Canadian court addresses issues of trustee removal
Leonardo La Calamita (the deceased) appointed his wife, Rose La Calamita, as his estate trustee and granted her a life interest in the residue of his estate. Upon her death, the deceased’s estate trustee would be their son John (the respondent), with the estate divided equally between the respondent and their two other children, Diane (the applicant) and Nadine. The respondent and applicant were appointed joint trustees of their mother’s estate, which was also to be divided equally three ways.
Between 2020 and 2022, the two parties brought four competing applications over the administration of their parents’ estates. In 2023, the respondent filed an application to be granted a Certificate of Estate Trustee with a Will, asking the court to allow his appropriation and distribution of the deceased’s primary estate asset of a commercial property. The respondent sought to continue to own the property with Nadine, while providing the applicant with a cash sum for her share.
The applicant sought to bar this on the basis of the settlement of the respondent’s 2022 application. She objected to the respondent’s interpretation of the deceased’s will and sought an order removing the respondent as estate trustee.
The court duly applied the “armchair rule” to determine how the deceased intended to dispose of his property. It found that the respondent’s deposition that the deceased was “explicit” on his testamentary intention “contravene[d] the prohibition against admitting direct evidence of the testator’s intention.” Further, it found that evidence was inadmissible because it related to the respondent’s understanding of the deceased’s intentions after the will was executed and so was irrelevant to will interpretation. “If not inadmissible on these grounds, the evidence is hearsay of questionable admissibility under the principled exception as its ultimate reliability has not been established,” the court said.
It found that the will gave the trustee the final and binding power to determine the value of the estate; however, power to “partition or appropriate” was for the purpose only of satisfying a beneficiary’s share in the estate. Moreover, the deceased’s will specifically directed that if the sale of property involved a purchase by a beneficiary who is also a trustee, the sale must be conducted by a disinterested trustee. Consequently, the court ruled that the respondent could not distribute the property to himself and Nadine.
It also found against the applicant’s cross-application. The court examined the Trustee Act’s directions on its authority to remove a trustee. It noted that the applicant had not provided sufficient and clear evidence to show that the respondent could or would not administer the estate properly, that he had breached his fiduciary duties or that he had endangered estate assets.
In particular, the court ruled that the respondent had acted properly in seeking directions on the interpretation of the will.
“Friction alone between co-executors is not itself reason for removal,” the court said. “For friction to be the basis for removal, it must rise to a level that prevents the proper administration of the estate…[there is] no evidence that the friction between [the respondent] and [the applicant] will impair the administration of the estate” (La Calamita v La Calamita, 2024 ONSC 4219).
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