Punitive Damages Awarded For Trustee’s Egregious Conduct

Punitive Damages Awarded For Trustee's Egregious Conduct

A trustee’s Egregious Conduct lead to an award of punitive damages of $100,000 against the trustee personally.

Walling v Walling 2012 ONSC 6580 involves a decision where the Ontario Supreme Court awarded $100,000 punitive damages against the trustee of an estate for extremely egregious conduct examples of breach of fiduciary duty. The court in fact awarded twice the amount that was claimed. The testator and his wife divorced prior to his death in 1999. The testator died when his two children were 16 and 12. His estate was to be divided equally between the children when the youngest term of 21, which occurred in 2007.

The testator’s brother, the children’s uncle, was the sole executor and trustee of the estate. The court found several examples of reprehensible conduct in the failure of the trustee to properly administer the estate. In addition to denying the children their rightful inheritance from the estate, the trustee in addition prevented them from attending funeral celebrations and refused their requests for meaningful mementos. The trustees conduct in relation to the estate limited the children’s postsecondary opportunities. The trustee not only grossly mismanaged the estate but also completely ignored court orders.

32 The Supreme Court of Canada commented on the purpose for punitive damages in Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595(S.C.C.). The court reflected that “retribution, denunciation and deterrence are the recognized justification for punitive damages” (at para. 111). The Court observed that an award of punitive damages must be:

1. proportionate to the blameworthiness of the defendant’s conduct;

2. proportionate to the vulnerability of the plaintiff;

3. proportionate to the harm or potential harm directed specifically at the plaintiff;

4. proportionate to the need for deterrence; and

5. proportionate to the advantage wrongfully gained by the defendant from the misconduct: see paras. 111-125.

33 In my view, punitive damages are called for in this case. The defendant was completely derelict in his duties to the estate, and therefore to the plaintiffs who are beneficiaries of the estate. The plaintiffs were children when the defendant became the trustee of their father’s estate. Their vulnerability is obvious. The defendant’s sin is compounded by the fact he was an uncle to the plaintiffs, an adult whom they should have been able to trust. Instead, he squandered their inheritance.

34 The defendant’s defaults include failing to offer the children any meaningful mementos of their late father; permitting others to take items from the estate; selling chattels from the estate under value; failing to preserve or properly account for the estate; and failing to distribute the estate. The only reasonable conclusion appropriate is that the defendant converted the funds in the estate to his own use.

35 The defendant also failed to include the children in any funeral ceremonies for their late father and was completely indifferent to their feelings, causing them great distress. One of the children required psychiatric care as a result of this callous treatment.

36 The misconduct of the defendant led to a frustration of the children’s post-secondary education for lack of funds. The enormity of the defaults is quite shocking.

37 The harm is compounded when one looks at the systematic failure of the defendant to comply with any of the court orders issued to secure the defendant’s compliance with the terms of the will and his wanton failure to pay costs as ordered. He embarked on a course of conduct that increased the cost to the plaintiffs of attempting to secure their rights, and delayed any redress.

38 In sum, the defendant’s conduct has been outrageous.

Breach of Fiduciary Duty In Widow’s Reliance On Family

Breach of trust 2

A breach of fiduciary duty was found when following her husband’s death, a widow relied upon  family members  to enter into improvident land transfers based on assertions that the widow relied upon.

It is a fact that families financially abuse each other and often in the nature of a breach of fiduciary duty, such as a power of attorney

Buccilli v Pillitteri 2012 ONSC 6624, involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business.

After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium.

Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including MISREPRESENTATION. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice and was misrepresentented to enter into the contract.. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.Patricia also asks that the Transfer Agreement be set aside on the basis that the widow relied upon the sons in law and they breached the fidciary duty that they owed to her.

