. Pitt. Although there are no other beneficiaries, the residue of the estate has not yet been quantified. The rule in Saunders v. Vautier applies to allow a beneficiary to access his or her gift held in trust prior to attaining the age as set out in the will. I am not, however, persuaded that it trumps the discretion of the estate trustee, where the discretion is being exercised reasonably and where the amount of the residue remains uncertain.

[45] The plaintiff's motion is dismissed.

Costs

[46] If the parties are unable to resolve the issue of costs of this motion, the estate trustee shall serve and file written costs submissions no longer than three pages in length, double spaced, by October 31, 2025. The plaintiff shall serve and file her submissions no longer than three pages in length, double spaced by November 14, 2025. The submissions may be sent to Nadine.Long@ontario.ca.

Justice Spencer Nicholson

Date: October 3, 2025

Released: October 3, 2025