Duties of a Trustee

Duties of a Trustee

Zimmerman v. McMichael Estate 2010 ONSC 2947, 57 E.T.R. (3d) 101,103 O.R. (3d) 25 is an excellent review of the strict duties that govern the conduct of a trustee.

Deceased were husband and wife and founders of extensive Canadian art collection (Collection) donated to province of Ontario in 1966. The Trustee was an attorney and friend to deceased .
In 2001 deceased executed mirror wills that appointed the other as sole executor and niece and her husband as alternates .
Their Wills left estate to their spouse but if no surviving spouse, residue of estate was to go to Collection after five bequests of $50,000 .
The Husband died November 2003 and wife signed power of attorney appointing trustee as her sole attorney.
In January and February 2004 lawyer prepared trust deed contemplating trustee would settle trust of wife’s property . The Niece then raised questions about trustee’s ability to settle trust in his capacity as attorney and wife executed deed creating trust and authorized all property be transferred to trust except for $250,000 which was held back to satisfy bequests in will.
The Trust deed contained terms that differed from will, including provision that on wife’s death property was to be retained for 21 years rather than immediately being distributed to Collection
The Wife died July 2007 and the niece and her husband were granted certificate of appointment of estate trustee with will.

The Niece and her husband successfully brought application for declaration that power of attorney and trust were void and order that required the trustee to account.

The Law

An attorney is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith,
for the incapable person’s benefit:
An attorney who receives compensation for managing property must exercise the degree of care, diligence and skill that a person in the business of managing the property of others is required to exercise:

30 A trustee of a trust owes the same duties of loyalty, prudence and good faith that an attorney
for property does pursuant to the S.D.A.: Banton v. Banton. [1998J O.J. No. 3528, 164 D.L.R.
(4th) 176 (Ont. Gen. Div.), at paras. 151 and 152. As a fiduciary, a trustee has three principal
duties:

(a) to carry out the terms of the trust with honesty and due care and attention;
(b) to personally carry out the responsibilities entrusted to him or her and not to delegate those responsibilities; and
(c) to ensure that his own interests do not conflict in any way with his duty to the beneficiaries that he serves.
See: Jenkins & Scott, Compensation & Duties of Estate Trustees, Guardians & Attorneys (Aurora, ON: Canada Law Book, 2006) at p. 12:20, citing the Ontario Law Reform Commission Report on the Law of Trusts – Volume 1 (Toronto: Ministry of the Attorney General, 1984) at p. 23; Donovan W.M. Waters, Waters’ Law of Trusts in Canada, 3d. ed. (Toronto: Thomson Carswell,2005)atp. 877.

(b) The duty to account

31 A trustee has an obligation to keep proper accounts. A trustee must keep a complete record of his/her activities and be in a position at all times to prove that he/she administered the trust prudently and honestly. He/she must have the accounts ready and give full information whenever required: Carmen S. Theriault, Widdifield on Executors and Trustees, 6th ed.(Scarborough, ON: Thomson Carswell, 2002) at p. 13-1; Waters’ Law of Trusts in Canada, above, at p. 1063; Sandford v. Porter, [1889] O.J. No. 43,16 O.A.R. 565 (Ont. C.A.).
32 An attorney for property has the same obligations. An attorney must, in accordance with the regulations established pursuant to the S.D.A., keep accounts of all transactions involving the grantor’s property: s. 32(6). Sub-section 2(1) of Ontario Regulation 100/96 relating to the S.D.A. provides that the accounts maintained by an attorney shall include, among other things:

(a) a list of the incapable person’s assets as of the date of the first transaction by the attorney or guardian on the incapable person’s behalf…;
(b) an on-going list of assets acquired and disposed of on behalf of the incapable person, including the date of and reason for the acquisition or disposition and from or to whom the asset is acquired or disposed;
(c) an on-going list of all money received on behalf of the incapable person, including the amount, date, from whom it was received, the reason for the payment and the particulars of the accounts into which it was deposited;
(d) an on-going list of all money paid out on behalf of the incapable person, including the

amount, date purpose of the payment and to whom it was paid; [and]
(h) an on-going list of all compensation taken by the attorney or guardian, if any, including the amount, date and method of calculation.
33 Sub-section 6(1) of that regulation provides that an attorney shall retain the accounts and records required by the regulation until he/she ceases to have authority and the attorney is discharged by the Court on a passing of accounts under s. 42 of the S.D.A.

34 A trustee must make a proper accounting as a condition precedent to being awarded compensation. Without a proper accounting, the court is unable to assess the conduct of the fiduciary and to determine the compensation to which he or she is entitled. Where a trustee is found to have failed to keep proper accounts and to have been grossly indifferent to his/her fiduciary obligations, he/she may be disentitled to compensation: Widdifield on Executors and Trustees, above, at page 13-7; Gibson, Re, [1930] M.J. No. 34, [1931] 1 D.L.R. 159 (Man. C.A.); Picov Estate, Re, [2000] O.J. No. 682 (Ont. S.C.J.).

