Executive Summary: Key Legal and Evidentiary Issues

• Scope and mandatory effect of the Referral Clause in the will, requiring disputes about estate administration between co-trustees to be referred to the testator’s accountant rather than the court.
• Interaction between the Referral Clause and the Mediation Clause, and whether all or only some types of disputes within the estate fall under mandatory referral.
• Extent of estate trustees’ entitlement to pre-death financial disclosure, including how far back joint and sole account records must be produced to identify assets and possible self-dealing.
• Assessment of alleged conflict of interest where a co-trustee (Reena) is both potential debtor to the estate and estate trustee, in light of her handling of joint accounts and post-death withdrawals.
• Characterization of the condominium-access dispute (method of inspecting chattels) as an estate administration issue subject to the Referral Clause rather than a breach of fiduciary duty.
• Allocation of costs in estate litigation where both parties achieve divided success and the testator took steps in the will to minimize conflict but the trustees nonetheless proceeded to litigation.

Background and parties

The case concerns the estate of Jechiel (“Harry”) Scheres, who died on December 30, 2023. His two daughters, Paula and Reena, and his grandson Michael (Paula’s son) are the key figures. Michael and Reena act as co-estate trustees (executors and trustees) of Harry’s estate. Reena is also a residuary beneficiary, and she lived with Harry in his condominium for about 15 years. The daughters have been estranged for approximately 15 years, and the judgment notes Harry foresaw the risk that their conflict would spill into the administration of his estate.

Key will provisions: referral and mediation clauses

Harry’s will contains two notable clauses that shaped the dispute. First is the so-called “Referral Clause,” which provides that when there are two trustees acting and they “are unable to agree respecting any matter involving the administration” of the estate, the matter “shall be referred to my accountant, ABE ZYBERLICHT … whose decision shall be final and binding upon all persons concerned.” This language is mandatory, and it focuses specifically on administration disagreements between co-trustees.

Second is a “Mediation Clause,” which expresses Harry’s wish that “any differences of opinion that may arise” in his estate be resolved early and informally through mediation, using a lawyer at Minden Gross LLP (or successor firm) as mediator. Unlike the Referral Clause, the Mediation Clause is framed as a non-binding expression of Harry’s wishes and applies more broadly to disputes generally, including those involving beneficiaries and non-administrative issues. The judge interprets these two clauses together as reflecting Harry’s effort to minimize conflict and cost: the Referral Clause governs trustee-to-trustee administration disputes; the Mediation Clause is broader but precatory rather than mandatory.

Issues before the court

The application raised three central issues. First, Michael sought disclosure of Harry’s financial records dating back two years before death, particularly to examine joint bank accounts held with Reena and to ensure no improper depletion of estate assets before death. Second, Paula wished to enter the condominium—bequeathed to Reena and now unoccupied—to inspect the household chattels that are to be divided between Paula and Reena under Harry’s primary and secondary wills; Michael supported Paula’s ability to inspect. Third, the court had to determine, as a threshold matter, whether these disputes (financial disclosure and condominium access) were “matters involving the administration” of the estate that must be referred to the accountant under the Referral Clause, or whether they instead engaged broader fiduciary duties and should remain for judicial determination.

Competing positions on the Referral and Mediation Clauses

Michael argued that the Referral Clause is confined to narrow “administration” questions (essentially logistics and routine management) and does not displace the court’s inherent jurisdiction over the scope of trustees’ fiduciary duties. In his view, both the financial records dispute and the condo-access dispute concern whether Reena is fulfilling her obligations as an estate trustee, not mere operational issues, and therefore they belong in court. He also pointed to section 25 of Harry’s primary and secondary wills, which allows a financially interested trustee to cede discretion to a co-trustee, contending that Reena was improperly allowing her personal estrangement from Paula to influence the chattel-division process.

