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..
Applications 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
Usher v Larabee 2010 BCSC 1608 discusses the general principles of inter vivos gifts and an alter ego trust set up by a mother, that was attacked by two sons in litigation.
The mother’s assets consisted of property in the stock portfolio with a total value of $650,000.
Her three children were placed in care of the provincial government when she had a nervous breakdown in 1963.
In 2000, the mother decided that she would not include one son as a beneficiary in her will as result of his criminal activity, his failure to repay loans, and his constant lying about her.
That son as well as another stated to her that they would contest her will and threaten to put a lien against her home.
In 2003, the mother established an alter ego trust, with the trust and will making provisions for her daughter during her life, and upon her death, to her daughter’s children.
The sons brought action for a declaration that the mother held the estate in trust for them, that the mother transfer of the portion of the estate to them, or alternatively damages for breach of contract that the trust be set aside.
The action was dismissed.
The court found that the evidence of the mother was straightforward, and she claimed that she did not estate to her son’s that they would have an interest in her property, and that there was no agreement to pay the money through her estate or in any other manner.
The court found that the alleged promises made by the mother to the sons had no context and were bald assertions, and the sons accordingly failed to meet the onus of proof on them to prove the verbal agreement with their mother.
The evidence given by the sons was vague and contradictory.
Certain verbal agreements could be enforced and result in express trust, however the evidence in this case did not establish such an agreement. The evidence in fact lacked specificity, time and place and some was simply unbelievable.
Since there was neither evidence of agreement, nor consideration for such agreement, the mother was free to set up the trust to benefit her daughter and defeat any future claims by her sons.
THE LAW
It is not disputed that alter ego trusts are standard estate planning tools used to achieve estate planning objectives: Mordo v. Nitting, 2006 BCSC 1761(B.C. S.C.).
42 A person is entitled to arrange their affairs as they choose, including dealing with potential claims of adult children such as the Wills Variation Act, R.S.B.C. 1996, c. 490: Hossay v. Newman, [1998] B.C.J. No. 3289(B.C. S.C. [In Chambers]).
43 In Antrobus v Antrobus, May 9, 2007, Vancouver Registry S066312, Mr. Justice Powers rejected the existence of the parents’ promises, who, in their 40s at the time, agreeing that the plaintiff would be the sole beneficiary of the estate was not sufficient to support an express trust. He concluded that the real nature of the plaintiff’s claim may be that of a constructive trust. However, in Antrobus, Mr. Justice Powers concluded that before proceeding with the summary trial pursuant to Rule 18A there ought to be examinations for discovery.
44 In order for the Court to make an order for constructive trust of an asset, or for that matter an order of compensation, there must be: an enrichment by one party, in this case Mrs. Larabee; there must be a corresponding deprivation by the other parties, Michael and Patrick who have not been compensated, and there must be an absence of any juristic reason for the enrichment.
45 An oral agreement is capable of enforcement: Hall v. McLaughlin Estate(2006), 25 E.T.R. (3d) 198(Ont. S.C.J.).
46 In order to have an enforceable secret trust, three certainties in an express trust must exist. These three certainties of an express trust are:
1) the intention to the primary donee of an obligation to a secondary donee;
2) the communication is made to the primary donee; and
3) the acceptance of that obligation has been made to the primary donee.
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.
Secret trusts likely exist much more than the public believes, as after all, they are secret.
WHAT ARE SECRET TRUSTS?
In Champoise v. Champoise-Prost Estate, 2000 BCCA 426(B.C. C.A.) at paras. 15-16, the Court of Appeal summarized the fundamental principles which inform the analysis:
[15] It is useful to review the basic principles of secret trusts.
A secret trust arises where a person gives property to another, communicating to that person an intention that the property be dealt with in a specific way upon the happening of an event, and the donee accepts the obligation. The essential elements are the intention of the donor, a communication of the intention to the donee and acceptance of the obligation by the donee… [Citation omitted.]
[16] In addition to these requirements for an enforceable secret trust, the three certainties necessary for any express trust must be exhibited; the words making the trust must be imperative, the subject of the trust must be certain, and the object or person intended to take the benefit of the trust must be certain. Further, those certainties must be exhibited at the time the trust is created: Re Beardmore Trusts, [1951] 1 D.L.R. 41; D.W.M. Waters, Law of Trusts in Canada, supra at 107.
In Anderson v Anderson 2010 BCSC 911, a claim for a secret trust was dismissed.
The deceased prior to his death transferred his interest in a cottage to his second wife for one dollar and other good and valuable consideration.
The plaintiffs were the deceased’s children from his first marriage. For several years following the deceased’s death, the plaintiffs and their families continue to enjoy access to the recreational property.
The defendants second wife however plan to sell the cottage, and the plaintiffs commenced court action for a declaration that the defendant held the property in trust for the plaintiffs, including a secret trust
The action was dismissed as the court found that the deceased intended to make a gift of the cottage to his spouse, and that she did not hold the property on any conditions of trust.
166 ” This type of trust, although an express trust, is secret because the donee’s obligations are not referenced on the face of the document under which the property is given to the donee.
