I recently came across the Ontario Court of Appeal’s decision in Gonder v. Gonder Estate, from March of this year.  In it, the court considers a very interesting issue: does the court have the discretion to remove a trustee without appointing a replacement and, if so, when should that discretion be exercised? 

By way of background, an individual ("the testatrix") left a will naming her sister and brother-in-law as her executors.  After the testatrix’s death, her brother commenced a claim against her estate. 

The executors later brought a motion under s. 37 of the Trustee Act seeking their removal on the basis of, amongst other things, financial stress, ill health, and other personal circumstances.  They did not seek the appointment of a replacement executor.  The testatrix’s brother opposed the motion, arguing that in the absence of a successor trustee, the current executors were “stuck with the job.” 

The motions judge ordered that the executors be removed and held that requiring them to continue acting would cause substantial hardship on them.  He further decided that s. 37 of the Trustee Act did not require the court to appoint a successor when removing an executor and found that an individual could not be compelled to act as a trustee.   

The testatrix’s brother appealed, arguing that the motions judge erred in removing the executors, leaving the estate with no personal representative. 

The Court of Appeal allowed the appeal.  It found that the motions judge was correct that the court does have the discretion to remove a trustee without appointing a successor.  However, this was to occur only in the rarest of circumstances.  It also found that when leaving an estate “trustee-less”, the court had the obligation to ensure “the proper administration of the estate in the best interest of the beneficiaries”.  That is, an alternate mode of administration must be implemented such that the estate assets will be maintained and the beneficiaries’ interests will be protected.

The court went on to conclude that while the circumstances were such that the removal of the executors was warranted, the motions judge erred in failing to ensure that the proper administration of the estate could proceed.  It ordered the Superior Court to reconsider the executors’ removal and, if they were to be removed, to ensure the estate and its beneficiaries would be protected.