25 Nov When Will An Estate Trustee Have To Personally Pay The Costs Of Litigation?
I have written before that accepting the role of Estate Trustee can be a headache instead of an honour. However, there can also be a downside such as having to personally pay litigation costs. This article will not cover all the circumstances and items for which an Estate Trustee may be personally responsible but will cover an example of when distrust and suspicion between trustees escalated and caused one Estate Trustee to be ordered to personally pay $30,000.00 of the legal costs of the other trustee.
It seems that one of the Trustees, P did most of the estate administration and kept track of the expenses. During the course of the administration, C asked for financial disclosure. P resisted. The resistance led to further suspicion and further inquiries. Eventually C moved for directions and to force P to make disclosure. P then moved to pass the Estate accounts.
Both applications were somewhat successful. C received disclosure and successfully established that about $20,000.00 of estate expenses were not valid. P successfully established that the rest of the accounting was good.
Of course, at the end of the day, was the really big question “who pays”. The judge considered the amounts submitted to be an accurate reflection of the amount of actual time and costs. However, C had insisted that the proceedings move forward in French. This caused P to incur translation expenses. P sought reimbursement of those expenses and was denied. The judge ruled that P should have been practical and retained a French lawyer.
The judge was less tolerant of C’s behaviour. While the judge stated that P’s initial resistance to making disclosure had increased C’s suspicion, C took things too far by advancing allegations of bad faith and wrongdoing in the absence of any evidentiary basis. Because of this, the judge ordered C to personally pay $30,000.00 of the legal costs.
The Lesson: I have often said, that it is better to scale back allegations of wrongdoing and let a judge think the wrongdoing is worse than to exaggerate and have a judge think you are wrong. Allegations of bad faith or fraud will likely bounce back and make you look worse than the party you are trying to smear.
As a co-trustee you have an obligation to share ALL financial records with your co-trustees within a reasonable time of requests. Failure or, worse, refusal to do so does not sit well with the court. If you cannot cooperate, do not take the role of co-trustee. If you do not like your work being scrutinized, do not take the role, co-trustees and beneficiaries have the right to review what happened and make reasonable inquiries, you will have to allow them to do that. Resistance generally causes problems as was the case above.
Cardinal v Perreault, 2020 ONCA 4825
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Gwendolyn Adrian acts on a wide variety of commercial, business and legal disputes including contractual shareholder and property disputes and defamation. Additionally, she represents both beneficiaries and estate trustees in estate disputes including passing of accounts and disputed passing of accounts.