FIDUCIARY DUTY 179 Elder Advocates of Alberta Society v. Alberta, [2011) 2 S.C.R. 261 (S.C.C.) is the latest S.C.C. case dealing with the tests for recognition of a fiduciary duty. In Frame v. Smith. \ 19871 2 S.C.R. 99 (S.C.C.) Wilson J. stated her view of when a fiduciary duty has been recognized. Her words have been adopted by the Supreme Court and other courts for many years.

 

Relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics:

 

(1) The fiduciary has scope for the exercise of some discretion or power.

2012 ONSC 6624, 84 E.T.R. (3d) 208,225 A.C.W.S. (3d) 115

The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.
The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

In Elder Advocates of Alberta Society, however, McLachlin C.J. stated that as useful as the three “hallmarks” referred to in Frame are in explaining the source fiduciary duties, they are not a complete code for identifying fiduciary duties. She laid down three tests to be applied.
First, the evidence must show that the alleged fiduciary gave an undertaking of responsibility to act in the best interests of a beneficiary. What is required in all cases is an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty reposed on him or her. The existence and character of the undertaking is informed by the norms relating to the particular relationship. The party asserting the duty must be able to point to a forsaking by the alleged fiduciary of the interests of all others in favour of those of the beneficiary, in relation to the specific legal interest at stake. The undertaking may be found in the relationship between the parties, in an imposition of responsibility by statute, or under an express agreement to act as trustee of the beneficiary’s interests.
Second, the duty must be owed to a defined person or class of persons who must be vulnerable to the fiduciary in the sense that the fiduciary has a discretionary power over them. Fiduciary duties do not exist at large. They are confined to specific relationships between particular parties. Historically recognized per se fiduciary relationships exist as a matter of course within the traditional categories of tmstee-cestui que trust, executor-beneficiary, solicitorciient, agent-principal, director-corporation, and guardian-ward or parent-child. By contrast, ad hoc fiduciary relationships must be established on a case-by-case basis.
Finally, to establish a fiduciary duty, the claimant must show that the alleged fiduciary’s power may affect the legal or substantial practical interests of the beneficiary. In the traditional categories of fiduciary relationship, the nature of the rela­tionship itself defines the interest at stake. However, a party seeking to establish an ad hoc duty must be able to point to an identifiable legal or vital practical interest that is at stake. The most obvious example is an interest in property, although other interests recognized by law may also be protected.
.

The remedy for breach of fiduciary duty is discretionary. The only realistic remedy to make Patricia whole from the breach is that the Transfer Agreement should be set aside and an accounting of profits of the defendants from the lands and developments that were the subject of the Transfer Agreement should be taken and one-third should be paid to Patricia.

Executor Must Renounce In Order to Contest the Estate

Executors fees

Executor Must Renounce to contest the will

It is fairly common in estate disputes that the executor of the will is also dissatisfied with the same will that the executor is by office bound to carry out and enforce. Since in estate claims it is necessary to sue all parties who have an interest in the estate, it then follows that the executor must be named as a defendant in any estate proceeding, and it is a rule of law that an executor cannot also be a plaintiff in his or her personal capacity. This follows from the legal concept that a party cannot be a plaintiff and the defendant in the same court action – one cannot sue oneself.

Further authority for this is Harrison v Harrison ( 1982) 12 ETR 246
It is established that a person cannot sue himself, even in a different capacity. In Pub. Trustee v. Guar. Trust Co., [1980] 2 S.C.R. 931, 19 C.P.C. 157, 7 E.T.R. 287, 115 D.L.R. (3d) 513, (sub nom. Guar. Trust Co. of Can. v. Berry Estate) 33 N.R. 271, it was held that this principle does not mean that a writ issued by an executor against himself is a nullity; rather it only means that he cannot recover judgment against himself. The majority of the Supreme Court, per Estey J., held that the writ in that case was a mere irregularity which was capable of being corrected by substitution of the Public Trustee for the executor as plaintiff. But it was agreed by counsel and accepted by the court that the matter could not have proceeded to trial and judgment had the executor remained on record as both plaintiff and defendant.

