Executors/Trustees Must Care For Estate Assets

Executors/Trustees Must Care For Estate Assets

The law is clear that a personal representative (executors, trustees, and administrators)  has a duty to care for the assets of the estate: Stanger v. Royal Trust Co., [1947] 1 W.W.R. 538, [1947] 2 D.L.R. 534 (Sask. C.A.).

Personal representatives undertake their duties in furtherance of their fiduciary relationship to the beneficiaries of the estate: Montreal Trust Co. v. Sproule, [1979] 6 W.W.R. 372, 103 D.L.R. (3d) 368 (Alta. Q.B.); Gibson Estate, Re, [1930] 2 W.W.R. 400 (Man. C.A.); Low v. Gemley (1890), 18 S.C.R. 685 (S.C.C.) held that persons who accept the office of executors or trustees must be supposed to accept it with the responsibility at all events for the possession of ordinary care and prudence.

Executors or trustees must undertake their responsibilities with ordinary care and prudence:

Low v Gemley was cited in Melito Estate v. Melanson, 2012 ONSC 2584 (Ont. S.C.J.) at para 81, 2012 CarswellOnt 5318 (Ont. S.C.J.)

Trustees For Infants versus Guardians

Trustees for Infants Versus Guardians

Leniuk Estate 2016 BCSC 159 held that a guardian for an infant is not permitted to be appointed the trustee to receive and hold in trust on the infant’s behalf all of the property to which the child is entitled to receive in place of the appointed executor and trustee. The application was brought under part 8 of the Family Law act and was opposed by the Public Guardians who successfully argued that the will is paramount and that Part 8 of the Family Law act did not apply.

Guardians not automatically entitled to receive property.

Section 176  FLA–  Except as set out in section 178 [delivery of small property], a child’s guardian is not, by reason only of being a guardian,

(a) a trustee of the child’s property, or
(b) entitled to give a valid discharge on receiving property on behalf of the child.

[13] Section 176 provides that a guardian, simply because they are a guardian, is not a trustee of a child’s property. As a result someone else can be trustee of the child’s property. Hence, a trust instrument, such as a will, that states a guardian is to receive a child’s property and is empowered to grant a discharge is not contrary to the section. Indeed s. 176 by its very wording recognizes this as it provides “by reason only of being a guardian”. (Emphasis added)

[14] In my opinion the FLA provisions were not intended to, nor do they, override trust instruments. For public policy reasons, the Legislature saw fit to provide that the FLA address the situation where there is property to which a child is entitled but the child only has a guardian and there is no existing trustee. In circumstances where the property exceeds the prescribed amount in the small property exception the child’s guardian is not deemed to be the child’s trustee simply because they are a guardian. An application to the Court is required in order to determine who the appropriate trustee should be. Section 179 provides the factors the Court should consider when appointing a child’s trustee. Similar to other provisions in the FLA, the best interests of the child are paramount. An example of a situation when this might occur would be if a child received property from a relative who died intestate.

[17] Part 8 also recognizes in s. 175 that a trust instrument includes a will and that trustees are authorized under such an instrument to receive or hold property in trust for a child. In other words, such a trustee is included in the definition of trustee just as is a trustee appointed under the FLA.

[21] To assert that children’s property advanced to a guardian by anyone is caught by these sections extends the FLA provisions beyond their purpose and the problem they were intended to address. The purpose of these sections is to ensure that there is a trustee to protect the interests of the child, whether that is the guardian as trustee or another person does not matter. The point is to have someone responsible for the infant’s funds and to address the fact, that often for various practical reasons, it is desirable for the guardians to have the funds. Where there is no trustee and where the property exceeds a certain value, the guardian can be appointed as trustee.

[22] This is not a situation where there is uncertainty over who is the infant’s trustee. It is the trust instrument (the Will) that establishes the trust and names the trustees. It is the terms of that instrument that govern the trust. As long as the trustees comply with the terms of the trust they are protected. In accepting a receipt from the guardian they would be acting in accordance with the terms of the will and the trust and as a result that would be a valid discharge.

[23] The trustees are in this instance attempting to delegate their duties as trustees to a third party. In effect they are seeking an order that amounts to a variation of the Will.

Executor Personally Liable for Court Costs

Executor Personally Liable for Court Costs

Craven v Osdacz 2017 ONSC 4396 held an executor of an estate personally liable for costs totalling about $150,000 for reckless and unreasonable behaviour that amounted to reprehensible for opposing a plaintiff’s court action for no valid reason other than to frustrate and delay the court proceeding.

