1. Introduction

Although it does happen occasionally, it is uncommon for a court to award punitive damages against an executor. Queripel v Shaddock[1] is a recent case in which the court awarded punitive damages and also directed the executor to pay full indemnity costs. So the case is well worth discussing.

2. Facts

The testator, Ms Shaddock, died a widow in 2002. She was survived by her daughter, Lorali Queripel; her sons, Clifford and Robert; and her grandchildren, Joshua, Madison, and Jacob (Clifford’s children), and Meredith and Jennifer (Lori’s children)  The testator’s will, made in 1996, set aside a fund comprising of the testator’s residence and the sum of $50,000 for Robert. Robert was entitled to live rent-free in the residence, or such other residence as might be substituted for it, and all maintenance costs and charges were to be paid out of Robert’s residuary share or out of the fund. Upon his death the residence was to be sold and the fund was to be distributed equally to the grandchildren.

The testator appointed Lorali and another person as executors. They sold the residence in 2002 and purchased a condo as a residence for Robert The second executor died in 2013. Robert died unmarried and without children in 2022.

Apart from a couple of brief emails, Lorali did not communicate with Joshua, Madison, and Jacob since 2003. She also did not respond to any letters or emails from Mr Deverett, the lawyer for Clifford and his children (the ‘Moving Parties’).

Lorali had been living in the condo with Robert. A title search on the condo showed that title liens had been registered against it for default in payment of common expenses. Mr Deverett wrote to Lorali in February 2022 asking for an accounting and an explanation about the liens. He also sought occupation rent, damages, payment of legal fees, and Lorali’s agreement to be removed as executor. In June 2022 Justice Kimmel made an order requiring Lorali to pass her accounts. She failed to comply with the order. In July 2022 Clifford paid money to the condo corporation to discharge the liens registered on title. He also paid the common expenses owing on the condo unit and a special assessment made against the condo. The latter was paid out of the proceeds of sale of the condo in May 2023.

In December 2022, Justice Dietrich removed Lorali as executor and named Clifford as the succeeding executor. The court also ordered Lorali to comply with Justice Kimmel’s order, transfer all estate assets to Clifford, inform him of all debts and assets of the estate, have the title to the condo changed to reflect that Clifford, as executor, was the new owner. The court also issued a writ of possession for the condo.

Lorali had informed the court of her email address, indicated that her address had not changed, and admitted that she had received all communications from Mr Deverett. Lorali and he daughter Meredith also attended the Case Conference in January 2023. In an email in March 2023 to Mr Deverett she promised to deliver all documents in her possession to him, and informed him that there were property tax arrears, legal fees, and a special assessment. However, she failed to deliver any of the documents.

The Moving Parties brought this motion for the following relief:

(a) to determine the damages caused by Lorali while executor, and requiring her to pay the damages;

(b) requiring Lorali to pay punitive damages for failing to comply with court orders and otherwise;

(c) requiring Lorali to comply with: (1) the order of Justice Kimmel to pass her accounts; (2) the order of Justice Dietrich to pass her accounts, transfer all estate assets to Clifford as executor, and advise in writing of all estate debts and assets; and (3) the order of Justice Gilmore to produce an informal accounting by 27 January 2023; and

(d) requiring Lorali to pay the costs of the motion on a full indemnity basis.

The motion was heard 23 May 2023. Lorali had plenty of notice of it but did not appear. Instead, Meredith appeared and explained that her mother was at work.

By affidavit, Clifford provided a breakdown of damages caused by Lori, consisting of real property taxes, the condo special assessment, common expenses, legal expenses, bank fees, painting and cleaning fees, interest, small miscellaneous expenses, and legal fees, for a total of $175,147.98.

The Moving Parties also sought punitive damages of $100,000 from Lorali for the following reasons:

(a) she breached the three court orders mentioned above;

(b) she failed to produce all documents to Clifford despite her promise to do so;

(c) as executor she failed to carry out the terms of the will by failing to sell the condo after Robert’s death but living there without compensating the estate;

(d) she defaulted in the payment of real estate taxes in 2018, which resulted in the City of Toronto issuing a warrant to distrain for taxes;

(e) she failed to pay common expenses or the condo special assessment, and failed to respond to the motion to remove her as executor;

(f) she failed to communicate with the majority of residuary beneficiaries for more than 20 years, and except for one email she failed to respond to communications from Mr Deverett;

(g) she has failed to admit her misconduct or respond to this motion.

3. Analysis and Orders

Justice Gilmore found that Lorali breached her fiduciary duties as estate trustee in that:

(a) she failed to communicate with the beneficiaries for 20 years and failed to respond to communication from their counsel other than one recent email;

(b) she failed to provide an accounting of the estate’s assets despite three court orders requiring her to do so (two of which required her to pass her accounts);

(c) resided in the condo and did not pay rent to the estate, failed to sell it after Robert died as required by the will, failed to pay real property taxes since 2018, and failed to pay the condo fees and the special condo assessment;

(d) her failure to maintain estate assets resulted in a lien being placed on the condo and caused the City of Toronto to take steps to distrain for taxes; further, the moving parties incurred legal fees to remove the lien, and they had to use their own resources to remove the line and pay other expenses.

Her Honour accepted the breakdown of damages provided by Clifford and directed that they should be paid to the estate.

With respect to the claim for punitive damages, her Honour applied Walling v Walling[2] in which the court awarded punitive damages for the egregious actions of the executor. She held that, as in Walling, the court needed to send a message in this case regarding ‘the abhorrence’ of Lorali’s conduct when she was executor, which included the fact that her actions caused increased costs, a failure to communicate with vulnerable beneficiaries, and a failure to account. She concluded:

Lorali’s conduct in this matter cannot be considered as anything other than egregious, abhorrent and dismissive of Court authority. An award of punitive damages will communicate to those named as Estate Trustees that breaches of fiduciary duty, and a continuing failure to account or communicate with beneficiaries will be considered conduct that should be the subject of deterrence.

However the reduced the amount claimed to $50,000 since, as distinct from Walling, Lorali did not sell the condo and misappropriate the proceeds for her own use.

Finally, Justice Gilmore awarded full indemnity costs on the motion in the amount of $49,601.09.

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[1]    2023 ONSC 3114.

[2] 2012 ONSC 6580.