Fiduciaries, such as trustees, attorneys, and estate trustees, are all under a legal obligation to keep proper records and accounts,[1] in order to be able to prove that they were administering the property in their care “in an honest and prudent manner.”[2] As recently noted by Justice Myers, fiduciaries “are accountable to the penny. The only way to hold them to account and to protect the vulnerable people under their charge is through transparency. To paraphrase Justice Brandeis, ‘Sunlight disinfects.’”[3]
To this end, fiduciaries may be compelled to pass their accounts. When this occurs, it is incumbent on the fiduciary to provide a full and complete accounting which is properly formatted and accompanied by proper documentation, in compliance with the Rules of Civil Procedure (the “Rules”).[4] This article explores the nature of these requirements, when imperfect accounts may suffice, and the potential consequences that may result from an imperfect accounting. While proper accounts are undoubtedly the ideal, fiduciaries are not held to a standard of perfection — rather, the standard is that of a person of ordinary care and diligence, managing their own affairs.[5] Accordingly, the court has discretion as to how to proceed when faced with imperfect accounts.
Improper Formatting
The Rules set out the information which must be included in a fiduciary’s accounts and how those accounts are to be organized.[6] Specific court forms must also be used.[7]
While formatting may seem like an inconsequential formality, its importance when preparing a fiduciary’s accounts should not be underestimated. If accounts are not “put into proper Court form, such that objections can be filed, and sense made of the documents,” Justice Gilmore has noted that the accounting essentially becomes “meaningless.”[8] The court may also decline to pass a fiduciary’s accounts or refuse to pass judgment if the accounts are not formatted properly or prepared using the correct “court-required form.”[9]
In the same breath, however, the court also has the power to hear an application to pass accounts, even if the accounts are improperly formatted, and may even choose to pass them. Under such circumstances, formatting irregularities may attract costs consequences.[10]
Incomplete Accounts
If a fiduciary submits incomplete or erroneous accounts, the court may order the fiduciary to correct them, and may even set a deadline by which a further and better accounting must be provided. In Rade Estate, for example, the court gave the estate trustee 30 days to update his accounts to include missing or wrong pages, to produce time dockets for his work as estate trustee and as solicitor for the estate, and to produce vouchers to substantiate expenses claimed through the accounting. Ultimately the court could not issue a judgment in this case, as the estate trustee never provided the missing information.[11]
Even if incomplete accounts are submitted, however, the court still has the power to permit an application for a passing of accounts to proceed.[12] If the accounts are incomplete because there are no receipts for certain expenses, other evidence could be submitted in order to substantiate those expenses, including:
- evidence given under oath explaining why the expense was incurred and why there is no documentation,
- accurate record keeping, such as a ledger, and
- the production of other records, such as bank statements and credit card statements, to corroborate the amount of the expense.[13]
For a fiduciary to satisfy the burden of proof on a passing of accounts this way, the fiduciary’s evidence should also be both credible and reliable.[14]
Undocumented expenses may not be substantiated using false receipts created by the fiduciary, as demonstrated by the court’s recent decision in Cochrane v Cochrane. In an attempt to account for years of undocumented spending from their son’s trust, the trustee parents in this case created receipts for services they claimed to have rendered to their son and for services provided by third parties.[15] While the court refused to consider the false receipts,[16] the incomplete accounts were ultimately passed by the court, despite being confusing and misleading. This decision was also upheld on appeal.[17]
Lastly, if a fiduciary does not have receipts for certain expenses, it may be possible to use another method to determine how much money may be allocated for those expenses. For example, in one case, the court permitted meals to be expensed to a trust on a per diem basis.[18]
The Consequences of Inadequate Record Keeping and Unexplained Expenses
If inadequate accounts are submitted and the fiduciary cannot explain or prove certain expenses, they will likely be ordered to reimburse the trust or estate, even if there is no evidence that the fiduciary deliberately misused or misappropriated the funds. Returning to the court’s decision in Cochrane v Cochrane, for example, the trustees were ordered to repay over $165,000 to their son’s trust, representing funds they had received on their son’s behalf but could not account for. The fact that they allegedly had not been told that there was a duty to keep detailed records was immaterial.[19] They were also ordered to pay prejudgment interest.
