All About Estates

Does the Estate Trustee Always Participate in Estate Litigation?

One of the duties of an estate trustee is to respond to litigation brought against the estate. The estate trustee is also the only person with the authority to start litigation on behalf of the estate. Because estates are not legal entities such as corporations, the party to the litigation is the estate trustee, not the estate. If the estate is named as a party to the litigation, the title of proceedings must be corrected to name the estate trustee (and not the estate) as soon as possible. The process for fixing the title of proceedings where the estate was improperly named as a party is set out at rule 9.03 of the Ontario Rules of Civil Procedure.

On occasion, someone may wish to start a lawsuit against an estate before an estate trustee has been appointed. In that case, rule 9.02 allows the court to appoint a litigation administrator to represent the estate for the purposes of the proceeding. The litigation administrator’s role is limited to responding to the litigation (or bringing it, as the case may be). The litigation administrator does not have the authority to administer the estate. However, similar to an estate trustee, the litigation administrator is insulated from personal liability for the lawsuit. Subrule 9.02(2) reads: “An order in a proceeding to which a litigation administrator is a party binds or benefits the estate of the deceased person, but has no effect on the litigation administrator in a personal capacity, unless a judge orders otherwise.”

On rare occasions, it may be appropriate for a court to appoint an estate trustee and someone else as litigation administrator. One such instance was McQuoid v Patterson, 2020 ONSC 7680.

Arthur Patterson Jr. died on April 2, 2019, without a will. He was survived by his common-law wife and biological son.

The common-law wife voiced her intention to commence an application for dependant support pursuant to Part V of the Succession Law Reform Act. At the same time, the common-law wife questioned the biological son’s entitlement to inherit the estate on intestacy, as he had become a Crown Ward as a child as was estranged from his father when Mr. Patterson died.

The biological son brought a motion to determine procedural matters before the main issues in dispute were decided. Namely, the biological son sought the appointment of a neutral estate trustee on the basis that both he and the common-law wife had conflicts of interest which disqualified either of them from taking on the role.

First, the court considered the appointment of a litigation administrator to respond to the common-law wife’s claim for dependant support. With regards to rule 9.02, the court found that the biological son had first entitlement to be appointed in that role and was in the best position to respond to the common-law wife’s claim.

However, the court held that it would not be appropriate to appoint the biological son as estate trustee at this time. With regards to sub-rule 75.06(3) of the Rules of Civil Procedure, the court held that it has the inherent power to appoint an estate trustee during litigation to manage and safeguard the estate assets while the litigation between the common-law spouse and biological son was ongoing. In reaching its decision, the court took into account the following factors:

  1. Whether the trustee may be a witness in the litigation;
  2. Potential for conflict of interest;
  3. Conflict between the interests of the trustees and/or beneficiaries;
  4. Hostility between the trustees and/or beneficiaries;
  5. Lack of communication between the parties; and
  6. Evidence of settlement discussions that exclude some of the parties.

In reaching its decision, the court also took into consideration the size of the estate. Where an estate is modest, or is simple or straightforward to administer, the costs of an estate trustee during litigation may be more difficult to justify. In those cases, it may be appropriate to appoint one of the parties as estate trustee, while imposing clear restrictions and terms on their powers.

In this case, both the biological son and the common-law wife sought the appointment of a neutral estate trustee and the court agreed.

While rare, the estate trustee’s duties may be separated and divided between two people. In this case, the biological son was granted the right to represent the estate’s interests in the litigation, while a neutral estate trustee administered the estate pending a final determination each parties’ claims. This type of division of duties is usually only done where it will create a more cost and time efficient outcome.

About Gillian Fournie
Gillian is a lawyer with de VRIES LITIGATION LLP. Her practice focuses on the area of trusts and estates litigation. gfournie@devrieslitigation.com

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