November 4, 2014

Although they sound similar, there are important procedural differences between “removing” an estate trustee and “renouncing” the right to act as an estate trustee. Where the named estate trustee has not yet begun acting in her role as estate trustee (i.e. she has not yet undertaken any work administering the estate), she may “resign” or “renounce” the position. However, once the estate trustee has begun administering the estate, she can usually only step down from the role after being “removed” by court order. The Ontario Court of Appeal addressed the difference between “renunciation” and “removal” in the case of Chambers v Chambers.

In Chambers, the deceased named his wife Agatha and his daughter as co-estate trustees. On his death, his daughter renounced immediately before acting. However, Agatha stepped into the role and began administering the estate as sole estate trustee.

The estate was worth millions of dollars and its administration proved complex. Problems arose quickly and the estate became involved in litigation with a nurse at the deceased’s nursing home. As part of the nurse’s litigation, the court issued an order whereby Agatha was “deemed” to have renounced as estate trustee. However, Agatha was unaware of the court order (her solicitor advised her that their presence at the hearing was unnecessary) and continued acting as an estate trustee.

Agatha later decided to bring an application for her removal (due to her age (81), her health, and the complicated nature of the estate). She also sought the appointment of an institutional estate trustee (Scotiatrust) in her place.

Michael, the son of the deceased, brought his own application seeking to be recognized as succeeding estate trustee on the grounds that Agatha had already been deemed to have renounced pursuant to the court order obtained in the nurse’s litigation. Given that he was the alternate estate trustee named in his father’s will, Michael argued that his authority to act started as soon Agatha had been “deemed” to renounce.

The lower court heard Agatha’s and Michael’s applications together. The lower court granted Agatha the relief she sought: it removed Agatha as estate trustee, passed over Michael as alternate estate trustee, and ordered the appointment of Scotiatrust as succeeding estate trustee. Michael appealed the decision.

In hearing the appeal, the Court of Appeal expressed doubt that a “deemed renunciation” could have effect as Michael claimed. An estate trustee cannot “renounce” where she has intermeddled with the estate administration. Once someone starts acting as estate trustee, she occupies that position until removed by court order. Having started to administer the estate, Agatha’s authority to act could only be ended by an order removing her. As a result, it was unlikely at the “deemed renunciation” had the desired effect. Nevertheless, the Court of Appeal found that it did not have to make a determination on this point since the outcome would have been the same in either event.

By way of illustration, the court found that if the “deemed renunciation” was effective, Agatha’s right to act as estate trustee granted under the will came to an end. However, since she continued to act as estate trustee even after the “deemed renunciation” came into effect, she became an executor de son tort. An executor de son tort is someone who assumes the role of estate trustee without having first having the legal right to step into that role. In order to protect the beneficiaries of an estate, the law imposes the same duties and liabilities on an executor de son tort as any other estate trustee. This includes the inability of an executor de son tort to resign from the role without first being “removed” by court order.

In this case, since Agatha continued to administer the estate even after the “deemed renunciation” came into effect, her tenure as estate trustee was extended by her own actions. Whether Agatha was an executor de son tort or an estate trustee pursuant to the deceased’s will, she could not be released from that position without bringing an application to court for removal.

The Court of Appeal dismissed Michael’s application to be recognized as the acting estate trustee. Because there was an acting estate trustee at all times (Agatha), the Court of Appeal found that the position never devolved to Michael as named alternate estate trustee. Having never assumed the role of estate trustee, the court did not need to “remove” him but was free to pass him over for appointment. The Court of Appeal further held that the trial judge was correct in passing over Michael and appointing Scotiatrust instead due to Michael’s deep hostility towards Agatha.