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This week on
Case citation:
Rooney Estate v. Stewart Estate 2007 WL3019262 (Ont. S.C.J.), 2007 CarswellOnt 650
As we all know, it is not uncommon for any investor to occasionally experience a substantial decrease in the value of one of the stocks in his or her portfolio. But what if the investor is a trustee?
In light of the recent amendments to the Trustee Act which appear to embrace the modern portfolio theory, it will be interesting to see how the Court will utilize this theory to assess a trustee's investment performance. Section 28 of the Trustee Act adopts an approach that is consistent with the modern portfolio theory. Under this section, a trustee is insulated from liability if “the conduct of the trustee, which led to the loss from the trust, conformed to a plan or strategy, for the investment of the trust property, comprising reasonable assessments of risk and return that a prudent investor could adopt under comparable circumstances”.
Under the “statutory legal list” approach, which I described yesterday, a trustee was limited to investing trust assets in authorized investments. However, with the development of the prudent investor rule, trustees are provided with a broader range of investment choices, which will likely increase their responsibility in determining an acceptable standard of care.
Presuming that a trustee is found liable for breaching the standard of care, section 29 of the Trustee Act permits a court to assess “the overall performance of the investments” when it is assessing damages. Based on the language of section 29, it appears that a trustee may be allowed to offset the loss of a bad investment against the gain of a good investment.
The trusts and estates bar will be watching with interest to see how the judicial consideration of the prudent investor rule evolves.
Happy Super Bowl Weekend! Go Patriots!
Rick
Last week, Paul Trudelle commented in two of his blogs on the well-deserved awards presented at the Ontario Bar Association, Trusts and Estates Section Year End Dinner that was held on Wednesday, May 30, 2007 at the Royal York Hotel. Specifically, Brian Schnurr was awarded the Award of Excellence, Jordan Atin the Hoffstein Book Prize and Peter Lawson the Widdifield Award.
In addition, Corina Weigl, the Chair of the 2006-2007 Section Executive presented a report on the past year's activities undertaken, and dealt with, by the Section Executive.
Following Ms. Weigl's report, the slate for the 2007-2008 Section Executive was dealt with and confirmed.
The 2007-2008 Section Executive is: Jordan Atin (Chair), Kimberly Whaley (Vice-Chair), Corina Weigl (Past-Chair) and Suzana Popovic-Montag (Secretary), together with the following Members-at-Large: Ann Elise Alexander, Robert Coates, Ed Esposto, Jan Goddard, Susan Heakes, Danielle Joel, Sean Lawler, Mitchell Leitman, Joanna Ringrose, Susan Stamm, Sender Tator, Craig Vander Zee, Mary Wahbi and Melanie Yach.
I thoroughly enjoyed working with this past year's Section Executive and look forward to working with the 2007-2008 Section Executive and Jordan, its new Chair.
Thanks for reading,
Craig
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