35 In Assaf Estate (Re) (2009), 94 O.R. (3d) 561, [2009] O.J. No. 1086 (Ont. S.C.J.), I referred to the following statement in Rodney Hull, Maurice Cullity & Ian Hull, Macdonell, Sheard and Hull on Probate Practice, 4th ed. (Toronto: Carswell, 1996) the authors state at 358-359:
The conduct of an executor or trustee in carrying out his or her duties may be such as to justify the Court in depriving him or her or the right to remuneration; and an executor must make a proper accounting as a condition precedent to being awarded compensatioa But only exceptional misconduct should deprive him or her of the right to remuneration … In general, although an executor may be guilty of neglect and defaults, these, if not dishonest, and capable of being made good in money, do not deprive the executor of the right to compensation although they may influence the amount allowed, [emphasis added]
See also: Sievewright v. Leys (1882), 1 O.R. 375, [1882] OJ. No. 137 (Ont. H.C.); McClenaghan v. Perkins (1902), 5 O.L.R. 129, [1902] O.J. No. 24 (Ont. C.A.); Picov Estate (Re.), above.

36 An attorney who fails to retain receipts supporting substantial cash withdrawals or expenses charged against the incapable person’s property has not adequately carried out his/her duties and will be held personally liable for the unsubstantiated withdrawals: Lanthier v. Dufresne Estate, [2002] OJ. No. 3397, [2002] O.T.C. 671 (Ont. S.C.J.) at paras. 52-57; Ronson Estate, Re, [2000] OJ. No. 1294 (Ont. S.C.J.) at paras. 15-20.

c) Misuse of trust funds

44 It is a basic principle of trust law that a trustee is not entitled to use the trust property for his or her own personal benefit. If a trustee cannot account for or explain disbursements or expenses charged against a trust he/she is personally liable to the trust for those disbursements and expenses. This is known as a “surcharge”: See, for example, Jacobs v. Hershorn, [2006] O.J. No. 1333, [2006] O.T.C. 331 (Ont. S.C.J.) at paras. 18-21.
45 Falsification of accounts occurs when there is a disbursement shown on the accounts which the objectors allege is wholly false or in some part erroneous: Picov Estate, Re, above, at para. 25; MacDonnell, Sheard, Hull, Probate Practice, (4th ed.) at p. 350.

The Authority of the Executor

Romans Estate v. Tassone 2009 BCSC 194 is a very good case authority of the executor that reviews the legal authority of an executor appointed under a valid will.

The matter related to the estate of an elderly man who was stricken late in life and
conveyed assets to a friend and named his new apparently much younger female caregiver his sole beneficiary.

The Court found:

The Executor’s Authority

[29] Probate in common form is the procedure by which a will is approved by the Court as the last will of a testator. Probate in solemn form pronounces for the validity of the will. It also confirms the appointment of the person named as executor in the will. The Court issues an order, called the “letters probate”, as proof of his or her authority to deal with the estate.

[30] Executors, however, take their authority not from the letters probate, but from the will itself, and, thus, they may act for the estate from the death of the testator.

[31] Of course, it may be necessary for an executor to act on behalf of the estate pre-emptively, for example, to preserve assets or to make claims and satisfy limitation periods. That said, the author of Feeney’s Canadian Law of Wills, 4th ed. (Toronto: Butterworths, 2000) at s. 7.33, page 7.13 notes that “[a]s a practical matter, however, there is little executors may do, other than pay debts, until letters are issued to them because the letters, for most purposes, are the only recognizable evidence of their authority”.

ER 991 (Ch. D.), Goulding J. referenced earlier jurisprudence noting that an executor’s authority was based on the will, not on obtaining probate, but obtaining probate was necessary to perfect the action and obtain judgement. Goulding J. held that the court should not, even where the defendant is prepared to admit the executor’s title, waive the production of letters probate:

40] The authorities in my view make several matters clear: (1) an action can be commenced without obtaining probate, as an executor’s authority is based on the will, (2) before proceeding with an action already commenced, the parties to an action may require that the Plaintiff prove their authority by producing letters probate, (3) the court may require that a Plaintiff prove their authority, by producing letters probate, of its own motion, when appropriate and (4) the court may order a stay of proceedings any time after the commencement of an action where it is in the interests of justice to do so, pending the issuance of letters probate.

The law seems to be clear that an executor can bring an action in his or her capacity as executor before probate is granted but cannot obtain judgment in the action without probate having been granted: see Chetdyv. Chetdy, [1916] 1 A.C. 603 (P.C.), cited by Allen J. in Harshenin v. Bayoff, [1991] B.C.J. No. 3161 (S.C.).

No Lack of Capacity or Undue Influence – Will Admitted to Probate

Chang Estate v Chang 2013 BCSC 976 is a well considered judgement of Justice Dardi, who had extensive experience in estate litigation prior to her elevation to the Bench.

The testatrix,a widow, died in 2007 at age 98. She and her late husband had four children, and their only daughter the plaintiff, was the youngest. Their three sons were the defendants.

In 1998 the deceased and her husband purchased a house and put one son on title as a joint tenant with his parents. The testatrix and her husband never did live in that property, and that particular son collected the rent and prayed paid the property taxes and expenses , until 2004 when the testatrix paid two thirds of the property taxes and utilities.

In 1997 that sons, son sued his grand mother and grandfather over a dispute that had arisen regarding the property.

The matter went to trial in July 1999 and was dismissed.

The testatrix found those events very distressing and in January 1998 she and her husband severed the joint tenancy , leaving that son with a one third interest as a tenant in common.

 

The testatrix executed her will in July 2000, and her husband executed a reciprocal will at the same time.

The plaintiff was appointed the executrix, and the son with the one third interest in the property was given a $10 bequest, with the remainder of the estate being divided 30% to the plaintiff, 30% to one brother and 40% to the other brother.

