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..

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.




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

Court Declines to Remove Trustee – Orders Construction of Trust

Court Declines to Remove Trustee

Winkler v Winkler 2012 BCSC 1949 involves an application by the surviving widow of the deceased, in her capacity as comity of the person and estate of the deceased, sought an order that her stepson be removed as a trustee of her late husband’s alter ego trust number three, and that his longtime accountant be appointed in his place. Remove trustee.

The proceeding arose as a result of the breakdown of the relationship between the trustee and the widow.


The property consisted of three port Moody properties valued at between eight and $10 million.

The beneficiary of the trust was the wife and for other persons after his death, including his son the trustee, Andrea his remaining children.

The court dismissed the petition to remove trustee and appointment accountant, with leave to amend to obtain construction of the trust instrument. The relationship of the trustee as residual beneficiary was not sufficient to disqualify him from being trustee. His actions were, while lacking transparency from the wife’s perspective, did not indicate imprudence or any violation of the trust.


Disagreements concerning the proper construction of the trust is related to what trust property was an advances on capital is a related to the wife’s maintenance, were subject to a further application to construe the trust.


The general principles concerning the removal of trustees are set out in cases such as Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.), and Letterstedt v. Broers, [1884] 9 A.C. 371 at 385-387. The jurisdiction to remove trustee is a “delicate” one, and in each case the main guide must be the welfare of the beneficiaries.

[7] The power to remove a trustee is ancillary to the Court’s principal duty of ensuring that the trusts are properly executed. The question in each case is whether the circumstances are such that the continuance in office of the trustee would be detrimental to the trust: Dicks v. Dicks Estate, 2010 NLCA 35 at para. 50, 298 Nfld. & P.E.I.R. 1.

[8] In Rose v. Rose (2006), 81 O.R. (3d) 349, 24 E.T.R. (3d) 217 at para. 70, (Ont. S.C.J.), Lissaman J. enumerated some actions, failures to act, and conditions that render remove trustee, including misconduct, lack of bona fides, an inability or unwillingness to carry out the terms of the trust, incapacity, personally benefiting from the trust, and acting to the detriment of the beneficiaries.

13] In my view, the respondent’s discontinuance of payments in light of the changed circumstances of the children is properly explained. Of course, Louis Winkler also supported his wife of many years from the income from the trust assets, which is entirely appropriate. In light of my disposition of this matter, the court will have to consider whether the respondent’s actions are consistent with his interpretation of the trust. I do not think that a mere potential for a conflict of interest is sufficient reason to interfere with a trustee’s appointment: Re: Estate of Andre Jacques Blitz, Deceased , 2000 BCSC 1596 at para. 25, 35 E.T.R. (2d) 172.

Breach of Fiduciary Duty

Breach of Fiduciary dutyBreach of Fiduciary Duty

In Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, [2011] 2 S.C.R. 261(S.C.C.), the Supreme Court of Canada concisely described the nature of a fiduciary relationship.

At para. 22, the Court observed that the doctrine relating to fiduciary duty arises out of trust principles. It requires the fiduciary to act with absolute loyalty toward the beneficiary in managing the beneficiary’s affairs.

In general terms, a fiduciary relationship comprises the following 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: see Elder Advocates of Alberta Societyat para. 27.


An estate trustee, such as the defendant, is in a fiduciary relationship with the beneficiaries of the estate. By the terms of the will, the testator creates a trust and places the executor as trustee with authority over that trust. The trustee has the freedom to refuse the appointment; however, when he accepts the appointment he is bound by his fiduciary obligations. Accordingly, he must forsake the interests of all others in relation to the legal interest at stake in favour of the beneficiaries of the trust: Elder Advocates of Alberta Societyat paras. 30 – 31.

Punitive Damages Awarded For Trustee’s Egregious Conduct

Punitive Damages Awarded For Trustee's Egregious Conduct

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

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

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

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

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

2. proportionate to the vulnerability of the plaintiff;

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

4. proportionate to the need for deterrence; and

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

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

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

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

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

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

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

Breach of Fiduciary Duty In Widow’s Reliance On Family

Breach of trust 2

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

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

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

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

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

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


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


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

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

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

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

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

The Reverse Onus of Proof When Suing a Fiduciary

Suing a Fiduciary and Reverse Onus Is Important

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

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

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

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

Court Removes Trustee and In Rare Case No Replacement Trustee Appointed

Court Removes Trustee

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

Trustee Discretionary Spending Limited By Court

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

Trustee Discretionary and the Courts Oversight

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

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

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

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

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

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

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

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

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

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

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

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

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Duties of an Executor or Administrator

Duties of an Executor or Administrator of an Estate

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

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

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

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


The personal representative’s general duties are as follows:

Duties of an Executor or Administrator

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


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


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


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


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


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


(4)        Advertise for creditors.


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


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


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


(7)        To ensure that investments are authorized.


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


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


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


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


(11)      To keep accounts:


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


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


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


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