Hull & Hull LLP
By Mandana Niknejad
July 22nd, 2025
Recent ruling reaffirms the modern cost approach in estate litigation: trustees who fail in their duties may not only be removed but may also bear the personal financial burden of their choices.
The Ontario Court of Appeal recently upheld the decision of the Superior Court of Justice on the removal of estate trustees and underscored the fundamental importance of fiduciary duties and impartiality in estate administration.
Case Background: “Muscat v. Muscat Estate”
The respondent in the case was the sole residual beneficiary of the estate of the deceased. The appellants included the estate itself and two estate trustees.
At issue was a jewelry business and its associated property, valued at approximately $515,000 for probate purposes. The beneficiary’s entitlement to the estate was held in trust until reaching a specific age.
In early 2023, a prospective buyer—who was in a romantic relationship with one of the estate trustees—offered to purchase the business for $400,000, an amount significantly below its probate value of approximately $515,000.
The beneficiary raised concerns about a conflict of interest arising from this relationship. However, counsel for the estate trustee dismissed these concerns as irrelevant and forwarded the buyer’s final offer to the beneficiary, imposing a 10-day deadline for acceptance and recommending that he sign the agreement, characterizing it as a bona fide offer.
The beneficiary requested additional time to consider the offer, which was refused. He then formally asked for the resignation of the estate trustee involved. Subsequently, the beneficiary obtained an independent appraisal, which valued the business as high as $911,550.
The application judge concluded that a conflict of interest did indeed exist and that the estate trustees had failed to perform due diligence in evaluating the offer. The estate trustees were removed, and they were ordered to personally cover the beneficiary’s legal costs.
This decision reinforces the high standards expected of estate trustees, particularly the duties of impartiality, loyalty, and full transparency. Trustees who place personal interests above their fiduciary obligations, fail to disclose conflicts, or neglect proper due diligence face serious consequences—including removal and personal cost liability. Notably, the case sends a strong message about the financial risks of misconduct in estate administration. The trustees were held personally responsible for legal costs underscoring Courts will not allow estate assets to be eroded by unreasonable trustee behavior or protracted, self-serving litigation.
Mandana Niknejad, Hull & Hull LLP, Toronto