 

The will explain the reasons for the minimal bequest to the one son, saying the testatrix and her husband had provided much assistance to him and had given him one third of the Surrey property, from which he had collected all of the rents for his own use.

 

The will also said that he and his family house have caused us much grief, heartache, and unhappiness and shame.

 

The plaintiff applied to prove the will and codicil dated July 2005 in solemn form.

 

The son challenged the validity of the will and codicil on the grounds that the testatrix lacked testamentary capacity and that the will was a product of coercion and or undue influence.

 

The court held that the testatrix had proved on the balance of probabilities that the will was executed in compliance with the statutory formalities, that the testatrix knew and approved of the contents of the will, and that she had testamentary capacity.

 

The professionals who prepared the will gave evidence, and it was proven that both documents were executed after having been read to the testatrix, who appeared to understand the contents.

 

The law presume the testatrix knew and approved of the will and possess the requisite testamentary capacity.

 

The evidence of the testatrix physician and those who prepared the documents and attended upon execution also established attempted testamentary capacity.

 

No suspicious circumstances arose in the facts established by the evidence, nor was there any evidence of undue influence by the plaintiff or anyone else.

Legal Framework

[25] The Supreme Court of Canada in Vout v. Hay, [1995] 2 S.C.R. 876 clarified the principles with respect to the burden of proof in litigation regarding contested wills. The Court articulated the considerations which govern the interrelation of the doctrine of suspicious circumstances and the issues of testamentary capacity, knowledge and approval, undue influence and fraud.

[26] In an action for proof of will in solemn form, the party propounding the will must prove on a balance of probabilities that the will was executed in compliance with the statutory formalities, that the will-maker knew and approved of the contents of the will and that the will-maker had testamentary capacity: Vout at paras. 19-20.

[27] In order to make a valid will, the will-maker must have a “baseline level of mental acuity” or a “disposing mind and memory”, sufficient to appreciate and comprehend the nature and effect of the essential elements of the testamentary act. This encompasses an appreciation of the claims of the persons who are the natural objects of her estate and the extent of her property of which she is disposing: Laszlo v. Lawton, 2013 BCSC 305 at para. 185; Banks v. Goodfellow (1870), L.R.5 Q.B. 549; Leger v. Poirier, [1944] S.C.R. 152 at 161. The assessment of whether a will-maker possesses testamentary capacity is a highly individualized inquiry and is a question of fact to be determined in all the circumstances: James v. Field, 2001 BCCA 267 at para. 51; Laszlo at para. 197.

[28] In certain circumstances, the propounder of the will, in discharging the burden of proof, is aided by a rebuttable presumption of validity. If the will was duly executed in accordance with the requisite statutory formalities after being read over to or by a testator who appeared to understand it, it is presumed the testator possessed the requisite testamentary capacity and knew and approved of its contents:Vout at para. 26.

[29] This presumption may be rebutted by evidence of “well-grounded suspicions”, referred to in the jurisprudence as “suspicious circumstances”, relating to one or more of the following circumstances:

(i) surrounding the preparation of the will;

(ii) tending to call into question the capacity of the will-maker; or

(iii) tending to show that the free will of the will-maker was overborne by acts of coercion or fraud: Vout at para. 25.

[30] If suspicious circumstances are established, then the presumption is spent and the legal burden of proof reverts to the propounder of the will. The propounder of the will then reassumes the legal burden of proving knowledge and approval, as well as proving testamentary capacity, if the suspicious circumstances reflect on the mental capacity of the will-maker to make a will: Woodward v. Grant, 2007 BCSC 1192 at para. 108. In order to discharge the burden, the propounder of the will is required to dispel the suspicious circumstances that have been raised: Ostrander v. Black (1996), 12E.T.R. (2d) 219 at para. 30 (Gen. Div.).

[31] In Vout, the Court affirmed that if a court determines that suspicious circumstances exist, the applicable standard of proof is a balance of probabilities. However, the evidence must be scrutinized in accordance with the gravity of the suspicion raised in any particular case.

[32] In order to rebut the presumption of validity, those attacking the will must meet the threshold of demonstrating that there is some evidence “which, if accepted, would tend to negative knowledge and approval or testamentary capacity”: Vout at para. 27; Maddess v. Racz, 2009 BCCA 539 at para. 31. The court in Scott v. Cousins (2001), 37 E.T.R. (2d) 113 (Ont. S.C.J.) describes the requisite evidence as that which “excites the suspicion of the court”. A “general miasma of suspicion that something unsavoury may have occurred” is insufficient to rebut the presumption of validity; the evidence must raise a “specific and focused suspicion”: Clark v. Nash (1989), 61 D.L.R. (4th) 409 at 425 (B.C.C.A.).

[33] The court in Laszlo provides the following instructive observations regarding the doctrine of suspicious circumstances at para. 207:

Suspicious circumstances have been found to exist in a wide array of situations and are not necessarily sinister in nature. There is no checklist of circumstantial factors that will invariably fit the classification. Commonly occurring themes include where a beneficiary is instrumental in the preparation of the will (especially where the beneficiary stands in a fiduciary position to the testator), or where the will favours “someone who has not previously been the object of [the testator’s] bounty and does not fall within the class of persons testators usually remember in their wills, that is to say their next of kin.

