Removal Of Estate Trustees In Ontario

When a dispute arises over the administration of an estate, one of the most contentious issues can be the removal of an estate trustee. In Ontario, the legal process for removing a trustee is not only complex but also requires substantial justification.

While an estate trustee holds significant responsibilities in managing and distributing the assets of a deceased person, the courts are generally reluctant to remove them unless there is clear evidence of misconduct, incapacity, or a serious breach of their fiduciary duties.

Legal Grounds and Principles for Removal

The Courts have the inherent jurisdiction to remove an estate trustee, An application under section 5(1) and 37(1) of the Trustee Act¹ and under rules 14.05(3)(a) and 75.04 of the Rules of Civil Procedure², can be brought for the removal of 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. While it is possible to seek the removal of a trustee, the grounds must be compelling. In a 2023 decision, Henderson v Sands (2023 ONSC 897)³, the court reiterated the principles to be considered when considering the removal of an estate trustee:

1. The court should not interfere lightly with the testator's choice of estate trustee;
2. Such interference must be not only well justified but must amount to a case of clear necessity;
3. Removal of an estate trustee should only occur on the clearest of evidence that there is no other course to follow;
4. The court's main guide is the welfare of the beneficiaries;
5. It is not every mistake or neglect of duty that will lead to removal. It must be shown that non-removal will likely prevent the trust from being properly executed. The acts or omissions must be such as to endanger the trust property or to show a want of honesty, capacity or reasonable fidelity;
6. Removal is not intended to punish past misconduct but to protect the assets of the trust and the interests of the beneficiaries; past conduct that is likely to continue will often be sufficient to justify removal; and
7. Friction alone is not itself a reason for removal. The question is whether it would be difficult for the trustee to act with impartiality. The friction must be of such a nature or degree that it prevents, or is likely to prevent, the proper administration of the trust.

A recent 2024 case dealing with alleged breach of fiduciary duty by the estate trustee, seems to have raised the bar even higher. In Deziel v. Deziel (2024 ONSC 5279)⁴, the court found that while two trustees had breached their fiduciary duties by selling a family home below market value and cashing an invalid cheque, it was not sufficient to remove them from their positions. Despite the breach of duties, the court found that the trustees acted in good faith and in accordance with their interpretation of the deceased's wishes. Instead of removing the trustees, the court imposed financial penalties, including restitution to the estate for the invalidly cashed cheque by one of the estate trustees.

This case illustrates the courts' preference for finding a middle ground—correcting the trustee's mistakes, but not going so far as to remove them unless the breach is serious or ongoing. It also highlights the challenge of proving that removal is necessary, even when breaches of fiduciary duty are found.

Conclusion

Removing an estate trustee in Ontario is a difficult and rare decision that courts approach with caution. While there are clear legal grounds for removal—such as breach of fiduciary duty, incapacity, or dishonesty—the evidence required to justify such a drastic action is often substantial. Courts are generally inclined to respect the testator's wishes and avoid unnecessary disruption to the estate administration process.

When faced with allegations of trustee misconduct, the court will typically opt for less severe remedies, such as restitution or corrective actions, rather than removal. Therefore, anyone considering seeking the removal of an estate trustee in Ontario should carefully evaluate the strength of their case and the potential consequences before pursuing such a course of action.

Footnotes

1 https://www.ontario.ca/laws/statute/90t23#BK47

2 https://www.ontario.ca/laws/regulation/900194

3 Henderson v. Sands, 2023 ONSC 897 (CanLII) at para 8

https://www.canlii.org/en/on/onsc/doc/2023/2023onsc897/2023onsc897.html

4 Deziel v. Deziel, 2024 ONSC 5279 (CanLII)

https://www.canlii.org/en/on/onsc/doc/2024/2024onsc5279/2024onsc5279.html

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.