March 10, 2014

The Ottawa case of Hawkins v Hawkins Estate provides a well articulated summary of the grounds for the removal of estate trustees. In addition, it provides an interesting discussion regarding disclosure of a solicitor’s file after the death of the testator.

The late John Hawkins ran a farming business near Ottawa and owned large parcels of land. On his death, the existing family conflict between his 7 children was only magnified. John had a set in place a complicated estate plan, dividing up both his real estate holdings and his farming company among his children. He named his son-in-law Carl and his son Garry as his co-estate trustees.

John’s sons Ian and Kent sued the estate and the estate trustees in their personal capacity, asserting that they held an interest in the farming business and the land. Should their claims succeed, the estate would be largely gutted.

Ian and Kent brought a motion to have the estate trustees removed on the ground that they were in a conflict of interest, having a personal stake in the outcome of the litigation, as well as the existence of animosity between beneficiaries and trustees. The court rejected this argument, holding that Carl and Garry’s personal interest in the outcome of the litigation was aligned with the interests of the estate. As for the personal animosity existing between the parties, Master MacLeod held: “It is not enough that the moving party does not like the trustee or trust him or her. The duty of the trustee is not to beneficiaries or claimants individually but to the objectives of the trust.” The mere fact that the estate trustees were involved in the litigation in their personal capacity did not place them in a conflict of interest. The court held that the mere fact of personal animosity and litigation involving the estate trustees and two of the estate beneficiaries was not sufficient to warrant their removal.

The court focused its attention next on the question of whether the estate trustees should be granted access to the files of the deceased’s solicitor, Mr. Young. Mr. Young was the long-time solicitor of John before his death, and it was believed his file may contain documents helping to resolve issues central to the litigation. Under normal circumstances, the right to view the solicitor’s file, as well as the right to waive the solicitor-client privilege that existed between John and Mr. Young, would pass to John’s estate trustees, Carl and Garry. However, Ian and Kent argued that permitting Carl and Garry to review the solicitor’s file gave them an unfair advantage in the context of litigation. Ian and Kent argued that Carl and Garry should be removed as estate trustees, or in the alternative, a neutral third party should be appointed by the court to act as 3rd estate trustee for the sole purpose of reviewing Mr. Young’s file.

The court held that although it had the power to grant the relief requested, there was no reason to do so. Master MacLeod held that the normal rules of disclosure and discovery provided adequate protection to Ian and Kent without having to remove the estate trustees. The requirement that the parties exchange affidavits of documents, as well as the opportunity of the parties to participate in cross-examination, creates sufficient safeguards and protection to the parties. In addition, the court noted that only some of the documents in the solicitor’s file would be privileged, namely communications between John while alive and his solicitor. The trustees would be required to produce many of the other documents in the solicitor’s file under the common interest exception to privilege which exists between trustees and beneficiaries. As a result, the court held that Carl and Garry were not given an unfair advantage by being able to view the solicitor’s file first.

Although the motion to remove the estate trustees failed, Master MacLeod did seize himself of the case, anticipating future disputes between the warring beneficiaries and estate trustees.