Reena, by contrast, maintained that the Referral Clause is mandatory for all disputes between estate trustees about the administration of the estate, and that it should be applied here. She characterized the Mediation Clause as a general, non-binding wish aimed more at disputes with or among beneficiaries. On the merits of disclosure, she stressed that Harry remained fully capable and actively managed sophisticated financial affairs with professional advice up to his death, including a major corporate reorganization just a week prior. She argued there was no basis to pry into years of pre-death finances or to treat the estate trusteeship as a licence to audit Harry’s lifetime spending decisions. Regarding the condo, she accepted that the chattels had to be shared but opposed Paula entering the condominium itself, citing long-standing estrangement and the presence of her own personal property, and suggesting alternative methods such as moving items to storage or preparing a photographic inventory.

Court’s interpretation of the Referral Clause

The judge rejected both parties’ more extreme readings. The court held that the Referral Clause is indeed mandatory when it applies and clearly covers “disputes about the administration of the estate between co-estate trustees.” The Mediation Clause, in turn, is a broader, non-binding expression of Harry’s preference for low-conflict resolution techniques for other kinds of disagreements, including those with beneficiaries. The inclusion of both clauses was seen as a deliberate attempt by Harry to insulate the estate administration from the known estrangement between his daughters and to avoid costly litigation, an attempt that unfortunately failed when the parties nonetheless came to court.

The key question thus became whether the specific disputes—condo access and financial disclosure—were administration matters (and therefore within the Referral Clause) or matters about alleged breach of fiduciary duty and conflicts of interest (which remain subject to the court’s jurisdiction).

Condominium access and inspection of chattels

On the condominium issue, the court concluded that the manner in which Paula inspects the chattels is fundamentally a logistical, administrative question. Reena did not deny that Paula has rights to certain chattels under the wills; rather, she disputed how the inspection should occur. The judge held that section 25 of the wills, which allows a financially interested trustee to leave the exercise of discretion to co-trustees if they choose, is permissive and does not create a mandatory obligation that Reena must step back or that Michael must control the process.

The dispute over whether Paula should physically enter the condo or whether the chattels should be photographed or moved elsewhere was characterized as a question of “how Paula gets to inspect the chattels,” which directly involves the administration of the estate rather than a conflict of interest in the legal sense. As such, it falls squarely within the Referral Clause. The judge therefore ordered that this condominium-access issue must be referred to Harry’s accountant, Abe Zyberlicht, for determination, with his decision to be final and binding.

Pre-death financial disclosure and joint accounts

The disclosure issue required a more nuanced analysis. Michael sought extensive production of Harry’s pre-death financial records, originally back to 2009 (around when Reena moved in with Harry) and later narrowed to two years before death. He was particularly concerned about funds in joint accounts held by Harry and Reena and the risk that Reena may have engaged in self-dealing before Harry died.

Reena had already acknowledged that after Harry’s death she withdrew funds from joint accounts and directed the bank to transfer the joint account proceeds to her, mistakenly believing she could deal with them by right of survivorship. She later accepted that all such funds (net of estate expenses already paid) are held in trust for the estate and proposed they be accounted for in the distribution of the residue, recognizing her status as a residuary beneficiary. She had also produced some joint account statements for 2022–2023, and Michael had reviewed tax returns and made inquiries of financial institutions, identifying only one dormant account and raising no clear red flags regarding Harry’s capacity or overall financial management.

In assessing the request for further disclosure, the judge distinguished between (a) an estate trustee’s duty to identify assets and liabilities the deceased possessed or was entitled to at death; and (b) an attempted forensic audit of a capable testator’s choices over many years. The court accepted that no one had challenged Harry’s testamentary or financial capacity, and the evidence from his long-time accountant, Jeffrey Miller, showed Harry consistently gave instructions, engaged in complex transactions, and deliberately decided to make a substantial $200,000 equalization payment to Paula and to pay her legal fees just days before his death.

Legal framework on pre-death disclosure

The court relied on several Ontario decisions to frame the scope of pre-death disclosure. Rule 74.17 of the Rules of Civil Procedure specifies what estate trustees must account for, focusing on assets at the date of death and not generally requiring accounting for inter vivos dispositions. In Munro v. Thomas, the court had refused beneficiaries’ demand for six years of pre-death records where there was no evidence of mismanagement and the deceased remained capable, emphasizing that disclosure orders under r. 74.15(1) are discretionary and must not be tools of harassment or fueled by suspicion alone. In Schutz Estate, however, the same judge distinguished Munro and ordered further inquiry where an unexplained $600,000 sale proceeds close to death created a real issue about self-dealing and potential conflict of interest.

