September 4, 2013

In an earlier blog by fellow blogger Jasmine Sweatman, she commented on the emerging principle of proportionality in our judicial system and how it might impact on a fiduciary’s duty to pass accounts.  She queried:

Where does proportionality “fit” with the right of a beneficiary of an estate or trust  to review and make inquiries of the accounts of the fiduciary?  Or with requiring the fiduciary’s passing of accounts?  Does proportionality have a place in matters where such a right exists?

The answer is not yet provided by the courts.  On the one hand, the argument is that we should allow proportionality to be used by litigants and judges to promote a more efficient justice system.  The contrary argument is that if the right to an accounting is immutable, then the role for proportionality remains, but perhaps more limited and at different and fewer points along the course of the litigation.

In other words, given that a fiduciary must be at all times ready to account, will a court ever refuse an application by a beneficiary to compel a passing of accounts? In The Estate of Rodney Erle Tinline, the Saskatchewan’s Queen’s Bench did just that.

The Court found that by virtue of its inherent jurisdiction over trusts and trustees, it may order an executor to account to a beneficiary.  Moreover, the Court held, its inherent jurisdiction over trusts and trustees extends to an attorney for property who has acted in a fiduciary capacity.

However, just because a trustee must account to the beneficiaries or donor does not mean that a court must always order an accounting.  Justice Barrington-Foote wrote, “the fact that the court has the authority to grant an order for an accounting does not mean that I must grant that order.  That is so notwithstanding the language of s. 55(1) of the Trustee Act, which states that the trustee shall provide an accounting on request.”

In this case, the Court found that the attorney had only exercised her power of attorney on the instructions and under the supervision of the donor while he was still capable.  In terms of her role as executor, less than a year had elapsed since she had received a probate certificate.  Her evidence in response to the beneficiary’s complaints about her administration of the estate were not contradicted in reply by the beneficiary and therefore accepted by the Court.  Finally, there was evidence that the beneficiary was uncooperative with her requests to provide information and documentation to her so that she could complete the necessary accounting.  In the end, the Court found that there was insufficient evidence that the executor had failed to carry out her duties, with the result that the Court declined to order a passing of accounts.  However, the order was made without prejudice to the beneficiary’s ability to apply again in the future.

Thanks for reading.