1. Introduction
When a settlor or testator empowers trustees to do something with the trust property ‘in their absolute discretion’, ‘ in their uncontrolled discretion’, ‘in their absolute discretion,’ or by the use of similar language, what exactly does that mean? Does it give the trustees carte blanche to do as they please? Karrow v Boghosian[1] makes it clear that the trustees do not have carte blanche but are constrained by the terms of the trust and must maintain an even hand toward the beneficiaries, unless the trust ousts that fiduciary duty.
2. Facts
The testator, Elizabeth Karrow (‘Elizabeth’), died in 2016. She had made her Will in 2003. It appointed her sons Niel (‘Niel’) and Thomas Karrow (‘Tom’), and family friend and financial advisor Brian Cameron as Executors and Trustees. The Will provided that the residue of Elizabeth’s estate should be divided into four equal shares for the benefit of her grandchildren, the children of her four children. Each share was to be held in trust until the youngest grandchild in each set of grandchildren reached age 30. One of the four one-quarter shares, which is the subject matter of the proceedings in this case, was for the benefit of the children of Elizabeth’s son Niel, Jordan Boghosian (‘Jordan’) and Sarah Karrow (‘Sarah’). However, in respect of this share the Trustees were also empowered to make certain payments to Niel. Paragraph 3(s)(i)(b) of the Will provided in part:
TO KEEP INVESTED one (1) such equal share and to pay the whole or such part of the net income derived therefrom together with such part or parts of the capital thereof as my Trustees in their absolute discretion deem advisable to or for my son, NIEL ALEXANDER KARROW, and his children, or some one or more of them, to the exclusion of any one or more of them, in such proportions and in such manner as my Trustees in their absolute discretion deem advisable from time to time, provided however, that such payments shall be made to or for the children of my said son, NIEL ALEXANDER KARROW, only in situations where my Trustees in their absolute discretion consider such payment or payments to be advisable for the medical necessity or illness or disability of such child of NIEL and that payments shall be made to NIEL only in such situations as my Trustees in their absolute discretion consider such payments to be necessary to maintain NIEL’S standard of living . . .
The paragraph went on to direct that when Niel’s youngest child, i.e., Sarah, reached age 30, which will be in 2030, the Trustees should divide the amount remaining in the trust equally between Niel’s daughters, Jordan and Sarah.
The net amount of the share in question was $375,000. In June 2018 the two Trustees other than Niel authorized a payment of $50,000 to him and a further payment of $95,000 in October 2018. Niel had made requests to the other two Trustees for these payments because he was in financial difficulties after he and his former wife Jodie Boghosian (‘Jodie’) separated in 2011 and ultimately divorced. The two Trustees had sought the concurring advice of the estate lawyer before approving the requests. Niel asked for a further $80,000 in April 2019 so that he could purchase a home but after consulting the estate’s lawyer, the other two Trustees refused the request. In May 2019 Niel managed to purchase a new home.
The three executors (the ‘applicants’) brought an application to pass their estate accounts. The respondent, Jordan, opposed the application on the ground that the applicants failed to act with an even hand, exercised their discretion inappropriately, and depleted the capital of the estate for the benefit of her father Niel, and to the detriment of herself and her sister Sarah. Jordan also argued that the Trustees failed to abide by the terms of the Will because they authorized the payments to Niel without exercising due diligence. The respondents argued that the even hand principle had no application, since the Will had ousted it by giving them unfettered discretion.
3. Analysis and Judgment
3.1 Does the even hand principle apply in the case?
Justice Smith noted that the law permits a settlor or testator to give disproportionate interests to beneficiaries and thereby to avoid their duty to act impartially toward all the beneficiaries. But nonetheless, it is the duty of the trustees to carry out the terms of the trust and ensure that they do not give advantage or impose burdens on beneficiaries that the trust does not permit.[2]
The question was whether the language of Paragraph 3(s)(i)(b) permitted the Trustees to favour Niel over his children because of language such as ‘as my Trustees in their absolute discretion deem advisable’, and ‘some one or more of them, to the exclusion of any one or more of them’, as well as the provision that the Trustees could make payments to Niel’s children only when they ‘in their absolute discretion’ consider such payments ‘to be advisable for the medical necessity or illness or disability’ of a child, and that payments could only be made to Niel if the Trustees ‘in their absolute discretion consider’ the payments to be necessary to maintain Niel’s standard of living.
