The Executors Obligation To Maintain Estate Assets

The Executors Obligation To Maintain Estate Assets


Executors obligation cannot just idly stand by and allow estate assets to deteriorate or waste- the executor and trustee has a duty of care to mange and preserve the estate assets.

The legal test is as follows:

The traditional standard of care of an executor/trustee is “that of a man of ordinary prudence in managing his own affairs” (Fales v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302, at para. 32). At paragraph 34, Dickson J. (as he was then) explains that:

“[e]very trustee has been expected to act as the person of ordinary prudence would act. This standard, of course, may be relaxed or modified up to a point by the terms of a will…[b]ut however wide the discretionary powers contained in the will, a trustee’s primary duty is preservation of the trust assets, and the enlargement of recognized powers does not relieve him of the duty of using ordinary skill and prudence, nor from the application of common sense.”

Scott on Trusts, 3rd ed. (page 1501) (“Scott”) states that “[i]n determining whether the trustee is acting within the bounds of a reasonable judgment the following circumstances may be relevant:

  • the extent of discretion intended to be conferred upon the trustee by the terms of trust;
  • the existence or non-existence, the definiteness or indefiniteness, of an external standard by which
  • the reasonableness of the trustee’s conduct can be judged;
  • the circumstances surrounding the exercise of the power;
  • the motives of the trustee in exercising or refraining from exercising the power;
  • the existence or non-existence of an interest in the trustee conflicting with that of the beneficiaries.”

Scott also states that “where a trustee is granted powers which are to be exercised at his discretion, the court traditionally will not interfere unless the trustee has not turned his mind to the exercise of his discretion or has acted unfairly or in bad faith”.

In Re: McDonald Estate, 2012 ABQB 704, the Alberta Queen’s Bench provides that if a trustee fails to meet the standard of care, he or she will “generally be held accountable and liable for any loss resulting from the breach, and must place the trust estate in the same position as it would have been in if no breach had been committed.” Similarly, if the assets of an estate have been damaged or wasted, “the beneficiary’s remedy is against the executor in the context of an action for breach of fiduciary duty or a challenge to the executor at the passing of accounts.” (at para. 85)

Lawyers Questionnaire Admitted Into Probate Will

questionnaireGarnett Estate v Garnett Estate 2013 BCSC 1731 is an interesting case where pre WESA, a lawyers questionnaire re will instructions was determined by the court to be a valid will and admitted into probate.

In this case the executrix brought an action to prove the will of the deceased in solemn form.

The deceased was in palliative care and it became apparent that she would not survive long enough to meet with a lawyer to complete a new will. She then had two witnesses sign the lawyers questionnaire left by the lawyer, which the deceased signed in the witnesses presence.

The will questionnaire did not have a residue clause, and in fact the two witnesses to the will were beneficiaries so they could not inherit under that document.

Nevertheless the court determined that the testamentary intention of the deceased was to make “a fixed and final expression as to the disposal of her property on death “( Das Estate 2012 NSSC 441 at para 18).

The court found that despite the unconventional form of the 2008 document and its original generation as a lawyers questionnaire which would ordinarily have led to the finalization of a more sophisticated document, the court found in the circumstances of the deceased demonstrated her obvious intention that the document constituted testamentary disposition.

Proof of a will in solemn form

[35] I quote from Gillis v. Ardies, 2009 BCSC 215 at paras. 19-20 per Parrett J.:

[19] In today’s process, proof in solemn form requires the executor (or the will’s proponents) to meet the evidentiary burden of proving the will before the court. In such a hearing the executor must satisfy the court by adducing evidence –

that the will in question was duly executed;
that the testator had the capacity to appreciate and understand its contents; and
that he had the ability to sign the will.
[20] In the present case, proving the will in solemn form is required to address the issue of whether or not portions of the writing are invalid, and to determine what, in fact, constitutes the will.

[36] I find the above a helpful summary of the steps I must take to deal with the application to prove Ms. Garnett’s will in solemn form.

Fiduciary Relationships- Leading Case


Fiduciary- Privy Council

It is important on occasion to revisit some of the  British Privy Council case authority chestnuts that have developed as pillars of certain areas of the law.

One such case would be the Privy Council case of Noriah v Omar 1929 AC 127  relating to fiduciary relationships.

The facts were that a very elderly woman in Malaysia, wholly illiterate, executed a deed of gift of land property in Singapore in favor of her nephew, who had the management of all her affairs.

Before executing the deed, the elderly woman had independent advice from a lawyer who acted in good faith.

The lawyer however was unaware that the gift constituted essentially the entirety of the donors property, and did not bring home to her mind that she could be more prudent, and equally effective, by benefiting the donee by bestowing that property upon him in her will.

The trial reached the highest court of the land in London England where the court held that where the relations between the donor and a donee raise a presumption that the donee had influence over the donor, the court will set aside the gift unless the donee establishes that it was of a spontaneous act of the donor acting in circumstances which enabled him to exercise an independent will, and which justified the court in holding that it was the result of the free exercise of the donors free will

If the evidence however establishes the fact above stated it should not be disregarded merely because the donor did not receive independent legal advice.

On the other hand, the receipt of independent legal advice may rebut the presumption although it is not acted upon. But to have that effect, the court held that it must be given with the knowledge of all of the relevant circumstances, and the such as a competent and honest advisor would give if acting solely in the interest of the door.

The court set aside the gift as the presumption was not rebutted

Neighbour Found to Be a Fiduciary re Finacial Advise/Abuse

Neighbour Found to Be a Fiduciary re Finacial Advise/Abuse

Neighbour Found to Be a Fiduciary

Janz v. McIntosh [1999] S.J. No. 121 is an excellent example of a court finding a breach of fiduciary duty where the alleged fiduciary was not a professional .

In fact he was simply a neighbor.

The Plaintiff was 58 years old female with Grade VIII education, who had never worked outside home, and lived at home with her parents until she married. The Plaintiff’s husband asked the defendant neighbour to assist plaintiff after his death.

Soon after the husband’s death, the defendant began to assist plaintiff with financial affairs to prevent the plaintiff squandering her inheritance.

Defendant borrowed $4,400 from plaintiff, then borrowed additional $10,000

Plaintiff received further inheritance after her father’s death, and defendant borrowed substantial sums from that amount to discharge his mortgage.

On her sister’s advice, the plaintiff brought action for repayment and damages from breach of trust, and the action was allowed.

While the relationship was not within recognized classes of fiduciary relationships, but defendant never the less acted in a fiduciary capacity with respect to financial advice.

The Plaintiff was vulnerable, defendant recognized plaintiff’s vulnerability and plaintiff trusted defendant to act in her best interests .

The defendant never disclosed to the plaintiff the benefits he derived from borrowing on her inheritance.

The Defendant never advised plaintiff to seek independent legal advice.

Defendant was in breach of fiduciary obligation

Plaintiff awarded outstanding amount of $58,111.40.