The executor was acting not as estate trustee but personally in carrying out vendetta against plaintiff to limit any compensation she received from estate where liability was clear virtually from start. The groundless defences raised by the executor were designed to ensure that plaintiff would see little or no estate benefits.

The executor occupied a position of fiduciary as estate trustee and used that position and estate assets to conduct litigation in way amounting to harassment of plaintiff to protect his own position. The plaintiff was successful on every major issue raised at trial including issue of trustees’ improper payment of legal fees from estate assets . The only area where the plaintiff was not wholly successful was concerning quantum of repayment of dissipated legal fees to estate, but she was substantially successful on this issue.

The executor’s reckless, totally irrational and totally unreasonable conduct rose to level of reprehensible conduct and personal confrontations with plaintiff rose to level of reprehensible conduct worthy of sanction in form of imposition of solicitor and client costs.

19 Michael Osidacz was acting not as estate trustee but personally in carrying out a vendetta against Julie Craven in order to limit any compensation she received from the estate where liability was clear, virtually from the start and it was obvious that she was entitled to substantial damages that would exceed the value of the estate.

20 I have found that Michael Osidacz advanced “speculative and groundless defences” and acted in a manner that was “anything but reasonable, prudent or appropriate”. I have found that Michael Osidacz raised the estate’s defence on “virtually no evidence” and was totally irrational and reckless in his conduct as Estate Trustee amounting to a dissipation of assets of an overall modest sized estate. I have also found that the groundless and frivolous defences raised by Michael Osidacz were designs to ensure that Julie Craven would see little or no benefits from the estate.

22 Michael Osidacz resisted Julie Craven’s obvious and lawful claims for 10 years until shortly before trial. His actions went far beyond “mis-guided litigation” and amounted to harassment of another party by pursuit of “fruitless litigation”. In the end, the plaintiff was successful on every major issue raised at trial including the issue of the trustees’ improper payment of legal fees from the assets of the estate. The only area where the plaintiff was not 100 percent successful is concerning the quantum of repayment of dissipated legal fees to the estate. Even on this issue, the plaintiff was substantially successful.

23 Based on the foregoing, reckless and egregious conduct on the part of Michael Osidacz, the plaintiff’s position is that “the loser pays” should apply in this case against Michael Osidacz and he should be required to pay her costs personally on an elevated basis, in this case, complete indemnity, except as set out below. I find that his reckless, totally irrational and totally unreasonable conduct and personal confrontations with the plaintiff rise to the level of “reprehensible” conduct in accordance with the case law and is worthy of sanctions as a form of chastisement justifying the imposition of solicitor and client costs.

24 If elevated costs are not awarded to the plaintiff, she would have to spend a substantial amount of her damages judgment on elevated legal fees caused by the conduct of Michael Osidacz, thereby allowing him to achieve his objective of seeing to it that she obtains as little of the assets of the estate as possible.

Trustee Cannot Be in Conflict With Duty

Trustee Cannot Be in Conflict With Duty

Equity will not allow a person who is in a position of trust to carry out a transaction where there is a conflict between his or her duty and his or her interest.

It is a rule of universal application that no trustee shall be allowed to enter into engagements in which he or she has, or can have, a personal interest, conflicting, or which may possibly conflict, with the interests of those whom he or she is bound by fiduciary duty to protect. So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness, or unfairness, of the transaction; it is enough that the interested parties object. It may be that the terms on which a trustee has attempted to deal with the trust estate are as good as could have been obtained from any other quarter or better, but so inflexible is the rule that no inquiry into that matter is permitted. It makes no difference whether the contract refers to real estate, personalty, or mercantile transactions, as the disability arises not from the subject matter of the contract, but from the fiduciary character of the contracting party. Broadly speaking, the reason for the rule is that the trustee should not be placed in a position in which his or her interests are liable to conflict with his or her duty to the cestui que trust. This reason applies equally to a person acting as an agent of the trustee.

For example in Butcher Estate v Hamilton 1997 CarswellBC 1917 (B.C. S.C.) a mother transferred substantial sums of money to her daughter. The transfers were not an  outright gift to the daughter, but were intended to be held in trust by her to use for care of mother and father. The mother and father lacked mental capacity at time of transfers. The daughter breached her  duty as trustee by dealing with funds as though her own.

