In Ontario, the Superior Court of Justice has authority under their inherent jurisdiction and statute to remove trustees. In this regard, Ontario’s Trustee Act,^[1] provides as follows:

Removal of personal representatives

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.

Applicable principles

When an application is brought seeking a trustee’s removal, it is insufficient to provide that the trustee had overlooked their duties or made a mistake in carrying out the trust.^[2] In the classic English case of Letterstedt v Broers,^[3] Lord Blackburn had this to say regarding when the court will remove a trustee:

[I]f it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee … it seems to their Lordships that the Court might think it proper to remove him.

[…]

In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on the details often of great nicety.

In the Ontario decision of Johnston v Lanka Estate,^[4] the court summarised the core principles to be considered in the removal of a trustee:

• The court will not lightly interfere with the testator’s choice of estate trustee;
• Clear evidence of necessity for removal is required;
• The court’s 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 estate/trust.

In Virk v. Brar,^[5] Justice Richetti provided a further, non-exhaustive list of factors for the court to consider:

• An application to remove an executor may be made by any person interested in the estate of the deceased;
• The removal of an estate trustee should only occur on the clearest of evidence and there is no other course to follow;
• The applicant must show that the non-removal of the trustee will likely prevent the trust from being property executed;
• Removal is not intended to punish past misconduct, rather it is only justified if past misconduct is likely to continue and the estate assets and interests of the beneficiaries must be protected; and
• Friction alone is not a reason for removal.

By way of an example, in Clayton v. Clayton,^[6]  three trustees were removed from their positions regarding a sizeable family trust. An application was brought by one of the beneficiaries for their removal for several breaches which included: failure to keep adequate records and to provide an accounting, the trustees approving unsecured and undocumented loans from the family trust and the degree of hostility between the trustees and the beneficiaries. In the court’s analysis, it applied the factors in Virk v. Brar and found the trustees’ conduct warranted their removal. In their place, BMO Trust Company was appointed to act.

Replacement of a trustee

In addition to the removal of trustees, most Canadian jurisdictions have also enacted statutory provisions which permit the court to appoint new trustees. In Ontario, the Trustee Act states:

Power of court to appoint new trustees

5 (1) The Superior Court of Justice may make an order for the appointment of a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee (R.S.O. 1990, c. T.23, s. 5 (1); 2000, c. 26, Sched. A, s. 15 (2)).

Once a trustee has been appointed by the court, they acquire “the same powers, authorities and discretions, and may in all respects act as if the trustee had been originally appointed a trustee by the instrument, if any, creating the trust”.^[7]

In Re Consiglio Trusts (No.1),^[8] the court found that misconduct on the part of a trustee is not a necessary requirement for the court to act pursuant to section 5(1) of the Trustee Act.  Instead, the court is justified in interfering when the continued administration of the trust has become impossible or improbable.

Concluding Comments

In Ontario, the Superior Court of Justice can remove and appoint trustees. In an application for the removal of a trustee, consideration must be given not only to the applicable principles enumerated above, but also the trustee’s conduct and their wider fiduciary duties.

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[1] Trustee Act, R.S.O. 1990, c. T.23.

[2] St. Joseph’s Health Centre v. Dzwiekowski,

[3] (1881), 9 AC 371 (PC). [emphasis added]

[4] Letterstedt v Boers (1884), 9 App Cas 271 (South Africa PC); Johnston v Lanka Estate, 2010 ONSC 4124.

[5] Virk v. Brar, 2014 ONSC 4611.

[6] Clayton v. Clayton, 2021 ONSC 5811 (CanLII).

[7] (supra note 1), section 7(1).

[8] Re Consiglio Trusts (No. 1), 1973 CanLII 681 (ON CA).