Executive Summary: Key Legal and Evidentiary Issues

• Propriety of using a Rule 75.06 application for substantive relief versus requiring a formal passing of accounts in estate administration disputes
• Reasonableness of the Estate Trustee’s disbursements, including software and paralegal fees, in light of a prior court order authorizing compensation and expenses from the estate
• Impact of a beneficiary’s refusal to sign a standard release and whether an estate trustee may pay that beneficiary’s share into court while distributing to cooperative beneficiaries
• Extent to which trivial (“de minimis”) disputes over modest disbursements can justify extensive litigation and cross-examinations in an estate context
• Application of estate costs principles to a court-appointed Estate Trustee seeking full indemnity for legal fees incurred due to a beneficiary’s unreasonable conduct
• Circumstances in which a technically “successful” party on a jurisdictional issue may nonetheless be ordered to personally pay substantial costs for unreasonable litigation behaviour

Background and family and estate context
Anna Hernandez, also known as Anna Florence Hernandez, died on March 1, 2020, leaving six children as her beneficiaries. Before her death, litigation had already been ongoing between one daughter, Cheri Ann Hernandez, and her siblings regarding matters connected to their mother, with court disputes dating back to 2017. After the death, three of the children, including Cheri, were originally appointed as co-estate trustees, which quickly led to discord in the administration of the estate.
By an order of Justice Carey dated February 15, 2022, all three siblings were removed as estate trustees. A lawyer, Sebastien Schmoranz, was appointed by the court as Estate Trustee in their place, with the order made on consent of all parties. As part of that order, the court expressly authorized Mr. Schmoranz to be compensated out of the estate assets, including an hourly rate and disbursements plus HST, capped at $4,000 plus disbursements and HST for his services.

Appointment of the estate trustee and scope of compensation
The terms of Justice Carey’s order were central to later complaints. The order clearly stated that the court-appointed Estate Trustee would be paid from the estate for his time and disbursements up to a fixed cap. Ms. Hernandez later argued that disbursements could not be charged unless authorized under the Law Society of Ontario’s rules. The motion judge, Justice Nicholson, rejected that position and held that the wording of the earlier order did not restrict disbursements in that manner and did permit the charges complained of. Thus, the court found Ms. Hernandez was substantively wrong on the disbursement issue, despite her persistent objections.

Administration of the estate and growing dissatisfaction
Very shortly after his appointment, Mr. Schmoranz faced repeated criticisms from Ms. Hernandez regarding how he was administering the estate. She objected to the pace of administration and took issue with the particular estate software he used to manage the file. Her complaints began almost immediately and continued over time.
In March 2023, Ms. Hernandez asked for a complete accounting of the estate administration. In September 2023, each beneficiary received an interim distribution. At that stage, Mr. Schmoranz initially required each beneficiary to sign a final Release before the final distribution would be made. Ms. Hernandez objected to signing a final release as a condition of receiving funds, and this condition was withdrawn. The interim distribution then proceeded.
The residue of the estate available for final division was $27,211.33, so each beneficiary’s remaining share was $4,535.22. Against this relatively modest amount, Ms. Hernandez continued to raise numerous objections, including small personal outlays such as $13.56 she spent faxing the Canada Revenue Agency, for which she demanded reimbursement.