167 The crux of this case turns on the Deceased’s intention relative to the disposition of the Property when he transferred it to the defendant on September 7, 1999.
168 The defendant and the Deceased were married for over 16 years and there is no evidence to suggest that their relationship was anything other than loving and supportive. At the time the Deceased transferred the Property to the defendant it was their only home. They had invested some the proceeds from the sale of their home in Duncan, which they owned jointly, in renovating the Property. The defendant also had purchased some materials from her former employer for those renovations and contributed her own labour to them.
169 As of the date of the transfer, the Deceased was 65 years old and he held assets of relatively modest value. The defendant was 57 years old. She was the designated beneficiary on the Deceased’s RRSP which was valued at approximately $100,000. She was the joint account holder on his bank account which had funds of $4,000 to $5,000. Upon his death, she became entitled to his survivor pension payments of $1,900 per month. She also received any vehicles he owned. She was also entitled to repayment of the loan of $35,000 that she and the defendant had made to Ms. Potts and her husband in 1995.
170 It is apparent from the manner in which the Deceased arranged his affairs that he clearly intended to benefit his spouse on his death. She had been the sole beneficiary under his will since December 1990. It is a reasonable inference that he believed that his primary obligation was to his younger spouse whom he expected would outlive him by many years.
171 Ruth Anderson and Walter Levick were the only disinterested witnesses in this proceeding. Their evidence supports a finding that the Deceased intended to gift the Property to his wife on September 7, 1999. I have accorded their evidence considerable weight.
172 It is entirely consistent with the probabilities of the situation that on September 7, 1999 the Deceased intended to give the whole of the legal and beneficial interest in the Property to the defendant. This course was also in keeping with his testamentary intentions expressed in his Will. If the presumption of advancement does apply, I find that, on a balance of probabilities, the plaintiffs have failed to adduce sufficient evidence to rebut it.
173 In the event the presumption of advancement is not applicable and the converse presumption of resulting trust governs, the result is no different. In weighing all of the evidence, I am satisfied on a balance of probabilities that on September 7, 1999 the Deceased intended to gift the beneficial ownership of the Property to the defendant absolutely.
174 In their final submissions, the plaintiffs did not argue that the Deceased intended that the Property would form part of his estate. For completeness, however I briefly address the claim for resulting trust as it is included in the amended statement of claim.
175 The evidence does not support a finding that when the Deceased transferred the Property to his wife in September 1999, he intended to retain the beneficial interest. Although Jeffrey in his testimony made some vague references to “tax planning”, there was no cogent explanation for the Deceased retaining the beneficial interest in the Property when he knew he was terminally ill.
176 In any case, such an assertion contradicts the plaintiffs’ primary submission that their father transferred the Property to the defendant on certain express trust terms: in essence, that the defendant could have the “unfettered use” of the Property for her lifetime, but when she “was done with it” she would transfer the Property to the three Anderson children.
177 I have considered all of the cases submitted by both parties on the secret trust claim. While I found the authorities instructive, I do not propose to review them as each case turns on its own unique facts.
178 I have, however, considered all of the evidence in light of the test enunciated in Champoise. For the reasons set out below, the evidence does not support a finding that the defendant holds the Property in trust for the Anderson children.
179 There was no direct evidence adduced at trial to support the allegation that when the Deceased transferred the Property to the defendant, he communicated to her his intention that she could have the use of the Property for her lifetime or as long as she wished, but thereafter the Property was to devolve to his three children. There was no evidence that she accepted such an obligation. Nor can this Court, upon careful consideration, reasonably infer that these essential requirements for an enforceable secret trust have been established on the evidence.
180 Moreover, the plaintiffs have not satisfied the Court of the existence of the three certainties required to prove any express trust. The subject of the trust was clearly the Property. However, insofar as the certainty of intention, as discussed above, the evidence does not establish that the Deceased intended to impose any trust condition on the defendant when he transferred the Property to her. This is fatal to the plaintiffs’ trust claim.
181 The preponderance of the probabilities that emerge from the totality of the evidence does not support a finding that prior to the Deceased’s death, the plaintiffs understood that the Property would eventually devolve to the three Anderson children. The plaintiffs’ own evidence is somewhat conflicting as to whether the intended ultimate beneficiary of the alleged trust was Darin alone or the three children. I find the plaintiffs have failed to demonstrate certainty of the objects of the trust at the time the trust was allegedly created.
182 I am satisfied that the plaintiffs in September 1999 were fully aware that their father had gifted the Property to the defendant and that is why it was not a source of dispute at the time of the Deceased’s death. Rather what lies at the heart of their case is their profound disappointment in the defendant’s decision in 2006 to dispose of the Property.
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.
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.
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.
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.
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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.
There is a presumption of resulting trust over a gift when a substantial asset is transferred for little or no consideration,-here the presumption was overcome by evidence of love and affection.