Of course, a fiduciary will also be ordered to reimburse a trust or estate if the accounting reveals that an expense was improperly incurred, such as using the funds to make personal purchases,[20] or if the court finds that a cost was not reasonably incurred for the benefit of the estate or trust.[21]
Other potential consequences that may arise from inadequate record keeping and unexplained expenses include:
- removal of the fiduciary;[22]
- an order to investigate the accounts;[23]
- withholding or reducing compensation payable to the fiduciary;[24]
- ordering any compensation pre-taken by the fiduciary to be repaid, with interest;[25] and
- ordering the fiduciary to reimburse funds used to pay for the preparation of the accounts, or instead deducting the expense from the fiduciary’s claim for compensation.[26]
There may also be costs consequences. The fiduciary may be ordered to pay their own costs personally, plus the costs of the other parties, potentially on a full indemnity basis.[27] However, costs at that scale usually will only be appropriate if additional circumstances, beyond failing to properly account, are at play.[28] One factor that is pertinent when determining the appropriate quantum of costs related to an accounting is the amount of money in dispute between the parties — a costs award should be proportionate to this amount. The value of the property being administered by the fiduciary will also be salient,[29] in addition to the conduct of the beneficiaries, including whether any of the beneficiaries took an unreasonable position as to the passing of accounts or made unsubstantiated allegations.[30]
Conclusion
The duty to account is more complex than it may seem at first glance. An accounting serves an essential function — proving that a trust or estate has been administered in an honest and prudent manner — but to perform this function, there are technical requirements that must be satisfied. Ideally, accounts ought to be properly formatted and clearly show how the property has been managed by the fiduciary. All expenses should also be substantiated with documentation. Ultimately, transparency is the goal that all fiduciaries should strive for, even though the court does have the power to pass imperfect accounts.
[1] See Albert H. Oosterhoff, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts, 9th ed (Toronto, Ont: Thomson Reuters, 2019) at 115-116; Ian M. Hull & Suzana Popovic-Montag, Macdonell, Sheard and Hull on Probate Practice, 6th ed (Toronto, Ont: Thomson Reuters, 2023) at § 22:2; In the Estate of Joan R. McAteer, deceased, 2025 ONSC 1197 at para 20. [McAteer]
[2] See Cochrane v Cochrane, 2021 ONSC 5228 at para 12 [Cochrane 5228], aff’d sub nom Benjamin Cochrane Trust (Re), 2023 ONCA 546 [Cochrane CA].
[3] McAteer, supra note 1 at para 7.
[4] RRO 1990, Reg 194, rr 74.16-74.18 [Rules].
[5] Fales v Canada Permanent Trust Co, 1976 CanLII 14 (SCC); Bellamy v Thompson, 2024 ONSC 309 at para 50 [Bellamy]; Toller James Montague Cranston (Estate of), 2021 ONSC 1347 [Cranston] at paras 50-53.
[6] Rules, supra note 4, r 74.17.
[7] Ibid, r 74.18. See also Forms 74.43 and 74.44.
[8] Mayer v Rubin, 2023 ONSC 4214 at para 105.
[9] See Rade Estate, Re, 2005 CanLII 38107 (Ont SC) at paras 19, 39. [Rade]
[10] In Sworik v Ware, 2005 CanLII 50596 (Ont SC), the court held that the use of non-existent court forms was scandalous, vexatious and patently offensive. The fiduciary was ordered to pay costs of $1,500 for the order directing the passing of accounts and to pay $10,000 in costs to the donor’s estate in light of her failure to maintain proper accounts, the presentation of improper accounts, and bad faith conduct during the “audit” proceedings.
[11] Rade, supra note 9 at paras 5, 6, 11.
[12] Bellamy, supra note 5 at para 51.
[13] See Cranston, supra note 5 at paras 55-61. See also para 5.
[14] Cochrane CA, supra note 2 at para 89.
[15] Cochrane 5228, supra note 2 at paras 18-19, 23-25.
[16] Some of the expenses for services provided by third parties that had no receipt were ultimately accepted by the court as valid: see para 62, for example.
[17] Cochrane CA, supra note 2.
[18] Ibid at paras 87-92.
[19] See Cochrane v Cochrane, 2021 ONSC 7504 [Cochrane 7504] at paras 13-14; aff’d Cochrane, CA, supra note 2 at para 22.
[20] See Zimmerman v. McMichael Estate, 2010 ONSC 2947 [Zimmerman].
[21] See Vanmaele Estate (Re), 2018 ABQB 840, var’d 2019 ABCA 499 [Vanmaele] at paras 24-25. The Court of Appeal did not disturb the lower court’s findings regarding the expenses that the personal representative had previously been ordered to reimburse.
[22] See Bereskin Estate, Re, 2014 MBCA 15.
[23] See the Estates Act, RSO 1990, c E.21, s 49(10).
[24] See Cochrane 5228, supra note 2; Cochrane CA, supra note 2; Menno v Menno, 2018 ONSC 2497.
[25] See Zimmerman, supra note 20 at paras 74-87, 115.
[26] Ibid at paras 103, 116.
[27] See Zimmerman v Fenwick, 2010 ONSC 3855. In Cochrane 7504, supra note 19, the Court also noted that enhanced costs may be ordered if “a party fabricated evidence for their own purpose”: see para 15.
[28] See Zimmerman, supra note 20 at para 113; the trustee in this case failed to properly account and also deliberately obstructed attempts made by the objectors to obtain a proper accounting.
[29] See Vanmaele CA, supra note 21 at para 39. See also Cochrane 7504, supra note 19 at paras 26-27.
[30] Cochrane 7504, ibid at paras 16, 18, 30.