The July 2025 meeting and the dispute over releases
The final distribution was scheduled for July 2025. On July 31, 2025, several beneficiaries, including Ms. Hernandez, met with Mr. Schmoranz at his law office. One beneficiary attended virtually. Before the meeting, Ms. Hernandez had flagged a series of concerns with the proposed accounting, and on the morning of the meeting she acknowledged an error in her calculations but said she did not wish to “quibble” over a small amount, an ironic statement in light of the subsequent dispute.
At the meeting, Ms. Hernandez challenged certain disbursements, specifically a software charge of $198 and a $16 paralegal fee. These amounts, spread among six beneficiaries, translated into roughly $35.67 per person. She contended these disbursements were not allowable pursuant to Law Society regulations. In response, Mr. Schmoranz maintained that the charges were permissible under the court order appointing him and insisted on having final releases signed. He indicated that if any beneficiary refused to sign, their share would be paid into court while other beneficiaries would receive their distributions.
Two of the siblings (who had previously been co-trustees with Ms. Hernandez) supported the Estate Trustee’s version of events in affidavits and expressed frustration that her refusal to sign was blocking completion of the administration. Ms. Hernandez would not sign the standard release as drafted, objecting to language that released the Estate Trustee from “any claim, actions, accounts and demands whatsoever.” She edited the document to narrow the release and signed the altered version.
The meeting deteriorated further. Ms. Hernandez alleged that the Estate Trustee yelled and threatened that no one would get their money and that he physically positioned himself to block her departure, leaving her frightened. For his part, the Estate Trustee deposed that he told her she could not unilaterally edit the release and that if she refused to follow his instructions she would be asked to leave. When she allegedly refused, he instructed his clerk to call police to formally trespass her from the premises. The police were called, and later Ms. Hernandez went so far as to have him charged with assault and forcible confinement, though those criminal charges were ultimately dropped.
Justice Nicholson declined to make definitive factual findings about every detail of this confrontation, noting that the accounts did not flatter any participant. However, the judge did conclude that Ms. Hernandez’s actions during the dispute were consistent with a pattern of hyper-critical, controlling behaviour regarding the administration of her mother’s estate.

Further complaints about administration costs
Beyond the software and paralegal charges, Ms. Hernandez objected to a $561.53 commission arising from the handling of certain Sun Life shares. She argued that the shares could have been transferred without incurring that fee. The judge acknowledged that this commission, once again, would have been divided among the six beneficiaries, further reducing the individual impact.
In the court’s view, even if these matters involved some unnecessary cost, the scale of the amounts—$198, $16, and $561.53 total, divided six ways—was de minimis compared to the beneficiaries’ remaining entitlements and certainly did not justify full-blown litigation.

The originating application and procedural path taken
Because Ms. Hernandez would not sign a standard release and the dispute was blocking completion of the file, the Estate Trustee retained counsel and commenced an application. He sought court approval to pay the cooperative beneficiaries their final shares, with Ms. Hernandez’s share to be paid into court until issues were resolved. He also asked that the legal costs of the application either be paid out of her share or from the estate prior to further distributions.
Ms. Hernandez, in turn, retained counsel, filed a Notice of Appearance, and demanded broad disclosure of all dealings with the estate. The Estate Trustee provided the requested materials by October 2025, including supplementary documentation as requested. Each side filed extensive materials, including application and responding records, a supplementary record, and factums. Remarkably, cross-examinations on affidavits were conducted on the eve of the scheduled hearing date.
By this stage, legal costs had become grossly disproportionate to the sums in issue. The Applicant Estate Trustee’s costs totalled approximately $27,056 on a full indemnity basis; Ms. Hernandez’s legal fees were about $27,993.45. Thus, each side spent more on lawyers than the entire residue of the estate, and vastly more than the small disputed disbursements.

The jurisdictional challenge and Rule 75.06
Although the Applicant advised the court that by the time of the hearing the only remaining live issue was costs, Ms. Hernandez then raised a jurisdictional objection. She argued that the Estate Trustee had used the wrong procedural vehicle by bringing an application under Rule 75.06 of the Rules of Civil Procedure (the “directions” rule) instead of bringing a formal passing of accounts.
Rule 75.06 allows a person with a financial interest in an estate to seek directions about the procedure for bringing any matter before the court. Prior case law, including Larmon v. Munro and Abrams v. Abrams, has emphasized that motions for directions are intended to be procedural tools, not mechanisms for obtaining final substantive relief such as payment of expenses, performance of duties, or delivery of assets. Under that jurisprudence, the court agreed that an application to pass accounts, rather than a Rule 75.06 application, would have been the technically correct route for the Estate Trustee to resolve the dispute.
Ms. Hernandez also relied on Brighter v. Brighter Estate to argue that an estate trustee cannot withhold a beneficiary’s share to coerce a release. The court accepted that a trustee cannot properly “hold assets hostage” to force a release, but also noted that it is common and permissible to ask a beneficiary to sign a release when paying funds. The objectionable conduct in Brighter concerned requiring a release as a precondition to payment, not merely presenting a release to be signed or, as here, seeking to pay a controversial share into court while allowing others to receive their funds.