Obligations of a Power of Attorney

Obligations of a Power of Attorney

The Manitoba Supreme Court in Krawchuk v Krawchuk 2017 MBQB 47 outlined the legal obligations  of a power of attorney.

Manitoba’s laws for powers of attorneys are essentially the same as for British Columbia.

The Court stated inter alia as follows:

18      The applicable law with respect to the obligation of an attorney in his or fiduciary relationship with the donor was not at issue. Some of the applicable principles can be summarized as follows:

(a) as a fiduciary, an attorney has an obligation to act in the best interests of the settler or donor and cannot permit his or her personal interests to conflict with that obligation (see Brown v. Lefebvre, 2007 ABQB 195, 419 A.R. 347 (Alta. Q.B.) at para. 20);

(b) the obligations of an attorney include keeping proper accounts of the trust estate, distinct from other accounts and preserving receipts for cancelled cheques (see Re Lefebvre at para. 21);

(c) the obligations of an attorney include producing accounts to the donor, court and any beneficiary and insuring the accounts clearly show all monies and assets received or accounted for;

(d) an enduring power of attorney requires the highest commitment of good faith, loyalty and trust (see B. (E.) v. B. (S.), 2010 MBQB 15, 248 Man. R. (2d) 260 (Man. Q.B.) at para. 50; Todosichuk v. Daviduik Estate, 2004 MBCA 191, 190 Man. R. (2d) 254 (Man. C.A.));

(e) breach of a fiduciary relationship gives rise to the widest array of equitable remedies (see Todosichuk at para. 21; Wewaykum Indian Band v. R., [2002] 4 S.C.R. 245, 2002 SCC 79 (S.C.C.));

(f) equitable remedies are always in the discretion of the court which is concerned not only in compensating a wronged plaintiff but also in upholding the obligations of good faith and loyalty (see Todosichuk at para. 22; Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534 (S.C.C.));

(g) the fiduciary relationship has trust, not self-interest, at its core, and when breach occurs, the balance favours the person wronged (see Todosichuk at para. 22; Canson Enterprises at p. 543 per McLachlin J. (as she then was)); and

(h) in considering whether to grant a remedy, and if so, the nature of the remedy, the question of deterrence is often most relevant (see Todosichuk at para. 25).

Use of Multiple Wills Approved

Use of Multiple Wills Approved

In re: Berkner Estate 2017 BCSC 619 the Court approved the use  of Multiple Wills in estate planning. 

The applicant submits that a person is entitled to have more than one valid will. As an example, multiple wills may be used when a will maker has assets in multiple jurisdictions. Rather than preparing a single will and then seeking a resealing in all other jurisdictions where the deceased holds property, multiple wills may be utilized. The Canadian Estate Planning Guide (Toronto: Wolters Kluwer, 1995) (loose-leaf revision 233), ch. 10, at p. 216 states:

In a world in which individuals frequently maintain assets in different jurisdictions, the convenience of using multiple wills has long been recognized. The testator simply prepares an original will for each jurisdiction in which he or she has assets. The principal advantage is that each will can be submitted to the proper court or put into effect without any dependence on the other will(s). Where there are assets in several jurisdictions, there is no need to limit oneself to two wills. But in each case, care should be taken to ensure that the will satisfies the formalities of execution of the relevant jurisdiction. Likewise, it is necessary to ensure that one will does not accidentally deal with assets that are also dealt with under another will and thereby create a situation of conflict, presumably resulting in the provisions of the later-dated will having priority with respect to the disposition of such assets.

10      There is no evidence that the deceased prepared two wills to address jurisdictional issues. A more likely motivation for the two wills is found in the following paragraph from the Canadian Estate Planning Guide:

Multiple wills are also used in some provinces as a means of reducing probate tax. Simply put, the basic strategy is to sequester assets that do not require probate in one will, while dealing with the remaining assets that do require probate in a second will. Of course, only the second will is probated, thereby saving probate tax on the assets covered by the primary will. . . .

11      The estate planning strategy of preparing two wills but only applying for probate of one of them was permitted in two Ontario cases, Granovsky Estate v. Ontario, 1998 CanLII 14912, 156 DLR (4th) 557, which I will refer to later, and also in Kaptyn v. Kaptyn (2010), 2010 ONSC 4293.