The defendant repaid most of the funds, but ultimately went bankrupt. The court imposed a constructive trust on the defendant’s home to the extent that the money that the neighbor obtained from the plaintiff was used to pay off the mortgage. The court further ordered that the plaintiff was entitled to bring legal action against the neighbor’s pension to the extent of the monetary compensation the court awarded the plaintiff.

A. Fiduciary Relationship

(1) The nature of a fiduciary relationship

20 In Frame v. Smith, [1987] 2 S.C.R. 99 (S.C.C.), at 136, Wilson J. in dissent identified criteria indicative of the existence of fiduciary relationships:

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 criteria were adopted by the majority of the Supreme Court of Canada in International Corona Resources Ltd. v. LAC Minerals Ltd. (1986), 53 O.R. (2d) 737 (Ont. H.C.).

21 In Hodgkinson v. Simms, [1994] 3 S.C.R. 377 (S.C.C.), at 408-09, LaForest J. described the criteria as a useful rough and ready guide, but clearly indicated that the criteria were not definitive. In that case, a stock broker approached an accountant for tax planning advice in what was apparently a commercial arm’s length transaction. The accountant was held to be a fiduciary. Because the accountant was also acting for the developers of a real estate project, the majority found that he breached his fiduciary duty to the appellant when he advised the appellant stock broker to invest in the project and failed to disclose his pecuniary interest in the project. Writing for the majority about fiduciaries and their duties, LaForest J. stated at p. 405:

… From a conceptual standpoint, the fiduciary duty may properly be understood as but one of a species of a more generalized duty by which the law seeks to protect vulnerable people in transactions with others. I wish to emphasize from the outset, then, that the concept of vulnerability is not the hallmark of fiduciary relationship though it is an important indicium of its existence. Vulnerability is common to many relationships in which the law will intervene to protect one of the parties. It is, in fact, the “golden thread” that unites such related causes of action as breach of fiduciary duty, undue influence, unconscionability and negligent misrepresentation.

At p. 406, LaForest J. stated that undue influence and inequality of bargaining power are not elements which must be present to make a finding that a fiduciary relationship exists. He stated:

… Indeed, all three equitable doctrines are designed to protect vulnerable parties in transactions with others. However, whereas undue influence focuses on the sufficiency of consent and unconscionability looks at the reasonableness of a given transaction, the fiduciary principle monitors the abuse of a loyalty reposed. …

With reference to factual situations which fall within the guidelines provided by Wilson J. in Frame, supra, La Forest J. noted that there are three uses of the term fiduciary, only two of which he considers truly fiduciary. He stated at p. 409-10:

… The first is in describing certain relationships that have as their essence discretion, influence over interests, and an inherent vulnerability. In these types of relationships, there is a rebuttable presumption, arising out of the inherent purpose of the relationship, that one party has a duty to act in the best interests of the other party. Two obvious examples of this type of fiduciary relationship are trustee-beneficiary and agent-principal. In seeking to determine whether new classes of relationships are per se fiduciary, Wilson J.’s three-step analysis is a useful guide.

As I noted in Lac Minerals, however, the three-step analysis proposed by Wilson J. encounters difficulties in identifying relationships described by a slightly different use of the term “fiduciary,” viz., situations in which fiduciary obligations, though not innate to a given relationship, arise as a matter of fact out of the specific circumstances of that particular relationship; see at p. 648. In these cases, the question to ask is whether, given all the surrounding circumstances, one party could reasonably have expected that the other party would act in the former’s best interests with respect to the subject matter at issue. Discretion, influence, vulnerability and trust were mentioned as non-exhaustive examples of evidential factors to be considered in making this determination.

Thus, outside the established categories, what is required is evidence of a mutual understanding that one party has relinquished its own self-interest and agreed to act solely on behalf of the other party. This idea was well-stated in the American case of Dolton v. Capitol Federal Sav. & Loan Ass’n, 642 P.2d 21 (Colo. App. 1982), at pp. 23-24, in the banker-customer context, to be a state of affairs

… which impels or induces one party “to relax the care and vigilance it would and should have ordinarily exercised in dealing with a stranger.” … [and] … has been found to exist where there is a repose of trust by the customer along with an acceptance or invitation of such trust on the part of the lending institution.

In relation to the advisor context, then, there must be something more than a simple undertaking by one party to provide information and execute orders for the other for a relationship to be enforced as fiduciary. …

22 The hallmark of a fiduciary duty would appear to be loyalty reasonably reposed in another, abuse of which would constitute a breach of the duty of loyalty or the fiduciary duty. To determine whether loyalty had been reasonably reposed in another one would have to examine the circumstances to see whether “one party could reasonably have expected that the other party would act in the former’s best interests with respect to the subject matter at issue.”

(2) Was Sam in a fiduciary relationship with June Ann?

23 Sam and June Ann’s relationship does not fit into any of the recognized classes of fiduciary relationships such as trustee — beneficiary, agent — principal, or solicitor — client. That, however, does not determine the question. The existence or absence of a fiduciary relationship is a question of fact to be determined by examining the circumstances and characteristics of the relationship.

24 There are several factors which point to the early formation of a fiduciary relationship. These include the following:

a) the request by June Ann’s husband that Sam look after June Ann;

b) June Ann’s request for help in dealing with her affairs;

c) June Ann’s reliance on Sam’s advice;

d) Sam’s knowledge that June Ann had difficulty managing her affairs;

e) Sam’s intervention when he believed June Ann was spending her inheritance recklessly;

f) Sam’s acceptance of an obligation to care for June Ann.

25 June Ann would appear to be vulnerable. This was evident from the manner in which she testified. She had only a grade eight education, had never managed her own affairs and had never taken care of herself until Jake died. Sam recognized her vulnerability. He referred to her as being mentally challenged and also described her as being a dependent adult. He said that on a scale of 1-10, June was a “2” as a financial person. He said he began acting as her advisor — not only on financial matters, but also on emotional matters. Sam knew June Ann trusted him and that she believed he was looking out for her interests.

26 All of these factors support a finding that Sam accepted a fiduciary obligation early on in the relationship and acted in a fiduciary capacity when advising June Ann with respect to the administration of her affairs.

27 June Ann had the right to expect that Sam would act in her best interests, as that appeared to be the basis of their relationship. Sam agreed to intervene for her to manage her financial affairs. Their agreement went beyond Sam simply providing information to June Ann and carrying out her orders. June Ann relied on Sam’s advice and Sam knew that she did and encouraged her to do so. The circumstances support a finding that Sam owed a fiduciary duty to June Ann with respect to the advice he gave regarding the management of her affairs. Sam cannot act as an advisor and expect to receive benefits from his role as advisor (other than any remuneration for his services agreed to by the parties) without risking the scrutiny of the court and possible sanctions for breach of fiduciary duty.

