In the recent case of Sassano v. Iozzo, 2024 ONSC 1517, the Court reviewed the applicable legal principles regarding passing over an estate trustee, and found that in the circumstances of the case, it was appropriate to pass over one of the named co-estate trustees.

In this case, the applicant sought, among other relief, the removal of the respondent, her sister, as an estate trustee of their mother’s estate. Their mother passed away in 2011, and the applicant and respondent were named as the co-estate trustees of her estate. The principal asset of the estate was a property purchased by the deceased in 1981. The applicant moved into the property in 1985, and lived there with the deceased until the deceased died.

The deceased’s Will provided that the applicant was permitted to continue residing in the property until the occurrence of the earliest of four specified events, after which the property shall be sold and the proceeds of the sale divided equally between the two residuary beneficiaries of the estate, the applicant and the respondent. One of the specified events was if the applicant voluntarily left the property with the intention of taking up permanent residence elsewhere.

In April 2023, the applicant notified the respondent (by letters to her lawyer and through a real estate agent) that she no longer wished to live in the property and intended to move to another residence. The property was in a state of disrepair and the applicant could not maintain the property due to  physical limitations resulting from her medical conditions.

The applicant deposed that she had not received any response from the respondent. In fact, the applicant swore that she had not spoken to the respondent since 2012 and had not seen her in person since 2008. The applicant submitted that her relationship with the respondent became strained as a result of disagreements over the care of the deceased in her elder years.

Of utmost importance was the fact that, since their mother died, the two sisters had not applied for a certificate of appointment as the co-estate trustees.

The Court started their analysis by recognizing that the court has inherent jurisdiction to remove trustees as embodied by the case law and by s.37 of the Trustee Act, R.S.O. 1990, c. T.23. However, the Court further recognized the principles echoed by the Court of Appeal in Chambers v. Chambers, 2013 ONCA 511 that an estate trustee can only be technically removed after they have received a certificate of appointment. If a certificate of appointment has not been issued, the executor is passed over, not removed.[1] In quoting the Court of Appeal in Chambers: “[p]ut another way, a person is removed as estate trustee after he or she has assumed authority to administer the estate, whereas a person is passed over as estate trustee prior to having assumed authority to administer the estate.”[2]

Due to the fact that neither of the co-estate trustees had applied for a certificate of appointment and the evidence showed that the respondent had not, at any time, assumed authority to administer the deceased’s estate, the Court stated that the respondent could not be removed although she could be passed over.

The Court further stated that the principles for passing over an estate trustee are the same as the grounds for removing an estate trustee and referenced Chambers to provide guidance on the proper factors to take into account when considering whether to pass over an estate trustee. Among other considerations:

• The court should not lightly interfere with a testator’s choice of the person to act as his or her estate trustee;
• The wishes of the testator will generally be honoured, even if the person chosen is of bad character; and
• The court should only pass over an estate trustee on the clearest of evidence and if there is no other course to follow.[3]

Conversely, the Court emphasized that an estate trustee may be passed over where they are endangering the trust property,[4] and that the paramount factor and the Court’s main guide should be the welfare of the beneficiaries.[5]

The applicant put forward evidence that the respondent’s husband had told the real estate agent (who went to the respondent’s house at the applicant’s instruction) that the respondent had received the letters from the applicant but was not interested in helping her fix up or sell the property and would not speak to her. The respondent’s husband further stated that the respondent had no interest in the property or in any estate proceedings.

The Court concluded that the respondent was endangering the property, the estate’s principal asset, by not taking any steps to collaborate with the applicant, and that the property was “wasting away”.

The Court acknowledged that the deceased’s wish to have both of her daughters as estate trustees should not be lightly interfered with and that passing over is a remedy of last resort. However, there was clear evidence that the respondent’s inactivity and refusal to cooperate was impeding the proper administration of the estate and the welfare of the applicant as one of its beneficiaries. As a result, the respondent was passed over as an estate trustee and the applicant was constituted as the sole estate trustee of the estate.

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[1] Chambers v. Chambers, 2013 ONCA 511, at para 90.

[2] Ibid.

[3] Chambers v. Chambers, 2013 ONCA 511, at paras 95-96.

[4] Di Michele v. Di Michele, 2014 ONCA 261, at para 84.

[5] Radford v. Radford Estate, 2008 CanLII 45548 (ON SC), at para 103.