Timing and conduct regarding the jurisdictional point
A critical factor for the motion judge was when the jurisdictional attack on Rule 75.06 was raised. The application commenced on August 25, 2025. Counsel for Ms. Hernandez was formally retained by September 11, 2025 and, after some scheduling and disclosure correspondence, proposed in mid-October 2025 that the parties resolve substantive issues and leave only costs to be determined by the court. During that period, counsel did not object that the matter had been improperly commenced under Rule 75.06 or demand that it proceed instead by a passing of accounts.
The issue about the $561.53 commission on the Sun Life shares arose only in mid-October 2025 and was then explored through further disclosure. But even at that stage, there was no challenge to the procedure. The record showed that the parties effectively treated the application as addressing and resolving the estate administration issues, with only costs left in contention. According to the judge, it was not until the eve of the first hearing date in December 2025 that Ms. Hernandez’s counsel raised the procedural jurisdiction argument.
Justice Nicholson concluded that while Ms. Hernandez was “technically correct” that the Rule 75.06 procedure was not ideal for substantive relief of this type, her late-breaking procedural challenge stood in tension with the overarching principles of Rule 1.04, which require that proceedings be conducted in a just, expeditious, and least-expensive manner and in a way proportionate to the importance and complexity of the issues.

No insurance or policy terms in issue
Unlike many estate-related disputes that intersect with life insurance or other coverage, this case did not turn on any insurance policy terms or contractual clauses of that nature. The core legal issues were procedural and administrative: how an estate is to be wound up, the scope of an estate trustee’s authority under a prior court order, and how far costs sanctions may go where a beneficiary’s conduct drives disproportionate litigation.

The court’s assessment of conduct and responsibility for the dispute
In assessing the overall picture, Justice Nicholson considered Ms. Hernandez’s pattern of conduct from the time she was removed as co-trustee through to the motion. The court found that she was not willing to step back from the trustee role and instead attempted to exert continuing control over the estate administration, second-guessing the court-appointed Estate Trustee on minutiae and small sums. The judge described the dispute as an “entirely unnecessary escalation” over trivial amounts and found that it was unreasonable for Ms. Hernandez to require the Estate Trustee to commence and pursue litigation over a software charge of $198, a $16 paralegal fee, and even the $561.53 commission, all of which were modest in the context of the estate and divided among six beneficiaries.
The court also observed that Mr. Schmoranz had been appointed for a capped fee of $4,000, reflecting the principle that estate trustees are normally fully indemnified from the estate for reasonably incurred costs. Without such protection, it would be difficult to attract people willing to take on what is often a difficult and thankless role. In this case, the judge found that the Estate Trustee was not acting in his own self-interest but was attempting to navigate a very challenging beneficiary and complete the administration in accordance with the prior order.

Outcome on the application and on costs
On the strict merits of the application, the court declined to grant the substantive relief sought by the Estate Trustee. Justice Nicholson accepted that Rule 75.06 was not the proper rule under which to obtain orders for distribution and payment into court. As such, the Estate Trustee did not obtain the distribution order he had requested, and the application was formally dismissed.
However, the court turned to the issue of costs with a very different lens. In Ontario estates litigation, the modern approach to costs imports the general civil costs regime, with the possibility in limited circumstances of ordering costs out of the estate for public policy reasons. The court reiterated the principles that: an estate trustee is entitled to indemnification from the estate for reasonably incurred legal costs; a trustee who acts unreasonably or in self-interest may be denied indemnity; and where some costs are recovered from another party, the trustee may still be indemnified by the estate for any reasonable remainder.
Here, the judge held that the Estate Trustee had acted properly concerning the disputed disbursements and had merely chosen the wrong procedural route to bring the matter before the court. By contrast, Ms. Hernandez’s conduct was found to be the primary cause of the litigation and the enormous fees incurred. The court emphasized that one of the core purposes of costs awards is to discourage unreasonable litigation behaviour. Awarding costs from the estate would unfairly penalize other beneficiaries who were content to receive their shares and did not fuel the dispute.
Ultimately, although the application itself was dismissed, the court exercised its broad discretion on costs and treated this as an appropriate case to award costs against a technically successful party. Justice Nicholson ordered that the Estate Trustee receive full indemnity for his legal fees, fixed at $27,000, payable personally by the respondent, Cheri Ann(e) Hernandez. In practical terms, the Estate Trustee emerged as the successful party in the outcome on costs, recovering his fees while Ms. Hernandez bore the financial consequences of pursuing what the court regarded as a disproportionate, unreasonable fight over trivial sums.