In a Will challenge proceeding, the Court in Lugarich v. Fabris, 2021 ONSC 7294, considered the interlocutory issue of whether to authorize the estate trustee appointed pursuant to the challenged Will to complete the sale of a residential property, or whether an estate trustee during litigation should be appointed to close the transaction.

The Facts: 

The Deceased died on December 6, 2019, leaving a Last Will and Testament dated November 12, 2018 (the “2018 Will”). In the 2018 Will, the Deceased appointed a solicitor, Antoine-René Fabris (“Mr. Fabris”), as estate trustee, and left his entire Estate to his late wife’s daughter, Victoria Elund (“Victoria”). The Deceased’s son, Josef Lugarich (“Josef”), challenged the validity of the 2018 Will on the basis that the Deceased lacked testamentary capacity and was unduly influenced when he signed the 2018 Will. Josef filed a Notice of Objection with the Court in December 2019, which paused the issuance of a certificate of appointment of estate trustee to Mr. Fabris. Joseph was a 50% beneficiary of the estate under the Deceased’s prior Will.

On June 7, 2020, Mr. Fabris entered into an agreement of purchase and sale with Rudy Langeballe and Bernadette Langeballe (the “buyers”) to sell the Deceased’s property at 10 McCully Street in Toronto (the “Property”). Josef was opposed to Mr. Fabris acting as estate trustee in completing the transaction or in administering any assets of the estate because Mr. Fabris was party to the Will challenge, was in an adversarial position vis-à-vis Josef, and was in a conflict with the estate in light of the Will challenge. Josef argued that, because of the Will challenge, the very foundation of Mr. Fabris’ authority to administer the estate had been called into question. As such, Mr. Fabris committed a breach of trust by entering into the agreement of purchase and sale, which caused damages to the estate as the Property was now worth more than it was in June 2020. Josef therefore took the position that the sale should be concluded by an estate trustee during litigation, and not Mr. Fabris.

Mr. Fabris and Victoria brought a motion to the Court for an Order authorizing Mr. Fabris to complete the sale of the Property.

The Motion:

The Court rejected all of Josef’s arguments, as they “fundamentally misunderstand his position in the litigation”. The 2018 Will was presumed valid until Josef proved otherwise. Joseph was not a beneficiary under the 2018 Will. As such, Mr. Fabris owed no fiduciary duties to him, and so Josef could have no claim against Mr. Fabris for breach of trust.

In addition, Josef failed to identify any reason why Mr. Fabris should be replaced in order for the sale of the Property to be concluded with the buyers, and replacing Mr. Fabris would only serve to delay the sale.  The buyers were a young couple with young children who had been left in limbo for over year. The buyers were at risk of suing the estate for breach of contract and damages. Without an estate trustee, the sale could not close and a motion would still be necessary to resolve the issue of whether an estate trustee during litigation should be appointed.

Notwithstanding the Will challenge and the lack of a certificate of appointment of estate trustee, Mr. Fabris was named as estate trustee in the 2018 Will and had fiduciary obligations to the estate. Mr. Fabris had no financial interest in the estate. Mr. Fabris was also a lawyer who was subject to strict rules of professional conduct and could be compelled to account for his estate administration.

The Court therefore ordered that: Mr. Fabris should act as estate trustee to close the sale; he was to retain an independent real estate lawyer to act for the estate on the closing; Josef was to receive all closing documents and any concerns raised could be dealt with on the Will challenge; the net proceeds were to be held in trust by Mr. Fabris’ firm pending written agreement or Court order; and Josef could have the Property appraised for fair market value to be used in the Will challenge. The motion for the appointment of an estate trustee during litigation was also scheduled.

The Take Away:

This case shows that an executor appointed under a Will, who has with no financial interest in the estate, will not be automatically stripped of his authority to administer the estate simply because the validity of the Will appointing him has been called into question. Moreover, a Court will not lightly permit an estate to be exposed to claims (such as for breach of contract by disappointed buyers) simply because of the Will challenge, absent compelling evidence that the estate trustee has not acted in accordance with his fiduciary duties.