The Reverse Onus of Proof When Suing a Fiduciary

Suing a Fiduciary and Reverse Onus Is Important

The duty of loyalty of a fiduciary is protected through onuses. Fiduciaries are held to an irregularly high standard of behavior in civil law due to the nature of their duties. It is the peculiarly unequal position of the parties that results in the reversal of onus onto the fiduciary in most fiduciary relationships. Fiduciary- reverse onus

Typically, the reverse onus works as follows: in asserting a breach of fiduciary duty claim, the plaintiff need only establish a prima facie inference of the fiduciary obligations and the breach. The fiduciary concept then imposes a reverse onus that shifts the burden of proof onto the fiduciaries to disprove the beneficiaries’ allegations.

The reverse onus burden of proof was applied more recently by Satanove J. in Lee Estate v. Royal Pacific Realty Corp., (2003) BCSC 911, where she held that certain relationships and specific categories of actors are presumed by law to be of a fiduciary nature. When such a presumption arises, the onus is on the defendants to rebut that presumption. She explains that even in the case of a real estate agent and a buyer, the court should look at the evidentiary factors which support or contradict the existence of a fiduciary relationship between them, recognizing that the burden of proof will be on the defendants.

Lasky v. ProwaX (1993), 7 ET.R (2nd) 70 (B.C.S.C) is another case where a reverse onus of burden was applied. This case involved the undue influence of a niece over a mentally compromised and hospitalized patient. The niece was able to get the patient to sign over sole possession of the house and cash into her name, in direct contravention of a will executed a month prior. The defence bore the onus of rebutting the presumption in s. 20 of the Patients Property Act (B.C.) that a gift made by a patient is to be deemed fraudulent and void as against the committee if the gift is not made for full and valuable consideration or the donee has notice at the time of the gift of the mental condition of the patient. Although the niece herself was not committee, the dangerous position of the patient and the importance of a protective and accountable fiduciary duty was evident to the judge. The BC Court of Appeal recently approved these cases in their decision Easingwood v Cockroft 2013 BCCA 182.

Court Removes Trustee and In Rare Case No Replacement Trustee Appointed

Court Removes Trustee

Evans v Gonder 2010 CarswellOnt 1240 Ont C.A is unusual in that the court removed a trustee without appointing a replacement, and found that it had the authority to do so.

The case involved a conflict of interest in the trustee necessitating his removal.

In very rare cases where equity demanded that sole trustee be removed but no replacement was forthcoming,
the courts possessed the inherent jurisdiction to order a trustee’s removal and provide for or­derly administration of estate

No single provision of Act, nor Act as whole, ousted inherent equitable jurisdiction of court to remove trustee.

This was true even if such removal would leave trust without trustee, so long as court ensured proper ad­ministration of estate in best interests of beneficiaries

Mitchell v. Richey, [1867] 13 Gr. 445 (U.C. Ch.), stands for the proposition that no person can be compelled to remain a trustee.

The law of trusts is a creature of equity and the Courts of Chancery. In exercising its equitable jurisdiction, a court must ensure that fairness is done for all parties. Equity is “the soul and spirit of all law … equity is synonymous with justice”: William Blackstone, 2 Commentaries on the Laws of England, 2d ed. (Chicago: Callaghan & Co., 1879), at p. 429.

The role of trustee is a difficult one. A trustee must act in the best interests of the beneficiary, even at personal hardship. However, if such obligations were unlimited, and if no relief were available, “no one would undertake the task of trusteeship”: see Donovan W.M. Waters, Waters Law of Trusts in Canada 3d ed. (Toronto: Carswell, 2005), at p. 841.

 

The courts have long recognized an inherent power to remove a trustee when circumstances require. In Letterstedt v. Broers (1881), 9 A.C. 371 (P.C.), Lord Blackburn stated, at pp. 386-87:

[I]f it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustec.it seems to their Lordships that the Court might think it proper to remove him.