Justice Smith agreed with Jordan that this language did not relieve the Trustees of their duty to act impartially. To achieve that result, the testator should have said expressly that the Trustees did not have comply with the fiduciary duty to act impartially.[3]
Consequently, Justice Smith concluded that the language used in Paragraph 3(s)(i)(b) of the Will did not relieve the Trustees of the duty to adhere to the even hand principle. On the contrary, they could not ignore the interests of Jordan and Sarah but had to consider them.
3.2 Were the Trustees even-handed?
Justice Smith found that the Trustees did not act impartially.
First, Mr Cameron swore that he had been legally advised that the Trustees did not have to act with an even hand, but the applicants asserted solicitor-client privilege over documents containing such advice.
Second, there was no evidence that the Trustees considered the interests of Jordan and Sarah. They only considered whether the payments made to Niel were necessary to maintain his standard of living.
Third, the size of the two payments to Niel, in the total amount of $145,000, confirmed that the Trustees did not maintain an even hand, since those payments amounted to almost 40% of the capital of the one-quarter share in question. In his Honour’s opinion the total amount ‘far exceeds what might have been reasonable to maintain Niel’s standard of living bearing in mind the interests of Niel’s children in the capital of the trust’. He held that this conclusion was supported by the structure of Elizabeth’s Will, the purpose of which was to give a substantial benefit to her grandchildren. In fact, by approving the payments to Niel, the Trustees allowed him ‘to encroach on the capital that was being held in trust for Jordan and Sarah for the purpose of fulfilling obligations he had toward them’, such as post-secondary education expenses and child support payments.
3.4 Did the Trustees act reasonably?
Since the Trustees ignored the interests of Jordan and Sarah, they breached the even hand rule, which amounted to a breach of their fiduciary duties, an absence of good faith, and an abuse of discretion. This meant that the Trustees failed to act reasonably when they approved the payments to Niel. This was evident from the meaning of the Will, which showed that the grandchildren were intended to be the primary beneficiaries of Elizabeth’s estate. In Justice Smith’s opinion, the Will could not be read to authorize a substantial gift to Niel of the capital of the relevant share (which was set aside for Jordan and Sarah).
Further, his Honour was not satisfied that the payments made to Niel were in fact necessary, or that the Trustees made inquiries about their necessity. Thus, he held that the evidence showed that the Trustees did not properly consider the question whether the payments were necessary to maintain Niel’s standard of living. This was true of the requests for both payments. Hence, the payments were unjustified.
3.5 Conclusion
Justic Smith noted that the burden of proof on an application to pass accounts is on the applicants. He considered the following circumstances, namely, the failure to act with an even hand, the failure to consider that the Will protected the interests of the two children, the approval of payments that represented a substantial portion of the capital of the trust, the failure to exercise due diligence, and the reliance on undisclosed legal advice, as well as the overpayment for legal fees, and the use of a portion of one of the payments for a purpose other than one for which it was requested. In consequence, his Honour held the requests for payment were unreasonable, and so were the payments themselves. Further, he held that the applicants failed to meet their burden to establish reasonableness and did not exercise the ordinary prudence of a person managing his own affairs.
3.6 Remedy
Justice Smith referred to section 49(3) of the Estates Act[4] and noted that it gives him power to order an executor, administrator, or trustee to pay such sum by way of damages or otherwise as he considers proper and just. He held that all three trustees were responsible for the payments made and ordered that they be jointly and severally liable to repay the amount of $145,000 to the trust with interest from the dates of the payments.
—
[1] 2026 ONSC 6680.
[2] Quoting an earlier edition of Waters’ Law of Trusts in Canada. The same quotation can be found in the 5th edition of that eminent text (Toronto: Thomson Reuters, 2021) p. 1090.
[3] Citing Clayton v Clayton, 2021 ONSC 5811, para 57, per Corthorn J., and Re Carley Estate (1994), 2 ETR 2d 242 (Ont SCJ), para 12, per Greer J., as authority, and distinguishing, inter alia, Edell v Sitzer (2001), 51 OR 3d 198, affirmed (2004), 9 ETR 3d 1 (Ont CA).
[4] RSO 1990, c E.21.