Undue Influence

[34] When undue influence or fraud is alleged, the party opposing probate always bears the legal burden of proving on a balance of probabilities the affirmative defence of undue influence: Vout at para. 28. It is important to appreciate that in these circumstances, the doctrine of suspicious circumstances and the shifting of the burden of proof has no application.

[35] In order to invalidate a will on the grounds of undue influence, the asserting party must prove that the influence exerted against the will-maker amounted to coercion, such that the will did not reflect the true intentions of a free will-maker and was not the product of the will-maker’s own act. The undue influence must constitute coercion which could not be resisted by the will-maker and which destroyed his or her free agency. It is well-established on the authorities that if the will-maker remains able to act freely, the exercise of significant advice or persuasion on the will-maker or an attempt to appeal to the will-maker or the mere desire of the will-maker to gratify the wishes of another, will not amount to undue influence: Maddess v. Racz, 2008 BCSC 1550 at para. 324 aff’d 2009 BCCA 539; Freeman v. Freeman (1889), 19 O.R. 141 at 155 (C. A.); Scott at para. 112.

How Much Should An Executor Be Paid

How Much Should An Executor Be Paid?

Hooke Estate v. Johnson 86 E.T.R. (3d) 92

 

The deceased appointed her solicitor as trustee of her estate. The Trustee handled her estate in accordance with deceased’s wishes and claimed executor’s compensation in amount of $21,900.93 for work done.

 

The Trustee applied to pass estate accounts and the Respondents objected on the ground that cthe ompensation claimed was excessive and unreasonable.

 

The Trustee reduced her claim for executor’s compensation to $10,287.84.

 

The Court awarded the Trustee compensation of $8,986.84, stating that the Trustee is entitled to such fair and reasonable allowance for care, pains, trouble and time expended in administering estate.

 

While the practice has developed in Ontario of awarding compensation on basis of 2.5 per cent against, inter alia, capital receipts and capital disbursements, those fees will not be automatically or routinely allowed.

 

The determination of fair and reasonable compensation does not necessarily involve maintaining fidelity to fixed percentages. The work involved in carrying out the deceased’s wishes as set out in her will was relatively simple and uncomplicated, and did not require an inordinate amount of time. This was relatively uncomplicated estate to administer. There were no court proceedings to deal with . The work performed did not require great skill and ability.

 

Given quantum and nature of work involved in fulfilling work either as trustee or counsel, reliance on 2.5 percentages was unwarranted.

 

Capital receipts claim was reduced from $1,582.32 to $1,264.84 — Capital disbursements claim was reduced from $1,483.52 to $500 — Total amount of executor’s compensation was $8,986.84.

 

The Law

 

The Trustee ActRSBC provides that a trustee is entitled to such fair and reasonable allowance for the care, pains, trouble and the time expended in administering the estate.

 

7 In assessing the appropriateness or otherwise of an executor’s compensation, five factors should be considered namely;

 

1) the size of the trust;

 

2) the care and responsibility involved;

 

3) the time occupied in performing the duties;

 

4) the skill and ability shown; and

 

5) the success resulting from the administration.

 

See Toronto General Trusts Corp. v. Central Ontario Railway(1905), 6 O.W.R. 350(Ont. H.C.).

 

8 In some cases, proper compensation may be attained by the allowances of percentages. These percentages however, should be employed only as a rough guide to assist in the computation of what may be considered fair and reasonable compensation. The reliance on percentages in some cases may violate the true principle of fairness and reasonableness upon which compensation should be estimated. See Atkinson Estate, Re(1951), [1952] O.R. 685(Ont. C.A.) at page 698.

 

9 While a practice has developed in Ontario, of awarding compensation on the basis of 2 1/2 percentage against the categories of Capital Receipts, Capital Disbursements, Revenue Receipts and Revenue Disbursements along with a management fee on the gross value of the estate, these fees will not be automatically or routinely allowed. See: Jeffery Estate, Re, [1990] O.J. No. 1852(Ont. Surr. Ct.), page 4..

Administration Durante Absentia

Section 7 of the Estate Administration Act allows the court to appoint a person to administer an estate or part of it where an executor resides out of the province “and it appears to the court to be necessary or convenient by reason of the insolvency of the estate of the deceased or other special circumstances.”

 Administration Durante Absentia

Section 11 provides: .(1) This section applies if

(a) the executor to whom probate of a will has been granted, or

 

(b) the administrator to whom administration of an estate has been granted,

 

is residing outside British Columbia at the end of 12 calendar months from the death of the deceased.

 

(2) A creditor, spouse, next of kin or legatee may apply to the court for an order under subsection (3), on an affidavit setting out

 

(a) the capacity in and the grounds on which the applicant applies, and

 

(b) that delay is being caused in the administration of the estate of the testator or intestate, owing to the absence of the executor or administrator from British Columbia.

 

(3) On application under subsection (2), the court may grant to the applicant special administration of the estate of the deceased person, either general or limited, and on the terms as to notice and security as the court thinks fit.

 

(4) Subsections (1) to (3) do not abridge the powers of the court as defined in preceding sections.

 

(5) If an executor capable of acting returns to British Columbia and becomes resident in British Columbia when an application under subsection (2) is pending, the executor must be made a party to the application, and the costs incurred by granting administration under subsection (3) are in the discretion of the court.

 

(6) A person to whom administration is granted under subsection (3) has the same powers as an administrator appointed pending the minority of the next of kin.