In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on the details often of great nicety.

When a sole remaining trustee was removed, the courts normally required a replacement trustee to be appointed. However, this was not intended to impose an additional burden to a trustee seeking to retire: see Courtenay v. Courtenay (1846), 3 Jo. & Lat. 519, at p. 533. Where no replacement could be found by the retiring trustee, the court could take it upon itself to ensure a continued administration. In cases from that era, the court would attempt to locate new trustees itself: see Gardiner v. Dowries (1856), 22 Beav. 395, 52 E.R. 1160.

[28] Alternatively, the court could take steps to obviate the need for a trustee. In Mitchell v. Rickey, Mowat V.C. permitted a sole surviving trustee to retire without appointing a replacement. Rather, he ordered that a receiver previously appointed by the court be continued, and that the trust funds be paid into court to be administered for the good of the beneficiaries.

[29] The case of Barker v. Peile (1865), 2 Dr. & Sm. 340, 62 E.R. 651 illustrates the court’s power to deal with an estate in the best interests of the beneficiaries in circumstances similar to the instant appeal. The case was summarized in the English Reports, at p. 651, in the following terms:

It appeared that the Plaintiff was the surviving trustee of a voluntary settlement – that the trust fund had always been an ascertained fund, but that many questions had arised among the parties claiming the fund, and several suits had been instituted with reference to the settlement, to all of which the Plaintiff had been made a party. The Plaintiff, under these circumstances, being desirous of avoiding further annoyance with regard to the fund, instituted the suit for administration of the fund by the Court, asking to be discharged, and, if necessary, that new trustees of the settlement might be appointed.

In that case the court ordered the discharge of the trustee in these circumstances, and took on the duty of administering the trust itself.

Trustee Discretionary Spending Limited By Court

Closeup of man holding briefcase with money spilling out close to his chest

Trustee Discretionary and the Courts Oversight

The decision of Steven Thompson Family Trust v. Thompson 2012 ONSC 7138, (Ont. S.C.J.) dealt with a contested passing of accounts for the Steven Thompson Family Trust .

The beneficiaries contested the passing and opposed 23 disbursements that had been paid to lawyers and accountants for the Trust

The trustees in turn  relied on the terms of the Trust which stated that they could employ lawyers, accountants and agents, and pay them from the Trust funds.

They also relied upon the very broad exculpatory clause in the Trust Deed which they argued indemnified them from any errors in judgments or mistakes made by them.

Justice McCarthy stated that while the courts have the inherent jurisdiction to limit the operation of an exculpatory clause,

Such clauses will generally be effective as long as the Trustees’ conduct does not constitute gross negligence, bad faith, or wilful misconduct. Accordingly, even if this court should find that the estate trustees breached the terms of the Trust, they should be relieved from liability in the absence of evidence of gross negligence, bad faith or wilful misconduct.

Justice McCarthy reviewed the legal principles applicable to these facts and stated that the law imposes limits on a Trustee exercising a trustee discretionary power.

The existence of an exculpatory clause in a trust document does not necessarily relieve a trustee from exercising fundamental duties which are referred to as “substratum duties”. Justice McCarthy summarized these as being: 

(a) no trustee may delegate his office to others;

(b) no trustee may profit personally from his dealings with the trust property, with the beneficiaries or as a trustee; and

(c) a trustee must act honestly and with that level  of skill and prudence which would be expected of the reasonable man of business administering his own affairs.

An exculpatory clause is not a licence to a trustee to act as they wish.

See more at: http://www.disinherited.com/blog/court-limits-trustee-discretionary-spending-and-rejects-exculpatory-clause-limiting-trustee-lia#sthash.pyFElPWB.dpuf

Duties of an Executor or Administrator

Duties of an Executor or Administrator of an Estate

A personal representative, whether an executor by a will, or an administrator appointed by the court,  has a duty to act solely and exclusively for the benefit of the beneficiaries.  This duty is construed strictly, and forbids a personal representative from making a profit that is not authorized, or occupying a position where the personal representative’s self interests would conflict with the duty to the beneficiaries.