Advising The Personal Representative


It is perhaps trite to state that the role of the drafting notary or solicitor is simply not to fill in the blanks and record the testator’s instructions, including his or her choice of executor, but instead to actively advise and draw to the testator’s attention all of the considerations relevant to his or her decision. Frequently the amount of discussion pertaining to the choice of the executor or administrator, is simply a discussion as to “who do you want your executor to be”? Prudent practice would dictate that any discussions pertaining as to who the appropriate executor or administrator might be, should perhaps be left to the end of the consultation, so that the drafting solicitor or notary is aware of all of the necessary personal and financial information relating to the testator’s intentions, or alternatively, to the estate. There is a huge responsibility to be undertaken on the part of the personal representative. Where so far as possible, the potential complexity and responsibility of the executor or administrator’s role should be impressed upon all concerned.


An executor derives the title from the will of the deceased, and does not have to wait for a grant of probate from the court before acting on behalf of the estate. An administrator on the other hand, derives his or her power by appointment from the court. The administrator may be appointed in the situation where the deceased dies intestate (without a will) or alternatively, dies with a will but there is no living named executor. In such instance, it is incumbent on someone to come forth and apply to the court to be appointed administrator.

The executor/administrator is the legal representative of the deceased and is often referred to as the personal representative. The office of the personal representative continues for life, so that if after completing the administration with regard to the assets discovered on the death of the testator, other assets fall into the estate, then the personal representative must reopen the administration and proceed with the distribution of the new assets in accordance with the terms of the will or intestacy.

An executor may be appointed expressly in a will or by implication. Sometimes the deceased fails to expressly name an executor, and upon a reasonable construction of the will being conducted, the court may conclude that the deceased did in fact grant to a named person, the essential duties of an executor. In such a case that person is said to be appointed “according to the tenor of the will”.


No one can be forced to be a personal representative, and an executor always has the option of renouncing, but this must be done before the executor “intermeddles with assets of the estate”. Any prospective personal representative should give serious consideration as to whether or not he or she

is prepared to act as the personal representative. Under no circumstances should the prospective personal representative deal with the assets or otherwise intermeddle in the estate, until he or she has in fact decided to act as the personal representative.

Some of the preliminary considerations for the prospective personal representative to consider are:

(a) the potential for personal liability which may arise under many circumstances;

(b) the possibility for conflict of interest, such as where the executor is also a business partner of the deceased;

(c) the nature of the deceased’s assets, including the complexity of the estate;

(d) the personal relationship of the prospective personal representative with the beneficiaries or intestate successors;

(e) the time, stress and hassle of being an executor and dealing with lawyers, beneficiaries and the like;

(f) the time involved versus the potential remuneration available;

(g) the actual terms of the will and such factors as whether there will be ongoing lengthy trusts.

Once a personal representative accepts an appointment, he or she becomes a trustee for the estate, and he or she must exercise the powers bestowed upon the office, with diligence and care. A personal representative may become personally liable if their office is carried out in a negligent or improvident manner.

There is a technical difference between the personal representative and the trustee, and that is why in most wills, the personal representative is appointed as the executor and trustee. One important difference is that a trustee can appoint other trustees and can also retire from the trust. An executor however cannot appoint someone to act as co-executor, and nor can he or she retire from the office once the will has been proved.


An executor may also be appointed other than by a will, where the executor intermeddles in the assets of the estate, to the extent that the intermeddling makes that person an executor de son tort. This arises where the intermeddler has assumed the authority and office of the personal representative, and has dealt with the assets of the estate. It has arisen in such instances where the executor de son tort has arranged the burial of the deceased, gathered in assets and paid the debts. Once an executor has in fact intermeddled, he or she loses the right to renounce executorship, and may incur personal liability for any loss or damage that has resulted from any improper administration of the estate. However slight acts of intermeddling are not enough to make a person an executor de son tort.


Almost anyone can act as an executor, and generally speaking a testator may appoint whoever he or she likes to be his or her executor. Generally speaking the courts are very hesitant to interfere with the appointment of the executor as chosen by the testator.

However, persons of unsound mind are incapable of acting as personal representatives, and when the personal representative is or becomes insane, the court will grant administration to someone else. An infant may be appointed to be a personal representative, but the infant cannot act as personal representative during his or her minority. Accordingly if an infant is named sole executor, administration is granted with the will annexed to the guardian of the infant or to such other person as the court shall think fit, until the infant attains the age of majority.

In many instances, the court will refuse a grant of probate and will pass over an executor, where the court considers it inappropriate that such an appointment be made. These situations are typically where the proposed personal representative has been convicted of a fraudulent offence or has become bankrupt after the date of the will, or in situations where it has been established that a marked hostility existed between the proposed personal representative and the sole beneficiary. However, as previously stated, the court will not likely interfere with the discretion exercised by a testator in naming his or her personal representative. Before any application can be made for the removal of an executor and the appointment of someone else as administrator, probate must first have been granted to the executor whose removal is sought.


The appointment of a personal representative may be either absolute or qualified. Where the appointment is qualified, it may be either as to time, place or as to purpose or subject matter. When the personal representative is appointed for a fixed period or until a specified event occurs, the authority ceases automatically when the period expires or when the event takes place. When the appointment is subject to a condition precedent, then that condition must be performed and the court has no power to relieve against an inadvertent failure to comply with it. A will may for example appoint one person as the personal representative for certain purposes or property, and another personal representative for general purposes. In that situation, probate will be granted to each personal representative, but will distinguish between their powers.


It is extremely important that the testator’s choice of his or her executor be given serious consideration. The attending notary or solicitor must remember that most clients have very little understanding as to the tasks and requirements that a personal representative must perform and the responsibilities that must be assumed. The appointment of the wrong person can be a costly and emotionally draining experience for all concerned. Accordingly it is important that the will’s draftsperson investigate the desired appointment and provide prudent legal advice as to who should be chosen to be the executor and trustee. Very often that choice cannot properly be made, until the attending notary or solicitor firstly enquires as to the nature of the assets, and the intentions to be carried out in the will.

There are many questions that the testator should consider prior to naming his or her executor, some of which are:

(i) will the executor be willing to act;

(ii) is the executor sufficiently sophisticated to carry out the job;

(iii) is the person trustworthy;

(iv) is the person young enough or healthy enough to carry out the job;

(v) will the executor be biased;

(vi) will the executor be able to work well with the beneficiaries;

(vii) does the executor have the time to do the job;

(viii) can the executor afford to do the job;

(ix) is there any conflict of interest or potential conflict of interest;

(x) should there be more than one executor;

(xi) the distance between where the testator and the executor reside.

The nature of the client’s affairs must be thoroughly examined to determine the like of active business interests, assets in foreign jurisdictions, loans or gifts to beneficiaries and the complexity of the various personal property and investments in the estate.

Generally speaking the choice for the testator usually comes down to choosing between:

(i) family members;

(ii) friends or acquaintances;

(iii) a corporate trustee.

Testators are often reluctant to talk frankly about the respective capabilities of their family members in choosing an executor. Often it is the notary or the solicitor’s job to tactfully ask the appropriate questions as to each of the respective family member’s strengths and weaknesses. It should be stressed that it should be the most appropriate person in terms of temperament, sophistication and personality that should be selected, rather than for example the oldest child. Certainly the testator should be prodded to speculate as to how the dynamics between his or her children will be after they are no longer alive.