 

(7) Pending an application for the grant of special administration under subsection (3) the court may appoint a person to collect any debts or effects due to the estate and to give discharges for them.

 

(8) A person appointed under subsection (7) must give security as the court orders for the proper discharge of the person’s duties.

 

s.11(2) A creditor, spouse, next of kin or legatee may apply to the court for an order under subsection (3), on an affidavit setting out(a) the capacity in and the grounds on which the applicant applies, and

(b) that delay is being caused in the administration of the estate of the testator or
intestate, owning to the absence of the executor or administrator from British Columbia.

 

Such a grant has been held to continue in force after the death of the original personal representative. (Taynton v. Hannay (1802) 3 Bos. & P26).

 

The application is made by way of a requisition and should be accompanied by an affidavit setting out the capacity in and the grounds upon which the applicant applies, and that the delay has been caused in the administration of the estate due to the absence of the personal representative from the province. Notice should be given to any person who has received a prior grant.

 

The grant is usually limited to the time at which the absentee returns to the province.

 

If an executor or administrator has disappeared (as opposed to being absent from the province) an application for revocation of the grant and issuance of a further grant under s. 7 of the Estate Administration Act may be advisable.

Administration By Attorney

administration by attorneyRule 21 (27) provides for the administration of an estate by an attorney.:

“ If a person entitled to administration resides outside British Columbia, administration by attorney, or administration with the will annexed, may be granted to the person or the person’s attorney acting under a power of attorney”.

The attorney need not be a resident of British Columbia, and such a grant generally will not be made to an attorney residing in the same jurisdiction as the donor.

 

In re Edmundson Estate 1963, 44 WWR 119 (BCSC) , the court commented at page 123 that the case law:

“suggests that if the principal and the attorney are both resident in the same place, the court would prefer the principle be appointed rather than the attorney. In other words, the provision for the appointment of an attorney is an additional right given to the person otherwise entitled to the administration to have an attorney appointed if the residence of the person otherwise entitled out of the jurisdiction makes it difficult for that person to perform his or her duties.”

The grant is limited for the use and benefit of the person who appoints the attorney and until that person applies for administration in British Columbia.

 

Administration by an attorney might be used when the person entitled to the administration has one or more of the following criteria:

 

A. Has language difficulties that may prevent him or her effectively handling the estate in British Columbia;

B. May be difficult to contact for the purpose of providing instructions are executing documents;

C. May have difficulty dealing with assets in this jurisdiction ie running an active business.

If there are several persons entitled to the grant, all residents of the jurisdiction, the grant may be made to the attorney of one, but subject to the consent of the others. Such an attorney is not merely the agent of the principal, but is responsible for the due administration of the assets and is liable to be called to account by the persons interested in the estate.

Court Declines to Remove Trustee

executtor not removedApplications to remove executors/trustees are common, and are not always successful with the court declining the application.

Miles v Vince 2013 BCSC 888 Removal of a Trustee

The petitioners husband settled the trust in 2007 and named the petitioner and her three children as the beneficiaries, and his sister, the respondent as the trustee.

 

The petitioner brought court application for the removal of the respondent has trustee, alleging that she had caused the trust to make imprudent loans, not in keeping with the object of the trust, for which she said was to provide for the settlers wife and children after his death.

 

The trustee allege that the object of the trust was to develop certain social housing projects according to the settlers wishes.

 

The court found that there was no clear object stated in the trust instrument, and also found that there was no improper or imprudent conduct on the part of the respondent to warrant her removal as trustee.

 

THE LAW

 

45] As can be seen from the trust instrument in this case, the respondent trustee has extensive powers over the trust property. These powers are set out above and discussed further below. Notwithstanding these powers it is well-established that not even the broadest language in a trust instrument (including the inclusion of a privative clause) can displace the court’s jurisdiction to review the exercise of a trustee’s discretion in a number of areas. A previous decision discusses this as follows:

A privative clause protecting the exercise of a trustee’s discretion will not be effective to prevent judicial review whenever the trustees:

1. have failed to exercise the discretion at all (Re Floyd [[1961] O.R. 50 (H.C.)], Re Blow [(1977), 18 O.R. (2d) 516 (H.C.)], and Re Sayers and Philip [(1973), 38 D.L.R. (3d) 602 (Sask. C.A.)];

2.have acted dishonestly (Gisborne v. Gisborne [(1877), 2 App. Cas. 300 (H.L.)], Re Sayers and Philip, Cowan v. Scargill [[1984] 2 All E.R. 750], Re Floyd);

3. have failed to exercise the level of prudence to be expected from a reasonable businessman (Re Sayers and Philip, Cowan v. Scargill); and

4. have failed to hold the balance evenly between beneficiaries, or have acted in a manner prejudicial to the interests of a beneficiary (Re Jeffery [[1948] O.R. 735, (H.C.)], Re Sayers and Philip).

This is a non-exhaustive list and taken from Boe v. Alexander, 41 D.L.R. (4th) 520, 15 B.C.L.R. (2d) 106 (C.A.); citing with approval the trial judgment under appeal at 21 E.T.R. 246.

[46] The primary allegation of the petitioner in this case is that the trustee respondent did not act prudently when she made the Loan, from the Insurance Trust to the Family Trust, and her actions were prejudicial to the interests of the beneficiaries. There is no serious issue that the trustee has not exercised her discretion at all. As well, the petitioner is very concerned about the actions of the respondent but those concerns are not framed in terms of honesty in this application.

