In a recent Ontario decision, a bank applied to court after it found that it was holding over $670,000 on behalf of a deceased client. Because the deceased’s estate had not yet been established, the bank sought to deposit the money into court and extinguish any of its possible liabilities regarding the funds.

Bank Wants to Dispose of Deceased’s Funds

The deceased had acquired exclusive title to a property in Ontario in 2006.

However, per the terms of the agreement with her bank, following a default on her mortgage, the property was sold by the bank for the sum of $985,000. This ultimately resulted in the bank holding a surplus of funds available for distribution in the amount of $670,624.

Because the deceased had passed away, the bank had been in contact with the lawyers for the deceased’s estate about what to do with the surplus funds. However, no estate trustee had yet been appointed. Additionally, while some of the deceased’s family members had applied to be the estate trustee, none had expressed interest in the surplus funds.

Thus, the bank brought an application to court to determine what to do with the money. The bank wanted to pay the funds into court to extinguish its liability while waiting for the estate to be established.

Court Orders Payment Into Court

The court began by explaining that what the bank was essentially seeking was an interpleader order, which is an order that money be paid into court.

Pursuant to Rule 43.02 of the Rules of Civil Procedure, a party may seek an interpleader order where:

• “two or more persons have made adverse claims in respect of the property”; and,
• the person seeking the order “claims no beneficial interest in the property, other than a lien for costs, fees or expenses”, and “is willing to deposit the property with the court or dispose of it as the court directs.”

Additionally, the court determined that the bank was holding the surplus funds in trust pursuant to the Trustee Act. It then explained that under s. 36 of the Trustee Act, a court may order the payment of trust funds into court where the sole trustee seeks to do so and cannot obtain the concurrence of parties of interest in the trust funds. Section 36 states:

Where any money belonging to a trust is in the hands or under the control of or is vested in a sole trustee or several trustees and it is the desire of the trustee, or of the majority of the trustees, to pay the money into court, the Superior Court of Justice may order the payment into court to be made by the sole trustee, or by the majority of the trustees, without the concurrence of the other or others if the concurrence cannot be obtained.

The court then determined that because the bank had no interest in the surplus funds and the deceased’s estate had not yet been constituted, there was no reason to require the bank to continue to hold the funds in trust pending determination of who was entitled to the funds. As such, the court held that the bank had met the legislative requirements to obtain an order for the payment of the surplus funds into court.

Additionally, the court declared that upon payment of the surplus funds into court, the bank’s liability would effectively be extinguished.

Finally, because the deceased’s family members had failed to respond or indicate interest in the surplus funds, the court ruled that the bank was entitled to costs for the court proceedings.

Get Help 

Estate disputes are complicated: they involve high levels of emotion, usually by individuals who are grieving the loss of a family member or who are dealing with a loved one who is very ill. Such disputes can become quite lengthy and can take months or even years to resolve, prompting individuals to take sides, creating acrimonious divisions, and eating into the value of an estate.

At Campbells LLP, our team of compassionate and highly skilled Oakville estate litigation lawyers have been assisting clients with estate disputes and resulting litigation since 1999. We are proud of the strong, long-lasting relationships that we build with our clients and provide a steady sounding board and legal advice to guide them through what can be one of the most emotionally draining times in their lives. With our help, we can ensure that the legacy of our client’s loved ones is carried out exactly as they wished, that their health and well-being is taken care of, and that their estate is protected.

At Campbells LLP, our exceptional estate lawyers can represent you in all estate litigation matters. We know that many individuals work during the week and cannot meet during the day. One of our lawyers would be pleased to meet you in the evening or during the weekend, by appointment, if your schedule so requires. Contact us online or at (905) 828-2247. We look forward to speaking with you and going through this process by your side.