Deadlocked Estate Administration
1. Introduction
When a testator appoints more than one executor to administer the estate, it happens fairly frequently that the executors disagree strongly about various aspects of the administration and then insist that their respective views be followed. This results in a deadlock in the administration. And then one or more of the executors typically makes an application to the court to resolve the dispute. There are two ways in which the court can proceed: (1) removing one or more of the executors and, if necessary, appointing a replacement; or (2) making the decision itself to resolve the problem. In the latter case the court in effect ‘casts the deciding vote’. Courts are usually loath to use the second approach, since that is not their role, but they will use this approach if necessary.[1] The issue arose again in the recent case, Rizzo v Farrugia.[2]
2. Facts
The testator died on 29 July 2021. She was survived by her three children, Sam, Ed, and Angela. She appointed all three her executors and directed that the residue of her estate be divided equally among them after payment of debts, taxes, and expenses. However, she provided that if Sam should be interested in purchasing her house, a market appraisal should be obtained, and he would have the right of first refusal. She also provided that Sam’s share of the residue could be used as the down payment for the purchase of the house.
Sam was interested in purchasing the house and the three siblings agreed to a purchase price of $660,000, and that this amount less tax and transaction costs would be distributed amongst them. Sam agreed to arrange mortgage financing for the purchase. However, on 7 October 2021, Angela made it clear to her brothers through her counsel, that she was willing to accept $220,000 as her one-third share of the house, but that this amount would be net of any possible estate tax exposure, which was to be borne by the two brothers. Sam rejected this proposal. Strangely, on 11 October 2021 Angela signed a hand-written agreement with Sam and Ed in which they agreed that the closing date for the sale of the house would be 15 November 2021, and that ‘all the remaining taxes of the estate … will be paid by’ the three siblings. However, through her counsel, on 18 November 2021, Angela informed her brothers that she had not agreed to be responsible for her part of the estate’s taxes and expenses. Her counsel again wrote to the brothers on 10 February 2022 that in further discussions Sam and Ed had agreed that Angela would receive $240,000 from the sale of the house in exchange for which she would transfer her interest in the property to the brothers and would renounce her office of executor. Angela’s counsel reaffirmed these matters in a further letter on 28 March 2022 and demanded payment of the $240,000 within 30 days on a ‘tax-free basis’. There was some further correspondence. But on 9 May 2022 Angela’s counsel informed the brothers that Angela was willing to accept payment for the $240,000 withing 60 days in exchange for transferring her interest in the house, her renunciation of her executorship, and her release of any further entitlement under the estate.
Angela then brought an application in her capacity as beneficiary in which she sought an order for sale of the property and payment of occupation rent by Sam. Sam and Ed brought an application for an order removing Angela as executor and dismissing her application.
3. Analysis and Judgment
Justice IR Smith held that Angela’s application should be dismissed. As far as her application for the sale of the house, his Honour noted that she had no standing to seek that relief,[3] since she had no interest in the house, but only an interest in the residue of the estate.
His Honour also held that Angela was not entitled to claim occupation rent as a ‘joint owner’ of the house. Only a joint owner can make such a claim, and she was not a joint owner of the house but only had an interest in the residue of the estate.
Justice Smith also agreed that Angela should be removed as executor for the following reasons. The siblings were not able to cooperate in administering the estate, and there was animosity between them. Thus, at least one of them should be removed, so that the estate can be administered without further delay.[4] Further, it was clear from the record that Angela’s conduct has been the chief impediment to the proper administration of the estate and was the main cause of the deadlock and delay. Although the siblings agreed to the purchase price Sam would pay, Angela then insisted, contrary to what the will provided, on receiving her share of the residue without being responsible for a one-third share of the debts, taxes, and expenses. Although she later agreed to pay an equal share of the expenses, she then resiled from that position through her counsel. Thereafter she increased the amount she claimed from the residue, again free of taxes. Moreover, while she stated that she was willing to renounce her executorship when paid, she never signed the appropriate forms. She also placed herself in a conflict of interest by demanding a greater share of the estate than she was entitled to.
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[1] See Re Kaptyn Estate, 2011 ONSC 2212, additional reasons 2011 ONSC 3491, paras. 2-4. And see Oosterhoff on Trusts 10th ed by Albert H Oosterhoff, Robert Chambers, and Mitchell McInnes (Toronto: Thomson Reuters, 2024) §13.10.
[2] 2024 ONSC 4615.
[3] Citing DiMichele v DiMichele, 2014 ONCA 271, paras 71 and 103-104.
[4] Citing Dewaele v Roobroeck, 2020 ONSC 7534, para 51-56.