[47] Section 15.2 of the Trustees Act, R.S.B.C. 1996, c. 464, states that a trustee, when investing trust property, “must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.” This appears to codify the common law on the standard of care of a trustee and another decision (Collett Estate (Re), 2009 BCSC 1800, 53 E.T.R. (3d) 271) discusses the history and elements of this as follows:

[74] The decision of Quijano J. in Nichols [Neville v. Central Guaranty Trust Co., (1995)13 B.C.L.R. (3d) 137)] provides a helpful review of the law relating to the standard of care expected of executors and trustees:

[26]The case of Fales et al v. Canada Permanent Trust Co. and Wohlleben v. Canada Permanent Trust Co. (1976), 70 D.L.R. (3d) 257 (S.C.C.) dealt with, amongst other things, the standard of care required of the trustees under a will with respect to exercising the powers granted to them under the will. In that case the trustees had been given the power to invest and keep invested the assets of the estate where income was for the benefit of a life tenant and the capital was to go to residuary beneficiaries. In dealing with the question of the standard of care Mr. Justice Dickson, speaking for the court, said at pp. 267-268:

Traditionally, the standard of care and diligence required of a trustee in administering a trust is that of a man of ordinary prudence in managing his own affairs (Learoyd and Carter v. Whitely et al. (1887), 12 App. Cas. 727 at p. 733; Underhill’s Law of Trusts and Trustees, 12th ed., art. 49; Restatement of the Law on Trusts, 2nd ed., para. 174) and traditionally the standard has applied equally to professional and non-professional trustees…. Every 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 and, in the present case, there can be no doubt that the co-trustees were given wide latitude. But 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.

[27]The trustee has a duty to all beneficiaries. In Re Stekl; Lauer v. Stekl and Public Trustee, [1974] 6 W.W.R. 490 (B.C.C.A.) McIntyre J.A., dealing with a claim of a beneficiary as to a life interest in an estate for an order compelling the trustee to convert the property of the estate to income producing so that her life interest might be of some benefit to her, said at p. 494:

It is well settled that a trustee must deal evenhandedly between different classes of beneficiaries. This, of course, is the reason for the rule in Howe v. Dartmouth where that case is applicable. While as I have found there is a requirement that a conversion be made here, there is as well an undoubted power to postpone. In the absence of mala fides on the part of the trustee, and none is suggested here, that power may not as a general rule be gainsaid. Nevertheless the interests of the life tenant must be protected….

[28]In Law of Trusts in Canada Professor Donovan Waters says, at p. 788:

…That duty must be discharged with honesty, objectivity and care, but that is all. Impartiality lies in the presence of an honest and objective evaluation of each named beneficiary’s position, and a consequent decision. The same is true when trustees have a power of encroachment over capital in favour of joint life tenants, or even a power of appointment over capital. The duty of impartiality has been breached when honesty, objectivity and care are all present, but the result is one which favours Beneficiary A over Beneficiary B without an express or implied authority from the trust instrument….

Perhaps the principal impact of the rule upon trustees, however, is when they must administer the trust assets in such a way that they provide fairly for the beneficiaries whose interests in the trust property are successive.

[75] Counsel for Public Trustee also brought to my attention the following additional passages from Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984) at 690, where Professor Waters provides some useful observations relating to the duties of a trustee:

The obligation which lies at the base of trusteeship has resulted in there being three fundamental duties applicable to all trustees. First, no trustee may delegate his office to others; secondly, no trustee may profit personally from his dealings with the trust property, with the beneficiaries, or as a trustee; thirdly, a trustee must act honestly and with that level of skill and prudence which would be expected of the reasonable man of business administering his own affairs. These might be called the “substratum” duties, to which the duties associated with the particular trust are added.

[48] Turning to the specific issue of removal of a trustee, as requested by the petitioner in this case, the courts have jurisdiction to grant that remedy. The primary concern is the welfare of the beneficiaries:

It is not disputed that there is a jurisdiction ‘in cases requiring such a remedy,’ as is said in Story’s Equity Jurisprudence, s. 1287, but there is very little to be found to guide us in saying what are the cases requiring such a remedy; so little that their Lordships are compelled to have recourse to general principles.

Story says, s. 1289, ‘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 to show a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.’

(Letterstedt v. Broers (1884), 9 App. Cas. 371, at p. 385 (H.L.); cited in Conroy v. Stokes, [1952] 4 D.L.R. 124 at pp. 126-127; also Re Estate of Andre Jacques Blitz, Deceased, 2000 BCSC 1596 at paras. 21-22).

[49] From the above discussion I conclude that the proper characterization of the issue in this case is whether the respondent, as the sole trustee of the Insurance Trust, exercised the care, skill, diligence and judgment of a prudent investor with regards to the loan from the Insurance Trust to the Family Trust in December 2009. Further, have the actions endangered the trust property that is to be managed for the benefit of all beneficiaries of the Insurance Trust

Administration Ad Colligenda Bona

Several years ago disinherited.com had an estate where the deceased had substantial assets that needed protection, while it took in excess of two years to locate his very distant next of kin in the far-off Ukraine. He had died intestate and no person came forward to be appointed administrator of the estate.

In these situations where there is a delay in the appointment of a general administrator and it is necessary for the protection of the estate that someone be empowered to protect the assets, then the court may well appoint an administrator ad colligenda bona.

