In MacBeth Estate v. MacBeth, 2025 ONCA 360 CanLII (“MacBeth Estate”) the lower court’s decision was affirmed by the Ontario Court of Appeal. The appellants appealed the lower court’s decision on the basis that the motion judge (i) erred in denying the appellants an adjournment; (ii) erred in removing them as estate trustees; and (iii) erred in permitting a holdback of only $50,000 (the estate trustees argued for a much larger holdback of $450,000).

In MacBeth Estate, John was the only beneficiary of the estate. John sought the removal of the two estate trustees. As part of John’s removal motion, he argued that the estate trustees sold the cottage triggering significant capital gains tax ($600,000) when they could have transferred the cottage to him as part of his inheritance. John argued that the estate trustees failed to notify him of the sale of the cottage, and proceeded with the sale despite advance warning of the tax consequences. John further argued that the estate trustees made it difficult for him to collect his personal belongings from the cottage before the sale. As sole beneficiary, the motion judge found that John had lost all trust in the estate trustees.

The OCA noted that whether to grant or deny an adjournment request is “quintessentially an exercise of judicial discretion” and that appellate intervention on the ruling of an adjournment request is limited. The OCA reviewed some of the factors to be considered by the court in determining an adjournment as set out in Toronto Dominion Bank v. Hylton, 2010 ONCA 752 CanLII, including a) the evidence and strength of the evidence of the reason for the adjournment request; b) the history of the matter; c) the prejudice to the party resisting the adjournment; and d) the consequences to the requesting party.

When John brought his removal motion, the estate trustees sought an adjournment on the basis that one of them was recently diagnosed with cancer. However, the OCA noted that the motion judge found no contentious facts at issue on the motion. Moreover, the motion judge did not agree that the reason for the adjournment request (the cancer diagnosis) had prevented the estate trustees from carrying out other estate administration asks the week before the removal motion. Nor was it clear to the motion judge what evidence, if any, the estate trustees would file if the adjournment was granted. Lastly, the motion judge found that John would suffer prejudice if the removal motion was delayed. In all, the OCA found that there was no basis for appellate intervention. The decision to deny the adjournment request was the motion judge’s “call to make”.

Turning to whether the motion judge erred in removing the estate trustees, the OCA noted that this is a “discretionary decision that is afforded a high degree of deference.”  The OCA found that the motion judge correctly set out the test for the removal of an estate trustee and the high bar to do so. In ordering the removal of the estate trustees, the motion judge found that the estate trustees would likely mishandle the estate moving forward. The OCA found that there was “ample” evidence before the motion judge to make such a finding.

The last ground of appeal was the appellants’ assertion that the motion judge erred in ordering a holdback of only $50,000. What is clear from reading the OCA decision is that the legal issues between the former estate trustees and the beneficiary did not end after the removal motion. A passing of accounts would be heard. The argument about the quantum of the holdback was, ostensibly, driven by the estate trustees’ concern regarding payment of their legal costs. A many who read this blog know, if a passing of accounts is contested then a hearing is required and a judge may make directions with respect to the hearing and issues. The costs of a contested passing of accounts can be significant. However, the OCA noted that the holdback issue and its quantum were not raised by John on the removal motion. Nor did the estate trustees file their own motion seeking an order allowing a holdback. The issue was raised before the motion judge when the estate trustees put forward their offer to settle which included a holdback of $450,000.

Despite the fact that the quantum of the holdback was not properly before the court, the motion judge nonetheless heard submissions before ordering a holdback of $50,000. The OCA pointed out that the appellants could still seek to recover costs already incurred or incurred as a result of passing their accounts; the motion judge’s decision did not prevent the estate trustees from doing so. In dismissing the appeal, the OCA ordered the appellants to personally pay the respondent $21,000 in costs as the appeal was unnecessary and not brought in the interests of the estate. MacBeth Estate serves as a reminder that the removal of an estate trustee is a highly discretionary decision that will be given much deference by an appellate court, and that the legal costs of a fiduciary are not automatically paid from the trust property.