A recent case of the Ontario Superior Court (Silva et. al v. Silva (Estate of)) demonstrates the wide remedies available to beneficiaries whose interests have been prejudiced by the misconduct of an estate trustee.

Jose Lima Silva died without a will on June 24, 2015. He was survived by 5 children and appointed one of his sons, the respondent, as the estate trustee of his estate. The other four adult children brought an application seeking, among other things, the removal of the respondent as estate trustee.

The estate trustee swore an affidavit responding to allegations of non-disclosure and misrepresentation of assets of the estate. Among other glaring discrepancies with the estate trustee’s evidence, his application for a certificate of appointment of estate trustee declared the value of the estate to be $117,000.00, whereas four months later he declared the value of the estate to be $36,000.00. It also became clear that the respondent paid himself $32,544.00 from the estate bank account.

Justice Price found that the evidence supported an inference of fraud and justified the respondent’s removal as estate trustee and an order that he pass his accounts. But, notably, the court went beyond that and found that the respondent’s conduct also warranted an injunction prohibiting him from disposing or encumbering any further assets of the estate. Interestingly, Justice Price also held, “There is, additionally, ample basis for a request that the police undertake a criminal investigation of the Respondent’s conduct.”

The court went on to review the five requirements for a Mareva injunction and their applicability to the case at bar; specifically:

• The applicant must make full and frank disclosure of all material in their knowledge. The applicants’ evidence set out their various concerns including, among other things, the discrepancy between the values of the estate as provided by the respondent, as well as the fact that he lavishly spent money on a car and a vacation (while he was unemployed) and ultimately claimed that there would be no residue to distribute to the applicant siblings, who were equal beneficiaries of the estate;

• The applicant must give particulars of the claim against the respondent stating the grounds of the claim and the amounts. Justice Price found that the applicants had done so with the particulars stated above;

• The applicant must give grounds for believing that the respondent has assets in the jurisdiction. The applicants provided evidence regarding the respondent’s home and of the estate’s assets;

• The applicants must give grounds for believing that there is a real risk of assets being removed or disposed of or otherwise dealt with so that the applicants will be unable to satisfy a judgment awarded to them. The diminishing estate, even on the respondent’s own evidence, satisfied this requirement; and

• The applicants provide an undertaking as to damages. The court found that this was not necessary in the circumstances as the estate itself is an asset which the applicants had an interest in and that would be sufficient to satisfy the applicants’ potential liability if they were ultimately mistaken regarding the estate trustee’s misconduct.

Given the respondent’s actions, he was also ordered to provide an affidavit or statutory declaration listing all of his assets, wherever situated and whether in his name or not, and whether jointly or solely owned. A certificate of pending litigation was issued on the respondent’s home and he was ordered to pay the applicants full indemnity costs.

This case is noteworthy as the court went beyond making the ordinary orders of, for example, requiring the estate trustee to pass accounts and removing the estate trustee from his position. It demonstrates the personal exposure to liability an estate trustee faces when he/she fails to properly administer and manage an estate.