Written by: Albert Oosterhoff
Posted on: August 27, 2026
Categories: Commentary, WEL Newsletter
1. Introduction
When a settlor or testator empowers trustees to do something with the trust property ‘in their absolute discretion’, ‘ in their uncontrolled discretion’, ‘in their absolute discretion,’ or by the use of similar language, what exactly does that mean? Does it give the trustees carte blanche to do as they please? Karrow v Boghosian[1] makes it clear that the trustees do not have carte blanche but are constrained by the terms of the trust and must maintain an even hand toward the beneficiaries, unless the trust ousts that fiduciary duty.
2. Facts
The testator, Elizabeth Karrow (‘Elizabeth’), died in 2016. She had made her Will in 2003. It appointed her sons Niel (‘Niel’) and Thomas Karrow (‘Tom’), and family friend and financial advisor Brian Cameron as Executors and Trustees. The Will provided that the residue of Elizabeth’s estate should be divided into four equal shares for the benefit of her grandchildren, the children of her four children. Each share was to be held in trust until the youngest grandchild in each set of grandchildren reached age 30. One of the four one-quarter shares, which is the subject matter of the proceedings in this case, was for the benefit of the children of Elizabeth’s son Niel, Jordan Boghosian (‘Jordan’) and Sarah Karrow (‘Sarah’). However, in respect of this share the Trustees were also empowered to make certain payments to Niel. Paragraph 3(s)(i)(b) of the Will provided in part:
TO KEEP INVESTED one (1) such equal share and to pay the whole or such part of the net income derived therefrom together with such part or parts of the capital thereof as my Trustees in their absolute discretion deem advisable to or for my son, NIEL ALEXANDER KARROW, and his children, or some one or more of them, to the exclusion of any one or more of them, in such proportions and in such manner as my Trustees in their absolute discretion deem advisable from time to time, provided however, that such payments shall be made to or for the children of my said son, NIEL ALEXANDER KARROW, only in situations where my Trustees in their absolute discretion consider such payment or payments to be advisable for the medical necessity or illness or disability of such child of NIEL and that payments shall be made to NIEL only in such situations as my Trustees in their absolute discretion consider such payments to be necessary to maintain NIEL’S standard of living . . .
The paragraph went on to direct that when Niel’s youngest child, i.e., Sarah, reached age 30, which will be in 2030, the Trustees should divide the amount remaining in the trust equally between Niel’s daughters, Jordan and Sarah.
The net amount of the share in question was $375,000. In June 2018 the two Trustees other than Niel authorized a payment of $50,000 to him and a further payment of $95,000 in October 2018. Niel had made requests to the other two Trustees for these payments because he was in financial difficulties after he and his former wife Jodie Boghosian (‘Jodie’) separated in 2011 and ultimately divorced. The two Trustees had sought the concurring advice of the estate lawyer before approving the requests. Niel asked for a further $80,000 in April 2019 so that he could purchase a home but after consulting the estate’s lawyer, the other two Trustees refused the request. In May 2019 Niel managed to purchase a new home.
The three executors (the ‘applicants’) brought an application to pass their estate accounts. The respondent, Jordan, opposed the application on the ground that the applicants failed to act with an even hand, exercised their discretion inappropriately, and depleted the capital of the estate for the benefit of her father Niel, and to the detriment of herself and her sister Sarah. Jordan also argued that the Trustees failed to abide by the terms of the Will because they authorized the payments to Niel without exercising due diligence. The respondents argued that the even hand principle had no application, since the Will had ousted it by giving them unfettered discretion.
3. Analysis and Judgment
3.1 Does the even hand principle apply in the case?
Justice Smith noted that the law permits a settlor or testator to give disproportionate interests to beneficiaries and thereby to avoid their duty to act impartially toward all the beneficiaries. But nonetheless, it is the duty of the trustees to carry out the terms of the trust and ensure that they do not give advantage or impose burdens on beneficiaries that the trust does not permit.[2]
The question was whether the language of Paragraph 3(s)(i)(b) permitted the Trustees to favour Niel over his children because of language such as ‘as my Trustees in their absolute discretion deem advisable’, and ‘some one or more of them, to the exclusion of any one or more of them’, as well as the provision that the Trustees could make payments to Niel’s children only when they ‘in their absolute discretion’ consider such payments ‘to be advisable for the medical necessity or illness or disability’ of a child, and that payments could only be made to Niel if the Trustees ‘in their absolute discretion consider’ the payments to be necessary to maintain Niel’s standard of living.