12      Authority for permitting two wills can be found in Astor, In the Goods of, [1876] P.D. 150, at p. 152:

. . . The question of incorporation in the probate of separate documents has frequently been a subject of consideration, and, I may say, a troublesome matter both to myself and my predecessors, in carrying out the jurisdiction I have now to exercise. I endeavoured to lay down the principles which should guide me in these cases In the Goods of Lord Howden (4), in which I held that where an English will ratifies and confirms a foreign will, it is right that the latter should be incorporated in the probate. In the present case, however, the testator has carefully used the clearest and strongest language to indicate his intention of keeping the English property separate from the American, and for that purpose has made the English will, which does not purport to ratify or confirm the American will, but merely expresses his desire that, if the two cannot be kept totally distinct, the English will shall be treated as a codicil to the American one. I have come to the conclusion that his wishes need not be disappointed, and that there is no reason why I should insist on the incorporation of the American will in the English probate.

13      The Astor case was referred to by the Ontario Court in each of Granovsky Estate and Kaptyn, and I am satisfied that it remains good law in the absence of any rule or legislation to the contrary 

Gratuitous Agency

Gratuitous Agency

Agency can simply be defined as a person authorized by another to act for him or her with entrusted business, and the agent represents that the agent is acting for another under the contract of the relation of agency.

The  case of Siemens v Howard 2017 BCSC 587 involved the plaintiff alleging a gratuitous realtor agency agreement that had been breached and damages should be awarded. The judge found that there was no agency agreement created.

A lawyer and a realtor are two common examples of the many types of agency relationships that exist in the business world.

The plaintiff  Siemens asserted that Mr. Howard was his realtor and agent, and that Mr. Howard acquired Old Riverside in breach of Mr. Howard’s obligations to Mr. Siemens.

The principal relief sought by Mr. Siemens is a declaration that Mr. Howard holds Old Riverside on a constructive trust for Mr. Siemens, and an order that the property be conveyed to Mr. Siemens accordingly. Mr. Siemens asserts that he is entitled to that relief based on the principles set out by the Supreme Court of Canada in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 (“Soulos SCC“), where a constructive trust was imposed as a remedy for wrongful conduct by an agent. A claim for general damages was abandoned by Mr. Siemens at the close of trial.

3      Mr. Howard says that there was never any agency relationship between him and Mr. Siemens, that he owed no obligations to Mr. Siemens and that, at all times, he was entitled to acquire Old Riverside for himself.

Mr. Howard says that he and Mr. Siemens discussed Mr. Siemens acquiring a portion of Old Riverside from Mr. Howard, but they were never able to reach an acceptable agreement on the essential terms. Accordingly, Mr. Howard says that he has no liability to Mr. Siemens and the action should be dismissed.

The Court found there was no agency relationship and dismissed the claim.

130      The principle applicable to deemed or gratuitous agency is stated in Bowstead & Reynolds on Agency, 20th ed. (London: Sweet & Maxwell, 2014), at p. 61, as follows:

Agreement between principal and agent may be implied in a case where each has conducted himself towards the other in such a way that it is reasonable for that other to infer from that conduct consent to the agency relationship.

131      That principle was cited and applied, for example, at trial in Soulos v. Korkontzilas (1991), 4 O.R. (3d) 51 (Gen. Div.) (“Soulos Trial“), at pp. 65-66, in support of the trial judge’s finding that Mr. Korkontzilas was the agent of Mr. Soulos. This finding was accepted in the subsequent appeals to the Ontario Court of Appeal and the Supreme Court of Canada. Indeed, in Soulos SCC, McLachlin J. observed, at para. 12, that “Most real estate transactions involve one person acting gratuitously for the purchaser, while seeking commission from the vendor.”

132      Thus, the fact that Mr. Siemens had no obligation to pay a commission to Mr. Howard is irrelevant to the question whether a deemed agency relationship existed.

133      The concept of gratuitous agency in relation to a realtor or real estate agent appears to have received little explicit attention in B.C. It is mentioned in Sandhu v. Shiell, 1996 CanLII 2193 (B.C.C.A.), where Lambert J.A. (writing for the court) said:

16      The [plaintiffs/appellants’] argument based on the existence of a relationship of gratuitous agency is said to be supported by a decision of the Ontario District Court in Calandra v. B. A. Cleaners (1990), 11 R.P.R. (2d) 63 where such a relationship was found. Reliance was also placed both on that case and on this passage from the “Restatement of the Law” 2d ed., vol. 2: Agency (2d) of the American Law Institute, at s.378:

One who, by a gratuitous promise or other conduct which he should realize will cause another reasonably to rely upon the performance of definite acts of service by him as the other’s agent, causes the other to refrain from having such acts done by other available means is subject to a duty to use care to perform such service or, while other means are available, to give notice that he will not perform.

