Legge Estate, Re, 2008 NSCA 8

• Judge: MacDonald, C.J.N.S., Roscoe and Saunders, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: January 24, 2008
• Jurisdiction: Nova Scotia
• Citations: 2008 NSCA 8;(2008), 261 N.S.R.(2d) 181 (CA)

Legge Estate, Re (2008), 261 N.S.R.(2d) 181 (CA);

    835 A.P.R. 181

MLB headnote and full text

Temp. Cite: [2008] N.S.R.(2d) TBEd. JA.044

Carl Miller and Walter O. Newton (appellants) v. Lawrence Legge, Robert Legge, Sharon Legge and David Legge (respondents)

(CA 282504; 2008 NSCA 8)

Indexed As: Legge Estate, Re

Nova Scotia Court of Appeal

MacDonald, C.J.N.S., Roscoe and Saunders, JJ.A.

January 24, 2008.

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, in a judgment reported (2007), 252 N.S.R.(2d) 78; 804 A.P.R. 78, 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. The trustees appealed.

The Nova Scotia Court of Appeal allowed the appeal to the limited extent of setting aside the order that the agency fees be returned by the trustees. The issue of agency fees charged by the trustees to the heirs of the estate in relation to the collection of non-estate accounts was not properly before the trial judge on the application respecting the closing of the estate. In all other respects, the trial judge's decision was affirmed.

Practice - Topic 7384

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 trial judge 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 disbursements, payable to the wife and the Proctor, were awarded against the trustees - The Nova Scotia Court of Appeal affirmed the decision.

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 trial judge 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 - The Nova Scotia Court of Appeal affirmed the decision.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 5].

McPhee v. Gwynne-Timothy (2005), 232 N.S.R.(2d) 175; 737 A.P.R. 175; 2005 NSCA 80, refd to. [para. 5].

Children's Aid Society of Cape Breton-Victoria v. D.C. and L.L.A. (2004), 229 N.S.R.(2d) 49; 725 A.P.R. 49; 2004 NSCA 146, refd to. [para. 6].

Toronto General Trusts Corp. v. Central Ontario Railway, [1905] O.J. No. 536, refd to. [para. 7].

Counsel:

Michael Ryan, Q.C., and Harry Thurlow, for the appellant, Walter O. Newton;

Peter Bryson, Q.C., for the appellant, Carl Miller;

Robert Legge, respondent, on his own behalf;

Lawrence Legge, respondent, on his own behalf;

No one appearing for the respondents, Sharon Legge and David Legge.

This appeal was heard on January 22, 2008, at Halifax, N.S., before MacDonald, C.J.N.S., Roscoe and Saunders, JJ.A., of the Nova Scotia Court of Appeal.

On January 24, 2008, the following judgment was delivered by the Court.