Oord v Oord 2012 BCSC 1857 is the classic scenario where a well-intentioned family ended up in litigation concerning the ownership to the home which the plaintiff and her deceased husband purchased with their son and his wife and two children. The purchase price for the home came entirely from the parents but title was registered in the names of both parents and both the son and daughter-in-law as joint tenants. After the death of the husband, his interest was transferred to the remaining three joint tenants in equal shares. The son and the daughter-in-law subsequently separated.
The mother plaintiff brought this action for a declaration that the son and daughter in law held part of their interest in the property in trust for the mother, for an order for partition and sale of the property, and for division of the proceeds in accordance with the beneficial interest. The court dismissed the action and found that as the monies used to purchase the property came entirely from the parents, the registration of title to the property and all four names amounted to a gratuitous transfer in favor of the son and daughter-in-law.
The presumption of advancement could not apply, and the presumption of resulting trust applied, but was rebutted by the sun with regard to the initial payment to purchase the lot. The existence of love and affection and desire on the part of the parents to assist their children was relevant in the courts determination as to whether the presumption of resulting trust was rebutted. The court found that the living arrangement was intended to be a permanent situation, and that the parents intended to make a gift of one half of the purchase price of the property, because they knew it was the only way such an arrangement would be possible. The court ordered partition and sale of the property, finding that sale was the only method for division of the parties interests.
In the leading case, Pecore v. Pecore, [2007] 1 S.C.R. 795 [Pecore], Mr. Justice Rothstein, writing for the majority, discussed the principles to be applied by the court when dealing with gratuitous transfers and determining whether a resulting trust was created or whether the transfer was a gift. He began by defining the competing notions of resulting trust and advancement at paras. 20 – 21:
20 A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner … .
21 Advancement is a gift during the transferor’s lifetime to a transferee who, by marriage or parent-child relationship, is financially dependent on the transferor.
[28] While it is the actual intention of the transferor at the time of the transfer that determines how a dispute concerning a gratuitous transfer should be determined, the law has developed certain rebuttable presumptions that will arise, depending on the circumstances. Rothstein J. referred to these presumptions at para. 22, as follows:
22 In certain circumstances which are discussed below, there will be a presumption of resulting trust or presumption of advancement. Each are rebuttable presumptions of law: see e.g. Re Mailman Estate, [1941] S.C.R. 368, at p. 374; Niles v. Lake, [1947] S.C.R. 291; Rathwell v. Rathwell, [1978] 2 S.C.R. 436, at p. 451; J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 115. A rebuttable presumption of law is a legal assumption that a court will make if insufficient evidence is adduced to displace the presumption. The presumption shifts the burden of persuasion to the opposing party who must rebut the presumption: see Sopinka et al., at pp. 105 – 6.
[29] With regard to gratuitous transfers, it is the presumption of a resulting trust that generally applies to gratuitous transfers as stated at para. 24 of Pecore:
24 The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
[30] The rebuttable presumption of advancement was restricted in Pecore to gratuitous transfers from a parent to a minor child (para. 40).
[31] As Rothstein J. remarked at para. 41:
41 There will of course be situations where a transfer between a parent and an adult child was intended to be a gift. It is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support his or her claim. In addition, while dependency will not be a basis on which to apply the presumption of advancement, evidence as to the degree of dependency of an adult transferee child on the transferor parent may provide strong evidence to rebut the presumption of a resulting trust.
[32] If the particular circumstances give rise to the presumption of a resulting trust, the burden of proof falls upon the party challenging the formation of a resulting trust to establish that the transfer was a gift. The standard of proof that is applicable to rebut the presumption is the balance of probabilities (Pecore at para. 43). The approach to be taken by the trial judge in examining this rebuttal is set out at para. 44 of Pecore:
44 As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.
[33] The evidence that a court may consider in determining the intent of the transferor includes evidence that arises subsequent to a transfer provided that the evidence is relevant to the intention of the transferor at the time of the transfer (Pecore at para. 59).
It is fairly common in estate disputes that the executor of the will is also dissatisfied with the same will that the executor is by office bound to carry out and enforce. Since in estate claims it is necessary to sue all parties who have an interest in the estate, it then follows that the executor must be named as a defendant in any estate proceeding, and it is a rule of law that an executor cannot also be a plaintiff in his or her personal capacity. This follows from the legal concept that a party cannot be a plaintiff and the defendant in the same court action – one cannot sue oneself.
Further authority for this is Harrison v Harrison ( 1982) 12 ETR 246 It is established that a person cannot sue himself, even in a different capacity. In Pub. Trustee v. Guar. Trust Co., [1980] 2 S.C.R. 931, 19 C.P.C. 157, 7 E.T.R. 287, 115 D.L.R. (3d) 513, (sub nom. Guar. Trust Co. of Can. v. Berry Estate) 33 N.R. 271, it was held that this principle does not mean that a writ issued by an executor against himself is a nullity; rather it only means that he cannot recover judgment against himself. The majority of the Supreme Court, per Estey J., held that the writ in that case was a mere irregularity which was capable of being corrected by substitution of the Public Trustee for the executor as plaintiff. But it was agreed by counsel and accepted by the court that the matter could not have proceeded to trial and judgment had the executor remained on record as both plaintiff and defendant.