Testators often wish to co-appoint one or more family members and I personally am of the view that this should be discouraged. If the client is adamant that there be a multiple number of family members as executors, then a majority rule clause should be inserted in the Will. If there is a handicapped child or children and discretionary trusts are being established, then careful consideration must be given as to who will be the executor and trustee, particularly as it relates to the possibility of a conflict of interest with respect to any residual funds after the death of the handicapped child.

If there are no appropriate family members, then consideration will then most likely turn to friends or acquaintances Friends or acquaintances are often of the same generation as the testator, and if so may be a bit too old.

The corporate trustee is certainly an appropriate alternative in many instances, particularly where there is a dysfunctional family and/or a complex estate with sizeable assets. The corporate fiduciary is impartial and will have the necessary sophistication and means to handle a sophisticated estate and/or difficult beneficiaries. The corporate trustee will also have a good understanding of the concept of even handedness and the potential for conflict of interest. Certainly the corporate trustee has a wealth of special knowledge and expertise, and this must be weighed against the negative considerations of choosing a corporate trustee, which are typically the expense, and its relative inflexibility and relative lack of personal touch.


A personal representative 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:

(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. Rule 61(20) of the Rules of Court, seems 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 Rule 61(20). 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.


Generally speaking the personal representative must not unreasonably delay in calling in the assets and settling the affairs of the estate, and distributing the assets in accordance with the will or the rules of Intestate Succession. There is no hard and fast rule as to what constitutes undue or unreasonable delay, but as a general rule of thumb, there is an executor’s or administrator’s one year to do so. The general rule is that the executor has one year from the testator’s date of death, and in the case of an administration, the administrator has one year from the date of the grant, to settle the affairs of the estate. There is case law to the effect that in the case of a legacy, the executor is entitled to withhold payment during the one year, even though the will indicates that the testator wishes payment to be made as soon as possible.

I will not deal with the topic of removal of an executor in the paper, but will do so at a later date.


Where the proposed personal representative has not intermeddled in a substantial way, then he or she can renounce the appointment as executor. Any renunciation must be unconditional and be in writing and properly witnessed. The renunciation takes effect as of the date of execution, but it may be withdrawn prior to filing it with the court. The renunciation is usually filed at the same time that the application for the grant of probate is made.

There are many reasons why an executor may wish to renounce, and this should be canvassed with the proposed personal representative at the initial meeting, and as soon as possible after the death of the deceased. For example I recently had a Provincial Court Judge renounce as executor, when it was likely that he would be named as a defendant as personal representative, in an action brought for an alleged sexual assault. This would be embarrassing to the executor given his job as a Judge.

If the proposed personal representative is one of two or more executors appointed under a will, then he or she may choose not to participate in the administration of the estate initially, and leave it up to the remaining executors to do so. In these circumstances, the remaining executors would apply for probate, and would reserve the right of the prospective personal representative to apply at a later date if he or she should choose to do so. Reserving the right to apply for probate may be appropriate where the prospective personal representative prefers not to act for reasons such as distance, lack of time, age, illness, or other such reasons.

The fact that an executor has not obtained a grant of probate does not mean that person is no longer an executor. Renunciation is generally preferable to a reservation of the right to apply for probate, unless the non-proving executor seriously wishes to reserve the right to apply for probate in the future.


If two or more executors have proved a will, and one of them dies after the grant, and no alternative executor has been named, then the surviving executor will continue, unless the will requires a minimum number of executors greater than the number of surviving executors.

However if a grant has issued and the sole executor or the survivor of several executors have proved the will, but dies before completing the administration of the estate, and no alternate was named in the will, then the executor of the deceased’s executor will become the executor of the original testator once he or she obtains probate of the deceased executor’s will. The replacement executor will stand in the shoes of the original executor in all respects.

This rule is referred to as the chain of executorship and it applies only in the circumstances where the executor named in the will has taken probate of the will before death, and each will in the chain must have been proved or probated.


Unless the will provides otherwise, all executors whether lay or professional, whether experienced or not, are entitled to be paid remuneration in accordance with the provisions of Section 88 of the Trustee Act, R.S.B.C. This section allows the executor to be paid, in the discretion of the court, up to a maximum of 5% of the gross aggregate value of the estate, including capital and income, together with an annual care and management fee of up to .4% of the average market value of the estate.

In most circumstances, the beneficiaries may well approve a 5% fee to the executor. In many instances however the courts will not allow the executor be paid the maximum 5% of the gross aggregate value of the estate. The courts will enquire into a number of factors, including the complexity of the estate, the experience of the executor, the time spent by the executor, the value of the estate, the amount of time spent administering the estate, and the like. However from a perusal of the somewhat limited number of cases on point, it would appear that the court very often will award fees more in the range of 2 1/2% to 3 1/2% rather than the maximum.


It is very important that the testator’s choice of an executor or executors be given sufficient scrutiny and discussion. As previously stated, most clients have little or no understanding of the onerous responsibility that an executor or alternatively an administrator, must perform. An inappropriate or improvident appointment can often complicate the administration of the estate unduly, and in certain cases, unnecessarily result in litigation. Accordingly, it is incumbent upon the drafting notary or solicitor to thoroughly investigate the desired appointment and to provide suitable legal advice.

BC Contested Wills: Removing Executors or Trustees and Grounds for Replacement

Removing Executors or Trustees and Grounds for Replacement

Trevor Todd and Jackson Todd have over sixty years of estate litigation practice, including removing executors and trustees


Removing executors or trustee is one of the most common enquiries that I receive.

The matter is both intriguing and somewhat complex, largely due to historical developments concerning the legal differences between the role of an executor and a trustee.

