ONTARIO COURT REMOVES ESTATE TRUSTEE FOR FAILURE TO ADMINSTER ESTATE IN TIMELY MANNER
ONTARIO COURT REMOVES ESTATE TRUSTEE FOR FAILURE TO ADMINSTER ESTATE IN TIMELY MANNER
In Ontario, removing an estate trustee used to be a very rare occurrence. Although there are clear legal grounds for removal, such as breach of fiduciary duty, incapacity, or dishonesty, the evidence needed to support such a significant step is typically substantial. In Morrall v. Gordon 2024 ONSC 5888, Justice Sanfilippo removed the estate trustee because he failed to take any meaningful action in administering the estate for over four years
The Facts
Barbara Jean Morrall passed away on June 16, 2020, leaving her spouse, William Gordon, as the estate trustee and her children, Christopher and Lisa Morrall, as beneficiaries. She left her house to Mr. Gordon and divided the remainder of the estate equally between her children, with Lisa’s share placed in a trust for her benefit. Christopher Morrall filed an application claiming that Mr. Gordon had failed to take any action in administering the estate over the past four years and had not responded to his attempts to communicate for over a year.
Christopher sought:
- The removal of Mr. Gordon as estate trustee or a declaration that he had renounced his role.
- An injunction to prevent Mr. Gordon from using or dissipating estate assets.
- Any further orders necessary for proper estate administration.
Mr. Gordon did not appear in the application, despite having the opportunity to do so.
On September 26, 2024, the court ruled to pass over William Gordon as estate trustee due to his failure to administer the estate properly. Mr. Gordon neglected key responsibilities, including addressing the health and financial needs of Ms. Lisa Morrall, as outlined in the Will, and managing estate assets like cottages and investments.
He also failed to respond to repeated inquiries from the beneficiaries over a period of two years. Based on these failures, the court determined that it was in the best interest of the beneficiaries to appoint Christopher Morrall, the alternate trustee named in the Will, to administer the estate. Mr. Morrall was granted leave to initiate the probate application and be appointed as the estate trustee.
Justice Sanfillipo noted:
“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.”
In the application, Mr. Morrall sought costs for his efforts to advance the estate administration, which was necessary due to Mr. Gordon’s failure to act. Mr. Morrall incurred costs of $23,966.67, with $20,278 in fees, $2,636.14 in taxes, and $1,052.53 in disbursements. The court considered the public policy of ensuring proper estate administration and ruled that Mr. Morrall should receive partial indemnity costs, as the application was vital for fulfilling the Deceased’s wishes. Mr. Gordon’s unresponsiveness and failure to resign as estate trustee justified the cost award against him. Mr. Gordon was ordered to pay $14,000 in partial indemnity costs to Mr. Morrall, which may be deducted from his share of the estate. The remaining balance of $9,966.67 will be paid from the estate assets.
SOURCE: Morrall v. Gordon, 2024 ONSC 5888 (CanLII), <https://canlii.ca/t/k7jjc>, retrieved on 2024-11-25
