Courts are generally reluctant to interfere with the expressed intentions of a testator, especially where it concerns who they appoint as their trustees. However, circumstances often arise which require that a trustee must be removed. In addition to the authority derived from section 37 of the Trustee Act, the court has an inherent jurisdiction to remove a trustee.
To briefly recap, section 37(1) of the Trustee Act, as amended, authorizes a judge to remove an executor by providing that:
37 (1) The Superior Court of Justice may remove a personal representative upon any ground upon which the court may remove any other trustee and may appoint some other proper person or persons to act in the place of the executor or administrator so removed. R.S.O. 1990, c. T.23, s. 37 (1); 2000, c. 26, Sched. A, s. 15 (2).
Section 37(3) of the Trustee Act also provides that, “any person interested in the estate of the deceased” can bring an application for the removal of a personal representative or trustee.
But what are the principles which guide the court’s discretion to remove a trustee? In the recent decision in Taetz v Mikolajewski the Ontario Superior Court of Justice addressed some of these principles in a proceeding where an estate trustee’s lack of disclosure led to his removal.
Rosemarie Mikolajewski (the “Deceased”) died testate on February 5, 2022. She was survived by her daughter (the “Applicant”) and her son (the “Respondent” or the “Estate Trustee”). Both the Applicant and Respondent were estranged from each other.
The Deceased’s Will, dated April 20, 2017, bequeathed her home and all of its contents to the Applicant, with the residue to be shared equally between the Applicant and Respondent. The Respondent and his spouse were living with the Deceased during the last period of her life. The Respondent was also the Deceased’s attorney for property and personal care.
Despite the Applicant’s requests, the Respondent failed to provide the Applicant with meaningful information regarding the administration of the estate. It was only after the issuance of the Applicant’s application and exactly one week before the trial that the Respondent provided this information.
In the Respondent’s two affidavits filed in the proceedings, he described his administration of the estate. According to his sworn statements, the Respondent filed the Deceased’s tax returns for 2019-2022 but has not paid the tax owing ($7,877). What’s more, he did not ensure the Deceased’s home and admitted that he does not have time to take care of it. The Respondent’s affidavits also indicated that the estate has two Registered Retirement Income Funds accounts of which the Respondent was the beneficiary, the estate had one unregistered Guaranteed Investment Certificate account that was deposited into the estate account, the Deceased held a joint bank account with the Respondent as Power of Attorney with the amount of $2,454.50 which was transferred to him, and the estate owes him $6,500 for a roof that was not completed.
At the hearing, counsel for the Respondent read an email which revealed that the Respondent had a tenant living in the nanny suite of the Deceased’s home for which he had been charging $120 per month for rent since October 2022. While the Respondent intended on paying back the rental income to the estate, he recognized that the rental amount was well below market value rent.
The Respondent submitted that if he remains Estate Trustee, he will not sell the home. However, the evidence indicates that with the debts owed, the sale of the home is inevitable.
The Applicant moved for an order removing the Respondent as Estate Trustee and appointing her in his place. She also moved for an order requiring the Respondent to bring an application to pass his accounts as both POA and Estate Trustee but also, an order authorizing the immediate transfer of the Deceased’s home to the Applicant on her undertaking to pay any legitimate debts of the estate as confirmed through the Respondent’s passing of accounts.
The court in Taetz cited section 37(1) of the Trustee Act as authorizing a judge to remove an executor. Next, the court looked to the 2010 Ontario Superior Court decision in Johnson v Lanka. In that decision, Justice Patillo outlined authoritative caselaw on the principles that guide the court’s discretion to remove an estate trustee, holding that these can be summarized as follows:
- The court will not lightly interfere with the testator’s choice of estate trustee;
- Clear evidence of necessity is required;
- The courts main consideration is the welfare of the beneficiaries; and
- The estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.
The court in Taetz also held that an estate trustee named in a will should be removed only “on the clearest of evidence that there is no other course to follow.” Additionally, the court held that past misconduct may justify removal if said misconduct is likely to continue in the future and that removal “is intended not to punish trustees for past misconduct but rather to protect the assets of the trust and the interests of the beneficiaries.”
The court held that despite the simple and straightforward will of the Deceased, the Respondent did not understand his role as an estate trustee and the duty he owed to his sister, the Applicant. Were it not for the application, his sister would not have received any meaningful information about the administration of the estate. It was only on the eve of the hearing of the motion that the Respondent disclosed that he was receiving income from an estate property and that he received $2,450 from a joint account for which he was not entitled to. The Respondent was also found to lack credibility regarding the roof repairs. The Respondent was also found to have compromised the only asset of the estate, the Deceased’s home, by failing to properly insure it.
The court in Taetz concluded that there was past misconduct on the part of the Estate Trustee who did not act in the interest of the beneficiaries. While the court did not find inordinate delay, it did find a consistent pattern of non-disclosure. As a result, the court held it was likely the misconduct would continue in the future. The court held that in order to ensure the beneficiary is aware of the details of the estate and ensure her interests are protected, a change of estate trustee is necessary.
The court, therefore, ordered that the Respondent be removed as estate trustee, the Applicant appointed as succeeding estate trustee, and further ordered that the Respondent to transfer all records and property belonging to the estate (including the keys to the Deceased’s home) and to bring an application to pass his accounts within 45 days.
While this decision doesn’t represent some of the most egregious conduct we’ve seen from an estate trustee, it does underscore the fiduciary duty an estate trustee owes to the beneficiaries of an estate. As this decision highlights, a consistent pattern of non-disclosure that occurred and is likely to continue, may well be sufficient to trigger the court’s discretion to remove an estate trustee.
 R.S.O. 1990, c. T.23.
 2023 ONSC 4635 [Taetz].
 Taetz, supra note 2 at para. 14
 Ibid., at para. 16 where it was reported that the tenant was a personal friend of the Respondent.
 Ibid., at para. 5.
 2010 ONSC 4124 [Lanka].
 See Radford v. Radford Estate, 2008 CanLII 45548 (ON SC),  O.J. No. 3526, 43 E.T.R. (3d) 74 (S.C.J.), paras. 97-113, per Quinn J.; and St. Joseph’s Health Centre v. Dzwiekowski, 2007 CanLII 51347 (ON SC),  O.J. No. 4641, 2007 CarswellOnt 7642 (S.C.J.), paras. 25-30, per Cullity J. [page263]; See, too, Weil (Re), 1961 CanLII 157 (ON CA),  O.R. 888,  O.J. No. 602 (C.A.); Consiglio Trusts (No. 1) (Re), 1973 CanLII 681 (ON CA),  3 O.R. 326,  O.J. No. 2022 (C.A.).
 See Crawford v. Jardine,  O.J. No. 5041 (Ont. Gen. Div.), at para. 18.
 Taetz, supra note 2 at para. 12 citing St. Joseph’s Health Centre v. Dzwiekowski, 2007 CanLII 51347 (ON SC),  O.J. No. 4641, 2007 CarswellOnt 7642 (S.C.J.) at para. 28.
 See Taetz, supra note 2 at para. 23 where the court reports that “the accounting regarding the roof repair lacks credibility as he stated in one affidavit that the roof cost $9,000 but the invoice produced was for a $800 deposit and then another $1,000 payment. He states that he was also responsible to purchase the materials but there was no evidence to support that purchase.”
 Ibid., at paras. 20-27 and 30.