As many of our readers may know, estate trustees have a duty to account to the beneficiaries of an estate for the property they administer. Beneficiaries are entitled to be kept informed and can reasonably expect transparency and communication from the estate trustee in this regard. Oftentimes, an estate trustee will deliver accounts to beneficiaries to demonstrate what funds have come into the estate, and what funds have been paid out. The accounting is effectively an estate audit and the beneficiaries can then ask questions or ask for supporting documentation from the estate trustee. This process is often referred to as an ”informal accounting”, as it takes place outside of the court process and is generally a more cost effective and efficient way of resolving issues relating to the administration of an estate by an estate trustee.

However, if an estate trustee refuses to account or provide information to beneficiaries regarding the administration of an estate, a passing of accounts application may be necessary. The passing of accounts application initiates a judicial “inquiry” into the affairs of an estate (Wall v. Shaw, 2018 ONCA 929, para. 47.). As such, passing of accounts applications are frequent in the world of estates and trusts litigation. The April 2024 case of Huang v. Nie, 2024 ONSC 2398 (“Huang”) provides a good refresher on the law relating to these applications.

In Huang, the deceased died in September 2019 without a will. The applicant was the deceased’s minor son and the respondent was the deceased’s widow (both of whom were beneficiaries of the estate). The widow had expressed an interest in remaining in the deceased’s home and managing her son’s property as a court-appointed guardian.

On behalf of the minor, the Children’s Lawyer (the “CL”) repeatedly requested from the respondent, who was issued a Certificate of Appointment of Estate Trustee without a Will on February 10, 2022, a list of assets owned by the deceased at date of death; a list of debts at date of death; and a list of all receipts (money received) and disbursements (money spent) since date of death, along with a list of any outstanding debts, among other things. The CL also advised the respondent’s counsel, “an estate trustee without a will is required to administer the estate in a timely manner by selling assets, paying debts, and making a distribution to the beneficiaries, and any deviation from that would require my office’s consent and likely a court order.” No responses were received to the requests for information, and so an application to compel the widow/estate trustee to pass her accounts was brought by the CL.

An application for an order requiring an estate trustee to pass accounts may be brought by any person “who appears to have a financial interest in an estate” (Rules of Civil Procedure, R.R.O. 1990, Reg. 194., Rule 74.15(1)(h)). The Court explained at paragraphs 12 – 15 of its decision that an estate trustee has a duty to keep proper books of account and to be always ready to account (Wall v. Shaw, 2018 ONCA 929, para. 23). Further, while there is no obligation on an estate trustee to file the accounts of the estate or to bring an application to pass accounts, an estate trustee may be compelled to do so pursuant to s. 50(1) of the Estates Act, R.S.O. 1990, c. E.21.

Justice Faieta went on to state: “An order for the passing of accounts may be required when an applicant raises a significant concern in respect of the estate trustee’s management of the estate whether related to misfeasance, wrongdoing or a significant erosion of estate…” The Court noted that more than 4.5 years had passed since the deceased’s demise and more than 2 years had passed since the respondent was appointed as estate trustee. The respondent ignored the CL’s correspondence and requests for information and “and most significantly, her son’s interests as a beneficiary of his father’s estate and in having the estate administered in a timely and transparent manner.”

Accordingly, the respondent was ordered to file accounts in accordance with rules 74.17 and 74.18 of the Rules of Civil Procedure within 45 days. The CL was awarded its costs fixed in the amount of $5,000.00.