1. Voluntarily Removing Executors

The personal representative is sometimes just as fed up with the beneficiaries as the latter are with the handling of the estate. On such occasions, a personal representative may be prepared to simply resign. The law however is not as a straightforward as is the simple proposition of resignation. The difficulty is caused by the legal fact that a personal representative is firstly an executor, and then later, a trustee of the estate. The general consensus of most British Columbia practitioners is that a personal representative becomes a trustee once he or she has completed his or her duties by collecting all of the assets and paying all the debts of the estate. The personal representative then holds the remaining assets as trustee for the estate, and distributes the assets in accordance with the will or laws of intestacy. It is often difficult to determine exactly when this conversion from an executor to a trustee occurs. We are all familiar with the general principle of “once an executor, always an executor”. Many personal representatives have attempted in the past to simply resign from their office by way of a deed. The courts have generally speaking not allowed this to occur. In Re McLean (1982),37 O.R. (2d) 164, Justice Osbourne stated: “Section 2 of the Trustee Act establishes a procedure whereby a trustee may resign by deed, while executors may only be removed from their office by the court pursuant to Section 37. This reflects the common-law principle that the function of an executor and trustee are different and separate. After the executor has fully administered the estate, the role of trustee is assumed. This however does not mean that the person appointed to fill both functions ceases to be an executor merely because that function has been performed.” The judge held that a person can resign as a trustee, yet continue as executor. However to resign as executor, an application would have to be made under the usual court application procedures. In Re Berg Estate (1994) 90 B.C.L.R. (2d) 237 Chief Justice Esson (as he then was), in deciding an application for removal of an executor and the appointment of a replacement, found that he must follow the direction of Section 26 of the Estate Administration Act, for the removal and replacement of a trustee who continues to hold the office of executor, and that it must be dealt with by Sections 27-32 of the Estate Administration Act, rather than the provisions of the Trustee Act. Justice Esson found that Section 30 of the Estate Administration Act was a specific section dealing specifically with those who are both trustees and executors, rather than the general provisions of the Trustee Act, which only refers to trustees. The general provisions of the Trustee Act, must defer to the specific provisions of the Estate Administration Act. As a result of this case, in British Columbia it is likely that in order to obtain the voluntary discharge of a personal representative, it is necessary to go through the process as set forth in Sections 27-30 of the Estate Administration Act, and not proceed by the mere discharge by deed alone. The formal process for discharge is set out in Sections 27-30 of the Estate Administration Act. The matter is brought before the court by notice of motion with supporting affidavits, setting out the reasons for removing executors voluntarily. In order to be discharged, the personal representative must have passed his or her accounts pursuant to Section 99 of the Trustee Act, or alternatively, has obtained the consents of all the parties involved. The court must appoint a new personal representative in the place of the one who was discharged, unless the estate has been completed or the court determines that it is unnecessary.

2. Involuntarily Removing Executors

The courts have historically been very reluctant in removing executors. There is some case authority for the proposition that the courts in fact do not even have power in removing executors at all, regardless of improper conduct, until the executor has become a trustee, and it is difficult to determine just when this has occurred. The courts have an inherent jurisdiction to govern trustee’s and personal representative’s actions to ensure that they are fulfilling their duties, but it is doubtful that the courts have an inherent jurisdiction to removing executors. If an application is being considered for removing executors (as opposed to a trustee), then the proper recourse is to apply under Section 97 of the Trustee Act, for an order restraining the executor from acting any further, and for the appointment of a judicial trustee in his or her place. With respect to the removal of an administrator, the courts would likely find that they have the inherent jurisdiction to do so, since the powers of an administrator arise from a court order. However, as with an executor, it may also be required that an order be obtained restraining the administrator from acting further, and for the replacement of a new trustee . Section 30 of the Trustee Act states: “A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of him or her, at any time on application to the court by any trust beneficiary who is not under legal disability, with the consent and approval of a majority in interest and number of the trust beneficiaries who are also not under legal disability”. Section 31 of the Trustee Act states: “If it is expedient to appoint a new trustee and it is found inexpedient, difficult, or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees”.

3. Power of the Court to Pass Over an Executor

In Mortimer on Probate 2nd ed., p.209, the learned author states: “Where a will has been made, and an executor appointed, “the court cannot exercise any discretion as to granting or refusing probate. If probate is refused, it must be on the ground of some legal disability, recognized and allowed by the common law. For an executor is but a trustee for the deceased, and such person as the testator thought proper to appoint for that office, without any previous qualification; nobody can add qualifications to him other than those which the testator has imposed, but he shall be who, and in what manner, the testator shall judge proper”. Many cases have stated that the right of a testator to nominate the executor to administer his estate should not be lightly interfered with. (see Re Agnew Estate (1941) 3 W.W.R.723) That case also stated that, apart from statute, a court of probate had no right to refuse probate to an executor named in a will unless he was legally incompetent to act. Ill will or animosity displayed between the parties is in itself not a sufficient ground to pass over an executor. In Re Wolfe Estate, 21 W.W.R. 85, B.C.C.A., the court held that under Section 92 of the Trustee Act, it is within the judicial discretion of the Supreme Court or judge thereof to appoint a judicial trustee before the grant of letters probate or letters of administration in place of an executor or person entitled to administration. Re Haggerty Estate, 60 W.W.R. 574 held that Section 9 of the Estate Administration Act confers a limited and unusual discretion on a court to pass over a named executor “by reason of special circumstances”. In that case a grant was refused where the named executor had within the last year been convicted of a crime involving misappropriation of estate funds. The court stated that while a testator’s choice of executor should not be lightly interfered with, this was a proper case where discretion should be exercised by refusing the grant to the named executor. The court discussed a long line of authorities that evidence of bad character alone is not a sufficient ground for refusing a grant. In fact, in Re Oughton, 40 E.T.R. 296, the notorious sex offender Oughton who was sentenced to an indeterminate sentence was not passed over as executor, on the basis that his circumstances were not sufficient to justify passing him over. In Stadelmier vs Hoffman 25 E.T.R. 174 however, the court passed over one of four named executors, where the other three intended to bring action against the fourth on the basis of undue influence with respect to some large inter vivos gifts. The court exercised its discretion to pass over due to the position of actual conflict that the fourth executor was in. He could not in his capacity of executor attack the gift to himself, while at the same time maintain in his personal capacity that the gifts were proper.

4. Grounds for Removal and Replacement of a Trustee 

A. General Principles The most commonly quoted case in this area of the law is Letterstedt v Boers, 9 App. Cas. 371, which stated that the welfare of the beneficiaries of the trust is the primary concern. Lord Blackburn quoted Story’s Equity Jurisprudence, s.1287 and stated: “Story says, but in cases of positive misconduct, courts of equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce courts of equity to adopt such a course. But the acts or omissions must be such as to 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”. The learned Judge held that the main guide for the courts must be the welfare of the beneficiaries.. B. Leading Case in British Columbia In the decision of Conroy v. Stokes, (1952) 4 D.L.R. 124 (B.C.C.A.), the court set out the test for the removal of a trustee. In that decision the Court was considering an appeal where the trial Judge removed trustees appointed under a will due to friction that had developed between the applicants and the trustees. An application was made under Section 30 of the Trustee Act which allowed the courts to remove and replace trustees where it “shall be expedient to appoint a new trustee”. The Court of Appeal applied the decision of Forster v. Davies (1861) 45 E.R. 1134 to the effect that: “The mere fact of there being a dissension between one of the several cestquis que trust and the trustee is not a sufficient ground for this court removing that trustee from the trust.” The court went on to quote with approval the test enunciated in Lettersteht v Boers (1884), 9 App. Cas. 371 where it was stated that in order to justify the removal of the trustee it must be shown that the acts or omission must be such as to endanger the trust property or to show a want of honesty, or want of proper capacity to execute the duties, or want of reasonable fidelity. Accordingly, the test as set out in Conroy V. Stokes can be stated as follows: In order to remove a trustee it must be shown that his or her acts or omissions either a) in danger trust property or, b) demonstrate dishonesty; or c) incapacity; or d) a lack of reasonable good-faith. Most of the recent cases demonstrate that the critical aspect of such an application is evidence that the trust property has been or is endangered by the conduct of the trustee. It therefore seems clear in law that while it is often the friction between the parties that causes the client to seek counsel, it is insufficient as a ground for removing a trustee unless the friction endangers trust property or otherwise demonstrates dishonesty, incapacity, or a lack of reasonable good-faith. It is essential that counsel critically consider the evidentiary basis for removing a trustee prior to bringing on such an application. The practitioner must analyze the particular family dynamics that are involved. There are increasingly more and more contested claims between siblings, step siblings, step parents and the like. While the clients will typically tell a tale of horror, embezzlement, and high handedness, it again must be stressed that the practitioner must carefully examine the aforesaid legal test, prior to rushing off to court to attempt to remove the offending trustee. The courts will also on occasions, gives the executor another chance to remedy the default or face being removed. The court will view a loss to the estate that is caused by inadvertence more tolerably then they will view a loss due to a breach of duty for personal gain, dishonesty, or incapacity.