Justice Smith agreed with Jordan that this language did not relieve the Trustees of their duty to act impartially. To achieve that result, the testator should have said expressly that the Trustees did not have comply with the fiduciary duty to act impartially.[3]
Consequently, Justice Smith concluded that the language used in Paragraph 3(s)(i)(b) of the Will did not relieve the Trustees of the duty to adhere to the even hand principle. On the contrary, they could not ignore the interests of Jordan and Sarah but had to consider them.
3.2 Were the Trustees even-handed?
Justice Smith found that the Trustees did not act impartially.
First, Mr Cameron swore that he had been legally advised that the Trustees did not have to act with an even hand, but the applicants asserted solicitor-client privilege over documents containing such advice.
Second, there was no evidence that the Trustees considered the interests of Jordan and Sarah. They only considered whether the payments made to Niel were necessary to maintain his standard of living.
Third, the size of the two payments to Niel, in the total amount of $145,000, confirmed that the Trustees did not maintain an even hand, since those payments amounted to almost 40% of the capital of the one-quarter share in question. In his Honour’s opinion the total amount ‘far exceeds what might have been reasonable to maintain Niel’s standard of living bearing in mind the interests of Niel’s children in the capital of the trust’. He held that this conclusion was supported by the structure of Elizabeth’s Will, the purpose of which was to give a substantial benefit to her grandchildren. In fact, by approving the payments to Niel, the Trustees allowed him ‘to encroach on the capital that was being held in trust for Jordan and Sarah for the purpose of fulfilling obligations he had toward them’, such as post-secondary education expenses and child support payments.
3.4 Did the Trustees act reasonably?
Since the Trustees ignored the interests of Jordan and Sarah, they breached the even hand rule, which amounted to a breach of their fiduciary duties, an absence of good faith, and an abuse of discretion. This meant that the Trustees failed to act reasonably when they approved the payments to Niel. This was evident from the meaning of the Will, which showed that the grandchildren were intended to be the primary beneficiaries of Elizabeth’s estate. In Justice Smith’s opinion, the Will could not be read to authorize a substantial gift to Niel of the capital of the relevant share (which was set aside for Jordan and Sarah).
Further, his Honour was not satisfied that the payments made to Niel were in fact necessary, or that the Trustees made inquiries about their necessity. Thus, he held that the evidence showed that the Trustees did not properly consider the question whether the payments were necessary to maintain Niel’s standard of living. This was true of the requests for both payments. Hence, the payments were unjustified.
3.5 Conclusion
Justic Smith noted that the burden of proof on an application to pass accounts is on the applicants. He considered the following circumstances, namely, the failure to act with an even hand, the failure to consider that the Will protected the interests of the two children, the approval of payments that represented a substantial portion of the capital of the trust, the failure to exercise due diligence, and the reliance on undisclosed legal advice, as well as the overpayment for legal fees, and the use of a portion of one of the payments for a purpose other than one for which it was requested. In consequence, his Honour held the requests for payment were unreasonable, and so were the payments themselves. Further, he held that the applicants failed to meet their burden to establish reasonableness and did not exercise the ordinary prudence of a person managing his own affairs.
3.6 Remedy
Justice Smith referred to section 49(3) of the Estates Act[4] and noted that it gives him power to order an executor, administrator, or trustee to pay such sum by way of damages or otherwise as he considers proper and just. He held that all three trustees were responsible for the payments made and ordered that they be jointly and severally liable to repay the amount of $145,000 to the trust with interest from the dates of the payments.
—
[1] 2026 ONSC 6680.
[2] Quoting an earlier edition of Waters’ Law of Trusts in Canada. The same quotation can be found in the 5th edition of that eminent text (Toronto: Thomson Reuters, 2021) p. 1090.
[3] Citing Clayton v Clayton, 2021 ONSC 5811, para 57, per Corthorn J., and Re Carley Estate (1994), 2 ETR 2d 242 (Ont SCJ), para 12, per Greer J., as authority, and distinguishing, inter alia, Edell v Sitzer (2001), 51 OR 3d 198, affirmed (2004), 9 ETR 3d 1 (Ont CA).
[4] RSO 1990, c E.21.
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