Grafton v Canada Trust 2012 ONSC 6955 is an interesting case on when a court will or will not remove a trustee.
In this case a 92 year old life tenant in a house of disrepair wanted to borrow $200,000 in a reverse mortgage at % 8 for the purpose of renovating the house she lived in. The capital account to maintain the house had expired in 1999.
The corporate trustee refused to authorize the reverse mortgage and the life tenant sought a court order to remove the trustee.
The court refused to remove the trustee, finding that it was acting in the best interests of both the life tenant as well as the residual beneficiaries. Any monies used to upgrade what was essentially a tear down house would not benefit the residual beneficiaries at all.
The court relied upon Radford v Radford 2008 43 ETR ( 3d) 74 and the five criteria it set out when determining whether to order the removal of a trustee or not:
1. Choice of estate trustee not to be lightly interfered with;
2. Clear necessity for removal must be established;
3. Removal must be the only course to follow;
4. Removal to be guided by the welfare of beneficiaries;
5. Non-removal must likely prevent proper execution of trust
The life tenant bears the onus of satisfying the Court that the removal of Canada Trust is logical and the only course for me to follow.
Clear necessity for removal of Canada Trust has not been established
Given that the court is not to lightly infer with the discretion exercised by the testator (in choosing that act as executors and trustees), as the Weil case,  O.R. 888 at 889 (Ont. C.A.) interference must not only be well justified, but must amount to a case of clear necessity. I cannot see that a basis for justification of the removal has been adequately established; the evidence presented me falls far short of clear necessity. The only justification I see is that Canada Trust disagrees with Ms. Ross’s suggested approach.
Removal must be the only course to follow
The evidence presented me falls far short of proving that there is no other course to take but the removal of Canada Trust as a trustee/executor. Canada Trust proposes selling the property; something the will empowers the trustees and executors to do. The will gives them the “the right to list and sell the property where “it is advisable in the light of future events or circumstances not at this time determinable”.”
 It seems apparent that the testator had hoped that the capital account would be sufficient to pay for maintenance of the property over the life tenancies of her daughters, but it fell short. This is the unforeseen circumstance that brings us to the current situation of indebtedness and absence of an ongoing income stream to support the property.
 The most problematic factor for me however is that:
Removal must be guided by the welfare of the beneficiaries
Paragraph 103 of Justice Quinn’s Radford v. Wilkins decision cites Crawford v. Jardine,  O.J. No. 5041 (Ont. Ct. (Gen. Div.)) which states that: “In deciding whether to remove an estate trustee, “the court’s main guide should be the welfare of the beneficiaries”.”
 While Ms. Ross argues that a reverse mortgage would provide funds to complete the required capital repairs to the foundation for instance, (thereby increasing the value of the property) I am uncertain if that will in fact increase the property value. If a purchaser were only interested in this lakefront property; intending to tear down the cottage for instance, it may well be that the money would have been unnecessarily spent.