This type of grant and is typically made when situations arise where either there is no one to be appointed administrator, or they cannot be located, or they have refused to accept a grant of administration.

 

The grant may even be made to a creditor or to a friend of the deceased, as the main purpose is to protect the assets until a proper administrator can be found and appointed.

 

The grant is usually limited to a particular purpose and time until the jungle until the general grant is made. It is for the administration only, the will is not proved her annexed, and bonding is generally required.

In Re Shalapay 3 BCLR 3d 217 the Court held that an Administratrix is entitled to reasonable remuneration for services performed as administratrix and as solicitor.

There is no statutory authority for the appointment of an administrator ad colligenda bona. However, the scope of the appointment is similar in nature to that of an administrator pendente lite. If the estate is large, a percentage fee as contemplated by s. 90 of the Trustee Act would be ridiculous. On the other hand, if the estate were small, a percentage fee might be insufficient.

An administratrix ad colligenda bona should be entitled to reasonable remuneration rather than a percentage of the estate for her work as administratrix and to her reasonable fees as solicitor. Her accounts as solicitor would be subject to review under the Legal Profession Act.

What Is Double Probate?

Executors frequently appoint more than one person as his or her personal representative, and on occasion not all parties who are entitled to apply for probate actually do. However at the same time they do not renounce their executor ship and reserve the right to apply at a later date.

If that executor does apply for probate at a later date, the new grant is called a double probate, that runs concurrently with the earlier grant, assuming one or more of the first executors to probate is still living.

 

The applicant for the double probate includes only the un- administered estate in his or her affidavit. The affidavit must also give particulars of the early grant of probate, and show that the power to him or her to apply was in fact reserved in the earlier grant.

 

The same notice of intention to apply for probate pursuant to section 112 of the Estate Administration act must be sent to all interested parties again, along with the appropriate supporting materials.

While textbook authors have stated that in theory one executor may apply for a grant of probate without notifying the other executors, in practice it is doubtful that a court would make such an order without notice, as it is important that the executors who are not appointed, reserve their right to apply at a later date, and that the right is specifically stated in the initial grant of probate.

Copy of Will Not Admitted to Probate, as No Proof Original Was Ever Signed

Re Whitehead Estate 2010 BCSC 348, the deceased was a founding member of a credit union and a retired bank manager. After his death, a “trued up” copy of will dated December 21, 1979 was found, but the original of that will was never located.

Under the will his sister was to receive $356,000, whereas on an intestacy, the sisters estate would receive 120,000. The sister had survived her brother, but subsequently died leaving two daughters.

The deceased was a meticulous record keeper who wrote letters to friends prior to his death that said she was getting her affairs in order, and did not want to leave loose ends for executors.

 

The deceased met with her financial advisors three times in the last month of her life. The financial advisor said that the deceased had plans to establish funds for various charities so as to reduce gifts to individuals and had placed $400,000 aside and guaranteed investment certificates.

 

The deceased solicitor had died and the original will was not found amongst his files.

 

The proposed administrator of the deceased estate made an application for a declaration that the deceased died intestate rated

 

The application was allowed.

 

No evidence was called to establish that the copy of will was properly executed in the first place, or was in fact a true copy of will.

There was no presumption that the will was destroyed, as there was no evidence that the deceased ever had possession of the original will.

 

20 The test for proving a lost will requires proof of the due execution of the will; particulars tracing possession of the will to the date of death, and afterwards if the will was lost after death; rebuttal of the presumption that the will was destroyed by the testator with the intention of revoking it; and proof of the contents of the lost will: Sorkos v. Cowderoy, [2006] O.J. No. 3652(Ont. C.A.).

 

21 Similarly, in O’Donovan v. O’Donovan, [2009] O.J. No. 5020(Ont. S.C.J.) the court noted that:

 

As previously stated, the original wills have not been located. Sheila found signed copies in the residence. Proving a lost will can be accomplished; that is proof as to its contents, due execution and testator’s capacity: see Oosterhoff on Wills and Succession, 5th edition, Carswell 2001 at p. 355. Professor Oosterhoff adds the propounder of the will “… must usually also overcome the presumption of destruction “animo revocandi” … if the will was last known to be in the deceased’s possession”: see, also, Lefebvre v. Major, [1930] S.C.R. 252(S.C.C.); and Sorkos v. Cowderoy (2006), E.T.R. (3d) 108 (Ont. C.A.). This concept follows the English authorities: see Sugden v. Lord St. Leonards(1876), 1 P.D. 154(C.A.).

 

There is no issue arising in this case as to the deceased’s testamentary capacity.

 

22 The applicant referred to Goudge, Re, [1978] N.B.J. No. 337(N.B. Prob. Ct.). In that case one of the issues was whether or not there was a properly executed will. The solicitor who had drawn the will testified that he was one of the witnesses to the execution of the will by the testatrix. He also said the second witness was present at the time the will was executed. On that evidence the will was proven to be a copy of a properly executed will.

 

23 The applicant says that kind of evidence is missing in this case. Not only has the solicitor who drew the will died, but also there is no one available who can identify the witnesses to the will whose names appear in the “trued up” copy. While the will has all of the appearances of a copy of a properly executed will, the applicant says that it cannot be presumed to be properly executed by appearance only and requires evidence from someone who can swear that it is a true copy of will and that it was properly executed.

