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Appointment of ETDL – Toller Cranston Estate

Toller Cranston was a renowned Canadian figure skater and artist who passed away in 2015 in San Miguel de Allende, Mexico where he had lived for nearly a quarter of a century. He died intestate and the Court in Mexico declared his three siblings, Phillippa Baran, Goldie Cranston and Guy Cranston as the sole heirs of the estate. The Court in Mexico also appointed Ms. Baran as Estate Trustee.  A Certificate of Appointment of Foreign Estate Trustee’s Nominee as Estate Trustee without a Will (“Certificate of Appointment”) was then issued by the Superior Court of Justice in Ottawa in 2016.

The estate consists of assets in Canada and Mexico including approximately 20,000 pieces of original artwork. The assets of the estate were originally valued in excess of $6 million CDN.

Among many issues, Goldie and Guy Cranston increasingly became concerned about the manner in which Ms. Baran was disposing of the art work. Some of the art work is consigned for sale in various Canadian galleries or in storage. One of the galleries is allegedly in some financial difficulty and is not providing regular sales reports or regular remittances. That gallery is represented by the same national law firm that represents Ms. Baran.

In addition, Goldie and Guy are seeking in specie distribution of some of the artwork amongst the beneficiaries but Ms. Baran has refused those requests and continues to sell requested artwork.

As such, Goldie and Guy brought a motion for directions seeking the removal of Ms. Baran as Estate Trustee and the appointment of an Estate Trustee During Litigation (“ETDL”).

Master Fortier provides a very helpful and concise review of the law regarding the appointment of an ETDL:

  1. Pursuant to r. 75.06(3)(f) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court, on an application for directions, may order that an estate trustee during litigation (ETDL) be appointed and file security as the court directs.
  2. According to the jurisprudence, the purpose of an ETDL is to ensure that the playing field is level. The court has comprehensive and inherent powers with respect to the supervision of an estate, including the appointment of an ETDL. The cases set out the following principles: 

a)      The court has broad and inherent powers to supervise the management of estates and to control its own processes and may draw upon its inherent jurisdiction where appropriate to protect parties so that justice can be done in the proceeding (see Mayer v. Rubin 2017 ONSC 3498 (CanLII), 30 E.T.R. (4th) 239, at para. 26).

 b)      The inherent jurisdiction of the court includes appointing an officer of the court to preserve and protect the assets of an estate which may be at risk during litigation(Mayer at para. 28).

 c)      The court must ensure that there is a level playing field and that the assets of the estate be immunized from the tactics employed by litigating parties.Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other beneficiaries. (Mayerat para. 36, Class v Smith, 2018 ONSC 623 (CanLII), 38 E.T.R. (4th) 326, at para. 40).

 d)      The assets of the estate ought to be administered to the maximum advantage of the beneficiaries. A trustee who is in an adversarial position towards a co-trustee or a beneficiary should not normally be left in charge of trust property;“simple prudence” calls for the temporary replacement of a trustee who is in such a position. (Mayer at para. 36; Class at para. 40). 

 e)      The appointment of an ETDL is not an extraordinary measure and the court should refuse the appointment only in the clearest of cases. The appointment of an ETDL will be favored by the court in the majority of cases of conflict between the trustee and beneficiaries unless the administration of the estate is particularly simple or straightforward. (McColl v. McColl et al, 2013 ONSC 5816 (CanLII), 93 E.T.R. (3d) 116 at para. 26;Mayer at para. 35; Class at para. 41.)

  1. In addition to the above, McEwen J.  in  Kalman v. Pick,2014 ONSC 2362 (CanLII), at para. 5(ii) indicated that, in his view, the appointment of an ETDL would most likely result in savings to the estate and to the parties where significant legal fees have been generated as a result of acrimony between the parties. 

Based on these principles the Court had no hesitation in ordering the appointment of an ETDL.  This is a very helpful tool to consider early in estate disputes.

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