On Wednesday I blogged about the decision of the Ontario Superior Court of Justice in the McDougall Estate. The case involved a handwritten will and codicil made by the deceased that was difficult to decipher. A dispute arose between the estate trustee and the residual beneficiary about whether the will authorized the estate trustee to make a charitable gift. Ultimately, van Rensburg J. found that although the deceased had intended that a charitable gift be made, the gift failed because the deceased had failed to specify the amount.
Given that the estate trustee had already made the $10,000 donation, an issue arose as to what recourse the residual beneficiary of the estate had. The beneficiary argued that as the donation had been improper, the estate trustee ought to be required to repay it (as well as the travel expenses incurred delivering the funds to the charity). The estate trustee took the position that notwithstanding that she had made the donation in error, she had acted reasonably and in good faith and ought not to be held personally liable.
Section 35 of the Trustee Act provides the court with the authority to relieve a trustee from liability for an improper act if it is satisfied that the trustee acted reasonably and honestly. Additionally, the common law also allows the court to excuse a trustee from liability for an innocent mistake made in good faith.
Here, van Rensburg J. found that notwithstanding the court determined that the gift to charity was not valid, the estate trustee’s interpretation of the will had not been unreasonable. Additionally, she pointed to the fact that although the estate trustee had erred, she had derived no personal benefit from the error. Ultimately, van Rensburg J. found that the circumstances were such that the trustee ought to be excused from liability and not required to repay the estate for the donated funds.