Legge Estate, Re, 2007 NSSC 53

• Judge: Warner, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: December 05, 2006
• Jurisdiction: Nova Scotia
• Citations: 2007 NSSC 53;(2007), 252 N.S.R.(2d) 78 (SC)

Legge Estate, Re (2007), 252 N.S.R.(2d) 78 (SC);

    804 A.P.R. 78

MLB headnote and full text

Temp. Cite: [2007] N.S.R.(2d) TBEd. FE.046

The Estate of Harold B. Legge, deceased;

 

An Application to vary a Trust, pursuant to the Variation of Trusts Act, pass accounts and discharge the Trustees.

(S.K. No. 258741; Probate No. 10330; 2007 NSSC 53)

Indexed As: Legge Estate, Re

Nova Scotia Supreme Court

Warner, J.

February 21, 2007.

Summary:

Legge died in 1993, leaving a $1.48 Million estate, of which $1.26 Million was the estate's share in his trucking company (LTL). Legge's will provided that 30% of his interest in LTL go to his three sons, with the remaining 70% interest held in trust, with income to be paid to his wife annually for the balance of her life. Upon her death, the sons would receive the remaining 70% interest. The estate trustees were a lawyer and accountant, who, at the family's request, continued to operate LTL even though they were not qualified to do so. The trustees were paid $75,000 in fees on the first closing in 1995. LTL was operated by the trustees until 1997, when it was sold. The estate recovered less than $400,000 of the $1.26 Million value. Over the past 13 years, the trustees paid themselves an annual commission (no court approval), but paid nothing to the wife since 1994. The wife applied to terminate the trust (after payment to her of monies owing). The trustees sought to pass their accounts, seeking approval of fees already taken, plus additional fees. Final distribution of estate assets were sought.

The Nova Scotia Supreme Court determined the amount payable to the wife out of the estate and terminated the trust. The remaining estate accounts, liabilities and fees were determined and the estate was ordered to be closed. The trustees failed to properly carry out their duties. They exercised poor judgment in how they operated LTL and how they sold it, resulting in a substantial loss in value to the estate. They ran LTL notwithstanding their acknowledged lack of expertise to do so. They failed to carry out the primary purpose of the trust, which was to pay income to the wife. They failed to properly document transactions and dealings with LTL, resulting in no satisfactory explanation for the loss in value of LTL. Of the $40,000 in pre-taken fees and commissions, the trustees were ordered to repay approximately $30,000 with interest. Their claim for additional trustee fees of approximately $43,000 was dismissed. Costs of $24,000 plus disbursement, payable to the wife and the Proctor, were awarded against the trustees.

Practice - Topic 7384

Costs - Party and party costs - Costs in trust proceedings - Payable by trustee - [See Trusts - Topic 6106 ].

Trusts - Topic 5924.1

The trustee - Duties - General - Duty to protect beneficiaries' interests - [See Trusts - Topic 6106 ].

Trusts - Topic 6106

The trustee - Compensation - Amount - Considerations - Legge died in 1993, leaving a $1.48 Million estate, of which $1.26 Million was the estate's share in his trucking company (LTL) - Legge's will provided that 30% of his interest in LTL go to his three sons, with the remaining 70% interest held in trust, with income to be paid to his wife annually for the balance of her life - Upon her death, the sons would receive the remaining 70% interest - The estate trustees were a lawyer and accountant, who, at the family's request, continued to operate LTL even though they were not qualified to do so - The trustees were paid $75,000 in fees on the first closing in 1995 - LTL was operated by the trustees until 1997, when it was sold -The estate recovered less than $400,000 of the $1.26 Million value - Over the past 13 years, the trustees paid themselves an annual commission (no court approval), but paid nothing to the wife since 1994 - The trustees sought to pass their accounts, seeking approval of fees already taken, plus additional fees - Final distribution of estate assets were sought - The Nova Scotia Supreme Court determined the estate accounts, liabilities and fees and the estate was ordered to be closed - The trustees failed to properly carry out their duties - They exercised poor judgment in how they operated LTL and how they sold it, resulting in a substantial loss in value to the estate - They ran LTL notwithstanding their acknowledged lack of expertise to do so - They failed to carry out the primary purpose of the trust, which was to pay income to the wife - They failed to properly document transactions and dealings with LTL, resulting in no satisfactory explanation for the loss in value of LTL - Of the $40,000 in pre-taken fees and commissions, the trustees were ordered to repay approximately $30,000 with interest - Their claim for additional trustee fees of approximately $43,000 was dismissed - Costs of $24,000 plus disbursement, payable to the wife and the Proctor, were awarded against the trustees.

Trusts - Topic 8443

Termination of trusts - By request of beneficiary - Where applicant is sole beneficiary - Legge died in 1993, leaving a $1.48 Million estate, of which $1.26 Million was the estate's share in his trucking company (LTL) - Legge's will provided that 30% of his interest in LTL go to his three sons, with the remaining 70% interest held in trust, with income to be paid to his wife annually for the balance of her life - Upon her death, the sons would receive the remaining 70% interest - The estate trustees were a lawyer and accountant, who, at the family's request, continued to operate LTL even though they were not qualified to do so - The trustees were paid $75,000 in fees on the first closing in 1995 - LTL was operated by the trustees until 1997, when it was sold - The estate recovered less than $400,000 of the $1.26 Million value - Over the past 13 years, the trustees paid themselves an annual commission (no court approval), but paid nothing to the wife since 1994 - The wife applied to terminate the trust (after payment to her of monies owing) - The Nova Scotia Supreme Court determined the amount payable to the wife out of the estate and terminated the trust - The wife was the only beneficiary of the trust income and no other family member objected - See paragraphs 119 to 124.

Cases Noticed:

Fales et al. v. Canada Permanent Trust Co., [1977] 2 S.C.R. 302; 11 N.R. 487, refd to. [para. 92].

Critchley v. Critchley (2006), 246 N.S.R.(2d) 76; 780 A.P.R. 76; 2006 NSSC 219, refd to. [para. 93].

Toronto General Trusts Corp. v. Central Ontario Railway, 1905 CarswellOnt 449, refd to. [para. 157].

Heron Estate, Re (1996), 10 E.T.R.(2d) 281 (Ont. Gen. Div.), refd to. [para. 196].

Authors and Works Noticed:

Macdonell, Sheard and Hull, Probate Practice (4th Ed. 1996), pp. 352 [para. 135]; 360 to 365 [para. 185]; 384 [para. 194].

Widdifield on Executors and Trustees (6th Ed. 2002) (2003 Looseleaf), c. 2.5 [para. 91]; 11 [para. 181]; 11.4.2 [para. 185]; 14.6.3, pp. 14-23, 14-26 [para. 195]. Counsel:

Trinda L. Ernst, Q.C., Proctor, and Siobhan Doyle, for the Estate;

Michael S. Ryan, Q.C., and W. Harry Thurlow, for Walter O. Newton, Q.C.;

Peter Bryson, Q.C., for Cark K. Miller;

James F. Dewar, Q.C., fore Sharon Y. Legge;

Lawrence E. Legge and Robert P. Legge, unrepresented.

This matter was heard on February 14, September 18, November 20, 21 and 27, and December 5, 2006, at Kentville, N.S., before Warner, J., of the Nova Scotia Supreme Court, who delivered the following judgment on February 21, 2007.