A case review of Rose v. Rose
It is reasonably easy to imagine many of the possible reasons for which a trustee or executor1 may be removed from their position by the Court. Perhaps he appropriated trust property for his own benefit, delayed in taking the steps necessary to administer the trust or estate, failed to account for trust property, or was otherwise clearly incompetent in the role. One would be correct in assuming that serious allegations of misconduct such as these have long been considered relevant by the courts in considering applications for the removal of trustees or executors, and in many cases would proceed unopposed due to the obvious need to replace the trustee (although each case is highly dependent on its own facts). The question of whether bad behaviour is a necessary prerequisite for trustees’ and executors’ removal is less self-evident, however, and is explored further below.
Historically, the courts have shown reluctance to remove executors except in rare circumstances, as the testator’s choice of executor and trustee was viewed with deference.2 In more recent years, however, the courts appear to have taken a broader approach to removal applications that is less focused on the conduct of the executor or trustee. Instead, the courts now focus on the question of whether non-removal would be detrimental to the execution of the trust, and will intervene where the relationship between the trustees and beneficiaries or trustees and co-trustees is so fractious that it negatively affects the trust property or welfare of the beneficiaries.
Rose v. Rose
In Rose v. Rose,3 the Ontario Superior Court of Justice considered an application by the beneficiaries of a trust seeking to remove their father as trustee.4 The trust contained a cottage and chalet held for the benefit of Brian and Janice Rose’s two children, Kelsey and Ashleigh. After Brian and Janice separated, the children’s relationship with Brian soured and there was a dispute as to whether the intention of the trust was to immediately give full control of the assets of the trust to the children or rather, as asserted by Brian, to allow the properties to continue to function as rental properties that would eventually pass to the children upon the deaths of Brian or Janice.
Kelsey and Ashleigh became dissatisfied with Brian’s conduct as trustee as they believed that he was neglecting the cottage, had attempted to sell the chalet below market value, and had prevented them from using either property. Consequently they brought an application seeking an order removing Brian as the trustee and winding up the trust with the capital to be distributed to them. Brian brought a cross-application for rectification of the trust to allow him to use, occupy and enjoy the trust properties, and also sought to transfer the properties back into his and Janice’s names.
The court found that the trust deed did not allow Brian to use and enjoy the cottage and chalet without Kelsey and Ashleigh’s approval. It also found that Brian did not have the power to revoke the trust, and therefore he could not transfer the properties back to Janice and himself.
The court saw fit to remove Brian as the trustee, due in part to the poor relationship between him and his daughters.5 In the Court’s view, Kelsey and Ashleigh did not need to establish misconduct on Brian’s part, or that the blame for the fractious relationship lay with him, to succeed in removing him as trustee. The court was satisfied that the level of friction in the relationship was great enough to make the administration of the trust by Brian difficult.6 Brian was therefore removed as trustee and replaced with an independent solicitor.7
In light of this discussion, let’s return to the question posed at the top of the page – is it necessary to prove bad behaviour in order to succeed on an application to remove a trustee? Based on our review of Rose v. Rose, other cases8 and some secondary authorities the answer to this question appears to be “no”. This decision indicates that the applicant on a removal application may still succeed if he or she can establish that the future administration of the trust would be difficult, regardless of where the blame for the problem lies. This is indicative of the courts’ more open approach to such applications, which is less concerned with the conduct of the trustee and instead focuses on ensuring the effective future administration of the trust.
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- An individual appointed to administer the estate of a deceased person ↵
- Oldfield v. Hewson (2005), 14 E.T.R. (3d) 290 (Ont. S.C.J.) at para. 19; Re Thorpe (1929), 35 O.W.N. 325 (H.C.). ↵
- 2006 CarswellOnt 3776 (Ont. Sup. Ct.). ↵
- While this case involved the removal of a trustee of a trust formed during the parties’ lifetime, rather than an executor appointed by the will of a deceased person, courts have considered this case in applications to remove estate trustees – see for example: Venables (Litigation Guardian of) v. Gordon Estate, 2012 CarswellOnt 1467; Gabriele Estate v. Gabriele, 2015 CarswellOnt 14830 (Ont. S.C.J.) at paras. 27 and 44; McDonald Estate, Re, 2012 ABQB 704 at para. 105. ↵
- The court also found that Brian was in a conflict of interest as his personal interest in continuing to use the properties was adverse to that of the beneficiaries – see para. 76. For more on the role hostility played in this case and as a ground for removal see Mathew Stroh’s blog at https://www.wagnersidlofsky.com/friction-with-beneficiaries/. ↵
- Rose v. Rose, 2006 CarswellOnt 3776 (Ont. Sup. Ct.) at para. 74. ↵
- Rose v. Rose, 2006 CarswellOnt 3776 (Ont. Sup. Ct.) at para. 76. ↵
- See Consiglio, Re, (1973) 3 O.R. 326, 36 D.L.R. (3d) 658 (Ont. C.A.) at page 660. The Court of Appeal said,”It is our view that misconduct on the part of a trustee is not a necessary requirement for the Court to act and that the Court is justified in interfering, and indeed required to interfere, when the continued administration of the trust with due regard for the interests of the cestui que trust has by virtue of the situation arising between the trustees become impossible or improbable. There is no doubt that such a situation has arisen here” ↵