The Courts of Equity have required personal representatives to ensure that each beneficiary receives exactly what he or she is entitled to receive under the will or the estate.  The personal representative must maintain an “even hand” when dealing with all beneficiaries.

The personal representative has a duty in exercising all of his or her powers, whether discretionary or administrative, to maintain the standard of care of a reasonably prudent businessperson managing someone else’s property.

Generally speaking, the personal representative cannot delegate his or her duties. The Courts in recent years however have permitted delegation of administrative duties that a reasonable and prudent businessperson would delegate in the management of his or her own business affairs.  This would include the use of brokers, real estate agents, accountants, lawyers, appraisers and so forth.

 

The personal representative’s general duties are as follows:

Duties of an Executor or Administrator

(1)        To dispose of the deceased’s body.

 

It is the executor and not the testator’s spouse or family, who has the right to determine the place and manner of burial. The Cemetery and Funeral Services Act sets up a priority structure as to who has the right to control the disposition of human remains.  First priority is given to the executor, then to the spouse, and then to various categories of relatives.  If the person who has the right to control disposition is unavailable or unwilling, the right passes to the next person of the priority list.   Proper funeral expenses incurred are payable out of the estate.  Generally, the person who instructs the funeral director will be personally liable to pay all expenses incurred, but is entitled to indemnity as a first priority against the estate for the reasonable expenses of a suitable funeral.  There are some cases where the executor has been denied reimbursement of the full funeral costs, where the costs have been found to be excessive under the circumstances.

 

(2)        Take possession or control of the deceased’s assets.

 

The personal representative must take steps to search for any cash, jewelry, valuables and the like, and arrange for their safekeeping.  Any personal property must be locked up and properly insured.  Other assets that may require insurance coverage must also be checked into.  Financial institutions and government agencies must be notified of the death.  Mail must be re-directed and the bills, including mortgages, must be paid.   Rents must be either collected or paid and businesses must be managed for the interim until distribution of the estate or until the sale of the business.  A personal representative must enquire as to whether they have sufficient legal authority to carry on the business, and must also be cognizant of the potential for personal liability for carrying on the business.

 

(3)        Complete a schedule of all of the deceased’s assets and ascertain their value.

 

After the executor has taken charge of the assets of the estate, and has made a full inventory of the assets and a valuation of same, the personal representative should then arrange to have an application made to the court for the issue of a grant of probate.  In the case where the deceased dies intestate or without a named beneficiary, there is often a delay experienced in finding some appropriate person to step forward and apply for letters of administration.The Rules of Court, seem to assume that in practice, in the absence of special circumstances, the court will usually give priority to appointing as administrator of the estate, the person or persons who have the greatest interest in the estate.  In practice consents will be required from any person entitled to share in the estate who has a greater or equal right to apply.  Thus, if two or more persons are equally entitled to apply, they must either apply jointly, consent to the appointment of one of them, or be served with notice under the Rules of court.  There is no limitation on the number of administrators who may be appointment.

 

(4)        Advertise for creditors.

 

Before any debts of the estate are paid, the executor or administrator should see to the publication of the proper advertisement for creditors, claims and other claims against the estate.  From my experience, common sense should prevail in deciding whether or not to advertise for creditors, as the costs can be considerable.  In the case of a little old lady with simple assets and a history of paying her bills on time, it may not be necessary to publish such an advertisement.  However if the personal representative is to protect him or herself from liability, then serious consideration should be given to the placement of such an advertisement, as Provincial Legislation states that the personal representative shall not be personally liable to creditors, where notice has been properly given and the assets of the estate have already been distributed.

 

(5)        To notify beneficiaries, and persons who would take on an intestacy with respect to an application for probate or letters of administration;

 

(6)        To act personally, although as aforesaid, delegation may be allowed in certain administrative  circumstances;

 

(7)        To ensure that investments are authorized.

