In the usual litigation battle, a release operates as a “shield” in the sense that if a beneficiary sues an estate trustee, the estate trustee can use the release as a defence. In Re: Sheard, the estate trustees were able to use signed releases to preclude them from having to pass their accounts for the period covered by releases.
In Re: Sheard, the estate trustees made two interim distributions. Each distribution cheque was accompanied by an accounting for the period, and a request that the beneficiaries execute a release in respect of the accounting period. The beneficiaries did so for the first two accounting periods, which ended July 1, 2009. However, the objecting beneficiaries refused to sign a release in respect of the third accounting period. Despite the refusal to sign releases, the estate trustees paid the third distribution. They then commenced an application to pass their accounts for only the period that had not been released (ie from July 1, 2009 onwards). The beneficiaries objected and sought an order that the estate trustees be required to pass accounts going back to the date of death.
The court required the beneficiaries to bring a motion to set aside the releases as a preliminary step. This, in my view, made a great deal of sense from a procedural perspective. It would have been unfair to require the estate trustees to account back to date of death, then respond to any objections arising from the first two accounting periods by raising the releases in defence.
The releases had been signed more than two years before the commencement of the motion to set them aside. The judge found that “since the grandchildren’s claim is really a new claim asserted in an estates application it seems to me that it should be treated in the same way as an originating process starting a proceeding and thus subject to the provisions of the Limitations Act. The court dismissed the motion to set aside the releases on the basis that it was statute- barred.
Even if the motion had not been out of the time, Justice Mesbur held, she was not persuaded that there was any reason to set the releases aside. Although the releases were signed without independent legal advice, and the accounts were alleged to be incomplete and inaccurate, the Court found that neither the lack of ILA nor the alleged errors in the accounting (even if true) would invalidate the releases. Moreover, the Court did not agree with the submission on behalf of the beneficiaries that the releases lacked consideration.
This decision is a great precedent for those who act as fiduciaries.
Thanks for reading,