5. Specific Conduct or Circumstances 

A) Bad character in itself is not sufficient ground for refusing a grant. See re Haggerty estate, and re Oughton estate; B) Hostility between the trustee and the beneficiaries; There must be more then mere friction or dissension, it must be near impossible for the trustee to act impartially and objectively (see Conroy V. Stokes); C) Dissension between trustees When the continued administration of the trust has by virtue of a situation arising between the trustees so that it has become impossible or improbable, the trustees were removed and a trust company up appointed (see re Consiglio Trusts ( No.1) (1973), 3 O.R. 326); D) Failure to pass accounts This is generally not sufficient to remove a trustee or a personal representative unless persisted in. A trustee has two years to pass accounts pursuant to the provision of the Trustee Act (see re Adams (1989) 62 D.L.R. (4th) 758 ( B.C.C.A.), and Conroy V. Stokes); E) Conflict of interest and duty (i) The question is whether it would be difficult for the trustee to act with impartiality (see Re Walter W. Shaw Company Ltd. (1922), 3 W.W. R. 119) (ii) It is not a conflict of interest and duty requiring the removal of a trustee where the trustee is also a beneficiary. (see Gillespie v Gillespie unreported, February 13,1991, Vancouver Registry No. C851522); (iii) In Stadelmier v. Hoffman 25 E.T.R. 174, the court passed over one of four named executors who had received a large inter vivos gift from the deceased, which was being attacked by the other three executors. The court found this to be an actual conflict of interest. F) Claims by an executor against the estate (a) The court used Section 31 of the Trustee Act to remove and replace a trustee who made a claim for compensation for services provided to the deceased (see Mardesic v Vukovich estate (1988), 30 B.C.L.R. (2d) 170); (b) An ongoing claim under the Family Relations Act by a widow who was executrix (see Harrison v Harrison (1982), 40 B.C.L.R. 143); G) Claims by the estate against the executor (a) Hall v. Hall (1983), 45 B.C.L.R. 154, where a claim was made by the estate against the trustee for breach of trust; H) Breach of Fiduciary Duty In Szpradowski v. Szpradowski (December 4,1991), Victoria Registry No. 903850, the court helped in removing executors where it found that the executor had taken money of the estate for his own purposes, had set an interest rate that was inappropriate, and pre took remuneration, was in gross breach of fiduciary duty. I) Failure to make a full and fair disclosure of gifts to the executor prior to the death of the deceased The court will make a presumption that the gift was held in trust for the benefit of the estate and ordered the executor to either pay a fund back to the estate or face removal as executor (see Ilott v. Klaussen ( January 14,1997) Nanaimo No. S14137); J) Intestacy or unwilling or incompetent named executor Section 7 of the Estate Administration Act states as follows: (1) This section applies if (a) a person dies intestate; (b) a person leaves a will, but without having appointed an executor willing and competent to take probate, or (c) the executor at the time of the death of the person resides out of British Columbia and it appears to the court to be necessary or convenient by reason of the insolvency of the estate of the deceased or of other special circumstances to appoint some person to be the administrator of the estate of the deceased, or part of it, other than the person who, but for this section, would have been entitled to a grant of administration. (2) In the circumstances referred to in subsection (1), the court may, in its discretion, appoint a person it thinks fit to be the administrator, on the person giving security the court must direct. (3) An administrator under subsection (2) may be limited or on condition or otherwise, as the court thinks fit.

6. Conclusion

I strongly believe that most estate practitioners will increasingly see an influx of upset beneficiaries in their office to help with removing executors and trustees demanding and replacing them when undesirable. A review of the law in this area quickly demonstrates to the practitioner that such an application is not nearly as straightforward and simple as one might think. The purpose of this paper has been to demonstrate that a careful analysis of the evidence available in order to make such an application must clearly be found and properly analyzed, if such an application is to succeed.

Further reading about removing executors

Court Orders Trustee Removed

Executor/Trustee Removal: The Law Summarized

Removal of an Executor Summarized

Fiduciary Relationships


FiduciariesMost of us likely do not give a moment’s notice to the concept of the fiduciary relationships. This concept, however, is an extremely important principle of the common law. It provides a very flexible legal remedy often used used to protect vulnerable individuals who have been wronged by another who holds a position of power over them.

Understanding fiduciary relationships and fiduciary duties is especially important to legal professionals as we are all in fiduciary relationships with our clients.

The focus of this paper will be to explain and give some examples of how fiduciary relationships have been imposed and interpreted by our courts.


As you may know, our common law legal system originally developed from judicial precedents established by English courts beginning almost 1000 years ago. Over the centuries our courts have developed legally recognized rights and duties that arise when persons are in certain relationships with others. For example, the case law developed the principle that a parent has a duty to provide necessaries to his or her child.

A fiduciary duty is the most onerous duty imposed by the common law. It is imposed by the courts whenever they find that a fiduciary relationship exists. The concept originally developed in Roman law and was borrowed by the Courts of Equity who developed the branch of the common law known as equity. These principles of equity are now part of our common law and are used by our modern day courts generally to avoid injustices being perpetrated.

Fiduciary duties originally developed as part of the law of trusts. Thus, fiduciary duties would arise whenever parties made a trust agreement. Under the terms of a trust, the trustee became the legal owner of the property yet owned and managed that property for the benefit of the beneficiary. In such a case, the trustee was said to be in fiduciary relationship with the beneficiary.

Equitable notions of justice demanded that trustees who had undertaken responsibility for the property or affairs of another, should not be permitted to exploit their position for their own benefit at the expense of the beneficiary.

Our courts have expanded this very useful concept of a fiduciary relationship well beyond the law of trusts. Thus, in general terms, modern courts will likely find that a fiduciary relationship exists whenever a relationship of trust or confidence exists between two parties. For example, because clients rely upon the integrity of their lawyer the courts will deem this legal professional to be in a fiduciary relationship with his or her client.

Whenever a fiduciary relationship exists the court will impose fiduciary duties upon the fiduciary who is in a position of trust towards another person.

The essence of a fiduciary relationship is that the fiduciary is in a position of confidence and power over another person and thus must exercise their power or discretion in the other’s best interest.