 

There is a duty to examine the assets and investments of the estate, and in general, to convert in a reasonable and timely manner, the assets that do not qualify as authorized investments for the estate.  The executor must be concerned with assets that may waste (ie, an unheated greenhouse) or that are to speculative (penny stocks), or reversionary assets;

 

(8)        To complete and file income tax returns and where necessary obtain a Clearance Certificate from Revenue Canada;

 

(9)        To pay the debts, including funeral, legal, testamentary expenses, succession duties and probate fees;

 

(10)      To claim all debts due to the deceased and generally collect all of the assets;

 

(11)      To keep accounts:

 

The personal representative has a duty to be prepared to account to creditors and to persons who have a beneficial interest in the estate.  The personal representative must give to anyone to whom he or she owes a duty such information as that person reasonably requires.  The type and amount of information varies, but the duty to account is owed to beneficiaries, unpaid legatees, unpaid creditors, successors, trustees, others who may have an interest in the deceased’s assets, and others provided for by statutes such as the Public Guardian or Revenue Canada.

 

(12)      To continue or bring and maintain court actions on behalf of the estate:

 

Under Section 59  of the Estate Administration Act, a personal representative of a deceased claimant may continue or bring and maintain an action for a loss or damage to the person or property of the deceased in the same manner and with the same rights and remedies as the deceased, except for certain actions such liable and slander, pain and suffering, and loss of expectancy of earnings.  A personal representative may continue or bring and maintain an action under the Wills Variation Act, or an action for constructing or resulting trust on behalf of the deceased.

 

(13)      To distribute the assets in accordance with the will or the laws of intestacy.

What is a Fiduciary?

What is a Fiduciary?

The term “fiduciary” is not well understood by the average citizen.

It was probably best stated  in the simple terms of the following:

” If one person undertakes to act in relation to a particular matter in the interests of another, and has been entrusted with a power of discretion to affect the other’s interests, in a legal or practical sense, so that the other is in a position of vulnerability, then a fiduciary duty exists.”

Williams Lake Indian Band v. Abbey (1992), 1992 CarswellBC 1067, [1992] 4 C.N.L.R. 21, K12,13,SkippJ.(B.C. S.C.)

Other  noted comments on the definition are:

“where by statute, agreement, or perhaps by unilateral undertaking, one party has an
obligation to act for the benefit of another, and that obligation carries with it a discretionary
power, the party thus empowered becomes a fiduciary. Equity will then supervise the
relationship by holding him to the fiduciary’s strict standard of conduct.”

Guerin v. R. (1984), 36 R.P.R. 1, 20 E.T.R. 6, [1985] 1 C.N.L.R. 120, 55 N.R. 161,13 D.L.R. (4th) 321, [1984] 2 S.C.R. 335, [1984] 6 W.W.R. 481, [1984] S.CJ. No. 45,1984 CarswellNat 813,1984 CarswellNat 693, 59 B.C.L.R. 301, f98, Dickson J. (Beetz, Chouinard and Lamer J J. concurring) (S.C.C.)

[In Guerin v. ft, [1985] 1 C.N.L.R. 120 (S.C.C.)] … Dickson J. writing for the majority stated at [p. 137] … that:

… where by statute, agreement, or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary.

Desjarlais v. Canada (Minister of Indian Affairs & Northern Development) (1988), 1988 CarswellNat 184, [1988] 2 C.N.L.R. 62,18 F.T.R. 316, f9, Strayer J. (Fed. T.D.)

– See more at: http://www.disinherited.com/blog/what-fiduciary#sthash.5GPs6Tw5.dpuf

A Fiduciaries Duty Of Trust and Loyalty

Fiduciaries duty is a persons in a position of trust, ranging from doctors, lawyers, accountants, to financial advisors and many others in between.

