Trustee Exemption Clauses: Redundant Or Required? By Archie J. Rabinowitz, B.A., L.L.B.*

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1. Introduction -

Many testamentary instruments include clauses which are intended to relieve trustees from liability in the execution of their duties. Such exemption clauses, as they will be referred to in this paper, take a variety of forms but are generally quite broad so as to relieve the trustee from consequences stemming from negligence so long as the conduct does not amount to fraud or intentional wrongdoing. As noted by the Ontario Law Reform Commission (“OLRC”) in its Report on the Law of Trusts, “trust instruments drawn in this Province, whether testamentary or inter vivos, very often exonerate the trustee from liability for any loss arising from the administration of the trust, if the trustee has acted in good faith”.1

While thecommonlaw has not dealt with this issue to a great extent in Canada, other jurisdictions have dealt with the issue of exemption clauses to a much greater degree. This paper will examine these approaches in an attempt to discern what the future approach of the Canadian courts may be. This paper will also examine the impact of the provisions in the Trustee Act which also address the issue of trustee liability. While clauses which purport to relive trustees of liability have become commonplace in the creation of testamentary and trust instruments, such clauses may have little utility in light of the detailed and comprehensive statutory provisions and the approach likely to be taken by the courts.

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