In a recent Ontario estate case, the court denounced the conduct of the testator’s son as being like a “proverbial dog in the manger”. The son had objected to the completion of a sale agreement that benefitted the estate.
Son Brings Several Claims in the Administration of His Father’s Estate
The testator died on December 6, 2019. He had made a last will and testament dated November 13, 2018, in which he appointed a lawyer as the estate trustee and left the entirety of his estate to his late wife’s daughter. The 2018 will revoked a previous will in which the son was a one-half beneficiary along with the daughter.
The testator’s son challenged the validity of the testator’s 2018 will, claiming that it was invalid for reasons related to issues of capacity and undue influence.
In December 2019, while the action challenging the 2018 will was still pending, the son filed a notice of objection with the court to prevent the issuance of a certificate of appointment of the lawyer as estate trustee, which was successful.
An urgent motion was subsequently bought by the lawyer who was to be named as estate trustee and the testator’s late wife’s daughter, seeking permission to sell the testator’s property.
Son Objects to Urgent Motion for Sale of Testator’s Property
The lawyer and the late wife’s daughter sought a court order authorizing the lawyer to complete the sale of the testator’s property. An agreement of purchase and sale had been entered into in June 2020 with two buyers in Toronto. They further sought an order that the net proceeds of the sale be deposited in a trust account with the lawyer’s firm to be held on behalf of the testator’s estate until further order.
The son did not object to the sale itself and acknowledged the buyers were genuine third-party purchasers. While he agreed the sale should be completed, he objected to the purchase being finalized by the lawyer as he was part of the larger estate litigation.
Relying on previous case law, the son argued that the lawyer should not be permitted to handle any of the estate’s assets as he was a party litigant and was in a position adversarial to the son. The son further submitted the lawyer was in a conflict with the estate regarding the sale of the property given the outstanding will challenge.
The son’s last argument alleged the lawyer’s sale of the property as estate trustee gave rise to a claim for breach of trust. He claimed the lawyer should not have entered into the sale agreement because he knew the son would challenge the 2018 will. The son stated the lawyer’s actions had caused damage to the estate because the property was worth more at the time of the hearing than at the time the sale agreement was signed.
Court Finds Lawyer Owed No Fiduciary Duty to the Son so Long as 2018 Will is Valid
At the outset, the court rejected the son’s reliance on the cited case law as it was distinguishable from the circumstances of the case at hand. The court then held the will was valid until proven otherwise. As the son is not a beneficiary under the will, the lawyer owed no fiduciary duty to him and only owed a duty to the wife’s daughter. As a result, the court found the son had no breach of trust claim against the lawyer so long as the 2018 will remains valid.
The court, therefore, held that the son’s arguments were both technical and theoretical. The court further found that the son had been unconvincing about any need or benefit to the estate to replace the lawyer to conclude the sale of the property.
Court Likens Son’s Behaviour to a “Dog in the Manger”
Not only did the court reject the son’s arguments, but it also found there were several reasons why preventing the lawyer from completing the sale would be detrimental and unadvisable.
First, the court noted that the sale agreement dated back to June 2020. It found that the delay in the sale completion had left the buyers in limbo and that the buyers could have sued the estate for breach of contract and damages, although they had not done so. In addition, the court stated that removing the lawyer as estate trustee would only further push back the sale completion date, which the court described as an “intolerable delay”.
Additionally, the court noted that even without the certificate of appointment, the lawyer had not been released from his obligations as estate trustee. The lawyer was not a beneficiary of the estate, nor did he have a financial stake in the outcome of the son’s will challenge. Conversely, the son did have a financial stake in the challenge as he would become a beneficiary under the previous will if the 2018 will was declared invalid.
Further, the court noted that the daughter had been paying all of the carrying costs of the estate, including the costs of the property, out of her own pocket. It determined that any further delay in concluding the sale would result in additional expenses to the daughter. Noting that the son, in contrast, had paid none of the carrying costs or expenses, the court stated:
“I agree with counsel for the [lawyer and the daughter] that the [son] is, in this sense, behaving like the proverbial dog in the manger.”
Court Orders Lawyer to Complete Sale of Property
The court observed the lawyer was a member in good standing of the Law Society of Ontario. As such, he is liable to account and is subject to stringent rules of professional conduct and requirements for managing trust funds. The court found no evidence that the lawyer represented a risk to the preservation of the estate assets and was fulfilling his duty to bring in, liquidate, and hold the assets of the estate until distribution.
As a result of these considerations, the court dismissed the son’s objections and ordered the lawyer to complete the sale of the property and to hold the net proceeds in a trust account for the estate.
Contact Campbells LLP in Oakville for Advice and Representation in Estate Litigation Matters
The estate team at Campbells LLP provides guidance to clients at all stages of the estate planning process. When disputes arise and litigation becomes necessary, we provide experienced and skillful advocacy in the courtroom.
To find out how we can help with your estate matter, contact us at 905-828-2247 or reach out online.