Court Directs Estate Trustees to Accept Revised Offer for Cottage Sale After Dispute Among Siblings
Court Directs Estate Trustees to Accept Revised Offer for Cottage Sale After Dispute Among Siblings
Case: In the Matter of the Estate of Ronald French, deceased, 2024 ONSC 7074
In the Matter of the Estate of Ronald French, deceased, 2024 ONSC 7074 (CanLII), <https://canlii.ca/t/k8g25>, retrieved on 2025-01-08
The case involved the estate of Ronald Louis French, who died on August 7, 2023. Ronald left a Will dated April 7, 2023, which bequeathed his cottage at 85 Red Cedar Road, Temagami, Ontario, equally to his seven adult children as tenants-in-common. The remaining assets were divided equally among his four daughters. The Estate Trustees, his son Roger and daughter Lynette, discovered that the estate had significant debts, including potential capital gains tax on the cottage.
To pay the debts, the Estate Trustees sought to sell the cottage. After consulting realtors, they valued the cottage between $435,000 and $450,000 and informed their siblings of the sale opportunity. Philip and Anita, two of the siblings, expressed interest and made multiple offers, starting at $250,000, which were rejected by the Estate Trustees.
The cottage was eventually listed for $450,000 on MLS, and after several counteroffers, a sale price of $430,000 was agreed upon with an arm’s length purchaser, Filagro Gemignani, through his company 2586248 Ontario Inc. However, Philip and Anita later made a revised offer of $440,000, which was $10,000 higher than the accepted offer.
Philip and Anita contested the transparency and good faith of the Estate Trustees’ actions and sought a court order to approve the sale to them instead. The application was adjourned, and the Estate Trustees then sought court advice and direction on how to proceed, rather than approval for the sale to the original buyer.
The main issues in the case were:
- Whether the Estate Trustees acted transparently and in good faith during the sale process.
- Whether the court should approve the sale to the arm’s length purchaser or accept the revised offer from Philip and Anita.
- The resolution of estate debts, including potential capital gains tax on the cottage.
- Whether Philip and Anita’s offer should be considered superior despite the higher arm’s length offer.
The Law
An Estate Trustee may make an application under s. 60 of the Trustee Act and rule 14.05(3)(a), (d) and (f) for approval of a sale as set out in an accepted agreement of purchase and sale when the sale agreement provides that it is conditional upon the Estate Trustee obtaining approval of the court: McKay Estate v Love (1992), 1992 CanLII 7508 (ON SC), 6 O.R. (3d) 511 (S.C.), aff’d (1992), 6 O.R. (3d) 519 (C.A.).
Rule 14.05(3)(f) allows the estate trustees to apply to the court for approval of their decision to sell assets of the estate before their decision is acted upon, so that subsequent litigation can be avoided.
The law governing the sale of estate property by Estate Trustees is primarily guided by section 60 of the Trustee Act and rule 14.05(3) of the Rules of Civil Procedure, which allow trustees to seek court approval for a sale when the sale agreement requires such approval. Courts generally do not interfere with the trustees’ business decisions unless there is evidence of bad faith or unfairness.
Estate Trustees are empowered to sell estate property to pay debts or distribute assets under section 17 of the Trustee Act, and they do not need beneficiaries’ consent unless the sale is for distribution purposes. If trustees act in good faith, transparently, and in the best interests of the beneficiaries, the court typically upholds their decisions. Additionally, under the Partition Act, tenants in common can compel the sale of property if they cannot agree on its use or maintenance.
Further, the court’s role in overseeing the sale of estate property is limited to ensuring that the Estate Trustees are acting within their authority and fulfilling their fiduciary duties. The trustees must demonstrate that they are managing the estate responsibly, which includes addressing any liabilities, such as taxes or outstanding debts, before distributing assets. If the trustees have made reasonable efforts to resolve any disagreements among the beneficiaries and are acting in the best interests of the estate, the court is unlikely to intervene.
In situations where there is a conflict among the beneficiaries, such as when some siblings wish to retain property and others wish to sell it, the court may direct the trustees to proceed with the sale if it is necessary to resolve the issue and ensure the estate’s debts are paid. If no consensus is reached on retaining the property, a sale can be compelled, as provided under the Partition Act.
Overall, the law emphasizes the discretion of the Estate Trustees in managing and selling estate property, provided they act within the legal framework and with the best interests of the estate and its beneficiaries in mind. The court’s involvement is primarily to provide guidance or approve actions when there is uncertainty, but trustees generally retain authority unless there is evidence of misconduct or failure to act fairly.
Good Faith Efforts to Sell the Cottage
The Estate Trustees, Roger and Lynette, took several steps to sell the cottage fairly. They obtained three professional opinions on its value and offered the beneficiaries the chance to buy it before listing it publicly. When they eventually listed the property, the sale was made after rejecting a lower offer from Philip and Anita and receiving a higher offer from another buyer, 258. The trustees acted in good faith throughout the process, providing transparency and considering all the beneficiaries’ interests.
Fairness in Estate Trustees’ Actions
The Estate Trustees were transparent and reasonable in their management of the estate, including providing the beneficiaries with information, involving them in decisions, and acting to pay off estate debts. Despite some disagreements from Philip and Anita, their criticisms of unfairness were not substantiated. The trustees did not violate their fiduciary duties.
Court’s Advice and Direction
After finding that the Estate Trustees acted fairly and in good faith, the court did not intervene in their discretion over which offer to accept. It reviewed two competing offers and, after considering all factors, concluded that the offer from Philip and Anita for $440,000 was the better one. The court directed the Estate Trustees to accept this offer, despite the earlier agreement with 258.
Other Relief Sought by Respondents
Philip and Anita had requested a full accounting of the Estate’s finances, but the court ruled that there was insufficient cause to order it at this time. The disclosure provided thus far was deemed reasonable, and further disclosure will be necessary after the sale is completed.
Conclusion
Justice Kalajdzic J. upheld the Estate Trustees’ actions, found them to have acted in good faith, and directed them to accept the offer from Philip and Anita for the sale of the cottage. Further motions for costs were to be submitted by January 10, 2025.
