A “passing of accounts” refers to the process of formally preparing and presenting accounts to the beneficiaries and the court. The accounts are either approved (i.e., “passed”) in the form presented, amended by court order and passed in revised form, or not passed because the court is not satisfied with the accounts or some aspect of the administration of the estate or property being managed by a fiduciary. Pursuant to sub-rule 74.18(3) of the Rules of Civil Procedure, the notice of application on all persons with a financial interest in the estate/property under management.
Under section 49 of the Estates Act, RSO 1990, c E.21, the court has broad authority to scrutinize the accounts and conduct of the estate trustee/guardian and to make remedial orders. Because the court has broad discretion on a passing of accounts, the proceeding can be used to address a wide range of issues related to the financial administration by the fiduciary. However, it is not an appropriate venue to re-litigate issues. This was the central theme in BMO Trust Company v Childs, 2019 ONSC 2637.
In 2015, the BMO Trust Company (“BMO”) was appointed as guardian of property for Mrs. Childs. Two of Mrs. Childs’ four children, Caroline and Michael, were appointed her co-guardians of personal care. This represented a loss for Caroline and another brother, Peter, who had sought to be appointed as Mrs. Childs’ guardian of property instead of BMO. They brought a series of unsuccessful appeals of the judgment, which ended in May 2018 when their application for leave to appeal to the Supreme Court of Canada was dismissed.
As one of the terms of its appointment as Mrs. Childs’ guardian of property, BMO agreed to pass its accounts on a regular basis. On the first application to pass accounts, Peter filed a 21 page notice of objection seeking to have BMO removed as Mrs. Childs’ guardian of property. Peter did not rely on new evidence in his notice of objection (other than some unsupported allegations, such as a claim of conspiracy). Rather, Peter relied on evidence filed in the prior litigation.
Michael, as litigation guardian for Mrs. Childs’, brought a motion for directions regarding Peter’s standing in the application to pass accounts. Michael’s main point was that Peter was engaged in a bad faith attempt to re-litigate matters finally determined by the Court of Appeal.
The judge hearing the motion agreed with Michael – the Court held that Peter’s arguments amounted to an abuse of process and a collateral attack on the Court of Appeal’s prior decision. The Court further held (at paragraph 7 of the decision) that the effect of Peter’s notice of objection was to turn “what should be a simple accounting and oversight exercise into a lengthy and unproductive re-litigation of positions previously rejected by the court.”
In a guardianship matter, the only persons who may participate as of right in the application to pass accounts are the guardian and the representative of the incapable person whose property is under management. In this case, Michael was Mrs. Childs’ litigation guardian and the only person entitled to respond to BMO’s application to pass accounts. Given Peter’s “vexatious” conduct, the Court denied Peter standing to participate in the application to pass accounts and struck out his notice of objection.
However, the Court held that Caroline should be given standing to participate in the proceedings since Caroline lived with Mrs. Childs and had a particularly close relationship with her. Nevertheless, the Court held that while some of Caroline’s objections to BMO’s accounts were permissible, she was not entitled to re-litigate the appointment of BMO as Mrs. Childs’ guardian of property or Michael’s appointment as their mother’s litigation guardian.
Guardianship matters are among the most contentious and bitter fights under the umbrella of “estates and trusts” law. Memories are long, and there is a strong temptation for individuals to continue fighting even after the court has made a determination. However, res judicata is a founding principle of the common law – matters already decided and no longer subject to appeal cannot be reopened.