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Trustee to repay $42K for misusing authority

|Written By Robert Todd

A woman has been forced to repay more than $42,000 she received for serving as an estate trustee after a judge found her to have misused her authority in the role.

In a strongly worded judgment, Superior Court Justice Thomas Lederer denounced the behaviour of Josephine Polk, who was among three executors of the will of Scarborough apple farmer and animal-welfare activist John Watson.

Justice Wailan Low ousted Polk from that role in 2006 after a series of contentious moves. They included her failure to disclose a $145,000 personal debt owed to the $7-million estate and threatening to have Watson’s beloved pets, which she was caring for, euthanized if forced to repay the money.

“Being asked to be the trustee of an estate is not a gift,” Lederer wrote in Watson Estate v. Beatrice Watson-Acheson Foundation.

“Being a trustee is a responsibility through which the deceased seeks the help of people he or she has faith in to be sure that the assets of the estate are distributed or disposed of consistent with his or her desires.

To misuse the trust or fail to understand the task is a breach of the faith of the person who is dead.”

Watson, who died in July 2004, never married and didn’t have children. He had two cats and three dogs at the time of his death. In 1999, he created the Beatrice Watson-Acheson Foundation to promote animal welfare.

According to Lederer’s decision, those who knew Watson were troubled by his decision in the days before his death to make a new will that dropped one executor of his estate and added Polk.

The new will included a provision that any decision made for the estate required the approval of a majority of the three trustees with the caveat that Polk must be among the majority.

One person even filed an affidavit indicating that Watson had earlier expressed his desire that Polk not be an executor of his will.

Low heard a motion to remove Polk as executor over four days in May 2006. The judge concluded that Polk seemed to have a “misapprehension” of her duties as a trustee.

“Ms. Polk launched a number of proposals or initiatives that, if translated into action, would certainly have amounted to breaches of the duties of the executors.”

The judge credited the efforts of the other two executrixes of the estate and its solicitors, Miller Thomson LLP, for putting a stop to most of these attempts.

According to Low, Polk’s actions included such things as an effort to auction off Watson’s five-acre property and home without appraisals and use funds to commission a book about him.

Most concerning, according to the judge, was Polk’s desire to block funds from going to the foundation until it had “proved its viability.”

“While not blaming Josephine Polk alone, Madam Justice Low made clear that the course of conduct surrounding the administration of the estate of John Cameron Watson was likely to create dysfunction and ill-will among the executrixes,” wrote Lederer.

As well, Polk had received a $145,000 loan from Watson in 2003 in order to consolidate her debts, which he took out a mortgage to facilitate.

Polk was to make monthly deposits to a joint account to pay down the mortgage but stopped doing so after Watson’s death. Low found that Polk had failed to disclose the loan in her role as executor.

Low also noted Polk’s treatment of Watson’s pets after he died. He had two cats and three dogs, but his final will included no provisions for payment of expenses related to their maintenance.

Rather than leave them on the farm with Watson’s handyman, who continued to reside there, Polk “insisted” on moving them all to her home, according to Low’s decision.

Polk had six dogs and 15 cats of her own. Rather than adopt the animals, she submitted thousands of dollars of costs for their food and shelter to the estate. The other executrixes later refused to make the payments.

In addition, Polk told the other executors that if she was forced to pay back the $145,000 loan, she would have to move into an apartment and have the animals euthanized.

“In my view, the animals were being used by Ms. Polk as a source of income for her acquaintances at the expense of the estate, and the fact that she discontinued the expenditure once the other two executrices refused to continue to reimburse her is demonstration that it was neither necessary nor reasonable,” wrote Low.

For his part, Lederer said Polk’s consideration of destroying the animals “verges on the unspeakable.”

The courts also frowned upon Polk’s handling of a $350,000 claim against the estate made by Ross Regele, the handyman who worked and lived in a mobile home on Watson’s farm.

Low said the basis for the claim was unclear but it initially was for $150,000 and seemed to relate to life interest in real property due to a promise, allegedly made by Watson, indicating that Regele could live on the farm until he died.

The amount desired increased after Regele was injured in a fall on the property.

Low found that Polk and another executor failed to offer the beneficiary foundation reasons for their willingness to settle the claim.

“What is apparent from this is that in dealing with the claims of Ross Regele, Josephine Polk did not reasonably carry out her responsibilities to the estate,” Lederer said in his decision.

“Any request was acceded to and no attempt made to analyze the validity or value of the claims being made.”

Lederer ordered Polk to repay the estate $42,035 she received as prepayment of compensation for acting as a trustee of Watson’s estate. While the case focused on Polk’s actions, the judge expressed dismay at the overall administration of the estate.

“No one involved should see this result as a victory,” he wrote. “As noted by Madam Justice Low, the estate, in the hands of these executrixes, was dysfunctional. In their own way, each one contributed to this failure.

To my mind, each one in their own way breached the faith placed in them by John Cameron Watson.”

Robert Allen, who represented the Beatrice Watson-Acheson Foundation in the case, says justice was served through the ruling.

Nevertheless, he’s eager to see whether his client will receive the $15,000 to $20,000 in fees it’s seeking. It appears he faces a tough battle on that front given that, as Lederer remarked in his reasons, “Without having heard submissions, it seems to me that this may be a case where neither party should seek an award of costs.”

But, Allen says, “That may be the more interesting decision, when it comes down, [of] whether or not the foundation, who is the respondent, should be deprived of its costs. It just seems to me that there’s no reason why it should be deprived of it.”

Polk, who represented herself in the case, couldn’t be reached for comment.

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