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Case commentary: Bunn v. Gordon

The following article has been authored by WEL Summer placement and U of T LAW student, Madeeha Hashmi. We wish Madeeha well as she returns to school this Fall to continue her studies.

Bunn v Gordon

When it comes to a testator’s decision about his or her trustee or executors, courts generally aim to preserve the testator’s wishes. In the recent Ontario Superior Court of Justice decision, Bunn v. Gordon,1 Justice Sweeney cites Oldfield v. Hewson,2 noting that courts are “reluctant to exercise [their] discretion to interfere with the discretion exercised by a testator.”3 Whether the court will interfere to remove a trustee depends on the “welfare of the beneficiaries,”4 which is the governing principle established in Letterstedt v. Broers.5

As mentioned in Oldfield,with respect to this principle, Professor Waters remarks, in his text Law of Trusts in Canada, that the court may consider removing a trustee when his or her continuance “would be detrimental to the execution of the trust,” meaning that his or her “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.”6 The circumstances in Bunn are an example of a situation where, keeping the proper execution of the trust in mind, the court must set hesitation aside in order to promote a functional relationship between the trustee and beneficiaries.

Facts

The testator, Hazen Allan Simpson, made a Will in December 2013, which named his girlfriend of three and half years, Carrie Gordon, as estate trustee.

According to the Will, Carrie was given the testator’s principal residence and was to hold an additional Burlington property in trust for his children, Kristen and William, until they attained the age of 21.

Additionally, the residue of the estate was left equally to Carrie, Kristen, and William, with the children’s shares to be held in trust until they turned 21.

After the testator’s death in January 2014, the children brought an application for the removal of Carrie as estate trustee in July 2014.

The applicants presented the following actions as the basis for Carrie’s removal:

1)    Failure to provide a Funeral Director’s Proof of Death Certificate

2)    Relocation of a Kodiak trailer from the Burlington property to Carrie’s own property, which resulted in the Applicants’ requesting that the police find Carrie criminally responsible for conversion of an estate asset

3)    Sale of a desk and cupboard, which Carrie could not prove had been gifted to her and Kristen and William wanted to keep based on their right of first refusal for the contents of both properties

4)    Failure to report on the sale of the Burlington property

Reasoning

In regards to the above actions, Justice Sweeney found that:

1)    While it is not clear that a trustee is required to provide a death certificate, the failure to provide one resulted in increased animosity between the parties

2)    Although criminal charges were excessive, Carrie was obliged to account for the trailer and should not have simply taken it

3)    The sale of the desk and cupboard exhibited enmity towards the beneficiaries as the items held sentimental value for the children

4)    The failure to report on the sale of the Burlington property is not sufficient to warrant removal because a trustee is not required to account at “every moment on every transaction”7

Based on these observations, Justice Sweeney concluded:

[16]        The trustee has a duty to account and to care for the assets and to administer the trust properly. In this case, the trustee was challenged at the outset and was under intense scrutiny. Demands for constant information and questioning are disruptive.  However, the reality is that a trustee has a duty and an obligation to account and communicate. The threat of criminal sanctions was, in my view, unwarranted and would naturally increase the animosity between the applicants and the respondent. However, that does not relieve the trustee of her obligations.

[17]        In all the circumstances of this case, I find that the relationship between the applicants and the trustee has broken down such that the trustee can no longer act as trustee. To paraphrase the Court of Appeal in [Re Davis]8 it is apparent that an unfortunate but substantial degree of hostility now exists between the trustee and the beneficiaries. The antipathy towards the beneficiaries is such that it will prevent the proper administration of the estate. While it is not all one-sided, the trustee has the fiduciary obligation. In the circumstances, Carrie can no longer continue as estate trustee.9

Conclusion

The Bunn decision demonstrates that while minor or perceived transgressions are not sufficient to result in the removal of an estate trustee, when such actions contribute to or are accompanied by an underlying current of hostility, the situation can require the courts to interfere with the testator’s original decision. A testator cannot always predict whether the chosen trustee and beneficiaries will interact well with each other, and courts have to keep the relationship between these two parties in mind when ruling on the removal of trustees.

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1. Bunn v Gordon, 2015 ONSC 4768, 2015 CarswellOnt 11387 [Bunn].

2. Oldfield v Hewson [2005] OJ No 375, [2005] OTC 87 [Oldfield].

3. Ibid at para 19.

4. Ibid at para 20.

5. Letterstedt v Broers, 9 APP CAS 371.

6. D.W.M. Waters, Law of Trusts in Canada, 2nd ed. (Toronto: Carswell, 1984) at 683.

7. Bunn, supra note 1at para 15.

8. Re Davis Estate (1983) 14 ETR 83 at 85 (Ont CA).

9. Bunn, supra note 1 at paras 16-17.

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