1. Introduction

I have written several times about the removal of executors and trustees. And so it may seem supererogatory for me review yet another such case. But I would like to speak about the recent case, Henderson v Sands,[1] for two reasons: (1) I discussed a prior motion in this case in a blog earlier this year,[2] and therefore it seems right also to discuss the current case which addresses a beneficiary’s application to remove the executor; and (2) Justice Dietrich outlines the circumstances in which an executor, who is not at all without fault, should not be removed but the court can impose conditions on her. The prior case was concerned with a motion that the executor brought for an order to allow her to continue to reimburse herself from estate funds. Justice Gilmore dismissed that motion.

2. Facts

The testator, Ms Solivo, died a widow in 2019. She had wanted to appoint a long-time friend her executor but she declined and preferred that a family member assumed the office.  By her will, made a month before her death, the testator therefore appointed her sister, Ms Sands, her executor, and her other sister, Ms Norris as substitute, although Ms Norris indicated that she would renounce if required to act. The testator did not appoint the applicant, her daughter Melissa, as her executor, but left the residue of her estate equally to Melissa and her other daughter, Marnie. The applicant is a real estate agent. Marnie does not work and receives ODSB benefits. Ms Sands deposed that the testator did not trust Melissa to administer her estate.

Melissa brought this application with Marnie’s support to remove Ms Sands as executor and an order appointing herself instead. She submits that Ms Sands is unfit to act as executor, that she has mismanaged the administration of the estate, and wrongfully transferred the testator’s car to herself. Further, she alleges that Ms Sands bears animosity toward the beneficiaries that amounts to hostility. Ms Sands denies the allegation of mismanagement, claims that if there is animosity it is not a ground for removal, and asserts that the testator made a gift of the car to her.

3. Analysis and Judgment

Justice Dietrich reviewed the law on removal of executor in some detail and referred to a number of cases, some of which I discussed in the above-mentioned blog. It is now almost de rigueur for our courts to begin a removal case by referring to Letterstedt v Broers,[3] the fons et origo of the law on this point. So it somewhat surprising that her Honour does not do so. However, she does include the following list of principles that guide a court in the exercise of its discretion to remove an executor, and the list is based on Letterstedt and many other cases:

a) The court should not interfere lightly with the testator’s choice of estate trustee;

b) Such interference must be not only well justified but must amount to a case of clear necessity;

c) Removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow;

d) The court’s main guide is the welfare of the beneficiaries;

e) It is not every mistake or neglect of duty that will lead to removal. It must be shown that non-removal will likely prevent the trust from being properly executed. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, capacity, or reasonable fidelity;

f) Removal is not intended to punish past misconduct but to protect the assets of the trust and the interests of the beneficiaries; past conduct that is likely to continue will often be sufficient to justify removal; and

g) Friction alone is not itself a reason for removal. The question is whether it would be difficult for the trustee to act with impartiality. The friction must be of such a nature or degree that it prevents, or is likely to prevent, the proper administration of the trust.

By reference to the Court of Appeal’s decision in Chambers v Chambers,[4] her Honour emphasized that there is a high threshold for removal, that the court should only remove an executor on the clearest of evidence, and that passing over of an estate trustee is an unusual and extreme course.

Her Honour noted that the testator considered carefully whom she should appoint as executor and deliberately did not appoint her daughters. She was satisfied that the testator was mindful of the fact that Marnie’s interests would be better protected if the estate was administered by a non-beneficiary.

Justice Dietrich acknowledged that Ms Sands’ administration of the estate has not been perfect. She was unreasonably slow in providing the beneficiaries with a copy of the will and misled them about its whereabouts. She also failed to review the testator’s bills in a timely way and then had to make late payments. She was late in paying the insurance on the testator’s mobile home in Florida, so that the insurance was cancelled. And she was late in paying the insurance on the house, which is he major asset of the estate. Ms Sands also failed to make timely disclosure of the estate’s assets and liabilities and of the sale of the mobile home. In earlier proceedings the court made an order requiring her to make disclosure, issued a preservation order, and ordered her to pass her accounts as attorney for property and as executor. And the court found earlier that she used estate funds improperly to pay her legal and accounting fees for this litigation. Ms Sands admitted that she failed properly to ensure that she got the best value for the mobile home. She was asked on cross-examination why she simply accepted the purchaser’s offer to buy the mobile home without making a counteroffer. She replied: ‘I would not know where to begin to maximize an estate. I am not an investor, a financier’; and ‘I am not a real estate person. I am not equipped to quibble about money’.

Nonetheless, Justice Dietrich concluded that Melissa had failed to meet the heavy burden to show that it was clearly necessary to remove Ms Sands, and that there was no other course to follow. She noted that when the application to pass the accounts is heard, the beneficiaries will have opportunity to challenge Ms Sands’ actions and she will be held accountable in that forum for them. Her Honour further concluded that Melissa has not demonstrated that Ms Sands’ past conduct as executor is likely to continue. Since Ms Sands admitted that she is not knowledgeable about the sale of real estate, her role could potentially put the estate at risk. However, in her Honour’s view it is not necessary to remove Ms Sands for that reason. Instead, the court should impose terms on her duties to protect the beneficiaries. These terms will require Ms Sands to engage an accredited real estate agent with experience in selling residential real estate in that locality and to seek the written approval of Melissa and Marnie to any sale. If they fail to approve, Ms Sands can seek the approval of the court.

This is an unusual order to be sure, but it does serve to satisfy the criteria of not removing an executor save only in clear cases, and of protecting the interests of the beneficiaries.

Her Honour then went on to consider the issue whether the testator had made a gift of the car to Ms Sands. She found that Ms Sands’ statements and conduct in connection with the car were inconsistent. Moreover, she had not met the burden of proving that the testator intended to make an inter vivos gift of the car to her and that she delivered the car to her.

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[1]    2023 ONSC 897.

[2]    https://welpartners.com/blog/2023/02/removal-and-passing-over-of-executors-and-administrators/.

[3]    (1883-84), LR 9 App Cas 371 (PC, South Africa).

[4]    2013 ONCA 511 para 95.