They sold a family home below market value and cashed an invalid cheque
In a recent decision, the Ontario Superior Court of Justice refused to remove estate trustees despite determining that they breached their fiduciary duties by selling a family home below market value and cashing an invalid cheque.
In Deziel v. Deziel, 2024 ONSC 5279, the court addressed a dispute involving Elizabeth Deziel's estate. The case was initiated by Sandra Deziel, one of Elizabeth’s four children, who sought to have her siblings, Debra and Bryan Deziel, removed as trustees and to reverse the sale of the family home located in Tilbury, Ontario. Sandra also requested compensation for alleged negligence and breach of fiduciary duty.
The primary issue was the sale of the home to Bryan, who, as a trustee, arranged to purchase the property for $280,000, which the court later determined to be below the fair market value of $310,000. The court found that while Bryan had a right to purchase the home under the will, his failure to recuse himself from the sale price negotiations created a conflict of interest. The court deemed this conduct, along with the trustees’ decision to reduce the price by the hypothetical value of real estate commission fees, a breach of their fiduciary duty and ordered Bryan to pay $30,000 to the estate as restitution.
The Superior Court also addressed the validity of a $40,000 cheque Elizabeth wrote to Debra before her death. Although it was labelled as a "gift" and cashed three days after Elizabeth’s passing, the court ruled that the cheque was not a valid gift under the law, as it had not been cashed before Elizabeth's death. Debra was required to repay the estate.
Despite these findings, the court declined to remove Bryan and Debra as trustees, noting that their inexperience did not justify such a drastic measure. Ultimately, the court ruled that they had acted in accordance with their interpretation of their mother’s wishes but had failed to properly fulfill their fiduciary duties.