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Written by: Albert Oosterhoff
Posted on: March 17, 2025
Categories: Commentary, WEL Newsletter
1. Introduction
When a testator appoints more than one executor to administer the estate, it happens fairly frequently that the executors disagree strongly about various aspects of the administration and then insist that their respective views be followed. This results in a deadlock in the administration. And then one or more of the executors typically makes an application to the court to resolve the dispute. There are two ways in which the court can proceed: (1) removing one or more of the executors and, if necessary, appointing a replacement; or (2) making the decision itself to resolve the problem. In the latter case the court in effect ‘casts the deciding vote’. Courts are usually loath to use the second approach, since that is not their role, but they will use this approach if necessary.[1] The issue arose again in the recent case, Rizzo v Farrugia.[2]
2. Facts
The testator died on 29 July 2021. She was survived by her three children, Sam, Ed, and Angela. She appointed all three her executors and directed that the residue of her estate be divided equally among them after payment of debts, taxes, and expenses. However, she provided that if Sam should be interested in purchasing her house, a market appraisal should be obtained, and he would have the right of first refusal. She also provided that Sam’s share of the residue could be used as the down payment for the purchase of the house.
Sam was interested in purchasing the house and the three siblings agreed to a purchase price of $660,000, and that this amount less tax and transaction costs would be distributed amongst them. Sam agreed to arrange mortgage financing for the purchase. However, on 7 October 2021, Angela made it clear to her brothers through her counsel, that she was willing to accept $220,000 as her one-third share of the house, but that this amount would be net of any possible estate tax exposure, which was to be borne by the two brothers. Sam rejected this proposal. Strangely, on 11 October 2021 Angela signed a hand-written agreement with Sam and Ed in which they agreed that the closing date for the sale of the house would be 15 November 2021, and that ‘all the remaining taxes of the estate … will be paid by’ the three siblings. However, through her counsel, on 18 November 2021, Angela informed her brothers that she had not agreed to be responsible for her part of the estate’s taxes and expenses. Her counsel again wrote to the brothers on 10 February 2022 that in further discussions Sam and Ed had agreed that Angela would receive $240,000 from the sale of the house in exchange for which she would transfer her interest in the property to the brothers and would renounce her office of executor. Angela’s counsel reaffirmed these matters in a further letter on 28 March 2022 and demanded payment of the $240,000 within 30 days on a ‘tax-free basis’. There was some further correspondence. But on 9 May 2022 Angela’s counsel informed the brothers that Angela was willing to accept payment for the $240,000 withing 60 days in exchange for transferring her interest in the house, her renunciation of her executorship, and her release of any further entitlement under the estate.
Angela then brought an application in her capacity as beneficiary in which she sought an order for sale of the property and payment of occupation rent by Sam. Sam and Ed brought an application for an order removing Angela as executor and dismissing her application.
3. Analysis and Judgment
Justice IR Smith held that Angela’s application should be dismissed. As far as her application for the sale of the house, his Honour noted that she had no standing to seek that relief,[3] since she had no interest in the house, but only an interest in the residue of the estate.
His Honour also held that Angela was not entitled to claim occupation rent as a ‘joint owner’ of the house. Only a joint owner can make such a claim, and she was not a joint owner of the house but only had an interest in the residue of the estate.
Justice Smith also agreed that Angela should be removed as executor for the following reasons. The siblings were not able to cooperate in administering the estate, and there was animosity between them. Thus, at least one of them should be removed, so that the estate can be administered without further delay.[4] Further, it was clear from the record that Angela’s conduct has been the chief impediment to the proper administration of the estate and was the main cause of the deadlock and delay. Although the siblings agreed to the purchase price Sam would pay, Angela then insisted, contrary to what the will provided, on receiving her share of the residue without being responsible for a one-third share of the debts, taxes, and expenses. Although she later agreed to pay an equal share of the expenses, she then resiled from that position through her counsel. Thereafter she increased the amount she claimed from the residue, again free of taxes. Moreover, while she stated that she was willing to renounce her executorship when paid, she never signed the appropriate forms. She also placed herself in a conflict of interest by demanding a greater share of the estate than she was entitled to.
—
[1] See Re Kaptyn Estate, 2011 ONSC 2212, additional reasons 2011 ONSC 3491, paras. 2-4. And see Oosterhoff on Trusts 10th ed by Albert H Oosterhoff, Robert Chambers, and Mitchell McInnes (Toronto: Thomson Reuters, 2024) §13.10.
[2] 2024 ONSC 4615.
[3] Citing DiMichele v DiMichele, 2014 ONCA 271, paras 71 and 103-104.
[4] Citing Dewaele v Roobroeck, 2020 ONSC 7534, para 51-56.
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