Written on July 12, 2013 – 11:53 am | by Angelique Moss
Sunday, July 14 is Bastille Day. This French national holiday commemorates the 1789 storming of a prison, which marked the beginning of the French Revolution. The act of storming the Bastille represented for many the soon-to-be French Republic’s three ideals: Liberty, Equality, and Fraternity.
What has become of fraternity? The case of Rousay v. Rousay provides an Ontario court’s answer. In that case, the plaintiff, Iain Robert Rousay (“Iain”) had commenced an action against his brother, John Rousay (“John”) and his sisters, Lauria Mae Lainson and Beverley Frances Rock (“Beverly”) (collectively “the defendants”). The claim arose out of the death of their mother, Mary Hoenderdos (“Mary”), and the disposition of her estate. Mary’s last will and testament (“Will”) named John and Beverley as the estate trustees of her estate. John was the sole beneficiary.
Iain claimed, among other wide-ranging relief, damages as against John on the grounds that John, as the power of attorney and estate trustee for Mary’s estate, committed fraud, resulting in unjust enrichment, and also that John caused Iain harm and deprived or excluded him from any benefit of the financial assets of Mary’s estate. He also claimed that John “maliciously spoke false statements to Iain regarding Iain’s legal inclusion in the estate”, that John “secretly sold the family home” and disposed of all the contents.
Not unsurprisingly given the alleged causes of action that Iain claimed, the defendants brought a motion to strike Iain’s claim pursuant to Rule 21 of the Rules of Civil Procedure on the grounds that the claim disclosed no reasonable cause of action and pursuant to Rule 25 on the grounds that the claim was frivolous, vexatious and an abuse of process.
Although Iain had pled that John owed him a fiduciary duty by virtue of his being a “potential beneficiary” of the estate, the court quickly determined that he was not, in fact, a beneficiary. The estate trustees accordingly owed no fiduciary duty to non-beneficiary “strangers” to the estate. Further, the court found that it had already been judicially determined (citing Ontario (Atty. Gen.) v. Ballard Estate, 1995 CarswellOnt 181 (Gen. Div. Commercial List) that a non-beneficiary to the estate does not have standing or capacity to bring an action against a trustee for breach of fiduciary duties owed to the beneficiaries of the estate. Iain’s claims as against John and Beverley in their capacity as estate trustees was dismissed.
But whither art thou brotherly love? Iain had also alleged that John owed him a fiduciary duty as a brother. The court noted that the essential elements required before a fiduciary relationship can be found are as follows: (1) the fiduciary has scope for the exercise of some discretion or power; (2) the fiduciary can unilaterally exercise the power or discretion so as to affect the beneficiaries’ legal or practical interest; and, (3) the beneficiary is peculiarly vulnerable to the fiduciary holding the discretion. The court found that there is no fiduciary duty arising from a filial relationship per se. Accordingly, Iain was required to set out in his pleadings the facts he relied upon to prove to the court that the elements of a fiduciary relationship existed (an “ad hoc” fiduciary relationship).
In order for an ad hoc fiduciary duty to arise, the court held that Iain had to show the following, “in addition to the vulnerability arising from the relationship, (1) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries; (2) a defined person or class of persons vulnerable to a fiduciary’s control (the beneficiary or beneficiaries) and (3) a legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control (citing Elder Advocates of Alberta Society v. Alberta, 2011 CarswellAlta 763 (S.C.C.).”
Unfortunately for Iain, his claim did not plead material facts to establish the requirements for an ad hoc fiduciary duty. For this reason, the court found that the pleading did not disclose a reasonable cause of action for breach of fiduciary duty and struck that portion of Iain’s pleading. (The court went on to strike all other portions of Iain’s pleading as well, without leave to amend, noting that Iain had already amended his statement of claim once before, and still the claim was “radically defective”).
Happy Bastille Day!