Haven't found a follow-up on this case, as it was appealed by WTS.
The result is summarized here: http://estatelaw.hullandhull.com/2014/02/articles/uncategorized/sawdon-estate-v-sawdon/
Sawdon Estate v. Sawdon
By Hull & Hull LLP on February 11, 2014 Posted in Uncategorized
Earlier this month the Ontario Court of Appeal released it’s decision in Sawdon Estate v. Sawdon. The decision provides an interesting discussion on cost awards in estate matters and in particular on the right of an estate trustee to be indemnified for the legal costs they incurred. I recently did a podcast with David Smith on this decision which should be posted today, but I think the case is worth further consideration.
I will briefly summarize the facts in this case below. The deceased, Arthur, was survived by his five children. Prior to his death he transferred seven bank accounts into joint ownership with a right of survivorship with two of his sons. The total value of the accounts was slightly over $1 million. He told his sons that upon his death the money was to be divided amongst his five children equally. He also left a Will which provided for specific bequests to his children and the residue to go to a charity called the Watch Tower. His son, Wayne, was appointed estate trustee. At trial, the Watch Tower argued that the bank accounts were held on a resulting trust for the estate. Wayne and the other children of the deceased took the position that the accounts were not estate assets. At trial, the Court found in favour of the estate trustee and beneficiaries and ordered the Watch Tower to pay the costs of the estate trustee on a partial indemnity basis. Wayne sought an order that the balance of his legal costs be paid out of the estate. The trial court declined to make that order. The Watch Tower appealed the decision, including the costs order. The estate trustee cross-appealed arguing that he should be indemnified from the estate for any costs not recovered from Watch Tower. The Court of Appeal dismissed Watch Tower’s appeal and granted the estate trustee’s request for indemnification from the estate. They reviewed the basic principles with respect to cost awards applicable in the circumstances. In particular, they discussed the case law which provides that an estate trustee should be indemnified for his or her legal costs out of the trust unless they have (i) acted unreasonably or (ii) acted in their own self- interest. In my opinion the most interesting part of this decision is the point made by the Court of Appeal that although Wayne took a position that the bank accounts were not part of the estate, and therefore he was not trying to enlarge the estate assets, the litigation did benefit the estate and he was not acting in his own self-interest. Rather, he was fulfilling his duty as ab estate trustee to verify the assets of the estate and to ensure that the testator’s wishes were carried out. The Court of Appeal was not troubled by the fact that Wayne stood to benefit in his personal capacity if the bank accounts passed outside the estate. They also said that the estate trustee had an obligation to present evidence in his knowledge about the deceased’s wishes, and it would not have been proper for him not to advance such evidence and remain neutral in the proceedings. Finally the Court of Appeal said that they saw no problem with making a “blended” costs award, where multiple parties pay a certain portion of the costs award. In reaching its decision, the Court emphasized that if estate trustees are faced with the prospect of personally paying costs, then more people will decline such appointments and more estate trustees will avoid bringing proper matters before the Court. This case should bring some comfort to estate trustees as it provides further authority for the proposition that estate trustees should ordinarily be fully indemnified for their legal costs out of the estate.
Thanks for reading!
The court record is here: http://www.canlii.org/en/on/onsc/doc/2012/2012onsc4042/2012onsc4042.html?searchUrlHash=AAAAAQAHamVob3ZhaAAAAAAB
Prior to TTATT, one would never have believed the depth of lying that WTS would go to grab cash.