July 3, 2023

An Estate Trustee During Litigation (“ETDL”) is an individual appointed by the Court to administer an estate (other than distributing the residue of the estate) while the estate is in litigation. The Court has authority to appoint an ETDL under s. 28 of the Estates Act or rule 75.06(3)(f) of the Rules of Civil Procedure.

Section 28 of the Estates Act provides that an ETDL can be appointed “pending an action touching the validity of the will of a deceased person, or for obtaining, recalling or revoking any probate or grant of administration”. This includes where an individual with an interest in an estate has filed a Notice of Objection on the basis that the will submitted to probate is invalid.

In the Ontario Superior Court of Justice case of Denny v Denny, 2022 ONSC 3267, (“Denny”), the Court was asked to consider the appointment of an ETDL. The estate litigation involved two warring brothers. Each brother put forward a name for who could be appointed ETDL. One brother suggested his ex-wife who had accounting expertise. The other brother suggested a retired estates lawyer who had experience acting as ETDL. In agreeing that an ETDL should be appointed, the Court in Denny agreed with the comments of Justice Myers in Mayer v Rubin, 2017 ONSC 3498, at paragraph 36, who said:

It is in the interests of all beneficiaries that the assets of the estate be immunized from the tactics employed by litigating parties. The court must protect the level playing field. Neither side should be able to use their control over the estate to benefit themselves or to prejudice the other. It is a simple inference that a trustee who is in an adversarial position towards a co-trustee or a beneficiary should not normally be left in charge of trust property. Simple prudence calls for the temporary replacement of a trustee who is in an adversarial position with a co-trustee or a beneficiary. It is not an insult to anyone’s integrity to understand that conflicts of interest are insidious. Conflicts of interest play havoc with peoples’ judgment of their own capacity to maintain neutrality and a fiduciary stance.

The Court then turned to who should be appointed ETDL. The Court stated that “Generally, a party unconnected with the litigation is the most appropriate person to be appointed estate trustee during litigation.” That led to an analysis of each individual proposed by the parties. The Court found that the brother’s ex-wife was not sufficiently unconnected to the litigation since her daughter was a beneficiary under one of the disputed wills and she had a close relationship to the deceased. In deciding that the retired estates lawyer was the proper individual to be appointed, the Court noted that the lawyer had no connection to the family or estate and was, therefore, neutral. The decision in Denny is an  example of the principles the Court will apply when considering who to appoint as ETDL.