“Wilson J. offered some guidance on the subject of fiduciary relationships in the leading case of Frame v. Smith, [1987] 2 S.C.R. 99 (S.C.C.). At p. 136, she stated:

Relationships in which a fiduciary obligation have been imposed seem to possess three general characteristics:

  1. The fiduciary has scope for the exercise of some discretion or power.
  2. The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.
  3. The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power”

 

  • The Supreme Court of Canada considered the concept of loyalty in fiduciary relationships in Hodgkinson v. Simms, [1994] 3 S.C.R. 377 (S.C.C.). At p. 407, Sopinka and McLachlin JJ., writing for the dissent, adopted the language from Keech v. Sandford (1726), 25 E.R. 223 (Eng. Ch. Div.):

At the heart of the fiduciary relationship lie the dual concepts of trust and loyalty. This is first and best illustrated by the fact that the fiduciary duties find their origin in the classic trust where one person, the fiduciary, holds property on behalf of another, the beneficiary. In order to protect the interests of the beneficiary, the express trustee is held to a stringent standard; the trustee is under a duty to act in a completely selfless manner for the sole benefit of the trust and its beneficiaries (Keech v. Sandford (1726), 25 E.R. 223) to whom he owes “the utmost duty of loyalty”. (Waters, Law of Trusts in Canada (2nd ed. 1984), at p. 31). And while the fiduciary relationship is no longer confined to the classic trustee-beneficiary relationship, the underlying requirements of complete trust and utmost loyalty have never varied.

109     In Moffat v. Wetstein (1996), 29 O.R. (3d) 371 (Ont. Gen. Div.), Granger J. canvassed the
duty to avoid conflicts of interest. At p. 390, he stated:

Subsumed in the fiduciary’s duties of good faith and loyalty is the duty to avoid a conflict of
interest. The fiduciary must not only avoid a direct conflict of interest but must also avoid
the appearance of a possible or potential conflict.

The fiduciary is barred from dividing loyalties between competing interests, including self-interest.

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Executors of Deceased Substituted For Deceased

substitute executorExecutors of Deceased Substituted For the Deceased In Court Action

Dicken Mechanical Ltd v Nohels Group Inc 2012 BCSC 917 is a good example of the process that the Rules of Court have established to deal with the situation where  one a party dies and how his or her executor can, in  court actions that survive a death, be substituted as the litigation  party in the place of the deceased.

The plaintiff had commenced a court action against the defendant  limited company and a personal director for damages relating to contaminated soil.

The defendant personal director died after the commencement of the proceedings.

The real issue was whether or not the claim was one that survived death or not, as it is only actions that survive death that the rules allow for an executor to be substituted as a party for a  deceased litigant.

 

The court ruled that claims under the Waste Management legislation do in fact survive death and allowed the deceased defendant’s executors to be joined in as substituted defendants for the deceased director.

Rule 6-2(1) of the Supreme Court Rules provides for a continuation of an action against a deceased person where the claim survives death.

With respect to the type of cases that survive death vs. those that do not, the court cited:

The maxim actio personalis moritur cum persona (“a personal right of action dies with

the person”: Black’s Law Dictionary, 6th Ed., p. 31) was discussed by Southin J.A. in McCulloch v. Green, [1995] B.C.J. No. 567, wherein she wrote at para.

… this maxim “is not applied in the old authorities to causes of actions on contracts, but to those in tort, which are founded on malfeasance or misfeasance to the person or property of another: which latter are annexed to the person, and die with the person, except where the remedy is given to (or by) the personal representatives by the statute law.” And the general rule of the common law was, that if an injury were done either to the person or to the property of another for which unliquidated damages only could be recovered in satisfaction, the action died with the person to whom, or by whom, the wrong was done …

For example, if a person is rear ended and suffers pain and suffering as well as wage loss, and dies before trial, the deceased’s  claim for pain and suffering dies with him or her, but the executors may continue the claim for the lost wages.

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