Lawyers as Fiduciaries: When Things Go Wrong
By Krystyne Rusek, Pallett Valo LLP
When choosing an executor or estate trustee for your estate, a lawyer can be a good option. As regulated professionals, lawyers are scrutinised by the Law Society of Ontario to ensure they refrain from “professional misconduct or conduct unbecoming a licensee”1. This extends to non-legal activities, such as when a lawyer is an estate trustee. Because lawyers are held to such high standards, beneficiaries can usually have confidence that their lawyer-trustee will act in their best interests. But, as illustrated in the recent case of the Law Society of Ontario vs Comartin, occasionally, a lawyer may abuse the authority granted and act in a way to further his or her own interests to the detriment of the estate and beneficiaries.
Mr Comartin had been a practicing lawyer in Ontario since his call to the bar in 1992. In 2004, he was appointed as a co-trustee of an estate worth about CAD 600,000, the other trustee being a family friend of the deceased. He and the coestate trustee were responsible for the administration of the estate and trusteeship of the testamentary trust created in favour of the deceased’s son, who was mentally disabled.
Mr Comartin was also appointed as co-attorney for property over the mentally disabled son, with a friend of the family as his co-attorney. As attorneys for property, Mr Comartin and the co-attorney had the responsibility of managing the disabled son’s finances, including money received from the deceased’s estate.
Lastly, Mr Comartin was also the estate solicitor, and both his co-trustee and co-attorney were his clients by virtue of their appointments.
The beneficiary could not care for himself, and all parties had fiduciary obligation to act in his best interests. Unfortunately, this did not happen. Over the course of 11 years, Mr Comartin intentionally and repeatedly abused his authority in his roles as attorney for property, estate trustee, and solicitor for the estate. Neither the co-estate trustee nor the coattorney was aware of the misconduct, and it was only during a spot audit of Mr Comartin’s law practice by the Law Society that concerns were raised.
The Law Society investigated, and it was revealed that between 2004 and 2015, Mr Comartin had systematically pilfered money from the estate to pay over CAD 350,000 in false legal costs for his trustee and attorney work. When he was forced to pass his accounts, he misled the court with respect to the approval of the accounts by the co-estate trustee, as well as the disability of the beneficiary. He served the accounts only on the disabled son, despite a legal obligation to serve the co- attorney, the co-estate trustee and the Public Guardian and Trustee.
During disciplinary proceedings by the Law Society, the co-attorney testified that she did not know she was attorney for property. The co-estate trustee had made attempts to become involved in the estate administration but was rebuffed by Mr Comartin. He stated that he eventually gave up his efforts to be involved in the estate administration and relied on Mr Comartin to act properly and honestly because he was a lawyer. In the end, Mr Comartin was found to have breached his professional obligations. The Law Society Tribunal permanently revoked Mr Comartin’s licence and ordered him to pay substantial costs.
This unfortunate situation shows that abuse of fiduciary powers can persist for too long before there is accountability. In the case of lawyers, the Law Society can conduct spot audits to ensure lawyers adhere to their professional obligations, but it does not monitor the actions of lawyers who act as estate trustees or attorneys for property.
It is up to the people who are appointed as co-fiduciaries to ensure that obligations are met. Had the co-trustee or co-attorney taken action, it is possible that the financial harm suffered by the estate and the disabled son would have been far less.
Fiduciary roles are onerous and should not be undertaken lightly. If an estate trustee or attorney for property is being excluded by a cofiduciary, that excluded person has an obligation to pursue information and documents with respect to all transactions that have occurred. If a person is unable to obtain information from the co-fiduciary, he or she should immediately seek independent legal advice. There are various ways that an attorney for property and a trustee can be forced to disclose information and documents and account for transactions.
Failure to take proper steps can result in personal liability to the fiduciary. In the case of Cahill vs Cahill2, a co-estate trustee was found to be negligent and liable for breaching her fiduciary duty, despite the fact that she was not actively involved in the estate administration, nor did she benefit in any way. It remains to be seen in the Comartin case whether the co-fiduciaries will be held to account at some point in the future.
The author would like to thank Ryan Deshpande, summer student-at-law, for his assistance with this article.
1 Law Society Act, s. 33.
2 2016 ONCA 962.
Krystyne RusekGGI member firm
Pallett Valo LLP
Law Firm Services
Mississauga (ON), Canada
T: +1 905 273 30 22, Ext. 312
Published: GGI Insider, No. 108, July 2020 l Photo: Gilberto Mesquita - stock.adobe.com