The judge in this case adopted that contextual approach: where there is a reasonable basis to suspect self-dealing or missing assets, some targeted pre-death disclosure can be ordered to allow trustees to discover what property the deceased was “possessed of or entitled to” at death, including possible debts owed to the estate. But such orders must be tailored and should not transform the administration into a long-range audit of every prior decision of a capable testator.

Application of the framework to Michael’s request

Applying these principles, the court rejected Michael’s initial, very broad request going back to 2009 as inconsistent with the proper role of an estate trustee in circumstances where the deceased was capable and managing his own affairs. The judge described such breadth as verging on a forensic audit of a decade or more, which is impermissible absent compelling evidence.

At the same time, the court acknowledged some objective basis for limited concern. Reena had taken control of joint account funds after death under a mistaken belief about survivorship, and she had a high level of practical involvement in helping Harry with online banking and virtual meetings because he did not use a computer himself. There were some unexplained bank drafts or cheques in the produced statements that Michael could not immediately trace, even though he conceded they might have gone to other investment accounts or to legitimate expenses. Reena had also only selectively produced joint account records, which raised a fairness question: if she accepted some level of pre-death scrutiny for a two-year period, why should Michael be confined to only partial statements she chose to provide?

Balancing these factors, the judge found there was “enough in the record” to justify a limited investigation of Harry’s pre-death finances. The court ordered that Michael, acting on his own (without Reena), is entitled to request:

• All account statements from institutions where Harry held accounts solely in his name, for the six-month period preceding his death; and
• All account statements from institutions where Harry held joint accounts with Reena (or with Reena and others), for the two-year period before his death.

The estate must bear the cost of obtaining these records, and Michael must give Reena copies of whatever he receives. The court further directed that if the joint account statements reveal “material withdrawals” during the two-year period, the parties must cooperate to trace those funds to ensure they have been captured as estate assets or otherwise properly accounted for.

The judge emphasized that this limited disclosure should suffice to identify assets and put Michael’s concerns to rest if Reena has not engaged in self-dealing. If, however, the new information raises reasonable concerns and the parties cannot agree on additional disclosure, Michael may seek further orders from the court in a subsequent proceeding.

Costs and overall outcome

On costs, the court applied the modern approach to estate litigation, as articulated in cases such as Neuberger Estate v. York and Muscat v. Muscat Estate. Under that approach, estates are not treated as automatic sources of payment for all parties’ legal fees. Instead, ordinary civil costs principles apply unless policy reasons justify charging the estate. Those principles aim to indemnify the successful party in part, encourage settlement, and deter unnecessary or disproportionate litigation.

Michael sought full indemnity costs of about $140,000, with a large portion to be paid by Reena personally and the rest from the estate, depending on his level of success. Reena sought substantial indemnity costs of roughly $122,000, proposing various allocations between Paula’s share of the estate, the estate generally, and her own costs, depending on whether she was wholly or partially successful. The court rejected all proposals to draw on the estate or to shift costs between the parties. It noted that Harry had tried hard through his will clauses to avoid the very conflict that occurred and concluded there was no policy basis to burden the estate.

The judge found “divided success”: Michael obtained some disclosure, though substantially narrower than requested, while Reena prevailed on the condominium-access issue (which was held to fall within the Referral Clause) and significantly limited the scope of production. Both parties had taken intransigent positions and should have been able to resolve the dispute without court intervention. In these circumstances, the court ordered that each party shall bear their own costs.

In summary, there is no clear single “successful party” in the conventional sense. Michael succeeded in obtaining limited pre-death disclosure and the ability to pursue further tracing if warranted, while Reena succeeded in having the condominium-access dispute referred to the accountant and in sharply constraining the financial production. The court did not order any monetary award, damages, or costs in favour of either party; instead, no specific sum was awarded, and each side must pay its own legal fees, with the estate insulated from these litigation costs.