17      That is a statement of a very attractive legal principle. I would not be prepared to say, in the context of this case, that the concept of “gratuitous agency” is entirely foreign to the law of British Columbia, but it is not necessary for me to say anything more about it than that.

 

Executors Entitled To Indemnification For Fees and Expenses

Executors Entitled To Indemnification For Fees and Expenses

Re Collett Estate 2017 BCSC 473  confirmed the well settled law that executors at entitled to  indemnification for properly incurred fees and expenses in carrying out their administration of an estate.

Jackson et al v. King et al, 2003 BCSC 328 at para. 12:

As Executors, the Respondents are entitled to be indemnified out of the Estate for all proper expenses incurred in relation to the Estate and this right of indemnity is a first charge upon the capital and the income of the Estate: Halsbury’s Laws of England, vol.17, 4th ed. (London: Butterworths, 1976) at 612, paragraph. 1190. The Respondents are also entitled to be indemnified for all costs including legal costs which are reasonably incurred: Geffen v. Goodman(1991), 81 D.L.R. (4th) 211 (S.C.C.). As well, the Respondents are entitled to full indemnity for all costs and expenses properly incurred in the due administration of the Estate: Thompson v. Lamport, [1945] S.C.R. 343.

The Supreme Court of Canada in Geffen v Goodman stated:

75      The courts have long held that trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred. Reasonable expenses include the costs of an action reasonably defended: see Re Dingman (1915), 35 O.L.R. 51. In Re Dallaway [1982] 1 W.L.R. 756, [1982] 3 All E.R. 118, Sir Robert Megarry V.C. stated the rule thus at p. 121:
In so far as such person [trustee] does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.

See also Re Ladner Estate, 2001 BCSC 943 at para. 9:

The cases and texts to which I have referred above indicate: (1) that executorship expenses, testamentary expenses and administration expenses are in essence synonymous terms which relate to the proper performance of the duties of the executor of the estate;

(2) such expenses include the costs incurred in obtaining the advice of solicitors or counsel with respect to ascertaining the debts and liabilities due from the estate, the payment of such debts and liabilities, and the legal and proper distribution of the estate among the persons entitled.

Trustee Fee For Care and Management of Estate Assets

Trustee Fee For Care and Management of Estate Assets

Re Pedlar 1982 BCJ 1553 deal with the criteria for an estate trustee fee for the care and management of estate assets not to exceed .4% of the average market value of the estate assets.

It was recently followed in Collett Estate 2017 BCSC 473

In 1980 the BC Trustee act was amended to allow an executor trustee to claim an additional fee for the care and management of estate assets not to exceed .4% of the average market value of the assets.

Re Pedlar estate stated inter alia:

3      Because s. 90(2) of the Act refers to s. 90(1) thereof, it will be convenient to set forth both s. 90(1) and (2) of the Act.

90.(1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or the registrar of that court if so directed by the court, to allow him a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his care, pains and trouble and his time expended in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him under any will or letters of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or the registrar of the court if so directed by the court thinks proper. The court or the registrar of the court if so directed by the court, may so order from time to time, and the amount of remuneration shall be allowed to an executor, trustee, guardian or administrator, in passing his accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(2) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

4      Briefly stated, it is apparent that s. 90(1) pertains to an allowance to be awarded to an executor, administrator, guardian appointed by any court, testamentary guardian, or any other trustee (hereinafter referred to as “a trustee”) for his care, pains, trouble and time expended by him in administering, arranging, disposing and settling an estate or trust, whereas s. 90(2) pertains to the allowance to a trustee of a care and management fee with respect to an estate or trust.

12      Under the common law of the provinces of Ontario and Nova Scotia a fee for the care and management of an estate or trust has been allowed for many years in addition to an allowance for the care, pains, trouble and time expended in administering, arranging, disposing and settling of an estate or trust: see Re Berkeley’s Trusts (1879), 8 P.R. 193; Re Williams (1902), 4 O.L.R. 501 (C.A.); Re Farmers’ Loan & Savings Co. (1904), 3 O.W.R. 837; and Re Creelman (1973), 40 D.L.R. (3d) 306 (N.S.).