 

24 In Goudge’s Estate, supra., and other cases such as Green Estate, Re, 2001 ABQB 835(Alta. Q.B.), and Flaman Estate, Re, [1997] S.J. No. 442(Sask. Q.B.) evidence was presented by a witness who was able to testify to the proper execution of the will and that it was a true copy of the original.

 

25 In Flaman, the court held that the two main requirements to admit a copy of will to probate are that there be proof of execution of the original and proof of the contents. The court held that there was no proof of execution of the will and it was not admitted to probate. Instead, a direction was given that proper proof of execution was required. The court referred to Williams on Wills, 5th ed., Vol. 1 (London, Butterworths, 1980) at p. 96 where it was stated:

 

… Where a testamentary document has been lost or destroyed in such a way as not to effect a revocation probate may be granted of the contents thereof upon proof of such contents and due execution and attestation of the instrument. Where the person setting up an alleged will cannot produce any copy or draft or any written evidence of its contents, he must prove all these matters so as to remove all reasonable (but not all possible) doubt on these points

 

. . . . .

 

9 As well, R.B. Rowe, E. Heward & G.F. Dawe, eds, Tristam and Coote’s Probate Practice, 25th ed. (London: Butterworths, 1978) sets out at p. 561 what an affidavit should show if, as in this case, no copy or draft of the will is available. First of all, “[i]f the original will was not forthcoming at the death of the testator, the full circumstances in which it was last known to be in existence but failed to be forthcoming at the death.” Secondly, “[d]ue execution of the original will, which should, whenever possible, be proved by one of the attesting witnesses.” Thirdly, the affidavit must also show “[w]ho are the persons prejudiced by the admission of the document sought to be established … and whether they are all sui juris.” Is there anyone who would take a greater interest under an intestacy or under an earlier will? Fourthly, the affidavit should “depose to the contents of the will as set out in a reconstruction, which should be in the form of a separate document exhibited to the affidavit.”

 

10 T.G. Feeney in The Canadian Law of Wills, states at p. 99 that:

 

… [P]robate may be granted of the contents of the lost will, after proof of due execution, on such secondary evidence as a copy or a draft or solicitor’s notes or any other written evidence; and indeed, if it is sufficiently clear, even oral testimony may be probated.

 

And the 35 C.E.D. (West. 3rd), Vol. 35, states at p. 155-162, s. 179 that:

 

S. 179 Should the presumption be rebutted, the lost will may be admitted to probate upon proof of due execution, and evidence of its contents may be adduced by way of a copy or a draft, solicitor’s notes or other writings, or even by oral testimony.

 

[Emphasis added]

 

26 In this case, there is no evidence to identify the witnesses to the execution of the will nor is there any evidence to show that the will is a true copy of the original will. While the copy presented has all of the characteristics of a legitimate copy of an original will, on the authorities it cannot be presumed that the original was properly executed or that the copy presented is a true copy. The authorities require proof of both.

 

27 It may be that the necessary proof can be presented through means other than a witness to the execution of the will. For example, proof of the usual practice followed by a solicitor or legal assistant that a will was only “trued up” once it had been properly executed and compared to the original may be sufficient to show that it is in fact a true copy. But some evidence is necessary to establish the necessary facts and here there is none. There is no witness available or even identified to say that the will was properly executed nor is there anyone to attest to any other evidence to establish that the copy of will is a true copy as that term is understood in law. Even if the standard of proof is lower than a balance of probabilities there is an absolute absence of any evidence whatsoever in this case.

 

28 The applicant is therefore entitled to succeed on the ground that there is no evidence upon which the court can conclude that the will of the deceased was properly executed or that it is a true copy of the original will.

 

29 If that conclusion is incorrect and the will is in fact properly executed and a true copy of the original, the next issue is whether the original will can be traced to the possession of the deceased. If it can be traced to her possession then on a finding that the original has been lost, the presumption arises that it has been destroyed with the intention of revoking the will. Feeney in The Canadian Law of Wills, 3rd edition, vol. 1 at pp. 134-135 states:

 

The same presumption, that of destruction animo revocandi, that arises when a destroyed or mutilated will is found among the testator’s papers on his death, arises also when it is shown that the testator’s will was last traced to his possession but cannot be found on his death. The presumption is well recognized in Canadian case law, but the fullest inquiries for the lost will must be shown to have been made for a court to apply the presumption in the first place. The presumption is often rebutted either by the circumstances tending to show a contrary conclusion or by declarations made by the testator showing that he regarded the lost will as valid and subsisting. However, strong evidence is usually needed to rebut the presumption.

 

30 The beneficiaries under the will submit that there is no evidence to suggest that the deceased was in possession of the will. No one has said that the original will was ever known to be in her possession nor is there any reference in the affidavit material to a comment of the deceased that she had at any time had the original of her will in her possession. The deceased named her solicitor as the sole executor of her estate without any alternates and it is likely that the original at least initially remained in his possession. The beneficiaries also say that if the deceased was in possession of her original will, there was no need for her to keep a copy in a briefcase containing other important papers. See Haider v. Kalugin, 2008 BCSC 930(B.C. S.C. [In Chambers]), at para. 22.

 

31 On the evidence presented in this case, I am not able to find that the deceased ever had possession of the original will and therefore the presumption that the will has been destroyed with the intention that it be revoked does not apply.

 

Conclusion

32 On the evidence the applicant is entitled to a declaration that the deceased died intestate as there is no evidence that the copy of will presented in evidence was ever properly executed by the deceased or that it is in fact a true copy of will.