This Blog was written by : Gosha Sekhon
In my previous blog post, I discussed the “what” and “why” of a passing of accounts. In this blog, I will provide a quick refresher on the technical process for a passing of accounts.
The procedure for an application to pass accounts in Ontario is set out at Rule 74.18 of the Rules of Civil Procedure. Taking a step back, Rule 74.16 states that “Rules 74.17 and 74.18 apply to accounts of estate trustees…” among others.
Rule 74.17 provides the exact form in which accounts must be presented to the Court. The form of accounts requires that the Estate Trustee shall have kept accurate records of the assets and transactions in the estate. It will require an accounting of all money received/disbursed, the purchase, income from, and realization of, investments, a statement of all assets in the estate, and a myriad of other details about the administration. Per the previous blog, the possibility of having to complete a passing of accounts is a key reason to maintain accurate and detailed records when administering an estate/trust.
Rule 74.18 then sets out the exact process for an application to pass accounts, including the material to be filed and requirements for serving notice of the application to various respondents, possibly including the Public Guardian and Trustee and/or the Office of the Children’s Lawyer if minors or individuals with a disability are involved.
The responding party is also guided by Rule 74.18 as to how to serve a Notice of Objection to Accounts, how to request Further Notice of the proceedings even if they are not objecting to the accounts, and the consequences if the party makes no response.
Depending upon the position taken by the parties to the application, the Court may then proceed to rule on the accounts with or without a hearing. The process for a Judgement on Passing of Accounts Granted Without Hearing is set out at Rule 74.18(9).
It is important to note that the default Costs granted when proceeding “Without Hearing” are in accordance with Tariff C. A party is, however, able to make a Request for Increased Costs. This too may be granted with or without a hearing, on a consideration of the documents submitted to the Court.
Finally, an applicant and responding parties should be prepared that the matter may proceed as a Contested Passing of Accounts involving a Hearing, per Rule 74.18(11.5). Often this is due to an objection regarding some aspect of the administration raised by a responding party and for which the Estate Trustee is not able to provide sufficient explanation or evidence regarding a transaction or decision.
In particularly contentious administrations, this process may even result in a Trial being directed by the Court per Rule 74.18(13.1).
While there may be situations where a passing is unavoidable, in reviewing the complex and time-consuming process required to pass accounts in court, Estate Trustees are well advised to keep thorough and detailed records of their administrations. This may well be another example of why engaging a professional Estate Trustee in your estate plan from the outset may be the best plan of action!