13      It is apparent that by the addition of subs. (2) of s. 90 of the Act in 1980, the provincial legislature decided to accord a trustee in the province of British Columbia an opportunity to apply to the Supreme Court for a similar care and management fee. The care and management fee referred to in s. 90(2) is clearly an allowance for remuneration in addition to the allowance for remuneration referred to in s. 90(1) of the Act. To hold otherwise would frustrate the obvious intent of the legislation.

14      Each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee (not exceeding 0.4 per cent of the average market value of the assets of the estate), include the following:

15      (a) the value of the estate assets being administered;

16      (b) the nature of the estate assets being administered — such as an active business, a farm, real property held for investment or appreciation, a portfolio of investments and the type of such investments;

17      (c) the degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust;

18      (d) the time expended by the trustee in the care and management of the estate;

19      (e) the degree of ability exhibited by the trustee in the care and management of the estate;

20      (f) the success or failure of the trustee in the care and management of the estate;

21      (g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.

22      While the foregoing list of factors is not intended to be exhaustive, it has been derived, primarily, from a consideration of the Ontario Court of Appeal decisions in Re Mortimer [1936] O.R. 438, [1936] 3 D.L.R. 380 (C.A.), and Re Smith, [1953] O.R. 185 (C.A.). It is recognized that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.

23      Section 90(2) of the Act does not indicate what information should be placed before the court in support of the application for a care and management fee. In my view, the trustee should give a general summary of the estate and of his services performed in the care and management of the estate, including information with respect to the factors previously referred to, and any other factors which may be relevant to the particular application.

Executor Trustee Removed For Delay

Executor Trustee Removed For Delay

Re Collett Estate 2017 BCSC 473 is the most recent of a judicial trend to remove an executor trustee for delay in the distribution and finalization of an estate.

In Collett the deceased died in 2008 and was removed as a result of the inordinate delay in finalizing a simple estate in a timely manner.

In Dirnberger Estate, 2016 BCSC 439, this Court wrote as follows in deciding to remove an executor as a result of his delays:

[13] The duty of an executor is to settle the affairs of the deceased and to distribute the estate in accordance with the terms of the will in a timely manner. Mr. Chase has failed to do this.

[14] I have concluded that Mr. Chase must be removed as trustee. I have reached this conclusion for two reasons. His actions demonstrate that he lacks the necessary capacity to act as trustee. . . . There is as well a want of reasonable fidelity.

[15] With regards to the first reason, this is a simple estate that has not been distributed more than four years after probate.

[16] In Levi-Bandel v. McKeen, 2011 BCSC 247, Justice Butler stated at paras. 21 and 23:

[21] . . . it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal . . . .

. . .

[23] . . . I have little difficulty in concluding that [the executor’s] inaction and her intransigence caused unnecessary delay. Her refusal or reluctance to proceed with the administration of the estate amounts to a want of reasonable fidelity and a failure to carry out her duties.

 Justice Butler further stated:

19      The test for removal of an executrix or trustee is not contentious. The leading authority in British Columbia remains the decision in Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.). In Conroy, the Court of Appeal considered whether it was expedient to remove one trustee and appoint a replacement when some of the beneficiaries were dissatisfied with the way the trustee was handling the estate. The court confirmed at 126-127 that the main test for removal of a trustee is the welfare of the beneficiaries:

In Letterstedt v. Broers (1884), 9 App. Cas. 371, their Lordships of the Judicial Committee held that the main principle upon which the jurisdiction of Courts of Equity has been exercised to remove old trustees and substitute new ones in cases requiring such a remedy, is the welfare of the beneficiaries of the trust estate. 

20      In Letterstedt v. Broers [(1884), L.R. 9 App. Cas. 371 (South Africa P.C.)], the court noted that it is not every act of misconduct that should result in removal of a trustee, only acts or omissions which endanger the trust property or show “a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

21      However, it is not only an act of misconduct that can be grounds for removal of a trustee. A failure to act can amount to grounds for removal. In Scott v. Scott, [1991] 5 W.W.R. 185 (Sask. Q.B.), Baynton, J. relied on the inherent jurisdiction of the Saskatchewan Court of Queen’s Bench to remove a trustee where the actions of one trustee in refusing to sign cheques or provide an accounting produced a stalemate amongst the trustees. His refusal was motivated by his wish to be compensated by the trust for caring for one of the principals of the trust. He refused to sign cheques or provide the accounting until he was paid. The court found that the trustee’s deliberate failure to act placed him in breach of his fiduciary duties to the beneficiaries of the trust.