Simply put where a fiduciary relationship exists, the fiduciary must not make a personal profit from his or her position and must not allow personal interest to conflict with his fiduciary duties. The fiduciary owes a duty of loyalty, a duty to act in good faith and a duty to avoid any conflict of interest or self-interest.

Every fiduciary is required to subordinate his or her own interests to the promotion of the interests of the beneficiary. The law dictates that the fiduciary cannot utilize his or her position of power to their own advantage or to the other’s detriment. Thus, the fiduciary must act solely and selflessly in the interests of the beneficiary.

How do we recognize a fiduciary relationship?

In the decision of Frame v Smith ( 1987) 2 S.C.R. 99 the court set out the following guidelines to help recognize fiduciary relationships, stating as follows :

“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.
(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. ”

Fiduciary relationships are of many different types and can range from giving money to the errand boy who is bound to bring back the change to the most intimate and confidential of trust. For example all professionals handling the affairs of others are typically in a fiduciary relationship with their clients. This would include partners, agents, directors and legal professionals as previously mentionned.

There is no closed category of cases where the courts will find a fiduciary relationship to exist. Indeed they have recognized fiduciary obligations in a wide variety of situations. Here are some examples

Guerin v. The Queen [1984] 2 S.C.R. 335 involved a lawsuit brought by the Musqueam against the federal government who made an agreement to lease their lands in 1958. These lands were 162 acres of superb green space, much of it waterfront, near UBC. The government rented these lands for 75 years to Shaughnessy Golf & Country Club in a sweetheart deal with a rent of merely $29,000. More troublesome yet was the lack of rent escalation for 15 years. Even then the escalation was capped at a maximum of 15 per cent per annum.

The Supreme Court of Canada found that this was an exploitative bargain which was “unconscionable” and a breach of the Crown’s fiduciary duty to the Musqueam nation whose affairs the Crown was managing. The court thus awarded damages of $ 10 million to the Musqueam.

More recently, in Norberg v Wynrib ( 1992) 92 DLR (4th) 449, at 499. McLachlin J. declared that “fiduciary relationships are capable of protecting not only narrow legal and economic interests, but can also serve to defend fundamental human and personal interests”.

In this case Ms. Norberg was a young woman addicted to painkiller medication. She was obtaining these drugs from an elderly doctor, who suggested that he would supply drugs in return for her giving him sexual favours . This casual arrangement of “sex for drugs” continued for some time. When Ms. Norberg asked Dr. Wynrib for help getting off drugs, he advised her simply “to quit”. He continued supplying drugs to Ms. Norberg until she decided, on her own, to go to a rehabilitation centre to get help with her drug addiction.

When the case reached the Supreme Court of Canada, two of the justices found that a fiduciary relationship existed. They found the doctor to be a fiduciary because he was in a relationship of trust and confidence who had the power to exercise a discretion over his patient. This discretion made her particularly vulnerable to any abuse by him and they ruled that the doctor had breached his fiduciary duties to his patient and awarded damages on that basis.

This case is also a good illustration of the courts’ ability to shape the common law to make it more socially responsive and acceptable to the community.

Similarly other decisions have recognized a fiduciary relationship between parent and child and school boards and students.

Another good example of the scope of fiduciary duties is the recent case of Olive Hospitality Inc. v. Woo 2006 BCSC 1554, appeal decision at 2007 BCSC 355. The facts and trial decision are summarized in the opening paragraphs of the appeal decision :

“Olive Hospitality Inc. was engaged in the development of a specialty restaurant franchise in this province, financed by Asian investors seeking entrepreneurial opportunities to facilitate their immigration to Canada. With an investment of $2,178,500 and financing from HSBC Bank Canada, the company had, through its subsidiaries, opened three restaurants and was about to open a fourth as part of a business plan for the eventual operation of 30 restaurants. Tae Soo Woo was a director of the company. He resigned in acrimonious circumstances. He sent a notice of his resignation to the bank and in so doing maliciously defamed the company in statements he made relating to its financial stability. The fourth restaurant was never opened and the investment was then lost when the company sold its assets for $10 and the assumption of some debt.

On the trial of this action, commenced by the company and its subsidiaries against its former director, Madam Justice Ross awarded general and punitive damages of $60,000 for defamation (plus $6,323.39 in respect of funds improperly taken from the company) and $1,088,995 in damages for breach of fiduciary duty based on the value of a lost opportunity to realize a future financial advantage: 23 B.L.R. (4th) 78, 2006 BCSC 1554.”

In this case, the BCCA overturned the trial decision essentially on the basis that the resultant loss to the company had not been properly established. At trial the loss that was proven was actually the loss to the other individual shareholders rather than to the company who was the plaintiff.

The list continues to expand. As this article goes to press, Madame Justice Wedge has very recently reserved in the case of Canucks dispute involving Francesco Aquilini’s purchase of the team. According to press reports Tom Gaglardi and Ryan Beedie have brought that action alleging that Aquilini was their partner and thus owed them the duties of a fiduciary. They allege that he breached those duties by secretly negotiating to purchase the Canucks while they were still attempting to do so.

Powers of Attorney

A common fiduciary relationship is that of a person holding a power of attorney for another. Many B.C. decisions have made it clear that a holder of a power of attorney owes a fiduciary duty to the donor.

For example Kask Estate v. Welsh 2000 BCSC 791 which involved a daughter who held a POA for her elderly father. She succeeding in depleting his estate in the years before his death after he became mentally incompetent. By the time of his death, little was left in the estate. In finding the daughter liable for breach of fiduciary duty, Lysyk J. said as follows :

[24] In that Ms. Welsh held her father’s power of attorney, she owed to him a fiduciary duty: ” It was her duty not to prefer her interest or that of her family over his in the handling of his money which he had entrusted to her. I do not consider that Ms. Welsh determined she would deplete all of what would be her father’s estate once she held his power of attorney and had the opportunity to spend his money. Rather, it seems more probable that she simply found his money to be a ready resource and, instead of preserving it as apart from the costs of maintaining him she was duty bound to do, she spent it. ”

A similar case, Egli (Committee of) v. Egli 2004 BCSC 529, involved a son who had transferred his father’s home and investment accounts to him and his wife under a power of attorney that the father had given him some years before. By the time of the father’s death, the estate had been completely depleted by these inter vivos transfers.

The trial judge ultimately decided that the transfer of the family home was valid however the transfer of an investment account was in breach of the son’s fiduciary duty. The son was thus ordered to compensate his father’s estate for the amounts transferred.

Garson J. stated at paragraph 82:

“It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage (Chapman) The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members”.

In this case, the judge found the transfer of the house was done with full knowledge and consent however the transfer of the investment account was not.

The principle enunicated in the above case may be somewhat problematic in that, almost invariably, where the holder of the power of attorney executes some transaction which personally benefits the holder, he or she will insist that all was done with the full approval and knowledge of the elderly, frail donor.

