After disputed cottage sale, executors found personally liable for legal costs when they appealed their removal

Co-executors are being held personally liable for $21,000 in costs associated with their unsuccessful appeal of a lower court decision that removed them as trustees of an estate, following a dispute over a cottage sale and other conflicts with the beneficiary.

While executors are generally indemnified for costs related to estate litigation, the Ontario Court of Appeal found the former co-executors’ appeal “was unnecessary, not brought in the interest of the estate, and should attract personal cost consequences.”

In MacBeth Estate v. MacBeth, the beneficiary, John MacBeth, brought a motion before the Ontario Superior Court of Justice last year seeking to remove Robert and Catherine Hurst as trustees of his mother’s estate and to have himself appointed as sole replacement trustee.

Mr. MacBeth claimed the executors hadn’t told him they intended to sell the family cottage and that they triggered capital gains taxes that could have been avoided.

Before the hearing date, the executors offered to step down and be replaced by Mr. MacBeth as executor, with a holdback of $450,000 to cover estate administration costs. Mr. MacBeth offered to settle under the same terms but with a holdback of $100,000. Each party rejected the other’s offer.

Ruth MacBeth died in 2009 with a will naming Mr. and Ms. Hurst as executors and Ms. MacBeth’s children, John and Wendy MacBeth, as alternates.

At the time of the motion, with most of the estate already distributed to other beneficiaries, Mr. MacBeth was effectively the only remaining beneficiary.

At the Superior Court, Mr. MacBeth argued that animosity between the executors and himself had reached the point at which he no longer trusted their administration of the estate and that ongoing litigation was diminishing the estate’s value.

He also claimed the executors had not kept him informed of their intention to sell the family cottage and made it difficult for him to collect his personal belongings before the property was sold.

Finally, Mr. MacBeth provided the court with an expert opinion suggesting the executors had unnecessarily triggered a $600,000 capital gains tax by selling the cottage to a third party rather than transferring it to him as part of the estate administration. The executors did not challenge the expert opinion, and it was accepted by the court.

The executors opposed the motion and sought an adjournment to have more time to respond, as one of the executors, Mr. Hurst, had been recently diagnosed with cancer.

The Superior Court judge dismissed the motion for adjournment, noting the executors had been aware of Mr. MacBeth’s intention to bring a motion to remove them as trustees for more than a year. She also said that, based on the material the executors had filed with the court, it was unclear what allegations they were disputing or what evidence they would introduce if they were granted more time.

In contrast, Mr. Hurst “would suffer real prejudice” if the adjournment were granted, as the estate had already taken years to administer and he’d been effectively paying both parties’ legal costs – his own, personally, and those of the executors, through his stake in the estate.

On the question of the executors’ removal, the judge said the evidence supported a finding that the executors would mishandle the estate moving forward, and the disharmony between the executors and the beneficiary warranted their removal. Mr. MacBeth was appointed as the replacement executor.

The judge also ordered that $50,000 be held back from the estate to cover costs related to the passing of accounts, which is the term for the accounting of estate administration in court.

Unsuccessful appeal

In September, 2024, Mr. MacBeth died, with the executor of his estate becoming the replacement executor for Ruth MacBeth’s estate.

In May 2025, Mr. and Ms. Hurst appealed the Superior Court judge’s decision, arguing she had erred in denying their request for an adjournment, in their removal as trustee, and by not hearing submissions before determining the holdback amount.

In dismissing their appeal, the Ontario Court of Appeal found the Superior Court justice had properly exercised her judicial discretion both to deny the adjournment and remove the executors. The court also noted that the former executors had recourse to recover expenses reasonably incurred as part of their administration of the estate beyond the set holdback amount.

The appeals court ordered the former executors to pay $21,000 to the executor of Mr. MacBeth’s estate as a partial indemnification of his legal costs.

Krystyne Rusek, an estate lawyer with Speigel Nichols Fox LLP in Mississauga, says executors are generally indemnified for legal fees – including for litigation – from the estate if the fees were reasonable, in terms of the amount, and proper, meaning incurred in the course of administering the estate.

However, “if you take steps to protect your interests as estate trustee, whether to protect anticipated compensation, or to avoid a claim by the beneficiaries, understand that you could be held personally liable for legal costs of the beneficiaries, and will not be indemnified by the estate,” she says.