In Fraser v Fraser 2000 BCSC 0211, four brothers were assisting their 90 year old mother to manage her financial affairs. One of them, unbeknowst to his three brothers, obtained a power of attorney from their mother without her first obtaining independent legal advice. A few days later he convinced her to take $ 40,000 from her GIC and invest it in Eron Acceptance. This represented 70% of her estate and was clearly a risky investment in which he lost all of her money. Although he did not use the POA to effect the transaction, the judge found that he had obtained the POA specifically for that purpose and would have used it, if necessary.

In finding the defendant liable for the loss, Dillon J. observed as follows :

[26] The defendant breached his fiduciary duty to the plaintiff in conducting himself in this manner when he knew that the plaintiff relied upon him. This fiduciary duty arises in all of the circumstances here, but also arose from the power of attorney whether or not it was actually used in the transaction “… He failed to exercise reasonable care in numerous respects, including: failing to read or understand the investment documents, failing to adequately protect the bulk of the plaintiff’s assets, failing to diversify the investment, failing to obtain independent advice, unreasonably relying on oral representations made at large meetings, investing at high risk in all of the circumstances, failing to obtain the consent and advice of his brothers, and failing to inform the plaintiff or his brothers either before or after the investment. ”

Remedies for Breach of Fiduciary Duties

Whenever a court finds a breach of fiduciary duty, then the fiduciary will be liable to place the beneficiary in that same position as the claimant would have been, had no breach been committed. Equity adopts the position that, where a breach occurs, any gain resulting belongs to the beneficiary whereas any loss is the trustee’s personal loss and full restitution must be made.

A breach of a fiduciary relationship can give rise to a wide range of remedies. Generally speaking, in addition to awarding compensation (damages are the common law remedy, compensation is the equitable remedy) our courts can impose restitutionary remedies such as the constructive trust, rescission, injunctive relief , equitable compensation and tracing and lastly an accounting for profits. Thus a claim of breach of fiduciary duty may open many doors not otherwise available at common law.


Whenever there is an inherent trust relationship between the parties with a corresponding potential for exploitation or damage, our courts are increasingly willing to recognize the existence of a fiduciary relationship and award a remedy for breach of fiduciary duties.

The concept of fiduciary relationships with corresponding fiduciary duties is one of the most sensible and flexible responses of the common law to the modern requirements of justice in individual cases.

Removal of an Executor – Trustee


Removing executorDunsdon v Dunsdon 2012 BCSC 1274 has an excellent and brief summary of the law relating to the removal of an executor-trustee, pre WESA as of April 1, 2014 :

[202] Put broadly, a trustee may be removed where his or her acts or omissions endanger the trust property or demonstrate a want of honesty, of reasonable fidelity, or of the proper capacity to execute the duties of office: Conroy v. Stokes [1952] 4 D.L.R. 124 (B.C.C.A.). The existence of friction between the trustee and one or more beneficiaries is usually not sufficient, of itself, to justify removal of the trustee: Erlichman v. Erlichman, 2000 BCSC 173; Re Blitz Estate, 2000 BCSC 1596. However, where there is dissension among the trustees themselves by which the trust administration grinds to a standstill or otherwise hampers the proper administration, the courts tend to remove one or more of them. In those instances, misconduct per se is not an essential prerequisite: Re Consiglio Trusts (No. 1) (1973), 36 D.L.R. (3d) 658 (Ont. C.A.); Wilson v. Heathcote, 2009 BCSC 554.

[203] In all cases, the fundamental guide must be the welfare of the beneficiaries: Letterstedt v. Broers (1884), 9 App. Cas. 371 (South Africa P.C.).

Criteria For Removal of a Trustee

criteria to removeCriteria For Removal of a Trustee:

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, [1961] 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”.”

[25] 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.

[26] 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, [1997] 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”.”

[27] 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.

Prior Unregistered Trust Takes Priority Over Creditor

Unregistered Trust Agreement and Creditors

Colantonio v Don Park and Mercedes Benz 2013 ONSC involves a dispute between an estate and a creditor with respect to an unregistered trust agreement, and the priority between the two competing claims.

A mother and father purchased a house in 1965, and when the father died in 2003 the mother became the sole owner. The mother shortly thereafter executed a transfer of title in the house to her two sons. Each son was to have an undivided 50% interest in the house while their mother reserved a life interest to herself.

Their mother also signed a declaration of trust which establish that her sons were her bare trustees but she retained the right to have the sons transferred title back to her.

This trust agreement was not registered on title to the house.

In 2006 one son applied to lease an expensive car and claim that he lived at the house and owned the house free and clear. That son subsequently died and the following year the estate agreed to reconvey title to the house back to the mother, so that she could sell the house to fund her assisted living.

At that time it was discovered that the car dealership had executions against the deceased son, which prevented the transfer of clear title being conveyed back to the mother.

The mother brought application, supported by the two estates, for a declaration that she was the legal and beneficial owner of the house.

The court agreed with the mother and found that the evidence of the car lease had little bearing on the determination of the parties interests.

The information in the application did not reflect the sons intentions nor those of her mother as settler of the trust.

The fact that the mother did not provide a motive in creating the trust was not fatal to finding that the trust existed.

The mother made sworn statements that she did not intend that her sons become beneficial owners of the house. When the mother made the sons bare trustees in 2003, she was not yet prepared to give away her house.

In fact the mother intentionally preserve beneficial interest in the house about the sons could not lose it.

The mother intended to convey the house to her sons in trust to herself. The fact that one son mispresented his interest in the house could not undermine his mother’s intention to the property. That sons information was false.

In Young v. LeMon (1985), 3 C.P.C. (2d) 163 (Ont. Dist. Ct), the Ontario District Court held that an un­registered trust agreement takes priority over an execution creditor where the trust instrument was created prior in time to the creditor’s Writ of Fi Fa. This court has recently reiterated the point in Michaud v. Coreslab Struc­tures (Ont.) Inc., 2012 ONSC 355 (Ont. S.C.J.), at para 59, where it stated (quoting Anger and Honsberger, Law of Real Property):

An execution creditor can sell the lands of his debtor under execution but the land to be sold is subject to the charges, liens and equities to which it was subject in the hands of the debtor. Hence, it has been repeatedly held that if there is an unregistered interest outstanding against the lands at the time that execution is lodged with the sheriff, the unregistered interest is entitled to priority over the execution. In other words the execu­tion creditor stands in no better position than his debtor.

It is long established that, “[i]n order to create a trust, there must exist what is commonly referred to as a certainty of intention.” Erb v. R. [1999 CarswellNat 2435 (T.C.C. [General Procedure]), 1999 CanLii 203, at para 27. As explained in Eileen E. Gillese, The Lawof Trusts (1997), at p. 39:

To satisfy the certainty of intention requirement, the court must find an intention that the trustee is placed under an imperative obligation to hold property on trust for the benefit of another. Certainty of intention is a question of construction; the intention is inferred from the nature and manner of the disposition considered as a whole. The language employed must convey more than a moral obligation or a mere wish as to what is to be done with certain property. The language used need not be technical, so long as the intention to create a trust can be found or inferred with certainty.